Retirement Planning Doesn’t Have to be Scary! We Can Help.

 

Ghouls and goblins will be knocking on your door this week asking for sugary sweets. Horror films will be played on a continuous loop on cable television channels, teenagers will be sneaking toilet tissue and eggs from their parents’ houses.  But maybe most terrifying of all, many LAGERS members will be preparing for retirement at the end of the year!  Oh, the horror!

A little dramatic, I know, but retirement is a truly terrifying new chapter in life.  I have seen the fear first-hand in hundreds of wide-eyed, soon to be retired, LAGERS members at seminars over the years.  The fear is real.  But it doesn’t have to be so frightening.  LAGERS provides several resources to help keep the retirement boogey man away from your door.

Pre-Retirement Seminars

Almost 1,000 people attend LAGERS pre-retirement seminars each year.  Nine out of ten folks that attend these seminars rate them as ‘Excellent’ and, more importantly, 99% say that they believe they have received adequate information to make informed decisions about their LAGERS retirement.  LAGERS staff conducts about 20 of these seminars each year across the state.  We offer full-day, afternoon, and evening meetings to accommodate anyone’s schedule. In addition to the regional seminars, we also conduct several smaller seminars where we travel to a participating employer and speak with that employee group.  Pre-retirement seminars are the best way to ensure you have all the information you need to make a sound decision about your LAGERS benefits.

One-on-One Counseling

LAGERS has benefit specialists on staff who are experts in all areas of LAGERS retirement.  Stop by our office (appointments are preferred) or conduct a counseling session over the phone.  We would love to walk you through the payment options, application process, and anything else related to LAGERS retirement!

Benefit Estimates

A benefit estimate is a document that shows your estimated retirement benefits based on a retirement date of your choosing.  This is different than your annual LAGERS statement because an estimate shows all of the payment options that are available to you. It is also more accurate as it is based on your most recent information.  You can get a benefit estimate by contacting our office, or you can generate as many as you want online using the myLAGERS web portal.

These estimates are extremely beneficial in retirement planning.  But you would be surprised how many people retire without ever requesting one.  “When I started at LAGERS 14 years ago, I was blown away by how many people retired without ever getting a benefit estimate from us!” said Tami Jaegers, LAGERS’ Assistant Director.  “Now, that has changed dramatically.  About 9,000 estimates were calculated in the last 12 months.  Staff did 4,400 and members did 4,600 online using myLAGERS. So members ran more estimates than LAGERS staff!  That is great!”  Great, yes, but there is still plenty of room for improvement.  LAGERS still sees far too many members retire who are seeing their benefit amount for the first time about two weeks before they walk away from work.  Now that is scary!

myLAGERS

The online myLAGERS web portal has been mentioned throughout this blog, and for good reason.  It is a great tool for retirement planning.  If you haven’t enrolled in myLAGERS yet, stop reading this blog and do so right now!  While the greatest feature (IMHO) is the benefit estimator, you can also change your beneficiaries, address, view annual statements, estimate service purchases, apply for benefits, and more.  And no need to worry about the security of this portal.  LAGERS hires a third party company each year to evaluate the security of our system.  This past year, LAGERS received the highest score possible for security of our system.  Your information is protected and secure with us.

Annual Statements

For members who are still decades away from retirement, the annual statement is a great way to help keep your retirement planning on track.  After all, your LAGERS benefit is not going to be enough to fully fund your retirement.  So the annual statement helps you know what your base monthly income will be so you can save additional funds for retirement appropriately.  It is also a wonderful annual reminder to do a little retirement planning check-up on yourself.

With these resources available, what is there to be afraid of?  We will help you every step of the way.  So go ahead and curl up with some popcorn and leftover Halloween candy and change the channel to a thriller on TV.  The LAGERS retirement process is one less thing to be frightened about.

 

Jeff Kempker
Manager of Member Services

The Top 5 Questions on LAGERS Retirees’ Minds

 

LAGERS retirees are an inquisitive and engaged group.  They ask wonderful questions to better understand their LAGERS benefits.  I have compiled a short list here of some of the most frequent questions we get from our retired crowd.  Let me know if we need to add some more to this list!

Can I retire and then come back to work for another employer?

