Transcript No Slide Title

Public Employees Retirement
Association of Minnesota
Police
&
Fire Fund
Statistical Data
Coordinated
Active Members
Deferred Members*
Benefit Recipients
Total
P&F
Correctional
143,353
164,823
66,059
11,035
2,191
7,362
3,715
3,208
386
374,235
20,588
7,309
Grand Total
PERA also administers a
Defined Contribution Plan with
approximately 6,200 members.
WE recently started a Statewide
Volunteer Firefighter Plan for
Volunteer Fire Departments OR Relief
Associations.
402,132
Benefit History
Retirement
Formula
Early Ret.
Reduction
1989-1993
2.50%/yr.
Actuarial
(4.5%/yr.)
1993-1997
2.65%/yr.
1995-1999
2.4%/yr.
1997-
3 %/yr.
1999-
3 %/yr.
1.2%/yr.
Post June of 2007
Entering/or reinstated
3%/yr.
2.4%/yr.
2010 Legislative changes
Vesting changes & contribution changes
Year
2010 Legislative changes
• Reduce P&F retiree pension increases from 2.5% to 1%
for 2011 and 2012 – then 1.5% until 90% funded triggering to inflation up to 2.5 percent
• Total 0.5% contribution increase split between employer
3% and P&F member 2% starting 1/1/2011
• Decrease the interest on refunds from 6% to 4% 7/1/2011
• Move to 5-year vesting for new Coordinated Plan
members 7/1/2011
• Move to 50% vesting for new P&F and Correctional
members after 5 years; add 10% each year - full
vesting after 10 years – beginning 7/1/2010.
• Deferred pensions grow at 1% per year beginning in 2012
• Eliminating 6% interest earned on escrow accounts of
retirees who exceed PERA’s earnings limits. 1/1/2011
WHAT is the
FUNDING LEVEL?
The official actuarial levels are only calculated once a
year. They smooth the gains/losses over 5 years. Our
investment return for 2010 was 15.2%.
FY2009
FY2010
• For P&F
83.2%
87%
By using straight Market Value (not actuarial), we can estimate our best
guess.
FY2009
FY2010
2011 Projected
• For P&F
63.6%
74.7%
84%
(Unfunded liability today: $1.5 billion (shortfall between assets and liabilities.)
There are several well-funded organizations which will be in the news a lot
this year as they rally against pensions at the State Legislature.
Your Contributions Today
Current P&F Contribution Level
Member
9.6%
Employer Rate
14.4%
Total: 24% of pay
Actuaries say to keep fund healthy – we need 31% of pay.
Today we have a 7% deficiency. We will continue to work
with you on solutions.
The Future:
Electronic
Statements
Visit us online and
register for MY
PERA, GO GREEN
request online
newsletters and
statements.
www.mnpera.org
You can print your retirement estimate,
Or project OUT your estimate on the
Building Your Pension
Your pension is built on a formula using:
 Age at Retirement
 Years of Service
 High-5
Average Salary
See charts
Retirement Qualifications
(Police & Fire)
Full Pension
 Age 55 with 3
years
of service
(10 years after 7/1/2010)
 Age 65 or older
with at least 1 year
of service
 Rule of 90
(If hired before 7/1/89)
Early Retirement
 Age 50 with vesting of
3 years of service
(10 after 7/1/2010)
Pre-7/07 = 0.1% reduction
for each month under age 55;
or 1.2 % per year
Post-6/07 = 0.2% reduction for
each month under age 55;
Or 2.4 % per year
Retirement Calculation (Police & Fire)
3% X Each Year of Service
X
High 5 Average Salary
=
Annual Pension Amount
Is early retirement for you?
Calculation Example (Police & Fire)
Age: 50
Service: 25 Yrs.
Avg. Hi-5 Salary: $50,000
3% X 25 yrs. = 75%
75% x $35,000 = $37,500/yr.
or $3,125/mo.
Post and Pre 07 Reduction:
2.4% X 5 yrs. = 12%
12% X $3,125 = $375
Monthly Pension:
$3,125
- 375
$2,750
1.2 X 5 yrs. = 6%
6% X 3,125 = 187.50
$3,125
-187.50
$2,937.50
See Charts – reduction based on start date
Combined Service
Service in your PERA plan can be
combined
with service under 14 other MN plans
 Pension from PERA
 Pension from other retirement plan
 Both benefits based on high-5 salary
(no matter when credit earned)
What’s the payback?
