Politics

Missouri’s State Pension In Crisis

Missouri State Treasurer, Eric Schmitt, told a panel of lawmakers on Wednesday that  Missouri’s State pension deficit exceeded $5.2 billion. He went on to explain,

“The future of the state’s finances are at stake…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.”

Missouri’s State Pension
skeeze / Pixabay

The Missouri State Employees’ Retirement System (MOSERS) has missed 16 projections in the past 17 years. The pension fund is only 60% funded, under the 80% or higher that is considered healthy funding status.

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

Missouri’s State Pension deficit is said to be the result of past administrations having unrealistic expectations regarding projected investment returns. In addition, expensive investment fees paid by the state also is considered a culprit in eroding the fund’s returns.  Calling the situation “the number one threat to the state’s AAA credit rating,” Mr. Schmitt contends that pension funding shortfalls could have a devastating affect on funding for schools, roads as well as health services.

Mr. Schmitt recommends that MOSERS adjust its earnings expectations to be in line with market environment and the fund should seek to lower its investment fees.

“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.