Absolutely!  I once talked to a member who said his dream was to retire and then become a greeter at Wal-Mart because he assumed that was truly a job with zero stress.  While I’m not qualified to speak about the stress levels of Wally World employees, I can tell you that this would be allowed under LAGERS’ rules.  A person who retires from a LAGERS employer can go back to work either part-time or full-time for any employer that is not in LAGERS and the monthly benefit will not be affected.  A LAGERS retiree can also go back to work part-time for a LAGERS employer, even one from which she is receiving a benefit, and the amount of the benefit will not be affected.  Be careful here, however, as LAGERS defines part-time differently than a simple 40-hour work week.  If you plan to re-employ after you retire with another LAGERS employer, check with our office first about how many hours you are allowed to work how this may impact your monthly retirement income.

What about working full time for a different LAGERS employer than one you retired from?  This is allowed too, but you must have at least one-month break between your last day of work or your retirement effective date (whichever is later) and your re-employment date.  If you don’t have that one month break, we would have to suspend the monthly benefit you are currently receiving.  So, take a month off, you deserve it!  If you do this, you would again be covered under LAGERS at your new employer and eligible for a second benefit after 12 months of employment; all the while, receiving your full, uninterrupted benefit from your first employer.

All of this can get a bit tricky, so if you are planning to go back to work for a LAGERS participating employer, either part-time or full-time, please contact us so we can walk you through it!

Who guarantees that my LAGERS benefit is secure?

People want certainty these days and a constant question we get from active members and retirees alike is, “how do I know my benefit will continue being paid, in full, for my lifetime?”  The good news is that receiving a retirement benefit from LAGERS is about as certain as one can get.  One reason for this is because your monthly payment is not affected by benefit changes your employer may make after you retire, nor is it affected by the economy or market swings.  Another reason is because your retirement benefit is pre-paid.  This means that at the time you retire, LAGERS sets aside, in a separate fund designated only for retirees, enough money to pay you for the rest of your life.  This protected trust is solely for the benefit of LAGERS retirees and beneficiaries.   And, that fund, as of June 30, 2015 is slightly above 100% funded, meaning we have all the money we need on hand today to pay the protected lifetime benefits for our 18,000+ current retirees.

When will I receive my tax forms from LAGERS? 

LAGERS mails the 1099-R form (which is basically a W-2 for retired people) annually to each of our retirees.  The IRS requires the 1099-Rs be mailed no later than January 31^st each year so retirees can expect this form in their mailbox in early February.  You may be able to get a copy about one week sooner by logging onto the myLAGERS web portal and printing it from there.

Can I waive the 20% tax withholding on the Partial Lump Sum?

If a retiree chooses the Partial Lump Sum (PLUS) and decides not to directly roll it into another retirement account, LAGERS withholds 20% of the PLUS and forwards it onto the IRS.  LAGERS is required to withhold this amount, in all circumstances, even if the retiree is disabled.  However, if your tax liability ends up being less than what was withheld, you can apply for a refund at the end of the year.

I need a pension award (income verification) letter, how do I get that?

A pension award letter is basically proof that you are receiving monthly income from a retirement plan.  This may also be called an income verification letter which may be needed if you are applying for a loan or some other type of credit.  There are a couple ways you can get this letter.  One is online through the myLAGERS web portal.  After logging into your account, click on the “Income Verification” link on the menu and then select “Download Income Verification.”  Another way is to simply call our office.  We will need to verify your identity over the phone, and then we will send the letter to you in the mail.

This has been a small sample of the questions we frequently receive from retirees.  Please comment on this blog if you believe we have missed some.  We always love to write about the topics you care about most!

 

Jeff Kempker
Manager of Member Services

For LAGERS, Self-Assessment is Part of the Success Formula

We’ve had a pretty great 2015 so far here at LAGERS.   But even with accolades like Plan Sponsor of the year, we are constantly self-assessing to make sure we are providing our members with the best customer service in the most economical way possible. In case you missed it, we wanted to share one strategy that LAGERS is using to continue to look for ways to become an even better retirement system for you!

LAGERS recently participated for the first time in an international pension benchmarking survey, which analyzed LAGERS performance in areas such as administrative cost efficiencies and customer service. The survey found that LAGERS is providing superior customer service at a low cost per member.

CEM Benchmarking, an independent global benchmarking company, conducted the survey by comparing LAGERS to a group of peers. CEM has surveyed over 75 leading global pensions systems and identified LAGERS’ peer group by selecting ten pension funds from their database that are of similar size and structure to LAGERS.

