Public Employees Retirement Association of Minnesota · Public Employees Retirement Association of Minnesota Alright, let’s take a moment to recap… After a year of changes, what

Public Employees Retirement Association of Minnesota

Serving Minnesota’s Public Employees For Over 80 Years


Alright, let’s take a moment to recap…

After a year of changes, what employers need to know about administering PERA

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• What’s the plan? • Defined Benefit Plan (DBP)

– Basics – Eligibility – Exclusions

» Notice of Non-Covered Employment or Provisional Coverage

• Overtime Reporting • Phased Retirement Option • Defined Contribution Plan (DCP)

– Eligibility » Elected vs. Appointed

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Defined Benefit Plan (DBP) • A Defined Benefit Plan provides a benefit based on

a formula, not on a member’s account balance at retirement. For PERA members, the benefit is based on: – Years of service – For each month in which there are

PERA-eligible earnings, the member receives one month service credit

– High-five salary – This is the highest 60 consecutive months of earnings wherever it falls in the member’s employment (typically, it is the last five years worked, but it may come earlier in the person’s career)

– Plan-specific multiplier – Age at time of retirement

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Eligibility

Mandatory Coverage Membership in a PERA Defined Benefit Plan is

mandatory for public employees filling non-elected positions whose salary from one governmental subdivision exceeds an annual earnings threshold. Includes full- or part-time employees hired to

fill positions that are permanent.

1Exclusions will be discussed later in the presentation

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Membership Eligibility • Longstanding minimum salary threshold

of $425 in any month has been replaced with annualized threshold of $5,100, or $3,800 for 9- or 10-month school employees.

• Current members retain membership until termination.

• Employers should have examined current employees excluded under the $425 earning threshold by Jan. 1, as well as those holding multiple positions.


Exclusions • In some instances, individuals are excluded from

participating in the Defined Benefit Plan • Full list of exclusions is in Statute

353.01 and

Chapter 3 of the PERA Employer Manual • Most common exclusions

– Employee never reaches the annual earnings threshold – Full-time student under the age of 23 – Re-employed PERA Retirees – Elected governing body official whose term

of office began after June 30, 2002 • Two exclusions have changed

– Solely Temporary Employee (as defined in PERA law) – Solely Seasonal Employee (as defined in PERA law)

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Multiple Positions • Person who hold more than one position may

require combining salary to determine eligibility – When salary is combined

• Positions are held concurrently with the same employer and

• All positions are permanent and are not covered by a non-salary exclusions (i.e. is solely not temporary, seasonal, etc.).

– When salary is not combined • Positions are excluded as temporary or seasonal and

there is a clear 30 day break in service • Positions are with different employers

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Notice of Non-Covered Employment or Provisional Coverage

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Exclusion Notification • Employers are required by statute to

inform newly hired employees of exclusion from PERA coverage for a salary-based reason within two weeks of hire.

• As seen above, excluded employees have the right to request a review of eligibility. They should first discuss this review with the employer.

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This form is available on www.mnpera.org.

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Phased Retirement Extended • Sunset Date of Phased Retirement

Option (PRO) Program moved to 6/30/2019

• Current Agreement Features Unchanged – May be with the same or a different

employer – Initial offer to a member to work under the

PRO must not exceed one year, but can be renewed for periods of up to a year for a total of five years

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Contribution Rate Increase • The contributions to the Coordinated

Plan increased by 0.25 percent of pay on Jan. 1, 2015, for members and employers – Member: from 6.25 percent to 6.50 percent – Employer: from 7.25 percent to 7.50 percent

• Any future Coordinated Plan contribution rate increases will occur on Jan. 1, rather than July 1

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Overtime Pay • Employers must report the portion of

PERA-eligible salary that is overtime pay for members

• Overtime has always been PERA-eligible salary

• The total earnings remain unchanged. The portion that is OT is to be reported in the OT column.

– Overtime paid when earned • File layout for the Salary Deduction Report (SDR)

have fields for overtime pay and for adjusting (-+) overtime pay previously reported.

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Overtime Pay • Why do we require overtime pay information?

– PERA requested this information from our employers to investigate the use of overtime for pension “spiking.”

– We did not receive the response required to make an educated policy decision based on data.

– Before making policy, we determined more information was necessary and asked the legislature to help us secure it.

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Defined Contribution Plan (DCP) • PERA’s DCP is a tax-qualified plan that provides an

investment opportunity to those who qualify for the plan. – Contributions from both employee and employer – No minimum salary to participate (w/ one exception) – Optional on part of each individual – Individual can choose from 7 different funds to invest in

(information on each fund available in Prospectus) – Eligible to receive lump-sum value of the account

upon termination of public service

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DCP Basics • PERA’s Defined Contribution Plan is

an optional plan for certain types of employees, such as governing-body officials and certain appointed officials. – Governing Body Elected Officials ̶ those

elected by the public and who have voting rights on how the entity conducts business (e.g. school board)

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Elected Official Eligibility • Elected or Appointed Officials

– Can begin participating in the DCP any time while in office; but no retroactive coverage

– Official must authorize the withholding of deductions by signing the Membership Election by Public Officials form

– Can stop any time while in office by providing signed documentation to the employer (who forwards it to PERA); withdrawal of funds not allowed until termination of service

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Presenter

Presentation Notes

For additional information regarding the Defined Contribution Plan and it’s parts, refer to Minnesota Statutes Chapters 353 and 353E. If there are any conflicts between information in this presentation and the state law, the law will govern.


Appointed Officials Eligibility

• Appointed Public Officials – Individuals appointed to fill what is normally an

elected position (e.g. someone appointed to complete the term of a school board member who resigns)

– Individuals first appointed after June 30, 2010, to a board or commission of a governmental unit (e.g. joint powers board, planning commission) if earnings exceed $5,100 annually.

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Presenter

Presentation Notes

For additional information regarding the Defined Contribution Plan and it’s parts, refer to Minnesota Statutes Chapters 353 and 353E. If there are any conflicts between information in this presentation and the state law, the law will govern.


Who you gonna call!? • Additional

information – Refer to the

Employer Manual – Contact PERA

• Employer Response Line

– 651-296-3636 – 1-888-892-7372

• www.mnpera.org – Contact Us

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Disclaimer

This presentation is meant to serve as an educational tool for public employers and is based on the laws in effect on the date noted herein. PERA reserves the right to revise the content of this presentation. The membership eligibility statutes that govern the PERA defined benefit plans are in Minn. Stat. Sec. 353. Should there be any conflict between this presentation and the governing statutes, or should the laws subsequently be changed by the legislature, the statutes in effect will prevail.

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Documents

Public Employees Retirement Association of Minnesota · Public Employees Retirement Association of Minnesota Alright, let’s take a moment to recap… After a year of changes, what