Sinqufield’s Blueprint for Disaster

A Response from Dr. James Sandfort

Recently, the Show-Me Institute launched a rather ambitious agenda for the coming year. Among the areas of focus, one, in particular, caught my attention – Public Pension Reform.

As far as public pension reform is concerned two important words were omitted from the title; “for Disaster.” For every PSRS/PEERS member, retired or active, Show-Me Institute’s 2018 Blueprint is a serious recipe for disaster. The goal is to replace the current defined benefit pension plan (DB) with a defined contribution plan (DC) – as the authors suggest – “think 401(k).”

The Show-Me Institute’s Logic:
*DC plans cannot incur unfunded liability
*DC plans put investment decisions into the employee’s hands
*DC plans are transferable from one job to another

The authors emphasize that DC plans for public employees exist, in some form, across the country. What they fail to mention is that other states have experimented with DC plans, judged them flawed and have returned to DB plans for their public employees; most notably, Connecticut.

Additionally, the authors fail to share that 401(k) plans, according to original proponents, were never intended to replace DB plans – only supplement them. Those who study the 401(k) approach have concluded that a 401(k) account, even when generously funded, rarely provides a secure retirement for the average worker – the 401(k) math used in the 80’s and 90’s didn’t add up. The reality is that a 401(k) plan is not a pension plan at all – it is just another type of savings account.

Although DC plans can be portable and move with the employee – once a member is vested in a DB plan (generally after 5 years) there is no need for portability. Upon retirement a check based on years of work, contributions and investment earnings will be there for the remainder of the retiree’s life. One of PSRS/PEERS’s rationales for the creation of Missouri’s DB plan was to attract and retain qualified teachers. It has done just that!

While a DC plan does place investment decisions into the employee’s hands, what employee has the technical knowledge to make those critical investment decisions or the time for ongoing meetings with various financial advisors discussing the intricacies of fees and commissions, risk analysis, a balanced portfolio and more? Most educators entered the profession to work with students and are quite content having qualified professionals at PSRS/PEERS invest their pension dollars. And why should they not be? PSRS/PEERS has provided a secure retirement for tens of thousands of public school educators for more than seven decades.

The claim that DC plans do not incur unfunded liability for the taxpayer overlooks a key point. Many DB plans that are experiencing difficulty financially are in trouble precisely because those same entities that would be funding DC plans have withheld contributions they were obligated to make to DB plans already in existence. It is wishful thinking to believe that these same entities would meet their commitments any better over the long term to any DC plans they create. Bad faith is bad faith regardless of the system in place!

So why would others want to dismantle PSRS/PEERS when it is functioning as intended? Perhaps it is a matter of political ideology or a case of “pension jealousy.” Or perhaps, more insidiously, they are eyeing the dollars involved and want a piece of the financial action, collecting unnecessary fees and commissions, at educators’ expense. Whatever the reason, that cannot be allowed to happen!

For seventy years, PSRS/PEERS has delivered on its promise without default or interruption. Although the check that PSRS/PEERS retirees have reliably received each month for decades may be viewed by others as something extra; for those who have spent a career in public schools educating young people, it is “deferred compensation” for work already done. For Missouri educators there are no social security checks, no stock options, no golden parachutes and no year-end bonuses – there is only PSRS/PEERS!

From my perspective,

Jim Sandfort, Retired Superintendent
Center for Pension Research

Click here to see 2018 Blueprint for MO – Pension Reform

45 thoughts on “Sinqufield’s Blueprint for Disaster

  1. Please do not take away my retirement checks. I became a widow in 2006. I do not get my husband’s ss. I would become destitute without my retirement check,

    • If my retirement goes away, we would be homeless. SS benefits are already reduced because of teacher’s retirement. No raises in two years, health cost going up. Continue to fight for all teachers.

    • Patricia; I, too, became widowed and draw PSRS retirement. I draw the penalized survivor benefit of my husband’s social security. It is better than nothing but angers me that our Congress deems the benefit a “windfall”. As if all that they get isn’t!!

    • I am also a widow- I wasn’t able to get any SS money from my husband. I only have my teacher retirement to live on-which has been frozen while health insurance is going up! I don’t understand why they think this is so much money! I work the 550 to help pay Insurance.

    • I would be desitute as well as would all spouses that canmot collect ss if our pension is changed for the worse.

  2. I agree with keeping things just the way they are. If it is working it does not need to be fixed or replaced. I do not want to learn all about investing and finding someone I can trust to help me is not an easy task, plus it can be can be costly. In my case, my retirement check is the compensation for 30 years of dedicated service to students and communities in Missouri. Keep fighting hard to keep our wonderful – working retirement plan intact.

  3. Thank you MRTA for looking out for the good of the PSRS/PEERS members… Years ago before working in a school district that offers peers, I was in a job that had a 401 k and I was responsible for my investing, it was not that fun. I prefer the PSRS/PEERS.

    Please keep fighting on our behalf.


