1. Public Employees Retirement Association of Minnesota Police & Fire Fund

2. Statistical Data 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. Coordinated P&F Correctional Active Members 143,353 11,0353,715 Deferred Members* 164,823 2,1913,208 Benefit Recipients 66,059 7,362 386 Total 374,235 20,5887,309 Grand Total 402,132

3. Benefit History Retirement Early Ret. Year Formula Reduction 1989-1993 2.50%/yr. Actuarial (4.5%/yr.) 1993-1997 2.65%/yr. 1995-19992.4%/yr. 1997- 3 %/yr. 1999- 3 %/yr. 1.2%/yr. Post June of 20073%/yr.2.4%/yr. Entering/or reinstated 2010 Legislative changes Vesting changes & contribution changes

4. 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

5. 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%. FY2009FY2010 For P&F83.2%87% By using straight Market Value (not actuarial), we can estimate our best guess. FY2009 FY2010 2011 Projected For P&F63.6% 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.

6. Your Contributions Today Current P&F Contribution Level MemberEmployer Rate 9.6%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.

7. 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 calculator.

8. Building Your Pension Your pension is built on a formula using:  Age at Retirement  Years of Service  High-5 Average Salary See charts

9. 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

10. Retirement Calculation (Police & Fire) 3% X Each Year of Service X High 5 Average Salary = Annual Pension Amount

11. 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% 1.2 X 5 yrs. = 6% 12% X $3,125 = $375 6% X 3,125 = 187.50 Monthly Pension: $3,125$3,125 - 375-187.50 $2,750$2,937.50 See Charts – reduction based on start date

12. 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)

13. What’s the payback? First 2-3 years The rest of your life Next 5-7 Years You get all your contributions back You get all of your employers contributions back The rest of your life, your pension is being paid by the investments earned…..

14. Benefit Options * Survivor may not be more than 10 years younger for the 100% or 19 years younger for the 75% options if other than spouse. Single-life 100% $2,188 $ 0 25% 96% $2,091 $ 523 50% 92% $2,002 $1,001 75%* 88% $1,920 $1,440 100%* 84% $1,845 $1,845 % Member (55) Survivor(52)

15. 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

16. 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 Repaying a Refund You may use deferred comp, an IRA or 401K to roll over and purchase your service credits.

17. Disability Benefits (Download info. From Web) 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 No minimum service requirement Minimum Benefit: 60% of average salary over high five years If over 20 years, 3% increase for each additional year Can be any disability resulting in activities or illness not related to the protection of property or personal safety of others. 1 year service required Minimum Benefit: 45% of average salary over high five years If over 15 years, 3% increase for each additional year Duty Disability Regular Disability

18. 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

19. 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)

20. 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

21. Limit $14,160 $37,680 No limit Reduction* $1 for every $2 over or suspension of benefit * PERA places reduction in escrow, and that money is available after one year. Earnings Limits for 2011* Earnings limits on pension only apply if you return to PERA- covered employment Annual Limit in 2010 Year you turn full retirement age (66) After full retirement age

22. 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 after- tax contributions back over your estimated lifetime, or the estimated lifetime of both you and your survivor. (1099R issued in Jan.)

23. 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.

24. Applying for Retirement – 30 day break Required Documents Proof of age* Proof of name change* * If choosing survivor option, PERA needs same info. for survivor Apply for Retirement Choose option Signed by member & spouse Termination Verification Sent to member before retirement Filled out by employer Meet with PERA Counselor Review pension estimates Discuss benefit options Retirement effective on the first of month following termination

25. PERA Office Headquarters in St. Paul With branch offices in Duluth and Mankato

26. Questions?