1. PUBLIC EMPLOYEES RETIREMENT ASSOCIATION
Minnesota PERA

2. Introduction to pera

3. Trivia Who is a PERA member? Paraprofessional Police Officer
City Administrator
Ambulance Personnel
All of the above

4. Defined Benefit
Defined Contribution
Based on Contributions
401(k)
IRA
403(b)
457(b)
Based on Formula
PERA
Social Security

5. PERA’s Defined Benefit Plans
General Coordinated
Cities
Counties
Townships
Public schools
Correctional
County facilities
Police & Fire
Local departments
Sheriff offices

6. SVFRP and Defined Contribution
Volunteer firefighters
159 departments and 4,000+ firefighters
One defined benefit plan
SVFRP
Ambulance personnel
Physicians
Elected officials
Defined Contribution

7. DB Membership Over 495,000 in DB Membership Active: 171,000+
Recipients
Vested
Active: 171,000+
Inactive: 209,000+
Not
Vested
Active
Recipients: 113,000+
Source: PERA’s Comprehensive Annual Financial Report, 2018

8. Our Vision
Sustainability
Equitability
Structure

9. Funding Status Improved

10. Funding Status Improved

11. Funding Status Improved

12. Pre-Tax Contribution Rates
How PERA’s DB Plans are Funded
Pre-Tax Contribution Rates
Coordinated
Correctional
Police & Fire
Employee
6.50%
5.83%
11.30%
Employer
7.50%
8.75%
16.95%
Contributions reduce taxable income.
Contribution rates are subject to legislative change.

13. P&F Contribution Rate Increase
Effective January 1, 2020, the contribution rates for the Police and Fire Plan will increase.
Contribution rates for Police & Fire
Employer
Employee
January 1, 2019
16.95%
11.30%
January 1, 2020
17.70%
11.80%

14. PERA’s NET Assets: $30.8 Billion
State Board of Investment
Diversified for the Long Term
PERA’s NET Assets: $30.8 Billion
Cash 2%
International Equity
17%
Fixed Income
20%
Private Markets
25%
Domestic Equity
36%
Source: PERA’s Comprehensive Annual Financial Report, 2018

15. MN SBI Combined Fund Actual Returns for Periods Ending June 30, 2018
Historical Investment Returns
as of June 30, 2018
Assumed Asset Return is 7.5%
MN SBI Combined Fund Actual Returns for Periods Ending June 30, 2018

16. Value of Your Pension Plan
Member Contributions
Recouped in first 2-3 years
Employer Contributions
Paid over next 5-7 years
Investment Growth
Rest of your life

17. Life Expectancy Present Age Men Women 50 82.2 84.5 55 82.9 84.9 60
Someone is Still Getting a Civil War Pension
Present Age
Men
Women 50
82.2
84.5 55
82.9
84.9 60
83.5
85.5 65
84.2
86.2 70
85.3
87.2 75
86.6
88.6

18. Terminology and Pera pension formula

19. PERA Service Start Date
Coordinated Vesting
PERA Service Start Date
Years
to Vest
05/16/89 – 06/30/10 3
07/01/10 - Present 5

20. Correctional Vesting PERA Service Start Date Years to Vest
1999 – 6/30/2010 3
Graded Vesting — 7/1/ Present
5 yr
6 yr
7 yr
8 yr
9 yr
10 yr
50%
60%
70%
80%
90%
100%

21. PERA Service Start Date
Police & Fire Vesting
PERA Service Start Date
Years
to Vest 5 3

22. 20-Year Vesting — 7/1/14 - Present
Police & Fire Vesting
Graded Vesting
10-Year Vesting — 7/1/10 – 6/30/14
5 yr
6 yr
7 yr
8 yr
9 yr
10 yr
50%
60%
70%
80%
90%
100%
20-Year Vesting — 7/1/14 - Present
10 yr
11 yr
12 yr
13 yr
14 yr
15 yr
16 yr
17 yr
18 yr
19 yr
20 yr
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%

