Public Employees Retirement Association of Minnesota

Police&

Fire Fund

Statistical Data

PERA also administers a Defined Contribution Plan with approximately 6,200 members.

WE recently started a Statewide Volunteer Firefighter Plan for Volunteer Fire Departments OR Relief Associations.

Coordinated P&F Correctional

Active Members 143,353 11,035 3,715Deferred Members* 164,823 2,191 3,208Benefit Recipients 66,059 7,362 386

Total 374,235 20,588 7,309

Grand Total 402,132

Benefit History

Retirement Early Ret. Year Formula Reduction

1989-1993 2.50%/yr. Actuarial (4.5%/yr.)

1993-1997 2.65%/yr.

1995-1999 2.4%/yr.

1997- 3 %/yr.

1999- 3 %/yr. 1.2%/yr.

Post June of 2007 3%/yr. 2.4%/yr.

Entering/or reinstated

2010 Legislative changes Vesting changes & contribution changes

2010 Legislative changes • Reduce P&F retiree pension increases from 2.5% to 1% for 2011

and 2012 – then 1.5% until 90% funded - triggering to inflation up to 2.5 percent

• Total 0.5% contribution increase split between employer 3% and P&F member 2% starting 1/1/2011

• Decrease the interest on refunds from 6% to 4% 7/1/2011• Move to 5-year vesting for new Coordinated Plan members 7/1/2011• Move to 50% vesting for new P&F and Correctional members

after 5 years; add 10% each year - full vesting after 10 years – beginning 7/1/2010.

• Deferred pensions grow at 1% per year beginning in 2012• Eliminating 6% interest earned on escrow accounts of retirees who

exceed PERA’s earnings limits. 1/1/2011

WHAT is the FUNDING LEVEL?

The official actuarial levels are only calculated once a year. They smooth the gains/losses over 5 years. Our investment return for 2010 was 15.2%.

FY2009 FY2010• For P&F 83.2% 87%

By using straight Market Value (not actuarial), we can estimate our best guess.

FY2009 FY2010 2011 Projected• For P&F 63.6% 74.7% 84%

(Unfunded liability today: $1.5 billion (shortfall between assets and liabilities.)

There are several well-funded organizations which will be in the news a lot this year as they rally against pensions at the State Legislature.

Your Contributions Today

Current P&F Contribution Level

Member Employer Rate9.6% 14.4%

Total: 24% of pay

Actuaries say to keep fund healthy – we need 31% of pay.Today we have a 7% deficiency. We will continue to work

with you on solutions.

The Future:Electronic Statements

Visit us online and register for MY PERA, GO GREENrequest online newsletters and statements.

www.mnpera.orgYou can print your retirement estimate,Or project OUT your estimate on the calculator.

Building Your Pension

Your pension is built on a formula using:

Age at Retirement

Years of Service

High-5 Average Salary

See charts

Retirement Qualifications(Police & Fire)

Full Pension Age 55 with 3 years of service (10 years after 7/1/2010) Age 65 or older with at least 1 year of service

Rule of 90 (If hired before 7/1/89)

Early Retirement Age 50 with vesting of 3 years of service (10 after 7/1/2010) Pre-7/07 = 0.1% reductionfor each month under age 55; or 1.2 % per year

Post-6/07 = 0.2% reduction for each month under age 55;

Or 2.4 % per year

Retirement Calculation (Police & Fire)

3% X Each Year of ServiceX

High 5 Average Salary=

Annual Pension Amount

Is early retirement for you?Calculation Example (Police & Fire)

Age: 50 Service: 25 Yrs. Avg. Hi-5 Salary: $50,000

3% X 25 yrs. = 75%

75% x $35,000 = $37,500/yr. or $3,125/mo.

Post and Pre 07 Reduction: 2.4% X 5 yrs. = 12% 1.2 X 5 yrs. = 6% 12% X $3,125 = $375 6% X 3,125 = 187.50

Monthly Pension: $3,125 $3,125 - 375 -187.50 $2,750 $2,937.50

See Charts – reduction based on start date

Combined Service

Service in your PERA plan can be combinedwith service under 14 other MN plans

Pension from PERA

Pension from other retirement plan

Both benefits based on high-5 salary (no matter when credit earned)

What’s the payback?

