Comprehensive Annual Financial Report - Minnesota State ...

Summary
N ote:
1
(Continued)
* Selection of a Survivor
Option will result in
a reduction in the
amount of the pension
from the Single-Life
pension level. The
amount of the reduction
depends on the
age of both the retiring
member and the survivor.
All survivor pension
options incorporate
an "automatic bounce
back” feature. This
returns the amount
of the pension to the
level of the Single-Life
benefit in the event
the designated survivor
predeceases the
retiree. The cost of this
protection is borne by
the funds, not by the
retiree.
Public Employees
Retirement Association
of Minnesota
of service. The reduction is 0.25 percent
for each month under age 65. A member
with 30 or more years of service may
retire at any age with the 0.25 percent
reduction made from age 62 rather than
65.
Method 2: Coordinated members
earn 1.7 percent of their high-five salary
for every year of public service. This
calculation provides for unreduced retirement
benefits at age 65 for members first
hired prior to July 1, 1989, and at the age
for unreduced Social Security benefits,
capped at age 66, for those first hired into
public service on or after that date.
Early retirement results in an actuarial
reduction with augmentation (about
6 percent per year) for members retiring
prior to full retirement age.
Police and Fire Members
Members receive 3 percent of average
salary for each of their years of service.
An unreduced retirement annuity is payable
to members when they meet the following
conditions:
Age 55 with a minimum of three
years of service (five years if hired
after June 30, 2010); or
Age plus years of service equal at
least 90 (if first hired prior to 7/1/89).
A reduced retirement annuity is available
to members between the ages of 50
and 55. There is a 1.2 percent reduction
in benefits for each year a member retires
prior to qualifying for an unreduced
retirement benefit. (For members hired or
rehired after June 30, 2007, the reduction
is 2.4 percent per year.)
Correctional Service Members
Correctional Plan members earn
1.9 percent of their average salary for
every year of public service under the
plan.
A full, unreduced pension, is earned at:
Age 55 with three or more years of
service (five years if hired after June
30, 2010); or
Age plus years of service total at least
90 (if hired prior to 7/1/89).
An actuarial reduction with augmentation
is made in a member’s benefit for
retirement prior to qualification for an
unreduced pension.
Defined Contribution Plan Members
The Defined Contribution Plan's benefit
amount is determined by the performance
of the funds in which contributions are
invested. The entire market value of the
member's account becomes payable upon
termination of public service, disability,
retirement, or death.
Statewide Volunteer Firefighter
Retirement Plan Members
Members qualify for a lump-sum benefit
any time after age 50 with five or more
years of service. A full, unreduced pension
is payable after 20 years of service. The
municipality and department determine
the benefit level for each year of credited
service.
Minneapolis Employees
Retirement Fund Members
MERF members earn 2.0 percent of their
high-five average salary for each of their
first 10 years of public service and 2.5 percent
thereafter. Full retirement age is 60 or
the member must have accrued a minimum
of 30 years of service. Members can retire
as early as age 55 with 20 or more years of
service under an alternative formula known
as the "Two Dollar Bill Option" if hired
prior to June 28, 1973.
Types of
Pensions Available
Members of the PERA Coordinated,
Basic, Correctional, and Police and Fire
plans may select from several types of
retirement benefits.
Single-Life Pension — A Single-Life
Pension is a lifetime annuity that ceases
upon the death of the retiree. No survivor
benefit is payable.
Survivor Options —Upon retirement,
members may choose from one of four
Survivor Options. All these pensions are
payable for the lifetime of the retiree. At
the time of the retiree's death, the designated
survivor begins to receive monthly
benefit payments at varying levels for his or
her lifetime. Depending on the Survivor
Option chosen by the member, survivor
payments are at a 25, 50, 75 or 100 percent
level of that received by the member.*