We had a fantastic success in Minnesota teachers’ defined-benefit pension plan last spring. Here’s what shaped that public employee pension adjustment bill:
What were the factors making it necessary to pass a pension bill?
Mortality Experience: An experience study in 2015 evaluated all actuarial assumptions (economic and demographic) and recommended an adjustment to the mortality tables — TRA members and retirees are living longer — on average an extra two years, adding significant cost to the fund.
Who has the longest average life expectancies in the USA?
…….people born in Hawaii, age 81.3
…….people born in Minnesota, age 81.1
…….people born in Connecticut, age 80.8
…….people with higher education
And which of these are Minnesota teachers?
Investment Return Expectations: A “mini-experience study” in 2017 of the economic assumptions recommended a lower investment return assumption, from 8.5% to 7.5%. This adds significant liability to the fund.
However, It isn’t over yet. Future legislatures and administrations could undo all of that, and there will certainly be a big push from Arnold Foundation millions to bring us all into their high fee brokerage firms with a defined-contribution plan. While we fight back at the polls, Minnesota TRA is heading toward stabilizing and advancing those hard won pension system benefits.
Engagement and education
TRA will provide information to empower members, employers, legislators and taxpayers to be informed and engaged about TRA’s governance structure as well as the value of a defined-benefit plan. Member educational materials should be clear, accurate, accessible and presented in innovative ways for all life stages.
Fund integrity balanced with equity in plan provisions
TRA will abide by its fiduciary duty to ensure the financial stability of the plan while working toward fairness in benefit structure and contribution rates. TRA will continually monitor the plan’s financial health. When needed, TRA will recommend adjustments to stabilize the fund while upholding the board’s guiding principles of shared commitment, intergenerational equity, long-term financial sustainability and maintaining the recruitment/ retention value of a TRA pension
Engaged, empowered, high-performing workforce
TRA will demonstrate dedication, stability and inclusivity. Leadership and staff will respect all perspectives and experiences. Succession planning and operational workforce planning will support the transfer of knowledge from outgoing employees and the recruitment and retention of new and existing employees.
TRA will be a risk-intelligent organization with a robust, proactive and comprehensive risk-management program. TRA will continue to monitor and respond to known and emerging risks.
Retirement security for Minnesota teachers
Support state’s education system by attracting and retraining teachers