Agenda - Council - 06/14/2022 - Laserfiche WebLink

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NOTE 9—DEFINED BENEFIT PENSION PLANS—STATE-WIDE A. Plan Descriptions The City participates in the following cost-sharing multiple-employer defined benefit pension plans administered by the Public Employees Retirement Association (PERA) of Minnesota. The PERA's defined benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. The PERA's defined benefit pension plans are tax qualified plans under Section 401 (a) of the Internal Revenue Code (IRC). 1. General Employees Retirement Fund(GERF) All full-time and certain part-time employees of the City are covered by the GERF. GERF members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security. 2. Public Employees Police and Fire Fund(PEPFF) The PEPFF, originally established for police officers and firefighters not covered by a local relief association,now covers all police officers and firefighters hired since 1980. Effective July 1, 1999,the PEPFF also covers police officers and firefighters belonging to local relief associations that elected to merge with and transfer assets and administration to the PERA. B. Benefits Provided The PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can only be modified by the state legislature. 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. 1. GERF Benefits 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. Two methods are used to compute benefits for PERA's Coordinated Plan members. Members hired prior to July 1, 1989, receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30, 1989. Under Method 1, the accrual rate for Coordinated Plan members is 1.20% of average salary for each of the first 10 years of service and 1.70% of average salary for each additional year. Under Method 2, the accrual rate for Coordinated members is 1.70%of average salary for all years of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at age 66. Benefit increases are provided to benefit recipients each January. The post-retirement increase is equal to 50.00% of the cost of living adjustment(COLA) announced by the Social Security Administration, with a minimum increase of a least 1.00% and a maximum of 1.50%. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase,will receive the full increase. Recipients receiving the annuity or benefit for a least one month, but less that a full year as of the June 30 before the effective date of the increase,will receive a reduced prorated increase. For members retiring on January 1, 2024 or later,the increase will be delayed until normal retirement age (age 65 if hired prior to July 1, 1989, or age 66 for individuals hired on or after July 1, 1989). Members retiring under rule of 90 are exempt from the delay to normal retirement. 80