PERA Employer Newsletter: Spring Edition

Minnesota Public Employees Retirement Association sent this bulletin at 05/22/2024 01:00 PM CDT

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PERA NEWS: EMPLOYER EDITION

Spring Newsletter | May 2024

Articles in this newsletter:

2024 Legislative Update
Upcoming Defined Contribution Plan Changes
PERA Financial Reports
EFT Required for Most Employers as of 1/1/2025
Payroll Corrections
Ask PERA: Can I look up PERA benefit recipients in ERIS?
Employer Education

2024 Legislative Update

The Legislature approved the 2024 Pension and Retirement Policy and Supplemental Budget Bill, House File 5040, and Governor Walz signed the bill on May 15. The Bill includes the following changes to PERA plans:

Defined Contribution Plan (DCP). Effective August 1, 2024, new DCP participants must make a one-time irrevocable election within 30 days of hire. All provisions permitting different election periods are removed from statute. See the DCP article in this newsletter for more information about this upcoming change.

2025 Correctional Plan Contribution Rates Increase.The Correctional plan contribution rates increase for all pay issued on or after July 1, 2025. This is due to an increase in the plan’s benefit multiplier from 1.9% to 2.2% for any service credit earned after this date. The following rates will apply effective July 1, 2025:

Members: 6.83%
Employers: 10.25%

Police & Fire Plan Firefighter Definition. The Bill updates the definition of firefighter for plan membership purposes to include certain employees that work in fire service that are exposed to the hazards of firefighting.

Statewide Volunteer Firefighter Plan. The Bill modifies the structure of 353G, updates definitions, changes administrative requirements, and establishes a defined contribution plan.

Coordinated and Correctional Workers’ Compensation Offsets. As of January 1, 2025, Coordinated and Correctional disability benefits will no longer be reduced by workers’ compensation.

Other Administrative Changes. The Bill updates language to ensure consistency in qualification requirements and compensation across fund executive directors. The Bill also modifies provisions in Minnesota Statutes Chapter 356 relating to amortization, correction of errors, and federal compliance.

We will provide additional communication in our Summer employer newsletter. In addition, we will share specific details to impacted membership groups as we begin implementing these changes.

Upcoming Defined Contribution Plan Changes

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The PERA Defined Contribution Plan (DCP) was established in 1987 and is a defined contribution plan for local government officials, physicians, city managers, public ambulance service personnel, and other categories of employees listed under Minnesota Statutes Chapter 353D.

The DCP differs from PERA’s defined benefit plans in that the employer and employee contributions are deposited in each member’s account and invested by the Minnesota State Board of Investment. Accounts are 100% vested and can be distributed as a lump-sum payment following termination of employment. DCP members do not receive monthly pension benefits from this plan.

PERA’s tax counsel recently reviewed PERA’s DCP for federal compliance and identified areas within the plan that need to be updated to ensure the plan meets federal Internal Revenue Service (IRS) requirements.

WHAT’S CHANGING

New Hires Effective August 1, 2024, all individuals newly hired or elected to a position eligible for DCP participation must make a one-time irrevocable election within 30 days of hire. All provisions permitting individuals to make an election more than 30 days after hire or to revoke an election to participate are removed.

This change may impact:

Elected Officials
City Managers
Physicians
Public Ambulance
Volunteer Firefighters

Elected or Hired between 2/1/2024 to 7/31/2024

Individuals who were hired or took office between February 1, 2024 and July 31, 2024 will have an opportunity to make a one-time irrevocable election during the month of October 2024. This includes City Managers choosing to revoke participation in the PERA Coordinated Plan.

Elected or Hired before 2/1/2024

Individuals who were elected, hired, or appointed before February 1, 2024 and had an unlimited or revocable election period will have until July 31, 2024 to make a final irrevocable choice before the new law takes effect.

More information will be shared with employers and members throughout the summer and early fall.

