Comprehensive Annual Financial Report - Minnesota State ...

facilities. Elected officials and ambulance
personnel who are covered by a public
or private pension plan because of their
employment are not eligible to participate
in the PEDCP. At June 30, 2012, there were
7,435 members in the PEDCP.
Shown in Figure 1 below are the membership
totals in PERA’s multi-employer
defined benefit plans as of June 30, 2012.
4. Benefit Provisions - Defined Benefit Annuity Plans
PERA’s defined benefit plans are tax qualified
plans under Section 401(a) of the
Internal Revenue Code. PERA provides
retirement benefits as well as disability
benefits to members, and benefits to survivors
upon death of eligible members.
All benefits for members first hired before
July 1, 2010 vest after three years of credited
service. Benefits for GERF members
first hired after June 30, 2010 vest after
five years of credited service. Benefits for
PEPFF and PECF members first hired after
June 30, 2010 vest on a pro-rated basis
from 50% after five years up to 100% after
10 years of credited service. Retirement
benefits are based on a member’s highest
average salary for any five successive
years of allowable service, age, and years
of credit at termination of service. GERF
members belong to either the Basic or
Coordinated Plan. Coordinated members
are covered by Social Security and Basic
members are not. All new GERF members
must participate in the Coordinated Plan.
Two methods are used to compute benefits
for Coordinated and Basic members. The
retiring member receives the higher of a
step-rate benefit accrual formula (Method
1) or a level accrual formula (Method 2).
Under Method 1, the annuity accrual rate
for Basic members is 2.2 percent of average
salary for each of the first ten years of
service and 2.7 percent for each remaining
year. For a Coordinated member, the
annuity accrual rate is 1.2 percent of average
salary for each of the first ten years of
service and 1.7 percent for each remaining
year. Under Method 2, the annuity
accrual rate is 2.7 percent of average salary
for Basic members and 1.7 percent for
Coordinated members for each year of
service. For PEPFF members, the annuity
accrual rate is 3.0 percent of average
salary for each year of service. For GERF
members whose annuity is calculated
using Method 1, and for all PEPFF and
PECF members who were first hired
prior to July 1, 1989, a full annuity is
available when age plus years of service
equal at least 90. A reduced retirement
annuity is also available to eligible
members seeking early retirement. The
annuity accrual rate for PECF members
is 1.9 percent of average salary for each
year of service in that plan. The annuity
accrual rate for MERF members is 2.0
percent of average salary for each of the
first ten years of service and 2.5 percent
for each remaining year. MERF members
may choose a death benefit option with
the death benefit being at least $500 and
not more than one half the value of the
employee’s total retirement benefit.
The benefit provisions stated in the preceding
paragraphs of this section are current
provisions and apply to active plan
participants. Vested, terminated employees
who are entitled to benefits but are
not receiving them yet are bound by the
provisions in effect at the time they last
terminated their public service.
5. Benefit Provisions and Contribution Rates—
Lump-Sum Defined Benefit Plan
The Statewide Volunteer Firefighter
Retirement Plan, first available on
January 1, 2010, is a lump-sum defined
benefit plan funded by fire state aid,
investment earnings and (if necessary)
employer contributions. Members do
not contribute to the plan. Employer
contributions are determined annually.
If fire state aid plus investment income
are not expected to cover the normal
cost of benefits during the next calendar
year, an employer contribution is calculated
and payable by the end of the next
calendar year. Benefits are paid based
on the number of years of service multiplied
by a benefit level chosen by the
entity sponsoring the fire department
Financial Section
PERA’s defined
benefit plans
are tax qualified
plans under Section
401(a) of the Internal
Revenue Code.
he Statewide
T Volunteer Firefighter
Retirement Plan, first
available on January
1, 2010, is a lump-sum
defined benefit plan
primarily funded by fire
state aid.
Public Employees
Retirement Association
of Minnesota
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