Minnesota Senate Bill SF5073

Minnesota 2023-2024 Regular Session

• Introduced: 3/18/24
• Refer: 3/18/24

Caption

PERA public employees defined contribution plan electing to participate requirements modifications

Impact

The bill is expected to have a significant impact on retirement benefits for city managers, as it provides them with an option that was previously unavailable. It aims to attract individuals to city management positions by offering them a choice in their retirement planning. The onus is placed on city managers to make this election within a set timeframe after their employment begins, emphasizing individual responsibility in retirement planning. The bill also repeals certain sections of Minnesota Statutes 2022 that previously governed these retirement options, streamlining the process for city managers.

Summary

S.F. 5073 modifies the requirements for participation in the Public Employees Retirement Association (PERA) defined contribution plan, particularly affecting city managers and local government officials. It permits city managers employed by statutory and home rule cities to make a one-time, irrevocable election to exclude themselves from the general employees retirement plan of the PERA. This change allows city managers to opt out of conventional retirement benefits and instead participate in a defined contribution plan, thereby granting them more flexibility regarding their retirement savings.

Contention

Notable points of contention surrounding S.F. 5073 include concerns regarding the adequacy of retirement savings for city managers who choose this new path. Critics may argue that shifting to a defined contribution structure poses risks, as it requires individuals to manage their retirement savings and investments, potentially leading to insufficient funds later in life. Proponents, however, assert that the ability to exclude mandatory participation in a traditional pension plan allows for increased financial autonomy and potentially better retirement outcomes if managed well. The debate reflects broader discussions on public sector retirement benefits and the balance between personal choice and collective responsibility.