Many of the public employee retirement plans in Missouri are faring better than those in the rest of the nation, but the state auditor says there are serious concerns about some.
Auditor Tom Schweich’s office looked at 89 public pension systems covering about 546,000 members. He says 15 of those plans are “in the most trouble,” and one or more could be the subject of full audits next year.
“We consider them to be a problem if their funding ratio is either below 70 percent, so it’s ten points below what’s considered reasonably safe,” says Schweich, “and anything below 95 percent of required contributions, because we think they should be funded at 100 percent … if it’s anything below 95 percent, that’s a downhill trend.”
Those 15 plans include the Missouri Department of Transportation and Highway Patrol employees’ retirement system and plans covering police and firefighters in Columbia, Joplin and Springfield, and plans covering Kansas City transportation authority and public school employees. Other plans on that list cover some employees of St. Louis County, Bridgeton and nonuniform employees of University City.
See the full report on the state auditor’s website
The survey found that statewide, Missouri’s pension plans have unfunded liabilities of $16-billion. Plans as of 2012 are funded at 78 percent of the present value of future retirement benefit payments previously earned by employees. That figure has decreased from 83 percent in 2003 but is higher than the national level.
Schweich says the survey found that in funding ratio, annual contributions toward solvency, and pension costs as a percentage of payroll, “Missouri is above average but in none of these areas is Missouri safe.”
Missouri recorded a 94 percent contribution rate but the survey found 34 of Missouri’s plans didn’t receive the full contribution recommended by actuaries. The percentage of payroll costs devoted to pension plans rose between 2003 and 2012 in Missouri and nationally, but again Missouri fares better than the national average.
Schweich says the main reason some plans are below an “acceptable” fund ratio is the recession of 2008 and 2009. He says some had high investment return assumptions and some didn’t have employees contributing.
He says some of the plans surveyed responded that they would raise their funding ratios to 100 percent of required contributions or would lower their investment return assumptions, both of which he considered positive changes.