March 13,
2018
2018 sustainability bill passes out of pension
commission
The
Legislative Commission on Pensions and Retirement (LCPR) on Tues., March 13,
passed the 2018 omnibus pension bill. The next stop for the bill is the Senate
State Government Finance Committee, which will hear it on Thurs., March 15, at
1 p.m. in Room 1200 of the Minnesota Senate Building.
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, currently moving as SF 2620 / HF 3353, 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).
Minnesota
Management and Budget Commissioner Myron Frans told commission members that
Gov. Mark Dayton endorses the pension bill in its current form and will include
the funds in his supplemental budget. Frans said the bill is a “very important
sustainability package” that has been several years in the making and includes
measures to improve the financial health of the pension funds and the state.
The bill
reduces liabilities by about $3.4 million immediately, lowers the rate of
return on investments to a “reasonable” 7.5 percent, puts the plans on the path
to full funding, provides funding to schools to offset increased pension
contributions, ensures that unfunded liabilities won’t weigh down bond ratings,
and safeguards the retirement security of public employees for the future,
Frans said.
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%)
|
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