SF3547

Purpose

• The bill aims to change how retirement benefits are funded for teachers by increasing employee contributions to the Teachers Retirement Association (TRA) and by allowing an unreduced retirement annuity when a member reaches age 62 with 30 years of service.

Main Provisions

• Amends Minnesota Statutes 2024 section 354.42(2) to set the employee contribution rate as a percentage of a member’s salary, with different rates for the Basic Program and the Coordinated Program.
• Specific employee contribution rates by time period:
  • July 1, 2014 – June 30, 2023: Basic 11%, Coordinated 7.5%.
  • July 1, 2023 – June 30, 2025: Basic 11.25%, Coordinated 7.75%.
  • July 1, 2025 – June 30, 2026: Basic 11.5%, Coordinated 8.0%.
  • After June 30, 2026: Basic 11.5%, Coordinated 12.5%.
• Rates are applied as payroll deductions and are based on the member’s salary, with the rule that if any portion of the salary is paid from non-public funds, the contribution must be based on the entire salary received.
• If a fiscal year rate changes, the new rate applies to the entire salary for the first payroll cycle of that year.
• Establishes a provision for an unreduced retirement annuity when a member reaches age 62 with 30 years of service (meaning benefits would be paid at full, unreduced levels at that threshold).

Significant Changes to Existing Law

• Introduces a structured, increasing schedule for employee contributions to TRA over multiple time periods, culminating in higher rates for the Coordinated Program after 2026.
• Adds a new entitlement: an unreduced retirement annuity at age 62 for those with 30 years of service.
• Changes involve amendments to Minnesota Statutes 2024, specifically sections 354.42 (subdivision 2) and 354.44 (subdivision 6) to implement these contributions and benefits.

Administration and Implementation Notes

• The changes are described as applying to public employee salaries and are implemented via payroll deductions through employers.
• Rates are designed to apply consistently across all employer units within the first payroll cycle of the fiscal year.

Relevant Terms - Teachers Retirement Association (TRA) - Basic Program - Coordinated Program - Employee contribution rate - Employer contributions - Unreduced retirement annuity - Age 62 - 30 years of service - Minnesota Statutes 2024 - Section 354.42 - Section 354.44