Public Employees Retirement Association statewide volunteer firefighter plan; defined contribution plan added, frequency of funding requirement determinations reduced, firefighters with previous service allowed to request service credit for vesting purposes, and other technical and administrative changes made.
Impact
In essence, HF5039 reflects a broader trend towards prefunding retirement benefits for volunteer firefighters and improving financial stability within the PERA framework. It allows firefighters with previous service to count that time towards their service credit for vesting purposes, which can enhance the benefits available to them upon retirement. However, the change to a defined contribution structure might generate concerns regarding the predictability of retirement income for future beneficiaries. Opponents argue that such a move could lead to less secure retirement benefits, while proponents believe it aligns the retirement system more closely with contemporary expectations of employee retirement planning.
Summary
House File 5039 proposes significant changes to the retirement system for volunteer firefighters in Minnesota, specifically focusing on the Public Employees Retirement Association (PERA). The bill introduces a defined contribution plan alongside the existing defined benefit plan, allowing volunteer firefighters to accumulate retirement benefits based on individual account balances rather than a traditional pension system. This shift aims to modernize the retirement benefits structure and provide more flexibility for participants as they plan for retirement. The defined contribution plan would be effective starting January 1, 2025, and incorporates various methodologies to determine funding requirements, including a shift from annual to biennial assessments.
Contention
Key contentious issues that have surfaced during deliberations include the balance between fiscal sustainability of the retirement plans and the adequacy of benefits for volunteer firefighters. With the introduction of defined contribution plans, there are concerns regarding investment risks and reliance on market performance, which differ from the guaranteed income stream associated with defined benefit plans. Additionally, stakeholders have discussed the potential ramifications for volunteer firefighters adversely affected by the switch, including those who may not have sufficient knowledge about managing their retirement investments, thereby underscoring the importance of education and awareness around these new tools.
Public Employees Retirement Association statewide volunteer firefighter plan service counted in determining vesting in a retirement benefit modification
Public Employees Retirement Association statewide volunteer firefighter plan provisions modified, and service counted modified in determining vesting in a retirement benefit.
Statewide volunteer firefighter retirement plan; requirements applicable to relief association after affiliated fire department joins statewide volunteer firefighter retirement plan amended.
State auditor's volunteer firefighter working group recommendations implemented, volunteer firefighters relief associations governing provisions modified, and conforming changes made.
State Auditor's volunteer firefighter working group recommendations; volunteer firefighters relief association provisions amended, and conforming changes made.
Mid-year effective date for joining Public Employees Retirement Association statewide volunteer firefighter plan provided for Hamel Volunteer Fire Department Relief Association and Loretto Firefighters Relief Association, and Public Employees Retirement Association authorized to merge assets and liabilities related to retirement benefits for merged firefighters.
Mid-year effective date provision for joining the Public Employees Retirement Association statewide volunteer firefighter plan for the Hamel Volunteer Fire Department Relief Association and the Loretto Firefighters Relief Association
State Auditor's volunteer firefighter working group recommendations; volunteer firefighters relief association provisions amended, and conforming changes made.