July 20, 2011
The House and Senate finished a marathon 13-hour Special Session just before 4:00 am this morning, passing nine budget bills, one bonding bill and the Omnibus Pension Bill. The Omnibus Pension Bill passed by a wide margin in both House and Senate. Governor Dayton signed the 2011 Omnibus Pension Bill on July 20, 2011 (Chapter 8).
Elements of the bill that affect, or are related to, TRA include:
A change in the automatic default plan for newly-hired MnSCU employees who have service credit in another MN public plan. Currently, new MnSCU hires default into IRAP (defined contribution plan). Under the bill, these new hires will default to TRA, effective July 1, 2011. TRA supported this change.
St. Paul Teachers Retirement – Rather than an automatic 2% annual post-retirement increase provided under current law for St. Paul retired teachers, the bill would provide a lower COLA based on the funding ratio of the system. If the system’s funding ratio is less than 80% (actuarial value measure), the COLA will be 1%; if the ratio is between 80% and 90%, the COLA will be 2% and if the ratio exceeds 90%, the COLA will equal inflation up to 5%.
NOTE: This provision DOES NOT affect TRA retirees and benefit recipients.
Actuarial Assumption Changes - The Legislature adopted modifications to several actuarial assumptions recommended by TRA's actuary. The assumptions are used in the calculation of estimated liabilities in TRA's actuarial valuation report.
In the State Government Finance Bill (Chapter 10), the Legislative Commission on Pensions and Retirement (LCPR) will be expanded from five to seven members from each chamber, effective January 2013.
Watch Governor Dayton's legislative bill tracker for updates on other bills signed into law.