SF5096

Purpose and Policy

• The bill creates a new, separate retirement plan for local government probation officers and public safety telecommunicators. It places this plan under the Public Employees Retirement Association (PERA) and is designed to provide earlier retirement and larger retirement benefits because the work can be hazardous or high-stress. The additional costs of these benefits are initially borne by employees.

Key Provisions

• Establishes a new chapter (local government probation and telecommunicator retirement plan) within PERA. The plan has its own fund and is administered by PERA’s board of trustees and executive director, with investments managed in line with state pension investment practices.
• The plan applies to probation officers and public safety telecommunicators, with specific eligibility rules.
• The plan provides retirement, disability, survivor, and other benefit features, some of which mirror the general state plan but with plan-specific rules and funding.
• Creates a mechanism to purchase credit for past service earned before the plan took effect, including estimated costs, an administrative fee, and a special past-service account to manage funds for these purchases.
• Specifies contributions from members and employers, funding sources, and rules for how contributions are deposited and managed.

Definitions and Scope

• Defines key terms such as:
  • Fund, plan, member, normal retirement age (60), and vesting thresholds (3 years of service).
  • Probation officer and public safety telecommunicator as plan members.
  • Past service (credit for service earned before January 1, 2027 that would have been covered by this plan if it had existed).
  • Offset amount (a reduction amount applied in calculating past-service purchase prices; exact calculation described in the bill).
  • Public safety telecommunicator and related duties and time commitments.

Administration and Funding

• The plan is a separate fund within PERA, with administration by PERA’s board and executive director.
• Assets are to be invested in the Minnesota Combined Investment Fund (or other PERA-approved options).
• The fund’s disbursements are restricted to purposes stated in the chapter, and administrative expenses and benefits are paid from the fund as allowed by law. Benefits are paid only after certification by the executive director.
• A dedicated “local government probation and telecommunicator past service account” is created to hold and transfer funds related to past service credits.

Membership, Contributions, and Benefits

• Membership: Probation officers and public safety telecommunicators are the plan members. Individuals who first became a public employee or joined a pension fund before July 1, 1989 are not eligible to participate in this plan.
• Contributions: Members contribute 8.82% of salary; employers contribute 7.5% of salary. All contributions are deposited into the fund, and contribution rules follow existing PERA procedures for collection and reporting.
• Retirement benefits:
  • Normal retirement: After vesting, members can retire with a normal retirement annuity equal to (average salary) × 1.9% × years of allowable service.
  • Optional annuity (bounceback): Members may choose an alternative form of annuity under specified sections.
  • Early retirement: If vested and age 55 or older (but before normal retirement age), members can retire early with an actuarially equivalent annuity.
  • Other provisions: If a member has allowable service from other plans (general plan or police/fire plans), benefits are calculated to align with the applicable formulas and rules from those plans when applicable.
• Disability and survivor benefits: Vesting members who become totally and permanently disabled receive disability benefits; survivor benefits are payable upon a member’s death as provided in the plan, following the same general framework as other PERA plans.

Past Service Purchase

• Eligible members may elect a one-time purchase of past service to add to their allowable service for retirement benefit calculations.
• Purchase costs involve actuarial calculations and offset amounts, with an initial administrative fee of $250 to prepare estimates.
• Members must transfer pretax funds from another retirement plan to pay for past service credits, and the offset amount is applied to the purchase price as determined by the plan’s rules.
• A past service account is created to manage funds for these purchases, and the transferred service credit is applied to the member’s period of service.

Significant Changes to Existing Law

• Creates a new, standalone local government probation and telecommunicator retirement plan under a new chapter (353H) rather than expanding the existing general employee plan for these groups.
• Establishes a new fund and administration structure within PERA specifically for this plan, including a dedicated past-service account and explicit funding rules.
• Sets specific contribution rates (8.82% employee, 7.5% employer) and a unique benefit formula (average salary × 1.9% × years of service) for this group.
• Introduces past-service credit purchase with its own process, fees, and actuarial calculations, including the possibility of transferring funds from other plans.
• Measures such actions against a policy that recognizes the higher risk and stress involved in probation and telecommunication work, with initial costs borne by employees.

Relevant Terms - local government probation and telecommunicator retirement fund - Public Employees Retirement Association (PERA) - normal retirement age - vesting - probation officer - public safety telecommunicator - past service credit - offset amount - advantage of actuarial present value - amortization through acturarial assumptions - bounceback annuity - disability benefits - survivor benefits - Minnesota Combined Investment Fund - plan administration fund - local government probation and telecommunicator past service account - general plan (PERA system) - eligibility exclusion (pre-1989 hires) - employee contributions - employer contributions - actuarial present value - vesting eligibility period (3 years) - estimated past service purchase price - administrative fee