Skip to main content Skip to office menu Skip to footer
Capital IconMinnesota Legislature

Actuarial changes in pension bill

Published (3/30/2012)
By Nick Busse
Share on: 

Some lawmakers think Minnesota’s public employee pension funds are expecting too much from their investments and ought to set their sights a little lower.

Rep. Morrie Lanning (R-Moorhead) sponsors  HF2199, the omnibus pension bill. It comprises the work of the bipartisan Legislative Commission on Pensions and Retirement, and proposes a variety of changes to various state and local pension funds.

Perhaps the most significant change would be to the actuarial assumptions used to calculate the funds’ long-term fiscal health. The bill would lower the assumed rate of return from 8.5 percent to 8 percent for a period of five years, when it would change back to 8.5 percent.

The bill would not impact the levels of contributions or benefits affecting current and former public employees. However, Lanning said that because dropping the assumed rate of return might increase the amount of unfunded liabilities, adjustments might be needed in the future.

The House Government Operations and Elections Committee approved the bill March 22 after adopting a delete-all amendment and sent it to the House Ways and Means Committee. Sen. Julie Rosen (R-Fairmont) sponsors the companion,  SF1808, which awaits action by the Senate Finance Committee.

Supporters say Minnesota’s current assumed rate of return is one of the highest in the country and doesn’t reflect the realities of the new marketplace.

“If you leave it where it is, I think we run the risk of continuing to make some promises that we may not be able to keep. And I care very deeply about the state of Minnesota keeping its promises with our employees,” Lanning said.

The bill’s opponents argue the change is unnecessary, and that its proponents are focused too much on the recent economic turmoil and not enough on the long-term outlook.

“I think there’s an innate human tendency to assume that whatever you’re living with now is what you’re going to be living with in the future,” said Rep. Ryan Winkler (DFL-Golden Valley).

Since 1980, the State Board of Investment has produced annualized returns of slightly less than 10 percent.

Session Weekly More...

Session Weekly Home

Related Stories

Minnesota Index: Jobs, jobs, jobs
Facts and statistics on employment in Minnesota.
(view full story) Published 3/30/2012

Jobs and housing bill vetoed
Plan would have reformed how DEED distributes grant money
(view full story) Published 7/15/2011

It’s a tough job, but…
Little enthusiasm expressed for ‘jobless jobs bill’
(view full story) Published 4/8/2011

No easy job
Jobs and economic development bill sparks controversy
(view full story) Published 3/25/2011

A smaller slice of the government pie
Lawmakers debate downsizing the state’s workforce
(view full story) Published 1/28/2011

Minnesota Index: State employment
Figures and statistics on employment in Minnesota
(view full story) Published 1/14/2011