The Legislative Commission on Pensions and Retirement (LCPR) unanimously passed a bipartisan Omnibus Pension Bill (SF2620/HF3053) on March 13th and was referred to the House and Senate. The bill has now passed through several Senate committees and on March 26th it passed unanimously on the Senate floor. That Senate bill has now been sent to the House and currently sits in the House Government Operations Committee. This bill is the product of three years of work but it still has a ways to go.
This bill puts $2.3 billion in state aid into Minnesota's statewide public pensions over a 30 year amortization period. This new funding plus increases in employee contributions and reductions in benefits should put the retirement plans on the path to full funding. This is not only beneficial for the statewide retirement plans, but credit rating agencies will see that the state is managing its retirement obligations in a fiscally sound manner. Hence, allowing Minnesota's credit rating to remain solid.
The main effect to Minnesota State Retirement System (MSRS) retirees is that our cost of living increases (COLA) will go from 2% to 1% for five years, then to 1.5%. This is a favorable position compared to Teachers Retirement Association (TRA) who will go from the current 2% to 1% for five years and then the rate will increase by .1% for another five years until it reaches 1.5%. Public Employees Retirement Association (PERA) will be 50% of the Social Security increase, but no less than 1% and no greater than 1.5%. The differences in the COLA formulas for each plan reflect the financial position of each plan.
The LCPR will conduct a study regarding the purpose of cost of living increases and whether current law is consistent with that purpose, or if other approaches to determining a COLA would be more appropriate.
For more information:
1. For more, see the LCPR staff summary of the bill
2. Follow further actions on the Omnibus bill.
3. Follow the progress of other retirement and pension bills.
4. Take action/get involved.