Yesterday afternoon, the Legislative Commission on Pensions and Retirement (LCPR) held a hearing on several topics, but took no action on pending items.
One item on its agenda was continued consideration of alternative post-retirement increase mechanisms. Discussion of this topic was delayed at the request of Sen. Julie Rosen. This topic will be taken up at the Commission’s next set of hearings which are scheduled for November 6 (1:00 pm) and November 7 (9:00 am) in Room 123.
First on yesterday’s agenda, the LCPR heard testimony on a dispute between the Metropolitan Council and the City of Minneapolis regarding the Met Council’s obligation for employer contributions to the Minneapolis Employees Retirement Fund (MERF) which is a closed fund that was administratively merged in PERA in 2010.
Second on the agenda, the Commission discussed PERA’s minimum salary membership threshold (currently $425 a month) which is the subject of an interim study by PERA that has identified options for revising its membership definition. PERA continues to work with its stakeholder groups on possible changes. Representatives of Education Minnesota, SEIU, AFSCME Council 5, and the MN School Employees Association testified on this topic.
Lastly, the LCPR began consideration of its “Principles of Pension Policy” which are used as guidance to the LCPR staff when they comment on and critique pending legislation. Kim Crockett with MN Free Market Institute/Center of the American Experiment, testified and called attention to the principle that indicates a preference for defined benefit (DB) plans over defined contribution (DC) plans. She asserted that if the Legislature promises a DB, then they have to fund it and fund it in a manner that equalizes the financial burden across generations of taxpayers. She criticized the practice of using 30-year amortization periods to pay down unfunded pension obligations, stating that a 30 year period is too long and violates the principle of equalizing across generations. She also emphasized that it is wrong to increase benefits when a plan is not fully funded.
Susan M. Barbieri
Teachers Retirement Association
Public Employees Retirement Association
Minnesota State Retirement System