March 26,
2018
Minnesota Senate OKs 2018 pension bill
The 2018
Omnibus Pension Bill passed out of the Minnesota State Senate on a unanimous
vote (66-0) on Mon., March 26. The bill will next proceed through various
committees in the state House of Representatives, most likely after the
Easter/Passover break.
Bill
co-author Sen. Julie Rosen, R-Vernon Center, who chairs the Legislative
Commission on Pensions and Retirement (LCPR), summarized the bill’s provisions
and praised the engagement of those who have worked for three years to bring
forward a public pension sustainability package whose reforms will result in
$3.4 billion in immediate savings.
To help
address the pension systems’ unfunded liabilities, SF 2620 includes
“significant benefit reforms” as well as contribution rate increases for
employers and employees, Rosen said. She explained that the bill has much work
behind it – the engagement of all stakeholders, the governor, the commissioner
of Minnesota Management and Budget – and reflects “true shared sacrifice.”
Rosen
noted that bond ratings agencies are watching Minnesota closely and expect
pension reform. The sustainability package moving through legislature is the
largest in Minnesota pension history, she said.
LCPR
member Sen. Sandy Pappas, D-St. Paul, added her support for the bill. Pappas
said the funding situation for Minnesota’s public pension plans is “serious”
and “not adequate.” She said that passage of the bill will come as welcome news
to bond ratings agencies such as Moody’s and S&P, which are paying close
attention to the issue. Pappas said that the reforms also will be good for
Minnesota as a whole.
Pension
commission members Sen. Dave Senjem, R-Rochester, and Sen. John Jasinski,
R-Faribault, also spoke in support of the bill.
The bill
includes sustainability measures for all four public pension systems: the
Teachers Retirement Association (TRA), the Public Employees Retirement
Association (PERA), the Minnesota State Retirement System (MSRS), and the St.
Paul Teachers Retirement Fund Association (SPTRFA). Details on the bill may be
viewed on the State Legislature website: https://www.revisor.mn.gov/bills/text.php?version=latest&session=ls90&number=SF2620&session_year=2018&session_number=0
(Senate version).
Besides
the immediate $3.4 million reduction in pension liabilities, the bill puts the
plans on the path toward full funding, provides funding to schools to offset
increased pension contributions, and safeguards the retirement security of
public employees for the future. The bill lowers the rate of return on
investments to 7.5 percent. Here are the key provisions of the pension bill
pertaining to TRA:
KEY TRA PENSION BILL PROVISIONS
|
COLA: 1.0% for 5 years (2019-2023), then increase by
0.1% per
year in each of next five years (2024-2028) to 1.5%
|
COLA delay to age 66 (effective 7/1/2024)
(exempt:
Rule of 90, disability, survivors, age 62/30 years)
|
Early retirement: Increase penalties, 5-year
phase-in
(fiscal years 2020-2024), age 62/30 years exempt
|
Employee contribution increase:
+0.25% beginning in FY2024 (7.5% to 7.75%)
|
Employer contribution increases:
+1.25% phased in over 6 years, FY19-24 (7.5% to 8.75%)
|
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.