    Willie Robertson

  4. I agree with other responders. I am a widow and do not get my husband social security. I only survive because of my pension from PSRS. If I did not have it each month I would be homeless.

  5. Tinkering with our retirement would ruin the financial future of almost all retired educators.

    Having had an dual career in business I see the total unfairness of having potential social security income negated by the amount of my teacher retirement. Why am I bitter? I have paid social security a million or millions of dollars for nothing because of the “windfall” provision.

    Why have I paid all the social security? For decades I have had to pay for myself and employees the 12.4 % FICA withholding tax and 2.90 % Medicare payment. I quit paying myself in 1990 because the social security payment was like pouring money down the drain. I will never see it unless the law is changed. It disgusts me to see working aged people who have not paid social security taxes to receive benefits that I paid for and cannot receive.

  6. Until federal law is changed that I can receive SS on my husband’s account, then let’s NOT change the PSRS/PEERS retirement plan. I am very happy with it as is.

  7. Thank You for sending this and pointing out the obvious problems.
    Interesting isn’t it…..that rich people always want someone’s else’s money. Or control of that money so they can get richer.
    How much is enough ?? Did Rex S. work all those years in a classroom teaching kids ? Hours grading papers in the evenings – after all day at school ? NO….he was grabbing all the $$$ he could.

    Leave Teacher Pensions alone….the system is good, among the best in the USA, and we do not need a change. Certainly not change to benefit Rex S. and his group. Any change to the current, well planned and taken care of P.S.R.S./P.E.E.R.S. system would be a major mistake.
    Thank You.

  8. Please leave the PSRS/PEERS plan alone…..With teachers not being able to receive is very important to keep the retirement system as it is…..

  9. This is a terrible idea. I have only my PSRS check to live on. My husband passed away in 2015 and I am not entitled to any of his social security. Please to not allow this to take place.

  10. Many thanks to Dr. Sandfort for his insightful response to this “blueprint.” I believe, as he suggests, that schemes to change PSRS/PEERS are motivated by “pension jealousy.” We have seen these types of recommendations before, none of which bode well for our excellently funded and managed pension plan. Members need to continue to speak up and speak out. Thank goodness we have MRTA in our corner!

  11. PSRS/PEERS has been a life saver for me. Please do not jeopardize a system that has worked extremely well. “If something ain’t broke, don’t fix!”

  12. It is especially dishonorable for the State to change/lower the retirement benefit for a person who has already retired and has planned for his or her retirement with the already promised amount per year. It seems to me the original conceived retirement amount is in the nature of a contract. If Mr. Sinqufield wishes to legislate a change in the pension system the only truly honorable way to do so. is to pass a law affecting teachers who become employed AFTER the law is passed. Already retired instructors and, in truth, those who were hired at a point when the current plan was/is still in effect should be exempt from what essentially would be an ex oost facto violation.

  13. Thank you MRTA for keeping our retirement system in Missouri!!
    Mr. Sinqufield, leave us alone. I am enjoying my retirement and living comfortably.

  14. Have been a member of MRTA since retiring in 1998. Great organization! Stays tuned to legislation affecting our teacher retirement. Encourages retired teachers to stay involved, write legislators about legislation and recommend MRTA to others. Have actively written to MO governor, state legislators and federal legislators/President about legislation affecting MO retired educators, including current federal legislation that affects SS benefits for MO retirees. Keep current fellow retirees, stay involved and persevere!

  15. Thank you MRTA. My Dad used to tell us,”If it isn’t broken, don’t try to fix it. Leave it alone.” I am completely satisfied with things the way they are now. Leave them alone.

  16. Why do some billionaires, after acquiring their wealth, think they are qualified to run everyone else’s life? This is not the first time our MO pension system has been eyed greedily by outsiders. My aunts taught in MO public schools for many years. They told me how, soon after the end of WWII, MO’s teachers voted to give up contributing to and drawing Social Security checks in favor of the Defined Benefit program we have had since then. Now, as a retired public school teacher, I benefit from a pension into which I contributed for my entire career Our DB program is the greatest! Do not change it!

  17. I’m glad that HRH Rex is so willing to look after my well being. I rest assured that HRH knows much more than the folks who administer the pension funds (DB) across the entire state of Missouri. The reality is that HRH and his high finance friends would “advise” us , take their fees, and since the regs are changing, to absolve them of any responsibility, We all need to realize that HRH has a political and financial agenda and it would NOY be in our best interests. Watch what is being proposed in the privatization of Lambert Field in St. Louis. HRH and a company he is involved with made the proposal and they want to “consult” in the matter,SLPD 1-27-18. PSRS, continue to be on guard!!!

  18. As many pension plans across the country have gone “belly up,” PSRS/PEERS pensions continue to perform with no interruptions every when the economic outlook is very bleak. I have enjoyed a comfortable retirement for 18 years thanks to the wise vision of our retirement funds leaders. I do not want any changes to my retirement just because some politician has nothing better to do. It angers me that people in power think they must always change things or they worry they will be criticized for not doing anything, even if it is at the expense of the welfare of Missouri residents. It sure makes me wonder how one of our political parties maintains any support at all!

