In case you missed it, MPERS had a great 2022 fiscal year. Despite periods of near-record inflation and an uncertain stock market, MPERS’ investment staff' strategic decisions benefited the System not only in FY 2022 but also for years to come. Take a look as Executive Director Scott Simon shares the 2022 Financial Status Update below.

MPERS’ benefit recipients are eligible for an annual cost-of-living adjustment, commonly referred to as the COLA. The COLA can vary from zero to five percent annually and is equal to 80% of the percentage increase in the Consumer Price Index for all Urban Consumers for the United States (CPI-U). 

The Consumer Price Index used to calculate the COLA for MPERS benefit recipients is different than the Consumer Price Index used to calculate the social security COLA. The Social Security Administration uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is why the social security COLA amount is different from the MPERS COLA amount.

According to the U.S. Bureau of Labor Statistics, the CPI-U is a more general index and seeks to track retail prices as they affect all urban consumers. It encompasses about 87% of the United States population.

The CPI-W is a more specialized index and seeks to track retail prices as they affect urban hourly wage earners and clerical workers. It encompasses about 32% of the United States population and is a subset of the CPI-U group.

The CPI-W places a slightly higher weight on food, apparel, transportation, and other goods and services. It places a slightly lower weight on housing, medical care, and recreation.

Why does it matter? MPERS calculates annual COLAs according to the statutory guidelines set out in state law. In accordance with Sections 104.103.5 & 104.1045.2, the annual COLA increase is determined each January based on the percentage change in the average Consumer Price Index from the previous year.

An example of how the COLA is calculated can be found in the illustration below. The following computations were used for the 2022 COLA and were based on information received from the U.S. Department of Labor.

In this example, the 2020 average is 258.811 and the 2021 average is 270.970.

The difference between the two averages, divided by the 2020 average is 4.698%, which is the percent of change between the two averages.

Since the COLA is calculated using 80% of percent of change in the CPI-U, 4.698% is multiplied by 80% and the result is the 2022 COLA percentage of 3.758%.

For the 2023 COLA, we will be using the 2021 and 2022 averages, however, the 2022 numbers will not be complete until mid-January.

If you would like to learn more about how Social Security calculates their COLA or more about how MPERS' COLA may affect you, please select the links below.

The IRS has updated the W-4P form and requires taxpayers to use it effective January 1, 2023.

This applies to active employees retiring effective January 1, 2023, and benefit recipients (retirees, survivors, etc.) who want to update their tax withholdings after January 1, 2023.

If you are a current benefit recipient and need to make changes to your 2022 federal or state taxes, you can use the W-4P Substitute.

If you are an active employee who will be retiring on or after January 1, 2023, or if you are a benefit recipient who would like to make federal tax changes to be effective January 1, 2023, or later, you must complete the IRS W-4P form.

The IRS W-4P form can be located on the Internal Revenue Service's website.

Currently, MPERS provides a W-4P substitute that combines the federal and state withholdings on one form. After January 1, 2023, federal and Missouri state tax W-4P forms must be submitted separately.

The MO W-4P can be located on the Missouri Department of Revenue's website.

Please remember, MPERS cannot give tax advice. Please consult a tax professional regarding completion of the IRS W-4P and the MO W-4P should you need assistance.

We are excited to announce that the first annual virtual State of The System will be held on December 7, 2022, from 3:00 p.m.-4:00 p.m!

Join MPERS’ Executive Director, Scott Simon, Assistant Executive Director and General Counsel, Greta Bassett-Seymour, Chief Financial Officer, Jennifer Even, and Chief Investment Officer, Larry Krummen, as they update our stakeholders on the status of MPERS and address questions they may have.

Further details including registration information will be coming soon!

MPERS has received an award in recognition of meeting professional plan design and administration standards.

The Public Pension Coordinating Council is a confederation of the National Association of State Retirement Administrators (NASRA), the National Conference on Public Employee Retirement Systems (NCPERS), and the National Council on Teacher Retirement (NCTR).

According to NASRA.org, to receive the Recognition Award for Administration, the retirement system must certify that it meets the requirements in five areas of assessment:

1. Comprehensive Benefit Program. The system must provide a comprehensive benefit program including service retirement benefits, in-service death benefits, disability benefits, vesting, and provisions for granting a cost-of-living adjustment.

2. Actuarial. An Actuarial Valuation must be completed at least every two years using generally-recognized and accepted actuarial principles and practices.

3. Audit. The system must obtain an unqualified opinion from an independent audit conducted following government auditing standards generally accepted in the United States.

4. Investments. The system must follow written investment policies and written fiduciary standards and the system must obtain an annual investment performance evaluation from an outside investment review entity.

5. Communications. Members must be provided a handbook or summary plan description, regular updates to the documents, and an annual benefit statement. Meetings of the governing board of the system are conducted at least quarterly with adequate public notice.

To receive the recognition Award for Funding, the retirement system must certify that it meets the requirements for funding adequacy, as defined as meeting one or more of the following criteria:

A. A funded ratio of 100%;

B. Contribution rates equal to or greater than 100 percent of the Annual Required Contribution; or

C. A plan has been approved by the governing body to achieve or one or both of these criteria within five years.

MPERS has been awarded the Public Pension Standards Award for Funding and Administration annually since 2004.

What would you like to see in The Pensioner: In the Moment?

Send comments and suggestions to Julie.West@mpers.org.