Public pension plan changes (new law)

Retirement plans for various public employees will undergo a series of administrative changes, under a new law.

Sponsored by Rep. Mary Murphy (DFL-Hermantown) and Sen. Don Betzold (DFL-Fridley), the law enacts modifications recommended by the Legislative Commission on Pensions and Retirement. These include:

• technical changes to disability benefit programs for state employees, including allowing disability benefit applications to be filed 18 months rather than six months after termination of service;

• permitting the Minnesota State Colleges and Universities system to establish an early separation incentive program for its employees, and also permitting MnSCU faculty a second opportunity to elect Teachers Retirement Association coverage within one year of achieving tenure; and

• establishing a voluntary statewide lump-sum volunteer firefighter retirement plan through the Public Employees Retirement Association, and an associated retirement fund to be invested by the State Board of Investment.

The legislation originally included provisions that would have increased teachers’ pension contributions to address deficiencies in several pension funds; however, the provisions were removed over concerns that Gov. Tim Pawlenty opposed the changes and would veto the bill if they were included.

“We are pushing this issue down the road, and it’s a huge mistake and it’s going to haunt us,” said Rep. Paul Thissen (DFL-Mpls).

Most of the law takes effect either May 23, 2009, or the first day of the first full payroll period commencing after final enactment.

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