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Pensions provisions modified (new law)

Published (5/30/2008)
By Brian Hogenson
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Changes for state retirees are included in the omnibus pensions law, a product of the Legislative Commission on Pensions and Retirement.

Sponsored by Rep. Mary Murphy (DFL-Hermantown) and Sen. Don Betzold (DFL-Fridley), the law makes changes to the postretirement fund by allowing it to be combined with active funds of each of the statewide retirement systems, if it falls below a certain threshold. The law provides that the investment-based component of the fund will only be paid if inflation is more than 2.5 percent.

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.

Changes that allow a phased retirement or phased return on retirement benefit for teachers are also included.

According to Murphy, the law 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 law 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.

Included in the law is a provision 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.

The law has various effective dates.


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