State pension plans modified

The omnibus pensions bill, a product of the Legislative Commission on Pensions and Retirement, passed the House 108-20 on May 12.

However, because the Senate passed its version, SF2720, 50-16 May 13, a conference committee is expected to work out the differences.

“This bill provides more security for every member of every public pension plan in the state,” said Rep. Mary Murphy (DFL-Hermantown), sponsor of HF3082. Sen. Don Betzold (DFL-Fridley) sponsors the Senate version.

The bill makes changes to the postretirement fund by allowing for it to be combined with active funds of each of the statewide retirement systems, if it falls below a certain threshold. The bill provides that the investment-based component of the fund would only be paid if inflation is more than 2.5 percent. Also, if the postretirement fund is more than 90 percent funded and the increase in the Consumer Price Index is less than 2.5 percent, any excess earnings can be used to pay an increase based on lost purchasing power from prior years.

Also included in the bill are changes that allow a phased retirement or phased return on retirement benefit for teachers.

According to Murphy, the bill ensures the actuarial evaluations are based on realistic expectations to give a better picture of the financial needs of the state’s major public pension plans. It also brings the state’s pension system in compliance with recently enacted federal regulations.

The bill increases the membership of the commission from five to seven members of each legislative body, with no more than five members from the majority caucus.

An amendment successfully offered Rep. Paul Thissen (DFL-Mpls) provides that if someone retires before the normal retirement age and has more than 30 years of state service, the minimum age requirement does not apply, and reductions and increases in benefits will apply to age 62 rather than the normal retirement age.