23. Three Retirement Factors
Age at Retirement
Years of Service
High-five Salary
There are three factors that come into plan in the pension benefit formula.
Age – there is some significance to the date 7/1/89. What happened? The Rule of 90 died. Anyone who began their public service prior to 7/1/89 has the potential of reaching the Rule of 90. And people make a really big deal out of Rule of 90, don’t they? You know a year ahead of time that someone is going to reach their Rule of 90. So what exactly is Rule of 90? It’s when age added to years of service equals 90 someone can retire early without a penalty for early retirement. So that begs the question… what is early retirement and what is full retirement?
We have to go down the rabbit hole a bit here… Early retirement and full retirement are different from a Social Security standpoint and a PERA standpoint.
For everyone here, from a Social Security standpoint your first eligibility to collect social security benefits is age 62 (there are some exceptions with disability but this is true for most).
For everyone here your full Social Security benefit is somewhere between ages 66 and 67. No longer 65 for anyone.
From a PERA pension perspective, your first eligible age to collect your pension depends on which plan you’re in . Age 55 for Coordinated and age 50 for Correctional and Police & Fire.
From a PERA pension perspective your full eligible age to collect a pension depends on whether you began your public service before or after 7/1/89. Age 55 is full retirement age in the Police & Fire and Correctional plans – difficult to reach the Rule of 90 prior to age 55. In the Coordinated plan, however, your full unreduced pension is 65 if you first began employment in public service 7630/89 or earlier and 66 if you first began public service 7/1/89 or thereafter.
So getting back to the Rule of 90… anyone who is Rule of 90 eligible began public service prior to 7/1/89 so their full unreduced pension age is 65. What Rule of 90 does for them is allows early retirement, prior to age 65, without a penalty for age. It doesn’t mean they have earned the same pension they would get if they worked until 65, however, and that’s often a misconception. It simply allows early retirement without a penalty.
The second factor… years of service, also referred to as service credit. Every month you work at least one day in the month you earn service credit for that month. Therefore you can earn 12 credits in a year.
And the final factor is high-five salary. High-five salary is the average of the highest 60 consecutive months of salary, wherever that falls. For most of us it will be our last 5 years as most of us are making more in our last years than earlier in our careers… but not necessarily. If we cut our hours to part time in our last few years, our high-five will likely be frozen of the period of time we were still working full time. In public safety there are often periods of time when a lot of overtime is offered… Super Bowl, bridge collapse, RNC, 9/11… therefore a high-five may be frozen over that period. Wherever the highest 60 consecutive months fall, that is what we will use in the calculation.
So these factors get multiplied together along with a plan-specific percentage to come up with what is called the Single Life Benefit amount.

24. Benefit Options Single Life Highest benefit amount
Lifetime payment to member only
Survivor option
Member’s payment reduced
Lifetime payment to survivor upon member’s death

25. Survivor Option One person
Monthly Lifetime Benefits
One person
Monthly payments to survivor if member dies first
Irrevocable, with exceptions

26. Changing an option: Revocation of survivor
If option is revoked, member will convert to the single life benefit for the rest of their life
Member does not get to choose another survivor
Changing
an option:

27. Survivor Age Restrictions
Non-Spouse Survivor Options
25%
No Restrictions
50%
75%
No more than 19 years* younger than member if not a spouse
100%
No more than 10 years* younger than member if not a spouse
*Per IRS modified age difference calculation

28. Beneficiary(ies) Primary and secondary Change at any time
People, entities, and/or trusts
Primary and secondary
Change at any time
Receive remainder of member contributions

29. Single Life Benefit – No monthly payments payable to any other person.
Benefit Estimate
Estimate Number: 1
Plan Name:
Coordinated
Termination Date:
12/31/20XX
Benefit Effective Date:
01/01/20XX
Member Age:
56 yrs 7 mos
Single Life Benefit Amount:
$1,098
Single Life Benefit – No monthly payments payable to any other person.
Name of member:
PERA MEMBER
Member’s Birth Date:
01/01/19XX
Designated Survivor Name
SURVIVOR
Survivor’s Birth Date:
Balance of Member Contributions
$69, Interest $53, = $123,047.31
Survivor Options
25%
Member Amount:
$1,075
Survivor Designee Amount:
$268
50%
$1,053
$526
75%
$1,032
$774
100%
$1,012
Estimate Details
Rule of 90:
Yes
Average Monthly High 5 Salary:
$2,000
Rate & Formula Used:
Step / 54.93%
Coordinated Plan Service Credit:
35 yrs 3 mos

30. Important to Note: Bounce Back
If survivor dies first, member ‘bounces back’ to single life benefit
No second survivor
Important
to Note:

31. Important to Note: Regarding Taxes PERA benefits are taxable
Tax-deferred contributions since January 1, 1983
Important
to Note:

32. Deferred pensions

33. Deferred Pension 47 Age at Termination Benefit Collection Benefit
Amount 47 55
$279 62
$443 66
$600
70 ½*
* You may not defer past age 70½ per IRS regulations

