What Types of Minnesota State Pensions are offered?
The Minnesota State Retirement Plan is the largest provider of retirement programs in the state. Within the program state employees will find ten programs available to choose from depending on the type of employment and other choices made by the individual. Separate benefits are available for public teachers not covered under the main state program as well. Employees that will find a specific retirement plan covered under the MSRS plans include:
- Legislators– 5% contribution from employee
- Transportation Department: Pilots Plan– 5% employee contribution
- Military Affairs Retirement Plan– 6.6% employee contribution rate
- Fire Marshals Retirement Plan– 6/78% contribution for employees
- General Employees including general state employees, civil service employees for the University of Minnesota, Metro council, specific judges, public safety personnel, inmate care personnel, elected officials, and any employee not covered under specific plans. This is mandatory enrollment and employer and employee both contribute 5% to the retirement fund.
- Correctional Employee Plan– employee contributions are 8.6%
- Judges– 8% employee contribution
- State Patrol– employees contribute 10.40% if employed before July 1, 2009 and 12.40% if enrolled after July 1, 2011
- Unclassified Plan is for elected officials or generally anyone elected to a state position. Other forms of employment may also fall under unclassified benefits. Employee contributions are 5% of gross salary
- Health Care Savings Plan is employer determined and if elected for employees, contributions come from the employer and the amount contributed to this program is determined in the employer contract. This program is not necessarily a permanent arrangement.
- The Deferred Compensation Plan is an additional option for investments towards retirement for state employees. The rates in which employees contribute is based on a number of factors including which investment to make but in general contributions range from 0.08% to .25%
Separate from the main state plan is the Teachers Retirement Association plan or TRA that covers public school, University and Community College teachers. Member contributions are determined by enrollment in the program. Those employed on July 1, 2012 pay 6.5%, July 1, 2013 7% and July1, 2014 will see an increase to 7.5%. Employers also match employee contributions in percentage.
Vesting periods and Retirement Descriptions for individual plans
Some general aspects of each retirement plan under the MSRS program are the same for each type while some other aspects differ, particularly when it comes to eligible retirement ages due to the nature of some types of work. In specific types of employment, retirement at a later age can actually affect an employees ability to perform functions and become dangerous for example those in corrections, pilots, and law enforcement officers. Any plans not listed separately under following information follows the same guidelines as General Employee Plans. The follow are the vesting periods for each type of employment:
General Employees- Benefits are calculated based on Length of service and average highest five years consecutive annual salary. Years of service are converted into a percentage, allotting 1.70% for each year of credited service. Full retirement age is 66 years old and reduced benefits can be taken beginning at age 55. Social security payouts and health care plans do not affect the amount of coverage under this plan.
- Those hired before July 1, 1989 may retire at age 65 or if the employees age and years of service combined total 90. Maximum years credited for benefits are 25 years of service.
- Those hired after July 1, 1989 may retire at age 66 or when 25 years of service have been completed with full benefits. Reduced benefit retirement begins at age 55
Vesting begins after five years of credible service.
- The Judges Retirement system and Fire Marshals are the same as the general employees.
- Correctional Officers and State Patrol Plans– Most information is similar to general employees except that employees are vested after three years of service credit and may begin full benefits after reaching age 55 or after reaching the 25 years of service maximum. Reduced benefits begin at age 50.
- Unclassified Retirement Plan– Benefit calculations are the same as general employees but the employee may take retirement with full benefits at age 55, with reduced benefits available starting at age 50.
- Legislators may retire with full benefits at age 63 and reduced benefits beginning at age 55.
- Transportation Pilots and Military Employees have mandatory early retirement. Full benefits begin after employee reaches age 55 and has 3 years vested service. Full benefits may also be taken if the employee’s age and years of service equal 90. Reduced benefits can be taken at any age once the employee reaches 30 years of service.
The TRA retirement program has a vesting period of 3 years for employees though membership begins on the first day of employment. Disability benefits are available within this retirement program although benefits will vary depending on whether vesting years have been reached. Also included in the package are survivor benefits. Full benefit retirement begins at age 55 with minimum vesting years reached. Benefit qualifications depend on hire dates:
- Before July 1, 1989- age 65 with les than 30 years service credit or age 62 with 30 or more years may take full retirement benefits
- After July 1, 1989- Normal retirement age depends on age and year of birth but in general follows the same rules as those hired before July 1, 1989
Each type of retirement plan including those enrolled in the TRS program has additional benefits included in their plans. One of the most important plan options available is the ability to purchase additional service credits to be counted towards retirement calculations. If an employee has 10 years of vested service and purchases an additional 5 years, then the final calculation will amount to 15 years factored service credits. The type of credits available for purchase are plan specific and using the handbooks offered, employees can determine which is right for them. Other additional benefits include:
Disability- temporary and retirement disability are offered in most retirement plans. Employees must meet plan specific qualifications for each but in general, temporary disability is available at any time through employment while retirement disability requires the plan vesting minimum to be reached.
Survivor Benefits are included in the retirement benefits packages for each type of employment plan. The survivor payouts upon death of employee depend on the specific plan and chosen options in some cases.