by Robert M. Costrell
July 29, 2014
Missouri repeatedly and considerably enhanced its pension benefit formula from 1975 to 2001, resulting in large increases in pension wealth, particularly for those retiring in their 50s with 25-30 years of service. Although many states have reduced benefits in recent years, especially for new teachers, this has not been the case in Missouri. Indeed, two enhancements that were scheduled to expire in 2013 were extended or made permanent. If funding pressures lead the legislature to consider benefit cuts, the history of enhancements provides a ready menu. However, it might be preferable to reconsider the fundamental structure of the system, which generates idiosyncratic incentives and gross inequities, due to the disjuncture between benefits and contributions.