Minnesota reviews privatization rules for Public Employees Retirement Association

On April 9, 2025, the Minnesota State Legislature introduced Senate Bill 3355, a significant piece of legislation aimed at reforming the privatization process for public employees' retirement plans. This bill seeks to address the financial implications of privatization on the Public Employees Retirement Association (PERA) and ensure transparency in the management of retirement funds.

The primary purpose of Senate Bill 3355 is to establish clear guidelines for the approval of privatizations based on actuarial calculations. If these calculations indicate a potential net gain for the general employees' retirement plan, the executive director of PERA is mandated to maintain detailed records of the consulting actuary's findings. These records must be made publicly accessible and shared with key legislative bodies, including the Legislative Commission on Pensions and Retirement and relevant committees in both the House and Senate.

Conversely, if the actuarial calculations suggest a net loss, the bill stipulates that privatization can still be approved if the governing body of the affected governmental subdivision commits to making a lump sum payment to PERA, covering the net loss plus interest. This provision aims to safeguard the financial integrity of the retirement system while allowing for necessary privatizations.

A notable aspect of the bill is its requirement for PERA to maintain a comprehensive list of all privatized former public employers, including details on withdrawal liabilities. This transparency measure is set to take effect by July 1, 2027, ensuring ongoing accountability in the management of retirement funds.

The introduction of Senate Bill 3355 has sparked discussions among lawmakers and stakeholders regarding its potential economic and social implications. Proponents argue that the bill will enhance the sustainability of public retirement systems while providing flexibility for governmental entities to privatize services. However, critics express concerns about the risks associated with privatization, particularly regarding the long-term security of retirement benefits for former public employees.

As the bill progresses through the legislative process, its implications for public sector employees and the broader retirement landscape in Minnesota will be closely monitored. The outcome of this legislation could set a precedent for how privatization is approached in the future, balancing the need for fiscal responsibility with the protection of employee benefits.