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PF.MSONNF.1. AND PUBLIC SAFETY COMMITTEE PROPOSED POLICIES <br />PPS-1. PENA BENEFITS, FINANCING, AND ADMINISTRATION (A) <br />The following principles should govern any changes the legislature makes in <br />PERA and the other statewide pension plans. <br />1. The League of Minnesota Cities opposes modification of the "high fi%," <br />formula. <br />The adoption in 1973 of the "high five year" benefit formula for PERA has <br />provided very adequate pension benefits for career municipal employees. Further <br />shortening of the averaging period would create windfalls for some PERA members <br />and multiply opportunities for manipulation of service and salaries to maximize <br />pension benefits witho, roporcional contributions to the fund. <br />Among all the proposals for benefit increases, the one that most threatens <br />the financial soundness of PERA and other Minnesota public pension funds, is the <br />proposal to provide health insurance to retirees paid from the pension fund. <br />Full payment would commit the taxpayers to an open ended promise to pay a cost <br />that is escalating at the rate of 15% to 20% per year even in low inflation <br />years. Partial payment would provide a font -in -the -door for partial payment. <br />Either would hamper efforts to control health care costs by making the recipient <br />responsible for a significant port.on of charges to encourage thrifty use. <br />5. <br />13- <br />