Of the notable findings on the survey, high marks in customer service were at the top, with a total service score of 86 out of 100. While LAGERS scored above our peer average in nearly every activity surveyed, the greatest impact to this score was the result of high member contacts, such as 1-on-1 counseling sessions, seminars, and targeted communication, as well as shorter call wait times, availability of features on myLAGERS, and less red tape when applying for benefits.

CEM defines service as ‘anything a member would like, before considering costs,’ and while LAGERS scored very high in service, remaining good stewards of our members’ money is also a top priority. CEM found that LAGERS Total Pension Administration cost was $16 per member below our peer average. One contributing factor to LAGERS cost efficiencies is the low number of administration staff at LAGERS. LAGERS has fewer administrative staff than any of our peers, which is remarkable considering LAGERS also had more member employers in our system than any of our peers, adding additional layers of complexity to the system administration.

While it is always great to hear that LAGERS is getting it right, these independent benchmarks not only help LAGERS to identify best practices, they also provide measurable information to help us to recognize areas where we are excelling as well as areas in which we can improve. LAGERS takes providing superior customer service in the most efficient and economical manner possible very seriously. Self-assessment is an important part of LAGERS’ success formula, and it is something that staff and leadership are mindful of every day. The detailed report provided LAGERS with actionable measurements that will help LAGERS continue to provide our members with even better customer service at the lowest cost possible into the future! And as always, our members are the best barometer for how we are doing; we love hearing from you and appreciate every complaint and compliment.

Elizabeth Althoff
Communications Specialist

How Will a Divorce Impact my LAGERS Benefit?

We get a lot of questions from members or spouses of members going through a divorce wondering if LAGERS benefits are a marital asset and how, if at all, a benefit will be impacted. This can be a really tricky subject for members and their attorneys to sort through because unlike other retirement assets, your LAGERS benefit has no account balance or value while you are still working. Instead, throughout your career, you are accumulating credited service that will someday be converted into a monthly benefit. Because there is no account value assignable to an active member benefit, it can make it difficult to know where to begin when dealing with a LAGERS benefit in a divorce proceeding. Here are my top three divorce FAQs to help point you in the right direction.

Is my LAGERS benefit considered a divisible marital asset?

There is no cookie cutter answer when it comes to whether or not your LAGERS benefit is a marital asset because there are no state statutes specifically addressing this. Whether your LAGERS benefit will or will not be a divisible asset is determined by the family court in each particular case.

A portion of my benefit, for the time I was covered in LAGERS and was married, has been ordered to be divided. Can LAGERS determine this amount for me?

We get inquiries from members or spouses from time to time requesting information to help determine who gets what in a divorce. Firstly, LAGERS will never release information regarding a member’s benefit to anyone except the member (or as required by law). A spouse, ex-spouse, or attorney for either party will not be able to request any personal information regarding the member’s benefit directly from LAGERS unless through an appropriate court order or a properly executed release of information form from the member.

Often, when members do inquire about their benefit during a divorce proceeding, they are looking for a present or ‘lump sum’ value of their benefit. Remember that because benefits accrue through credited service, and not by account balance, LAGERS does not provide present value calculations for members. There are, however, two documents that members can request to assist with the court’s determination. Members receive an annual benefit statement each year from their employer which will tell a member if they stopped working as of Dec 31, what their monthly benefit would be at retirement age. Members can access their statements from their myLAGERS account, or request a copy from the LAGERS office. LAGERS can also, at the member’s request, provide a benefit estimate which will show the member’s future monthly benefit for accrued service to date. If a member was married for only a portion of their LAGERS service, an estimate can be generated for that specific period, if desired.

When I retire, how will my ex-spouse receive their court-ordered payments?

Under current Missouri statutes, your LAGERS benefit is not subject to execution, garnishment, attachment, bankruptcy, or any other process of law (with the exception of court ordered child support deductions). What this means is that when a member begins drawing their monthly benefit in retirement, it is solely the member’s responsibility to forward appropriate payment to the ex-spouse.

LAGERS has a more complete divorce FAQ section as well as general information about how LAGERS benefits are calculated on our website, but of course, these resources, as well as this blog, should not be interpreted or used as legal advice. Members with specific questions about their case should speak with their personal legal counsel.

Elizabeth Althoff
Communications Specialist