The pensions budget jurisdiction appropriates $80,000 to secure and strengthen pensions for E12 educators and public safety workers, including police officers, State Troopers, and firefighters. Providing meaningful benefit improvements to teachers and well as cost-of- living-adjustments (COLAs) to retired public safety employees were priorities of the Senate DFL this session. (SF 2884)
Key Provisions:
K12 Teacher Career Rule
The 2025 omnibus pension bill omnibus provides $20 million per year to the Teacher Retirement Association (TRA) to help fund a new career rule for teachers. It reduces early retirement penalties to 5% for active teachers who have taught for 30 years and who are over the age of 60. Currently, these early retirement reductions are higher per year for teachers between the ages of 60-62 but are comparable once a teacher reaches the age of 62. This benefit will allow teachers who have committed their professional lives to educating our E12 students to retire sooner without reducing their overall pension benefits.
Retired Public Safety Officials COLA improvements
The Legislative Commission on Pensions and Retirement (LCPR) approved increased COLAs for public safety employees within the Public Employee
Retirement Association (PERA) Police & Fire Plan. The COLA adjustment for these retirees are increased to 3% for one year in 2026 and equal to 1% in 2027. $17.7 million is appropriated per year to PERA P&F to support this retirement improvement, which will help to avoid the erosion of public safety retirement benefits by inflation.
Currently, PERA P&F members must wait three years after collecting their pension benefit before they are able to receive a COLA. If inflation is high during this period, it could significantly hamper their purchasing power prior to being eligible for their COLAs. The omnibus pension bill was able to secure a reduced waiting period of 2 years for PERA P&F beneficiaries.
$2.3 million is appropriated per year to the Minnesota State Retirement System (MSRS) State Patrol Plan to provide ongoing COLA increases of 1.25 percent, increased from 1%, to retired State Troopers.
Secure Choice Plan Improvements
The Secure Choice Retirement Plan was passed in 2023 but has not yet begun operation. To help facilitate the success of the program, the omnibus pension bill authorizes the new agency to obtain employer and employee data from the Department of Employment and Economic Development (DEED) to help identify small businesses who do not provide retirement plans for their employees, ensure they have established an employee payroll deduction for Secure Choice, and help educate employees of their options within the Secure Choice Plan. The legislation will also allow the new Secure Choice Board to implement penalties for noncompliance, which will allow the Minnesota to join an interstate administrative compact to lower costs and improve the efficiency and effectiveness of Secure Choice. This will ensure every employed Minnesotan has access to a retirement plan and has the option to invest in their own future.
Probation Officer Work Group
The omnibus pension bill includes a new working group to analyze the feasibility and potentially establish a new pension plan for probation officers and 911 telecommunicators. A bill to create a career rule within the PERA General Plan for probation officers was considered multiple times by the LCPR; the proposal to create a work group represents a compromise and will consider past service credit as well as future service has an employee in these professions.
MSRS Formula Multiplier
The MSRS General Plan has been operating under a significant fund sufficiency, which has allowed the Plan to recommend benefit improvements without state aid or increased contributions from employees. The omnibus pension bill implements recommendations from their board to increase the formula multiplier, which is multiplied by state employees’ average salary to determine benefit levels, from 1.7% to 1.9%, which will provide employees continuing to work in state service with a higher benefit once they retire. This benefit improvement is credited to the strong financial stewardship of MSRS, the significant contributions of state employees, and the strong investment returns provided by the State Board of Investment.
Duty Disability Reform
The omnibus pension bill includes language that attempts to limit the increased costs to cities and counties for PERA Police and Fire duty disability claims by restricting the ability of applicants to accept settlement payments in lieu of their health insurance by capping health care coverage for duty disability recipients (excluding total and permanent recipients who will continue to receive health care coverage) to 60 months or until the recipient reaches age 65. This builds off the duty disability reforms passed in 2023 to require applicants to undergo treatment, especially for duty disability claims related to PTSD.
Did not pass:
Rule of 90 for Teachers
Proposals to reimplement Rule of 90 for teachers hired after June 30, 1989 did not become law this session. Reimplementing Rule of 90 would be cost prohibitive, with estimates as high as $3.3 billion in addition to ongoing costs to pay for the benefit improvement for future teachers. Since the increased liabilities for Rule of 90 are not fully addressed through significant increases in employee contributions, employer contributions, and state aid, it would jeopardize the financial stability of the teachers’ pension plan to the detriment of retirees, active and future generations of teachers, and taxpayers.