State Senator Julie Rosen (R-Vernon Center), chair of the Commission on Pensions and Retirement, celebrated the signing by Gov. Mark Dayton of a landmark overhaul of Minnesota’s public pension system. Senator Rosen spent several years working on the reforms, which will close the unfunded liability gap in Minnesota’s public pensions.

The overhaul will save Minnesota $6.1 billion over a 30-year period, $3.4 billion of which is immediate savings, through a series of benefit reforms, increases to employer and employee contributions, modifications to retiree cost of living adjustments, and some state funding.

“Minnesota has one of the highest unfunded liability gaps in the country,” said Senator Rosen. “We made a commitment to our valuable, hardworking state employees, without these reforms we were at risk of not being able to honor that commitment. Today we guaranteed the solvency of every pension fund for the foreseeable future, while creating significant taxpayer savings in the process.”

“It’s truly a testament to what we can get done if we work together,” added Senator Rosen. “The only way we were able to reach this agreement is through shared sacrifice and compromise by everyone involved.”

The bill includes the following notable reforms and benefit changes.

• Reduces the investment rate of return to 7.5% to more accurately reflect market returns.
• Lowers the plans liabilities by eliminating COLA triggers, which automatically increase the COLA if a certain funding level is reached.
• Removes an automatic benefit increase for public employees who leave public service.
• Modifies early retirement benefits to reflect the contributions not made by the individual as a result of early retirement.
• Defers COLAs until normal retirement age (66) for those who retire after 2023.
• Reduces plan liabilities by adjusting retiree COLAs.
• Asks employees and employers to make small contribution increases, depending on the plan.