Minnesota educator pensions: The movement for change
Educators from Education Minnesota are in multiple pension systems: Teachers’ Retirement Association (TRA), St. Paul Teachers’ Retirement Fund Association (STPRFA), Public Employees Retirement Association (PERA) and MSRS (Minnesota State Retirement System).
- PERA or Public Employees Retirement Association is a set of five defined-benefit pension plans. Non-licensed employees of public school districts fall under the General Plan.
- TRA or Teachers’ Retirement Association is a defined-benefit pension plan for most Minnesota public education teachers, licensed school staff and some administrators.
- SPTRFA or St. Paul Teachers’ Retirement Fund Association is a defined-benefit pension plan for anyone employed in a St. Paul Public Schools’ position which requires a teacher’s license.
- MSRS-CERP is a defined-benefit pension plan that covers certain correctional officers and other specified Department of Corrections and Human Services employees, including some teachers, who spend at least 75% of their time directly responsible for inmate or patient care.
What are some of the biggest issues around pensions right now?
There are many different layers to pensions and retirement benefits, especially as it relates to the different pension systems and where educators are in their career.
The Rule of 90 was established for many public workers, but only for those who began teaching before July 1, 1989. Currently, non-Rule of 90 workers (Tier 2 workers) have to work until 66 or forfeit a significant amount of their pension benefit to penalties if retiring before that age.
Each plan has a Normal Retirement Age and reductions or penalties if you retire before that age. NRA is the age that when someone reaches it, they are eligible to receive a full, unreduced benefit. When someone retires before the set NRA, their pension amount has a “penalty” for that early retirement. Everyone’s NRA and penalty amount is dependent on which plan you are in. NRA is not reflective of when participants actually retire, other paths to an unreduced benefit or when an individual is supposed to or should expect to retire. If the NRA were to lower, typically the penalties would change at ages below it as well.
In 2023, the Minnesota Legislature lowered the NRA by one year for TRA and SPTRFA members to 65 starting in 2025, which in turn also shifts the penalties for retiring at ages below 65.
There are many more important components to creating fair pension systems in Minnesota, including making sure employee contributions don’t increase and that the State Board of Investment continues to grow the pension assets. Education Minnesota continues to advocate for all of the issues surrounding pensions with the Legislature and all pension boards.
Who makes the decisions on pension plan reforms?
The board of trustees overseeing each pension plan system is often the beginning or end of any plan discussion. The board makes decisions on administration of the plans, hires the executive director and sets other policies that aren’t in state statute. These boards, their staff and their executive directors are influential when decisions or changes are being considered at the Legislature as well. These boards are made up of a mix of elected pension plan members and appointees from certain groups or government agencies.
What is the Legislative Commission on Pensions and Retirement (LCPR)?
In Minnesota, many decisions on pension improvements have to be made through legislative action. The LCPR is a joint legislative commission, with both Senators and Representatives, that discusses, considers and recommends pension legislation. The LCPR is the cornerstone for pension discussions, and members are looked to by the full Legislature for recommendations.
