Pension policy modifications enacted under new law

More than a dozen largely non-controversial provisions put forth by the Legislative Commission on Pensions and Retirement have been rolled into a new law.

The finished product includes, among others, changes to the Minnesota State Retirement System, Public Employees Retirement Association, and Teachers Retirement Association.

Rep. Kaohly Vang Her (DFL-St. Paul) and Sen. Nick Frentz (DFL-North Mankato) sponsor the largely technical law with updates and corrections. It also addresses a handful of one-off cases. It took effect May 20, 2023, unless otherwise noted.

Three changes to the PERA Statewide Volunteer Firefighter Plan are included: counting years of service with any prior relief association in determining a volunteer firefighter’s vested percentage with the plan; eliminating requirements imposed on relief associations after the affiliated fire department joins the plan; and allowing the Hamel Volunteer Fire Department and the Loretto Firefighters relief associations to join the plan mid-year and have the executive director of PERA merge assets and liabilities of the departments, formerly the assets and liabilities of the two relief associations.

Effective July 1, 2023, definitions used to determine eligibility for PERA pension plans for “included employee” and “excluded employee” will replace the 12-month and school-year thresholds — $5,100 and $3,800 respectively — with a monthly threshold of $425; allow a person to be classified as a dependent child in all cases until age 23; and provisions regarding salary credit purchase for periods of reduced salary are amended largely to conform to how PERA administers them.

Other changes in the law include:

• effective Dec. 31, 2023, increasing the threshold for requiring relief associations to file audited financial statements from $500,000 to $750,000 in assets or liabilities in any prior year;

• altering the monetary threshold required for a governmental subdivision employee to participate in PERA-administered pension;

• permitting local appointed government officials to participate in the PERA Defined Contribution Plan;

• allowing employees in the State Patrol Plan to apply to begin their annuity no more than 60 days, rather than 90, in advance of the employee’s annuity starting date;

• establishing an expanded right for judges to purchase service credit for a period of military leave;

• extending to three years the minimum time for purchasing service credit for periods of military leave under the Teachers Retirement and St. Paul Teachers Retirement Fund associations;

• upping the limit on employer contributions to supplemental plans that are in addition to the primary pension plans provided to public employees for two construction trade unions;

• allowing two Metropolitan Airports Commission employees to transfer service credit for several months of service in 2005 from the PERA General Plan to the PERA Police and Fire Plan upon payment of the missed employee contributions plus interest;

• letting former members of the St. Paul Teachers Retirement Fund Association who receive a retirement annuity to change it to a joint and survivor annuity and designate a same-sex spouse as the survivor if the retiree could not to do so when same-sex marriage was not recognized under state law; and

• authorize four Fond Du Lac Tribal and Community College employees and a Minnesota State employee to transfer from the Minnesota State Higher Education Individual Retirement Account Plan the Teachers Retirement Association. The quintet did not receive the opportunity to transfer when they first became eligible. Additionally, a working group will be established to recommend legislation to eliminate the need for special legislation in similar cases.

HF2950*/SF3016/CH47

HF2950* / SF3016 / CH47