Pension reform bill signed Long-awaited legislation becomes law

The long-awaited pension reform bill (Senate File 2620) was signed into law by Gov. Mark Dayton this morning (Thursday) in front of a packed crowd in the Capitol Rotunda in St. Paul.

In the photo on the right, Gov. Mark Dayton signs the pension reform bill Thursday morning in the Capitol Rotunda in St. Paul.

Gov. Dayton surveyed the crowd before noting that the Rotunda was "packed up to the rafters. It underscores how important this bill is and what a phenomenal accomplishment it is" to get it approved unanimously by both houses of the Legislature.

Pension reform was the last bill passed in both bodies (131-0 in the House and 67-0 to concur in the Senate) on the final day of this year's regular legislative session.

“Hard working Minnesotans who have dedicated their lives and careers to serving our state deserve the security of retirement benefits they have rightly earned,” said Gov. Dayton. “This bipartisan legislation stabilizes pension benefits for 511,000 workers, retirees and their families. I thank members of the pension commission, legislators and my terrific MMB Commissioner Myron Frans for securing the bipartisan enactment of these essential reforms.”

In the photo on the right, MAPE Statewide President Chet Jorgenson (left) poses with Gov. Dayton following the signing of the pension reform bill Thursday in St. Paul.

"... Public employees provide services that impact every single person in Minnesota,” said Management and Budget Commissioner Myron Frans. “This session, the governor and the Legislature took a stand in support of these dedicated public servants, approving state contracts and passing meaningful pension reform. Not only will the pension reform signed today ensure all public employees are supported in their retirement, it reinforces Minnesota’s solid fiscal foundation and furthers Governor Dayton’s brand of sound fiscal management.”

In the photo on the right, Gov. Dayton (right) thanks Rep. Tim O'Driscoll (far left) and Sen. Julie Rosen (center) for their work getting the pension reform bill approved by the Legislature.

Pension reform immediately reduces unfunded liability of Minnesota pension funds by more than $3 billion and saves $6 billion in future costs, ensuring full funding of nearly all plans at the end of the amortization period. Reforms for Minnesota State Retirement System general and correctional plans include:

• Elimination of subsidies in the calculation of early retirement benefits.
• Changes in actuarial assumptions for investment rate of return from 8 to 7.5 percent.
• Elimination of deferred augmentation or interest paid to a retiree who postpones retirement benefits until a later age.
• Elimination of COLA until a retiree reaches normal retirement age.
• Reduce COLAs for retirees from 2 percent to 1 percent for five years and 1.5 percent thereafter.
• Contribution increases of .25 percent in FY2019 (July 1, 2018) and in FY2020 (July 1, 2019) for employees and .375 percent each of the two years for employers. Correctional plan employees will see a .5 percent increase while the employer will experience a 6 percent increase spread over the next four years.
• Resetting the amortization period to 2048.

For a listing of retirement benefits by county, go here: Retirement benefits by county