The contributions will be phased in beginning with a jump from the current 5 1/2% to 6% in 2006 followed by increases of 0.25 percentage points in four subsequent years, the newspaper reported. The bill also increased employee contributions.
Since PERA is the major source of funding for local government pensions, it is those governments that will shoulder most of the burden for the expense, the newspaper notes.
Opponents felt the bill, passed in the final hour of the state legislature’s special session, should have been considered more thoughtfully. But, the newspaper quotes Minnesota state senator Larry Pogemiller as saying, “The idea is there’s no benefit increase [in the bill]. It’s an employee and employer increase. It gets it back on stable funding.” Pogemiller said the contribution increases were recommended by the Legislature’s Pension Commission, according to the news report.
The bursting of the dot-com stock market bubble, coupled with benefit increases, left the fund with about 77 cents in assets for every $1 in liability, according to House Republican research staff, the Star Tribune said.
Governor Tim Pawlenty said he was reviewing the bill and expected to sign it.