County Retirees Only Entitled to 62% of Pension Benefits
Counties’ Liability for Pension Benefits is Nil
On Thursday, October 27 the board members of the Missouri County Employees Retirement Fund testified before the Governmental Accounting Standards Board. I was shocked when the plan’s actuary, Fred Munzenmaier, stated that the counties’ liability for the plan was “nil”. He went on to say that the plan and counties’ liability was limited to the assets in the plan.
Mr. Munzenmaier went on to quote a law that says, “. . . the board shall apportion the benefits according to the funds available”. As of June 30, 2010 the plan had assets that represent only 62% of the benefits promised.
Shouldn’t the current retirees be receiving only 62% of their benefits? If the plan is paying current retirees 100% of the benefits calculated according to the benefits structure, when the plan runs out of money the employees retired then will received nil.
Here is my evidence:
Link to CERF testimony before GASB can be found at:
http://www.gasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175823001762&blobheader=application%2Fpdf
The quote from Paragraph 2 on page 2
“Most important, the liability for the benefits is limited to the existing plan assets. Thus, at any point in time, the true net pension liability of the plan as a whole and for anyone of the 111 participating counties (i.e., employers) is nil.”
I think that the public and employees should know this. Also I believe that the current employees s/b being paid only 62% of their benefits based upon the quote of law in Paragraph 1 on page 2:
“If insufficient funds are generated to provide the benefits payable pursuant to the provisions of sections 50.1000 to 50.1200, the board shall apportion the benefits according to the funds available ….”
From CERF audited financial report 12/31/10 page 3:
http://www.mocerf.org/References/Audit_Report.pdf
At June 30, 2010, the date of the latest actuarial valuation, the actuarial value of assets was $294,482,927, while the fair market value of assets was $259,165,927. The aggregate actuarial liability for CERF was $423,561,319, based on plan members’ projected compensation.
Currently the plan has only 62% of the assets needed to pay benefits.
From what the CERF board members told me they are paying 100% of benefits to current retirees. This will mean that when the plan runs out of money to pay benefits, the retirees in the plan at that data will get no benefits. The other issue is that employees contribute to the plan. If the plan continues to pay 100% of benefits to current retirees, then when the plan runs out of assets, the newer employees who contributed to the plan will not even receive their own contributions back.
