2024 MN Legislative Update and How It Affects Your Teacher Pension
Another Minnesota legislative session is upon us, and it seems it's going to be ANOTHER major disappointment for Minnesota's Tier 2 teachers. Minnesota has an every other year bonding cycle, so this year is not a year for adding much in new monies. This meant it was always a long shot to get meaningful reform this year. After yesterday's Legislative Commission on Pension Reform meeting, the only change to TRA pension was to move the change from Normal Retirement Age (NRA) of 66 to 65 from starting in 2025 to 2024. This is "technically" an improvement, but not really and here's why...
The movement of NRA is the most expensive improvement that can be made to the pension, but hey, at least we can now say we have the same NRA as our neighboring states. What Tier 2 teachers are really lacking are career and mid-career rules. Currently, the legislature and TRA are considering teaching until 65 a "career". I've known a few teachers in my 20+ years of teaching that did teach until their mid-60s. I even knew one that stayed into their 70s. The difference is that they were there because they wanted to be. Contrast that with a school filled with teachers in their early to mid-60s who HAVE to be there or they lose 20-30% of their pension. It will NOT be an ideal situation for students. I know that I have gotten more cynical as I've gotten older. I wonder how cynical I'll be after 15 more years in the classroom!
Typical Staff Development Day in 2035
The only rule Tier 2 teachers currently have is 62/30. This means you can retire IF you are at least 62 years old and have taught for 30 years. You would THINK that would be considered a career, but no. You still forfeit 14% of your pension (10.4% when NRA moves to 65). None of our neighboring states penalize their teachers for putting in a FULL CAREER! In fact, St. Paul's Teacher Retirement Association got their 62/30 approved in last year's session and it took effect this year. Why can't it work for the rest of the state??
What most Tier 2 teachers are looking for is a career rule like 62/30 or even 60/30 that is penalty FREE! We also believe there is a need for a mid-career rule for someone who started teaching later in life where they can retire and still receive a penalty free pension.
It's true that the session isn't over yet, and there could be a last second Hail Mary that could make Minnesota's pension comparable with neighboring states. Maybe Ted Siedle's investigation into the handling of investments will reveal wrongdoing on the state's behalf and will force them into action. But we won't know the final picture until the last day of the session which is May 20th. Whatever happens, I will post an update at the end of the session, but until then, KEEP STACKIN!!
