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The MN Legislative Commission on Pensions and Retirement, LCPR, under the able leadership of LCPR Chair Senator Nick Frentz from North Mankato, successfully shepherded a wide-ranging public employee pension omnibus bill through all the typical end of session chaos. The LCPR pension omnibus bill passed both the Senate and the House in the final moments of the regular session of the Minnesota Legislature that ended at midnight Monday, May 19 and has been signed by the Governor.
The highlights of the 2025 Public Employee Pension Bill of interest to our members, by Pension Plan, is as follows: MSRS • Increases the multiplier used to calculate the annuity amount for those in the General Plan from 1.7% to 1.9% for years of service earned after June 30, 2025; effective July 1, 2025 • Increases the post-retirement adjustment (COLA) for those in the General, Legislators, and Unclassified Plans from 1.5% to 1.75% beginning January 1, 2026; effective for COLAs beginning on or after January 1, 2026. • Increases the COLA for the MSRS State Patrol from 1% to 1.25% PERA • For those in the PERA Correctional Plan, updates the multiplier for calculating the duty disability benefit from 1.9% to 2.2% to incorporate the multiplier change made in 2024, applicable to years of covered service after June 30, 2025; effective the day following final enactment. • Increases the maximum COLA for the PERA General Plan. Under current law, the COLA for the PERA General Plan is 1% effective each January 1, unless the Social Security COLA is greater than 2%, in which case the COLA is 50% of the Social Security COLA not to exceed 1.5%. Under the bill, the COLA for the PERA General Plan is 1% unless the Social Security COLA is greater than 1%, in which case the COLA is the same as the Social Security COLA, not to exceed 1.75%. A new provision requires an automatic decrease to the COLA maximum in effect on January 1, from 1.75% to 1.5%, if the funded status for the PERA General Plan reaches either of the following: o 85% or less in the most recent two consecutive annual actuarial valuations. o 80% or less in the most recent annual actuarial valuation. • The PERA General Plan COLA changes are effective for postretirement adjustments beginning on or after January 1, 2026. TRA The language of the TRA portion of the bill includes: • Increases the pension adjustment revenue and employer contributions by .31% of their sufficiency. • Lowers the age for the enhanced early retirement reduction from 62/30 to 60/30 (age/years of service). • Lowers the reduction/penalty percentage from 6% to 5% for early retirement. • Deletes all exceptions to Cost of Living delays for new retirees. • Appropriates money to school districts to fund increased employer contributions. • Makes all pension funds consistent with an amortization date to 2048. • Nothing for retirees. It should be noted that the benefit enhancements for the MSRS General, Legislators and Unclassified Plan and the PERA General Plan are funded completely through the existing Retirement Plans and require no Legislative Appropriations. Direct State Aid for Public Safety Plans including Public Employees Police and Fire Retirements Plans cost $35.4 Million while the benefit enhancements for the State Patrol costs $4.6 million for the biennium. TRA benefit enhancements paid to state agencies and school districts cost $37.9 million for the biennium. Those advocating for Public Safety and especially TRA benefit enhancements were numerous, provided many testifiers, voluminous written testimony, attended LCPR meetings in large numbers and have been contacting their legislators for several years. |
