2025 Legislative Update
The Minnesota legislature approved the 2025 Pension and Retirement Bill, Senate File 2884, and Governor Walz signed the bill on May 23, 2025. The bill includes several changes to PERA plans.
Annual Increases
The 2025 Pension and Retirement Bill changes annual increases for several benefit recipients:
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Coordinated, Basic, and MERF Benefit Recipients. Starting in January 2026, eligible recipients will receive 100% of the Consumer Price Index (CPI) that the Social Security Administration uses, with a minimum annual increase of 1% and a maximum of 1.75%. If the plan’s funding status is less than 85% for two years or less than 80% for one year, the bill reduces the maximum annual increase from 1.75% to 1.5%. The maximum annual increase would return to 1.75% when the plan’s funding improves. As of June 30, 2024, the plan’s funding status is 89.1%.
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Police & Fire Benefit Recipients. To receive their first annual increase, eligible recipients must complete a waiting period of 19–30 months. Previously, recipients waited 31–42 months. In addition, recipients who started benefits on or before January 1, 2025 will receive a 3% increase in 2026. The annual increase will be 1% in 2027 and future years for eligible recipients.
New Working Group for Probation Officers and 911 Telecommunicators
The bill established a working group to consider a new retirement plan for public safety-adjacent positions, such as probation officers and 911 telecommunicators. This working group must complete their recommendation by January 2026.
Privatization Withdrawal Liability
Effective July 1, 2027, future privatizing entities will be assessed a withdrawal liability that covers the entity’s unfunded liability.
Amortization Methodology
The bill implemented better amortization methodology for all Minnesota public pension plans. This policy change makes pension costs more transparent and will improve intergenerational equity.
State Aid
The Police & Fire Plan will receive $17.7 million in direct State aid each year until July 1, 2048. The bill extends the direct State aid to the Police & Fire Plan until the plan is 110% funded for three consecutive years.
Other Administrative Changes
The bill makes several administrative changes, including:
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Membership Salary Threshold. The bill clarifies that defined benefit plan membership is mandatory from the date of hire for employees who are expected to earn more than $425 in a month. This means that all full-time and most part-time employees must be enrolled immediately.
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Correctional Duty Disability. The bill provides additional clarification about the multiplier in the benefit calculation for members who have more than 25 years of service.
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Refunds. The bill clarifies that a member’s right to a refund does not expire.
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Elected Public Officials. The bill amends language so that the 30-day period to elect optional coverage begins when an individual takes office, rather than the date they are elected.
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Membership Election. The bill clarifies the 30-day period for certain membership elections and the timeline to submit the applicable election form.
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Psychological Treatment Requirement. The bill expands the psychological treatment requirement to allow members of the Police & Fire Plan with a psychological condition who can maintain full-time or part-time work to apply for the treatment requirement. In addition, the bill amends administrative components.
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SVF Defined Contribution Plan (DCP). The bill clarifies language about the new SVF DCP, incorporating new defined terms, and adding missing language.
We are in the process of updating our website and publication materials with these changes.
As part of the legislation passed during the 2024 session, effective July 1, 2025:
- The Correctional Plan multiplier increased from 1.9% to 2.2% for service credit earned on or after July 1, 2025. The multiplier for service earned before July 1, 2025 is 1.9%.
- Employer contributions for the Correctional Plan increased 1.5%, from 8.75% to 10.25%.
- Employee contributions for the Correctional Plan increased 1%, from 5.83% to 6.83%.
These changes do not impact Correctional members who currently receive benefits from the plan or members who terminated employment and deferred their benefit.
Are you considering returning to Minnesota public service after you retire?
To return to work in a Minnesota public service position after retirement, you must terminate from all Minnesota public service, apply for PERA benefits, and cannot return to work until after your benefit effective date. If you return to work in Minnesota public service without meeting these requirements, your PERA benefit may be delayed or canceled.
Learn more about PERA’s termination requirements to ensure your retirement benefit begins on time:
Termination Requirements
To be eligible for a lifetime monthly benefit, you must meet PERA’s termination requirements:
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You must officially separate from all Minnesota public employment.
- Termination means that you separate, retire, resign, or are dismissed from your public position and are no longer considered employed with that entity (or entities).
- Public service includes employment at schools, townships, cities, counties, joint power agencies, and state agencies in Minnesota. Public service includes any jobs that pay into the Minnesota State Retirement System, the Teacher’s Retirement Association, or the St. Paul Teacher’s Retirement Fund Association.
- Public service does not include federal agencies, public positions outside Minnesota, or private sector employment.
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You cannot have a verbal or written agreement to return to Minnesota public service before you terminate public service.
- You cannot accept a new employment offer in Minnesota public service before you have terminated your current position.
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You must remain out of all Minnesota public service for 30 days.
- Depending on application processing, you may receive your first benefit payment before the end of your 30-day separation. However, receiving your first payment does not mean you have completed the 30-day separation.
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You cannot return to Minnesota public service on or before your benefit effective date.
- If you return to Minnesota public service on or before your benefit effective date, you are considered a public employee again and must re-meet termination requirements to collect your benefit.
- You cannot return to Minnesota public service on or before your benefit effective date, even if you remained out of public service for 30 days.
Applying for Benefits
To apply for monthly benefits, you must submit a valid Retirement Application and other necessary paperwork. All application documents must be properly completed, notarized, and sent in to PERA. We highly recommend you start the application process 60–90 days before retirement. Learn more on our Apply for Retirement page at mnpera.org
Working After Retirement Scenarios
Learn how working after retirement can impact your benefit payment in the scenarios below:
Scenario 1
You retire on June 4 and want to begin your PERA benefit immediately. You send PERA a valid Retirement Application with a benefit effective date of July 1.
You can return to work in Minnesota public service 30 days after the termination date. Since your termination date is June 4, you can return to work 30 days later, on July 4.
Scenario 2
You retire on June 4 but decide to defer your PERA benefit. You send PERA a valid Retirement Application with a benefit effective date of October 1.
To meet PERA’s termination requirements, you cannot return to Minnesota public service until after your benefit effective date. Your termination date is June 4, and your benefit effective date is October 1. The earliest you can return to public service is October 2, even though October 2 is more than 30 days after you termination date.
If you return to Minnesota public service before October 2, your Retirement Application will become invalid because you returned to work before your benefit effective date. To receive benefits, you would have to terminate the new position and redo the retirement process.
Scenario 3
You retire on June 4 and want to start your PERA benefit on July 1. However, you file your paperwork late and complete the application process on December 15 with a benefit effective date of July 1.
PERA can pay up to five months retroactively after receiving your completed application and required documents. If you did not return to Minnesota public service before December 15, you can receive benefits back to July 1.
If you did return to public service before December 15, to receive benefit payments, you would have to terminate the new position and redo the retirement process.
Learn More
You can learn more about returning to work, including potential earnings limits, on our Working After Retirement page at mnpera.org.
The Minnesota State Board of Investment (SBI) is responsible for the asset management of PERA’s retirement plans. Every quarter, SBI publishes the Comprehensive Performance Report, which provides performance data for all asset classes under SBI management.
Visit our Investments page at mnpera.org for an overview of plan investment information. Or, you can visit SBI’s website directly at msbi.us for additional information.
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