S.F. 2573 Summary

• Increased vesting requirements: Changes service credit requirements from 3 years to 5 years for employees hired after June 30, 2010 across multiple retirement plans (MSRS, PERA, TRA, State Patrol, correctional employees).

• Reduced postretirement adjustments: Lowers annual benefit increases from 2.5% to 2% for state plans, 1% for PERA general employees (until funding stabilizes), and suspends increases for Teachers Retirement Association (2011-2012) and St. Paul Teachers Retirement Fund (2011).

• Increased employee and employer contributions: Raises contribution rates across retirement systems, with phased increases for Teachers Retirement Association (9% to 11% for basic members) and PERA coordinated members (6% to 6.25%).

• Reduced interest rates and augmentation: Decreases interest rates on refunds and deferred annuity augmentation from 6% to 4% after July 1, 2011; eliminates interest on reemployed annuitant earnings limitation accounts.

• Extended amortization periods: Pushes back full funding dates for several pension plans (general state employees to 2040, correctional state employees to 2038) to spread unfunded liability costs over longer periods.