PERA Financial Reports

PERA has several financial reports available. On our website’s Financial page, you can find:

2023 GASB Toolkit,
Actuarial Valuations: GASB Statements No. 67 and No. 68 Accounting and Financial Reporting for Pensions,
PERA’s Annual Comprehensive Financial Report (ACFR), and
Popular Annual Financial Report (PAFR)

EFT Required for Most Employers as of 1/1/2025

Effective January 1, 2025, all PERA employers who remit payroll taxes to the Internal Revenue Service (IRS) through their Electronic Federal Tax Payment System (EFTPS) will also be required to submit PERA contributions through Electronic Funds Transfer (EFT) instead of mailing a paper check.

Minnesota law requires employers to remit full payment of all employees’ PERA deductions and the total employer contributions within 14 calendar days of the date the employees were paid. PERA has offered employers the choice to remit payments using EFT or by paper check for many years.

EFT is a secure and convenient way for employers to send a payment directly from their bank accounts to PERA’s account without writing a check. It also provides added control for employers because you can choose the day your bank account will be debited.

There are two types of EFT— the ACH Credit method and the ACH Debit method — as follows:

ACH Debit Method - Under the ACH Debit method, you would use a special Internet system to authorize an EFT payment. The payment is then transferred between your governmental unit’s bank and PERA’s financial institution. This service is provided by a third-party payment processor whom PERA has contracted.
ACH Credit Method - The ACH Credit method allows you to generate an electronic request for transfer of funds using either your own self-developed application or the software program of a financial institution. The electronic payment request must be prepared in a specified format. Once sent to the financial institution, it generates an ACH transaction that debits your unit’s bank account and credits PERA’s account on the payment due date.

While PERA encourages EFT use for all employers, we will continue to accept paper checks from employers who do not utilize EFTPS for IRS payments. Please call PERA’s Employer Representatives to get started with the EFT process as soon as possible. The setup process can typically be completed within one business day.

Payroll Corrections

PERA allows employers to make payroll corrections on member accounts for up to 60 days from the paid date that the error occurred. Any errors that are discovered with a paid date over 60 days old will need to be corrected by PERA.

Please contact PERA if you discover a payroll error that is older than 60 days. Employers may also request PERA to make corrections for any error reported, even those within the 60 day timeframe.

If you are unsure if a correction is allowable through payroll or if PERA should help make the correction please contact PERA to inquire about how to resolve the error.

Ask PERA

Did you know you can look up PERA benefit recipients in ERIS?

When an employer hires an individual who may be a PERA annuitant, the first step is to check with PERA to determine if the individual is receiving a benefit from us. Individuals receiving a benefit from PERA are excluded from participating in a PERA Defined Benefit Plan.

The Employer Reporting and Information System (ERIS) includes a module that enables you to simply enter the Social Security Number of the individual and receive an instant message stating if a benefit is being paid to the holder of that specific SSN.

If you do not have access to ERIS, you can also get this information by calling PERA’s Employer Response Line, 651-296-3636 or 1-888-892-7372.

Individual Benefit Recipient Search for ERIS

PERA Education

Next Live Webinar: Employer Reporting

We are working on our next webinar where employers can learn how to accurately report contribution and wage data to PERA. We will share the time and date later this summer.

When: Fall 2024

Recommended for: Payroll, HR, and business managers that are new to PERA

On-Demand Employer Education Programs

PERA offers several ways for employers to learn more about PERA. To view upcoming live webinars and on-demand programs, visit our Employer Programs page at mnpera.org.

Understanding ERIS. This webinar introduces employers to the Employer Reporting and Information System (ERIS.)

Topics:

ERIS Overview: Learn about ERIS and its various uses
User Accounts: Create Administrator and Representative accounts
ERIS Menu: Navigate the different menu options
Member Enrollment: Enroll a new member and update employment statuses

Recommended for: Payroll, Human Resources and Business Managers new to PERA

Length: 30 minutes

Intro to PERA Eligibility. This webinar provides employers with an overview of basic pension eligibility and addresses questions such as:

What qualifies an employee for PERA membership?
What excludes an employee from PERA membership?
Which PERA plan should the employee be enrolled in?

Topics:

Eligibility: Learn about PERA membership eligibility rules
Monthly Salary Threshold: Understand what earnings count towards the threshold
Exclusions: Learn how the exclusion process works and which employees are excluded from PERA
Enrollment: Determine which plan to enroll employees in

Recommended for: Payroll, Human Resources and Business Managers new to PERA

Length: 30 minutes

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