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Newsmakers

Missouri Treasurer: State Pension Crisis ‘Is at our Doorstep’

Suggests MOSERS lower expectations, investment fees.

By Chris Butera

Missouri State Employees’ Retirement System (MOSERS) has a funding deficit exceeding $5.2 billion, Missouri State Treasurer Eric Schmitt told a panel of lawmakers Wednesday.

“The future of the state’s finances are at stake,” Schmitt said at the meeting. “Five billion dollars means we are thousands of dollars in debt for every single Missouri taxpayer. This liability is the number one liability for our state—a problem that, without action, will only get worse and worse every year.”

Schmitt said that MOSERS is currently 60% funded, missing 16 projections in the past 17 years, and considers a pension plan to be healthy when its funded status is 80% or higher.

“So 60% is alarming, but even more alarming is the trajectory,” he said. “In the early 2000s, we were nearly 100% funded. Now, just a few years later, we’re at 60% and falling.”

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The treasurer attributed the MOSERS deficit to past administrations for having unreasonably high expectations of investment earnings and expensive investment fees paid by the state that went to Wall Street rather than stay in Missouri. He also called the plan “the number one threat to the state’s AAA credit rating” in a newspaper op-ed, arguing that funding for schools, roads, health services, and other priorities would also suffer should the problem go unaddressed.

Schmitt said he would suggest MOSERS lower expectations for earnings as well as lower its investment fees during Thursday’s meeting.

“This crisis is no longer on the horizon, it is at our doorstep,” Schmitt said. “The future of Missouri’s finances are at stake, and this is a conversation that we need to have.”

MOSERS could not be reached for comment.

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Home > News > Research > Moody’s: US State Pension Liabilities Spike to $1.3 Trillion in FY 2016
Research

Moody’s: US State Pension Liabilities Spike to $1.3 Trillion in FY 2016

Illinois, Alaska, and Connecticut among largest unfunded liabilities.

By Chris Butera

State-funded US pension liabilities jumped 4.5% in fiscal 2016, increasing the total unfunded pension liabilities to $1.3 trillion, reported by Moody’s Investors Service Wednesday. It projected the liability will grow to $1.7 trillion in fiscal 2017.

According to Moody’s, the liability increase can be attributed to underperforming returns, low interest rates, and insufficient contributions to government worker retirement systems.

“About half the states are also not making sufficient payments to pension systems to prevent their unfunded liabilities from growing, even if investment targets are met,” Moody’s said in a statement.

According to Reuters, the $1.3 trillion fiscal unfunded liability accounted for 122% of state revenue.

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Illinois had the biggest unfunded liability in fiscal 2016, equal to 487% of its revenue, followed by Alaska and Connecticut at 443% and 285% of their respective revenues. The median unfunded liability for all states was 82% of revenue.

The lowest pension liability was North Carolina at 23.6% of its revenue.

Moody’s projected the liability to grow to $1.7 trillion in fiscal 2017.

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