by James V. Shuls, Michael Rathbone
April 15, 2014
The goal of public employee pensions is twofold: to provide a safe and secure retirement for our valued state employees and to help recruit and retain talented individuals into public service careers. Unfortunately, many of Missouri’s public employee pension systems have flaws that make it difficult to achieve either of these tasks. Moreover, these pension plans put taxpayers on the hook if and when they become unfunded. The Show-Me Institute consistently points to the flaws in these systems and has recommended that the state transition to plans that are structured in a more effective and efficient manner. The solution to Missouri’s pension problem is to align benefits to contributions. This can be accomplished by transitioning to better designed alternatives (e.g. defined contribution, hybrid defined contribution/defined benefit, cash balance, etc.). These plans would solve the problems outlined in this paper and would be a better system for most public sector workers.