Call us boring, it’s OK. We at LAGERS actually like being boring. If ensuring retirement security for thousands of Missourians sounds like a snooze fest for you, you may not want to work here. However, we’re pretty passionate about it. Here’s why.
Day in and day out what we strive to do the most is to fulfill our mission statement:
“To provide secure retirement, survivors’, and disability benefits to members and beneficiaries in the most efficient and economical manner possible, while providing superior service and fulfilling our fiduciary obligations.”
That doesn’t sound particularly flashy. But it’s serious business, and oh so important to our members. Like many we believe that our nation is headed for a retirement crisis, and it’s because not everyone has what we think everyone who works hard is entitled to—a secure retirement.
This past year we decided to expand upon our mission statement – which has been in place for quite some time – and develop a formal vision statement. In coming up with the vision statement our Board ultimately adopted, we started with the mental phrase:
“We dream of _____.”
The dream or vision doesn’t have to be easily attainable, or it may not be completely attainable at all, but it is something to always have in mind, to always strive for.
Ultimately our vision statement became “A secure retirement for all.” Our vision hopes and promotes that every working person may have a secure retirement benefit that will allow them to leave the workforce with dignity when that time comes. Our mission requires us to make sure of it for our members.
How We Actively Pursue our Vision to Accomplish our Mission
So how do we ensure the security of our members’ benefits? There are several ways we accomplish this, but primarily through plan design and investment strategy.
Our plan design requires mandatory participation by all full-time employees of participating agencies—no opting out. The plan allows for shared financing-both employees and employers can share in funding required contributions to the plan. The plan requires all contributions be paid to the plan—no pension contribution holidays.
In addition, benefits paid out should be adequate as one component of an individual’s retirement benefits. Think of the three-legged stool analogy—retirement benefits ideally consist of pension benefits (LAGERS), Social Security where applicable, and personal savings. Our plan has a minimum benefit multiplier of 1% and up to 2% for those participating in Social Security. Therefore, a 30-year career would yield benefits equal to 30% to 60% of pre-retirement salary, depending on the program elected by the employer.
The final plan design component that supports retirement security is lifetime benefit payouts. A person who retires and receives a monthly benefit cannot outlive that monthly benefit, and may also provide for continuing payments to a beneficiary in the event of his/her death. In addition the plan provides for annual cost-of-living adjustments to keep pace with inflation.
Besides plan design, a significant factor in the security of LAGERS benefits is investment strategy. This includes the pooling of assets maintained for all employers, members and retirees, professional investment management at negotiated fees, a well-diversified portfolio of investments (including investments not typically available to individuals), and a long-term investment horizon. Read a previous blog by one of our investment staff for more on this.
The result of LAGERS’ solid plan design and investment strategy is a current funded ratio of around 95%. That means we currently have 95% of the assets on hand to pay for benefits promised.
Good news doesn’t make headlines as often as bad news, but this is very good news for our members who work hard making our local communities better and who deserve a secure retirement, as do all.