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State pension reforms

An Associated Press article that appeared in the Dispatch

stated that Minnesota’s public pension plans are “worse off than they

were” before sustainability legislation was enacted in 2010. This claim

is incorrect.

The numbers

used in the article to back up this claim average gain and loss

experiences of the funds over five years. Since only two years have

passed since the 2010 pension reforms, it is highly misleading to cite

these numbers and build a case that the funds are worse off.


fact, on a market — or real — value basis, the Minnesota State

Retirement System (MSRS) General Plan has improved from 65.6 percent

funded in 2009 to 82 percent funded in 2012, thanks in large part to

the 2010 reforms. The Public Employees Retirement Association (PERA)

General Plan went from 53.8 percent funded in 2009 to 73 percent funded

in 2012. And the Teachers Retirement Association (TRA) went from 59.8

percent funded in 2009 to 72.5 percent funded in 2012. In total, the

2010 reforms reduced benefit liabilities for the pension funds by $5.9


The article

unfairly cherry-picked a particularly bad investment return year to

create the wrong impression about the period following the 2010

reforms. The article stated that the State Board of Investment “saw

only a 1.5 percent rate of return” in 2011. True enough. But SBI also

returned 14.4 percent in 2010 and 13.7 percent in 2012, facts that the

article omitted. Since 1980, the SBI has returned an average of 9.9

percent per year, placing it in the top third among institutional

investors nationwide.


boards of directors, executives and stakeholders of the three statewide

retirement systems continually monitor the funds’ health and have a

history of recommending proactive reforms that the state legislature

has adopted in a bipartisan manner to ensure financial stability.

Skewed stories such as these do a disservice to our 729,000 active and

retired members as well as taxpayers.

Laurie Fiori Hacking, executive director, TRA

Dave Bergstrom, executive director, MSRS

Mary Most Vanek, executive director, PERA