  19. I agree that we need to be diligent watching out for our retirement system for current teachers who are not currently drawing benefits but I get a little frustrated with the attempt to scare people currently drawing benefits that the legislature could do something that would impact what we are receiving. I’m confident a court would rule that those of us drawing benefits have an irrevocable contract that cannot be changed. We might not get a cost of living increase but our current benefits would not be reduced. I encourage Warren and Jim to be honest with current retirees but also encourage current retirees to stay alert and protect benefits for future retirees.

  20. It is my understanding that PSRS/PEERS is one of the most secure retirement plans in the nation. “It works well.”

    Politicians have removed/transferred reserves from Social Security to the general budget. The Federal Reserve has lowered interest rates to a point that retirees can no longer live on interest derived from a lifelong savings plan, so many now resort to reverse mortgages.

    So NOW is someone’s plan to harvest the secure retirement benefits of current and future Missouri Retired Teachers and Classified Staff in order to charge high fees for trades in some Mutual Fund. Who is paying these Lobbyists? What are their benefits from such a change? Are they Public School Employees?

    Missouri Public Employees have served and are serving Missouri’s students with honor and respect. Please respect our service by maintaining the current PSRS/PEERS System rather using an Ex Post Facto method to annihilate Retirement System that is Secure, Proven Over Time, and “One That Works.”

  21. I agree with several of the individuals above who are wholly dependent on the their teacher’s pension. I myself have paid into 40 quarters of my social security funding and only receive 1/3 of it because of receiving my teacher’s pension. Seven of the years that I paid into Social Security, I was in a teaching position that did not fund the teacher retirement funding. The whole social security system in my case is unfair. It would be even more unfair if the DB program is changed. Leave it alone!

  22. Thank you for your response, Dr. Sandfort. I reside out of state, but rely on my pension and those who “keep it in good shape” to assist me in my retirement years. My social security has already been penalized and the likelihood of that changing will not occur in my lifetime!
    The DB program has worked: it needs no adjustments.

  23. We can post till our faces are blue. We NEED to be writing to our Representative and Senators who’s ear might be bending toward Rex Sinquefield and his pac money. That’s who needs to hear our opinions!!

  24. Leave the pension alone. It is the safest thing that most of us have in these economic times. Plus I do not trust the governor and watching him try to dismantle public education for charter schools!
    Governor + Rex = double trouble!!

  25. The MRTA has been a model of how things should be done. It should NOT be used to bail out others, or be altered. It should be observed and perhaps learned from by our poor quality government members. It seems dishonest is the norm and honest hard working people continue to be victims of stupidity in our government plans that fail. Please leave us alone! Please never borrow against us! Please let us function for our hard working retired workers. Please do not break a well engineered plan! Please only observe us as successful retirement for Missourians that worked hard in our schools!

  26. Please keep fighting for us Jim. You are our hope in maintaining PSRS/PEERS in tact. We ALL stand ready to follow your lead to preserve our pensions. I am fearful that Rex’s money has put some folks in “high places” that will make holding our ground more difficult than ever.

  27. PSRS/PEERS and MRTA Please keep fighting to preserve
    our pensions. My husband and I worked in the public school
    and contributed to our retirement for 35+ years. We would be lost
    without it, those people in “high places” should mind their own business.
    Thanks to those who are working so hard to protect our rights against the
    “money grabbers”
    Mary Roehrs

  28. Very good analysis Jim. This is the first time anybody from M RTA or PS RS has ever defined the difference between the two. You do this very well thank you…

  29. Please leave PSRS alone. It’s been so consistent over the years and has successfully fought any other organization that’s wanted to buy it out. Personally speaking, my life income relies on my PSRS check. I’m presently single so I definitely depend on this check. Stand firm!

  30. I am a retired bookkeeper for 22 years. I just recently checked the amount of money I had paid in against what I have received in those 22 years. It was amazing, and I believe it is strictly because of the great management by the financial team at the Retirement System of Missouri. As the old saying goes,” if it ain’t broke don’t fix it.” I believe our system is working very well and I don’t won’t anyone to take it away.

  31. Thanks, MRTA and Jim, for fighting viciously to keep our lifetime investments as they are. No wonder so many others would like to have a finger in our pie. Keep fighting and keep us informed. THANKS!

  32. Our retirement plan is none of his business. Please, someone put a stop to this moron! If Rex wants to help then get rid of the Windfall Act!

  33. Must work to keep DB. One major reason Sinqufield pushes DC is that he was the person who originated indexed funds. Many 401Ks are connected with indexed funds.

  34. My husband and I were both teachers for many years. Part of why we kept working so long was for financial security. Please keep the retirement system working as it has been. We are counting on the right, honest decisions to be made. Trusting you, David and Faye McHenry.

  35. Yes! I consider the paycheck I currently receive to be “deferred compensation” for all the years that I lived on very little income, while teaching. Thank you for your article and support of the system.

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