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05-28-24-R
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05-28-24-R
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NOTE 7 — DEFINED BENEFIT PENSION PLAN — STATE-WIDE <br />A. Plan Description <br />The City participates in the following cost -sharing, multiple -employer defined benefit pension plan <br />administered by the Public Employees Retirement Association (PERA) of Minnesota. The PERA's <br />defined benefit pension plan is established and administered in accordance with Minnesota Statutes, <br />Chapters 353 and 356. The PERA's defined benefit pension plan is a tax qualified plan under <br />Section 401(a) of the IRC. <br />General Employees Retirement Fund (GERF) <br />All full-time and certain part-time employees of the City are covered by the GERF. The GERF <br />members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security. <br />B. Benefits Provided <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 />GERF Benefits <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 for each of the first <br />10 years of service, and 1.7 percent for each additional year. Under Method 2, the accrual rate for <br />Coordinated Plan members is 1.7 percent for all years of service. For members hired prior to July 1, <br />1989, a full annuity is available when age plus years of service equal 90, and normal retirement age is <br />65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social <br />Security benefits capped at age 66. <br />Benefit increases are provided to benefit recipients each January. The post -retirement increase is <br />equal to 50.0 percent of the cost of living adjustment (COLA) announced by the Social Security <br />Administration, with a minimum increase of at least 1.0 percent and a maximum of 1.5 percent. <br />Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 <br />before the effective date of the increase, will receive the full increase. Recipients receiving the <br />annuity or benefit for at least one month, but less than a full year as of the June 30 before the effective <br />date of the increase, will receive a reduced prorated increase. In 2023, legislation repealed the statute <br />delaying increases for members retiring before full retirement age. <br />In 2023, the Legislature allocated funding for a one-time lump -sum payment to the General Employee <br />benefit recipients. Eligibility criteria and the payment amount is specified in statute. The one-time <br />payment is noncompounding towards future benefits. <br />Qc1:2 <br />
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