Laserfiche WebLink
For PERA P&F, in 2013 employers paid <br />14.4% of salary, while employees paid <br />9.6%, reflecting the historical ratio of 40% <br />employee contribution to 60% employer. In <br />2014, the employer contribution increased to <br />15.3% and the employee contribution <br />increased to 10.2% while in 2015, the <br />employer contribution will again increase to <br />16.2% and the employee contribution will <br />increase to 10.8%. <br />Response: Any further increases in <br />employer contributions should only be <br />considered by the Legislature after other <br />measures have been considered, <br />including: <br />For PERA General Plan: <br />a) An increase in employee <br />contributions so that employees and <br />employers truly bear the same <br />responsibility to bring the pension <br />plans to full funding; or <br />b) The removal of the cap on PERA <br />Pension Aid payments so the state <br />equalizes the contributions of <br />employees and employers. <br />c) A review of the automatic <br />contribution adjustment mechanism <br />in Minn. Stat. § 353.27, subd. 3b to <br />ensure that additional employer and <br />employee contribution increases are <br />truly needed to protect the long-term <br />stability of the General Plan. For <br />PERA P&F: <br />d) An initial increase in the employee <br />contribution of at least 1.0% of salary <br />with subsequent increases split evenly <br />between employee and employer so <br />that the contribution ratio moves <br />toward a more equitable split between <br />employees and employers; or <br />e) An additional general fund <br />appropriation to fund the deficiency <br />in police and fire pension aid <br />payments so that the state equalizes <br />the contributions of employers and <br />employees. <br />For both PERA General Plan and PERA <br />P&F, the establishment of a hybrid <br />pension plan requiring a Defined <br />Contribution component to the public <br />employee retirement plans. <br />The League of Minnesota Cities is open to <br />exploring the establishment of a <br />completely new pension system for new <br />hires in PERA General and PERA P&F <br />that is more cost effective for public <br />employers and reflective of demographic <br />realities. Closing an existing defined <br />benefit plan and replacing it with either a <br />hybrid or defined contribution pension <br />plan can increase short term costs and <br />decrease revenues for the closed plan. If <br />an alternative plan is implemented, the <br />Legislature must ensure that the closed <br />public pension plan remains financially <br />viable. <br />The 2014 levy limit did not exempt levies <br />needed to cover the required contribution <br />increase for cities. When levy limits are in <br />place, cities and counties must be able to <br />increase their property tax levy to cover <br />PERA contribution increases. School <br />districts lack the underlying levy <br />authority to fund required pension <br />payments. Because nearly half of active <br />PERA members are school district <br />employees, the League supports providing <br />school districts with additional levy <br />authority to cover the cost of additional <br />contribution increases. <br />HR-10. Public Employees <br />Retirement Association (PERA) <br />Administration <br />Issue: In addition to the contributions of <br />employers and employees and the <br />League of Minnesota Cities <br />2015 City Policies Page 77 <br />