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05-24-21-R
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05-24-21-R
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<br />-37- <br />NOTE 6 – DEFINED BENEFIT PENSION PLAN – STATE-WIDE (CONTINUED) <br /> <br />B. Benefits Provided <br /> <br />The PERA provides retirement, disability, and death benefits. Benefit provisions are established by state <br />statutes and can only be modified by the State Legislature. Vested, terminated employees who are entitled <br />to benefits but are not receiving them yet, are bound by the provisions in effect at the time they last <br />terminated their public service. <br /> <br />GERF Benefits <br /> <br />Benefits are based on a member’s highest average salary for any five successive years of allowable <br />service, age, and years of credit at termination of service. Two methods are used to compute benefits <br />for the PERA’s Coordinated Plan members. Members hired prior to July 1, 1989, receive the higher <br />of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. <br />Under Method 1, the accrual rate for Coordinated Plan members is 1.2 percent of average salary for <br />each of the first 10 years of service, and 1.7 percent of average salary for each additional year. Under <br />Method 2, the accrual rate for Coordinated Plan members is 1.7 percent of average salary for all years <br />of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of <br />service equal 90, and normal retirement age is 65. For members hired on or after July 1, 1989, normal <br />retirement age is the age for unreduced Social Security benefits capped at age 66. <br /> <br />Annuities, disability benefits, and survivor benefits are increased effective every January 1. <br />Beginning January 1, 2019, the post-retirement increase will be equal to 50.0 percent of the cost of <br />living adjustment (COLA) announced by the Social Security Administration, with a minimum <br />increase of at least 1.0 percent and a maximum of 1.5 percent. Recipients that have been receiving the <br />annuity or benefit for at least a full year as of the June 30 before the effective date of the increase, <br />will receive the full increase. For recipients receiving the annuity or benefit for at least one month, but <br />less than a full year as of the June 30 before the effective date of the increase, will receive a reduced <br />prorated increase. For members retiring on January 1, 2024 or later, the increase will be delayed until <br />normal retirement age (age 65 if hired prior to July 1, 1989, or age 66 for individuals hired on or after <br />July 1, 1989). Members retiring under Rule of 90 are exempt from the delay to normal retirement. <br /> <br />C. Contributions <br /> <br />Minnesota Statutes, Chapter 353 sets the rates for employer and employee contributions. Contribution <br />rates can only be modified by the State Legislature. <br /> <br />GERF Contributions <br /> <br />Coordinated Plan members were required to contribute 6.5 percent of their annual covered salary in <br />fiscal year 2020, and the City was required to contribute 7.5 percent for Coordinated Plan members. <br />The City’s contributions to the GERF for the year ended December 31, 2020, were $134,798. The <br />City’s contributions were equal to the required contributions as set by state statutes.
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