34. refunds/rollovers

35. You will receive a 1099-R tax form the following January
Refunds & Rollovers
Member Contributions Only + 3% Interest
20% Federal Income Tax
10% Federal penalty
State Taxes
Lump Sum ✓
PERA Rollover
No current taxation
You will receive a 1099-R tax form the following January

36. Repaying a refund

37. Repaying a refund typically increases
Refund Repayment
Restores previously forfeited service credit
Repaying a refund typically increases
your PERA benefit
Pay by check or rollover funds from your own:
457(b) - Deferred Compensation
403(b)
IRA - Individual Retirement Account
401(k)

38. Refund Repayment
Example – Time to Recover Cost
You repay $20,000 to restore service
Your benefit increases by $200
$20,000 ÷ $200 increase = 100 months (about 8 years to recover cost)
You are then ahead $200 each month for your lifetime

39. Combined service annuity (CSA)

40. Both benefits calculated using PERA High-Five Salary
Combined Service Example
Plan
Years of Service
High-Five Salary
PERA 20
$5,500
MSRS 3
$1,200
Benefits
PERA: 20 year benefit
Both benefits calculated using PERA High-Five Salary
MSRS: 3 year benefit

41. DISABILITY BENEFITS
For the general programs, I simply state that as part of their PERA benefits a disability benefit exists if they meet the following criteria on the next slide. Depending on time, I say they can find more information on this in the plan handbooks online and the first step in initiating a disability claim is to contact our call center for estimates and paperwork.

42. Disability Qualifications
Unable to work for at least one year
Must supply medical evidence of disability
Active public employee when disabled (Must apply w/in 18 months of leaving)
May not be collecting a retirement benefit
Under full retirement age
When discussing the second bullet point, I make it clear that all the documentation goes to a third-party organization of medical professionals and they are the body that determines approval or denial of the claim. I also explain the appeals process to our executive director and that the Board has the final determination.

43. Death before retirement

44. Survivor Benefits Spouse Dependent Children Beneficiaries
Survivor benefits may be payable should a member die before receiving a benefit.
Depending on plan and marital status, benefits may be payable to the following:
Spouse
Dependent Children
Beneficiaries
Depending on which plan a member is in, there may be benefits payable to a surviving spouse first, and then depending children. If no surviving spouse or children (depending on plan) a lump sum of member contributions is payable to beneficiaries.

45. Important Provisions

46. Annual Benefit Increases
Increases effective every first of January
General and Correctional
Based on Social Security COLA
Police & Fire
Fixed 1%

47. Online Resources

49. MY PERA Active Members Retirees View retirement estimates
Use retirement calculator to create estimates
See contribution history
Retirees
Access 1099R
Change
tax withholding
direct deposit
address

50. Register for MY PERA Social Security number Last name Date of birth
Required Information
Social Security number
Last name
Date of birth
Zip code
PERA ID number

51. Retirement process

52. Verification of Termination
Required Information
When you apply for retirement, you’ll need—
Retirement Application
Verification of Termination
Member & Survivor ID

53. First of two PERA documents
Retirement Application
First of two PERA documents

54. Second of two PERA documents
Verification of Termination Form
Second of two PERA documents

55. Initial payment deposited two weeks from effective date
First payment is always on a Friday
Subsequent payments deposited first banking day in month

56. Information you should know before you retire
Retirement Checklist
Information you should know before you retire

57. Your guide to prepare for retirement
Retirement Checklist
Your guide to prepare for retirement

58. 30 Day separation State Statute 353.01, subd. 11a

59. Separation From Public Service
A right to a retirement benefit requires:
A complete and continuous separation from all public employment for 30 days
No written or verbal agreement prior to termination to provide services to a public employer
Independent contractor?

60. Working after retirement with a pera employer

61. Earnings Limit Timeline
Under full SSA retirement age
Earn up to annual amount with no offset
January 1 the year of full SSA retirement age
$46,920 annual limit
Full SSA
retirement age*
No limit
*See Working After Retirement brochure
$17,640 annual limit
Reduction $1 for every $2 over limit or suspension of benefit. Offsets are recovered.

62. PERA is governed by Minnesota Statutes; especially chapters 11A, 353, 353A, 353D, 353E, 353F, 353G, 356 and 356A.
Changes to PERA's plans, including benefit provisions and contribution rates, are made through the introduction and passage of legislation by the Minnesota Legislature.