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Pension policy modifications receive strong House support

Eighteen bills initially approved on a bipartisan vote by the Legislative Commission on Pensions and Retirement have been rolled into the pension and retirement supplemental budget bill.

The finished product that includes, among others, changes to the Minnesota State Retirement System, Teachers Retirement Association, St. Paul Teachers Retirement Fund Association, Public Employees Retirement Association, and volunteer firefighter relief associations, received strong House support Wednesday via a 130-0 vote.

HF5040, as amended, now goes to the Senate.

“We had such little money, we did some really fantastic work and the policy changes that we made will have great impact on our workers and our pension members here in the state of Minnesota,” said Rep. Kaohly Vang Her (DFL-St. Paul), the bill sponsor.

The bill contains a one-time $31.49 million appropriation.

Of that, $28.46 million would accelerate by one year — from July 1, 2025, to July 1, 2024 — the effective date for changes made to lowering the normal retirement age from 66 to 65 for Teachers Retirement Association members hired after June 30, 1989. The St. Paul Teachers Retirement Fund Association would receive $1.54 million, Her said, to provide an employee contribution decrease for the next two years.

The remaining $1.46 million would be directed to the Minnesota State Higher Education Individual Retirement Plan to transfer retirement coverage to the Teachers Retirement Association. “[This would] ensure state employees who were incorrectly not given the option to elect into a TRA pension, the ability to do so and support the transfer of their retirement account,” Her said.

[MORE: View a detailed summary of the bill]

The employee contribution rate for St. Paul Teachers Retirement Fund Association members would be reduced by 0.25% of salary for fiscal years 2025 and 2026, and a 2022 law to temporarily suspend the earnings limitation for retirees of TRA and St. Paul Teachers who return to teaching service would be extended by three years.

Other potential changes in the bill would:

  • match the Employee Retirement Association correctional plan benefit multiplier to the statewide correctional plan at 2.2% to keep local correctional employees benefit package competitive with a statewide plan;
  • based on recommendations from the State Auditor’s Fire Relief Association Working Group, provide largely noncontroversial updates and changes to volunteer firefighter relief associations;
  • add a defined contribution plan to the statewide volunteer firefighter plan;
  • make largely technical changes to plans administered by the Public Employees Retirement Association; although it would increase the contribution rate for the correctional plan by 1% of pay for employees and 1.5% for employers;
  • provide mostly technical changes to plans administered by the Minnesota State Retirement System;
  • codify a program that state patrol members can use to continue working for their unit until age 60 without being penalized by earning caps;
  • permit home and community-based services employees to participate in the Minnesota Secure Choice Retirement Program;
  • revise requirements for supplemental plans, including that contributions must be funded by the value of sick leave, vacation leave, or severance pay;
  • allow all workers to count student loan payments as the employee contribution to retirement savings to receive their employer match for their retirement benefit;
  • ensure Internal Revenue Service compliance regarding amortization of unfunded liabilities, and establish a working group to “conform to actuarial best practices for amortizing liabilities”;
  • revise the expiration date for state aid paid to retirement plans;
  • change executive director qualifications and compensation for the Public Employees Retirement Association and Teachers Retirement Association;
  • make technical changes to the St. Paul Teachers Retirement Fund Association; and
  • remove or revise obsolete statutory references and add that reports and investment disclosure forms can be delivered to the commission electronically.


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