Next 5-7
First 2-3 years
Years
You get all your
contributions back
You get all of
your employers
contributions
back
The rest of your
life
The rest of your life,
your pension is being
paid by the investments
earned…..
Benefit Options
%
Single-life
Member (55)
Survivor(52)
100%
$2,188
$
25%
96%
$2,091
$ 523
50%
92%
$2,002
$1,001
75%*
88%
$1,920
$1,440
100%*
84%
$1,845
$1,845
* Survivor may not be more than 10 years younger for the 100% or
19 years younger for the 75% options if other than spouse.
0
Refunds
Take the $ and run!
Contributions + 6% Interest
- 20% Federal Withholding
- 10% Federal Penalty
(until age 59½ if leave
before 55)
If someone wants a refund, we encourage a Direct Rollover
Then there is No Withholding No Penalty
Repaying a Refund
Total Repayment (Lump sum)
 Must return to public service minimum 6 mos.
 Refund + 8.5% interest compounded annually
Partial Repayment
 Must be active public employee
 Refund must cover at least 2 yrs. service
 Repayment must be at least 1/3 of refund you received
You may use deferred comp, an IRA or 401K to roll over and
purchase your service credits.
Disability Benefits (Download info. From Web)
Duty Disability
Regular Disability
Unable to obtain ANY gainful work
because of disability resulting from
hazardous activities specific to
occupation, like protection of property
and personal safety of others
Can be any disability resulting in
activities or illness not related to
the protection of property or
personal safety of others.
No minimum service
requirement
Minimum Benefit:
60% of average salary over high five
years
If over 20 years,
3% increase for
each additional year
1 year service
required
Minimum Benefit:
45% of average salary
over high five years
If over 15 years,
3% increase for
each additional year
More on Disability
Benefit Options
Same as retirement – single life, 25%, 50%, 75% and 100%
Survivor Options
(No automatic Survivor Option EXCEPT total and permanent
disability.
Conversion:
Disability becomes a retirement benefit at age 55 or 60 after
approval
We’ve closed the gap on much of the disability misuse/over-use
Survivor Benefits (Download info from PERA web)
100% option pension payable to
spouse if member reaches age 50
with 3 or more years of service or
any age with 30 years of service
OR
50% of average salary of last six
months for spouse and 10% for each
child
OR
Refund of member deductions plus
6% Interest
(Maximum monthly family benefit is
70% of average salary)
Post Retirement Increases
You will receive an increase on your retirement
pension each year. Your first raise is pro-rated.
2010 Pension reform changes affected your
raises in retirement:
Reduce P&F retiree pension increases from
2.5% to 1% for 2011 and 2012 – then 1.5%
until 90% funded - triggering to inflation
up to 2.5 percent
Earnings Limits for 2011*
Earnings limits on pension only
apply if you return to PERAcovered employment
Annual Limit
in 2010
Limit
Reduction*
$14,160
Year you turn
full retirement
age (66)
$37,680
After full
retirement
age
No limit
$1 for every $2 over or suspension of benefit
* PERA places reduction in escrow, and that money is
available after one year.
Taxes
Most, if not all, of your PERA
pension is taxable income.
If you were hired after Dec. 31, 1983,
your entire benefit is taxable
If you were a member prior to 1983, you will receive your aftertax contributions back over your estimated lifetime, or the
estimated lifetime of both you and your survivor.
(1099R issued in Jan.)
Insurance Premium Withholding
• Allows $3000 in federally tax free premium
payments
• Those eligible are: Police and Fire
members; Correctional members,
Ambulance Personnel, Parole and
probation personnel, AND judges.
• Must be of age for a FULL retirement
benefit (age 55 for P&F, or rule of 90) or
receiving a disability benefit.
Applying for Retirement – 30 day break
Retirement effective on the first of month following termination
Meet with PERA
Counselor
Review pension
estimates
Discuss benefit
options
Apply for Retirement
Choose option
Signed by member
& spouse
Termination
Verification
Sent to member
before
retirement
Filled out by
employer
Required Documents
Proof of age*
Proof of name change*
* If choosing survivor
option,
PERA needs
same info.
for survivor
PERA Office
Headquarters in St. Paul
With branch offices in
Duluth and Mankato