A bill that makes major changes to the Public School Retirement System was filed late last week in the Missouri House of Representatives.
Currently, teachers in Missouri are required to participate in the PSRS system. PSRS is a defined benefit plan that establishes your benefit upon retirement and pays a lifelong benefit. HB864 (Taylor) creates a defined contribution option for all PSRS members. This is similar to a 401(k) plan that many private employees have. The benefits paid out upon retirement in a defined contribution plan are vastly different than what PSRS members currently have under a defined benefit plan.
Under the legislation, PSRS members would have to decide if they wanted to remain in the defined benefit plan or enter into the new defined contribution plan. Once that decision is made, it cannot be changed.
PSRS members who enter into the new defined contribution plan would be in Social Security and have their employers contribute 5 percent of their salary into the plan. Employees would be required to contribute between 3-50 percent of salary unless restricted by federal law.
The employees in the new defined contribution plan would have to make specific investment options.
MSTA is opposed to the legislation. This opposition is based upon the MSTA Resolution that states “MSTA supports PSRS being a defined-benefit retirement plan.”
The PSRS Board of Trustees also has gone on record in opposition to this bill.
A recent study conducted by the National Institute on Retirement Security that looked at teacher pensions vs. 401(k) plans concluded, among other things, that 84 percent of Missouri Teachers are better off in a defined benefit plan than a 401(k) plan and that contribution costs for Missouri teachers would double in order to realize the same retirement income in a 401(k) as a defined benefit plan. The full report can be seen at: https://www.nirsonline.org/reports/teacher-pensions-vs-401k/
MSTA is tracking the progress (if any) for this bill. Currently the bill has not been assigned to a committee nor had a hearing scheduled. MSTA Government Relations lobbyists are working with members of the House and Senate to inform them of the harmful effects of this bill on public education. To stay up to date on this or any other education-related bill, MSTA members are encouraged to read MSTA Action each week and attend the upcoming MSTA Capitol Visits.