First 2-3 yearsThe rest of your lifeNext 5-7

Years

You get all your contributions back

You get all of your employers

contributions back

The rest of your life, your pension is being

paid by the investments earned…..

Benefit Options

* Survivor may not be more than 10 years younger for the 100% or 19 years younger for the 75% options if other than spouse.

Single-life 100% $2,188 $ 0 25% 96% $2,091 $ 523

50% 92% $2,002 $1,001

75%* 88% $1,920 $1,440

100%* 84% $1,845 $1,845

% Member (55) Survivor(52)

Refunds

Take the $ and run! Contributions + 6% Interest

- 20% Federal Withholding

- 10% Federal Penalty

(until age 59½ if leave before 55)

$

If someone wants a refund, we encourage a Direct Rollover Then there is No Withholding No Penalty

Total Repayment (Lump sum) Must return to public service minimum 6 mos. Refund + 8.5% interest compounded annually

Partial Repayment Must be active public employee Refund must cover at least 2 yrs. service Repayment must be at least 1/3 of refund you received

Repaying a Refund

You may use deferred comp, an IRA or 401K to roll over and purchase your service credits.

Disability Benefits (Download info. From Web)

Unable to obtain ANY gainful work because of disability resulting from hazardous activities specific to occupation, like protection of property and personal safety of others

No minimum servicerequirement

Minimum Benefit:60% of average salary over high five years

If over 20 years,3% increase for each additional year

Can be any disability resulting in activities or illness not related to the protection of property or personal safety of others.

1 year service required

Minimum Benefit:45% of average salaryover high five years

If over 15 years,3% increase for each additional year

Duty Disability Regular Disability

More on Disability

Benefit OptionsSame as retirement – single life, 25%, 50%, 75% and 100% Survivor

Options(No automatic Survivor Option EXCEPT total and permanent

disability.

Conversion:Disability becomes a retirement benefit at age 55 or 60 after

approval

We’ve closed the gap on much of the disability misuse/over-use

Survivor Benefits (Download info from PERA web)

100% option pension payable to spouse if member reaches age 50 with 3 or more years of service or any age with 30 years of service

OR50% of average salary of last six months for spouse and 10% for each child

OR

Refund of member deductions plus 6% Interest (Maximum monthly family benefit is 70% of average salary)

Post Retirement IncreasesYou will receive an increase on your retirement pension each year. Your first raise is pro-rated.

2010 Pension reform changes affected your raises in retirement:

Reduce P&F retiree pension increases from 2.5% to 1% for 2011 and 2012 – then 1.5% until 90% funded - triggering to inflation up to 2.5 percent

Limit $14,160 $37,680 No limit

Reduction* $1 for every $2 over or suspension of benefit

* PERA places reduction in escrow, and that money is available after one year.

Earnings Limits for 2011*

Earnings limits on pension only apply if you return to PERA-covered employment

Annual Limit in 2010

Year you turn full retirement

age (66)

After full retirement

age

Taxes

Most, if not all, of your PERApension is taxable income.If you were hired after Dec. 31, 1983, your entire benefit is taxable

If you were a member prior to 1983, you will receive your after-tax contributions back over your estimated lifetime, or the estimated lifetime of both you and your survivor. (1099R issued in Jan.)

Insurance Premium Withholding

• Allows $3000 in federally tax free premium payments

• Those eligible are: Police and Fire members; Correctional members, Ambulance Personnel, Parole and probation personnel, AND judges.

• Must be of age for a FULL retirement benefit (age 55 for P&F, or rule of 90) or receiving a disability benefit.

Applying for Retirement – 30 day break

Required DocumentsProof of age*

Proof of name change* * If choosing survivor

option, PERA needs

same info. for survivor

Apply for RetirementChoose option

Signed by member & spouse

Termination Verification

Sent to member before retirement

Filled out by employer

Meet with PERA Counselor

Review pension estimates

Discuss benefit options

Retirement effective on the first of month following termination

PERA Office

Headquarters in St. PaulWith branch

offices inDuluth and Mankato

Questions?