That’s a Good Question!

Submit questions to, info@sptrfa.org.
Good Question

SPTRFA Member Estimates and final average salary.
Does my SPTRFA member estimate include monthly benefits for other non-SPTRFA Minnesota Public Pension Plans which I contributed to?

No. The SPTRFA member estimate only reflects your monthly SPTRFA estimated benefit.
If you have service with another Minnesota public pension plan, your monthly benefit with that plan will be determined and calculated by that plan. The service credit you have with the other Minnesota public pension plan is used in the benefit calculation to determine the SPTRFA member estimate. The estimate assumes you qualify for Combined Service Annuity (CSA) at the time of retirement; for more information on CSA read below.

Combined Service Annuity authorizes allowable retirement service credit and salary from any Minnesota Public defined benefit plan to be considered jointly at the time of retirement when determining eligibility and level of benefits.

How is my ‘Final average salary’ calculated?
Final Average Salary (FAS) is determined by the average of the highest five successive years of salary. This does not mean that your final average salary will occur in your final years of employment. FAS may occur at any point during your career with St. Paul Public Schools.

If you are a deferred SPTRFA member no longer working with SPPS but are contributing to another Minnesota public pension plan, your FAS will be provided by that Minnesota public pension plan to SPTRFA. Your FAS will be determined using the Minnesota Combined Service Annuity law.


Tier I and Tier II, Rule of 90, and Requesting Benefit Estimates.
My Annual Statement has Tier I and Tier II amounts on it, what does this mean?

If your statement shows two Tier amounts this indicates that you were first hired before July 1, 1989. Each Tier has a different method for calculating your benefit amount. At the time you start to draw your benefit you will be eligible to receive the higher benefit calculation in either Tier I or Tier II.

I hear a lot about the Rule of 90, what does that mean?
Rule of 90 is available for members who were first hired before July 1, 1989. The Rule of 90 is in the Tier I benefit calculation. The Rule of 90 eliminates the early retirement reduction when your age plus years of service are equal to or greater than 90. For members first hired after July 1, 1989, you are eligible for the Tier II benefit calculation only and the Rule of 90 does not apply.

May I request an estimate of my benefits if I am younger than 40?
Yes, you may request an estimate of your benefits online on our website at, www.sptrfa.org. Click on the link, “Request a Benefit Estimate.” Our goal is to provide you with an estimate within 6 – 8 weeks of your request. If you have special circumstances which require a more expedited response, please note this with your request and a member of our benefits team will contact you directly.


To Merge or Not to Merge?
Why did SPTRFA not choose to join the PERA (Public Employee) or TRA?

PERA (Public Employees Retirement Association of MN) serves current and former public employees from over 2,000 local units of government throughout the state of Minnesota, this plan does not include Minnesota licensed teachers. SPPS employees covered under PERA include TA’s and EA’s.

After studying the merits of joining the State’s TRA (Teachers Retirement Association), the SPTRFA Trustees opted to remain a separate organization at this time based on a variety of considerations, one of which is COST. To merge would cost State taxpayers nearly 6 times the price tag of the status quo.

There were other important considerations. Based on what is known at this time, there is, overall, too much uncertainty and potentially negative impact to members in merging. Our members (active and retired) have experienced major changes in contributions and Plan operations to strengthen the Plan. Our actuary, Gabriel, Roeder, Smith & Company, says, once all current changes are fully in place, the Plan will be on a path of funding sufficiency, if assumptions are realized. To merge with TRA, which is staring at a major funding shortfall of over $5 billion, runs the risk that members could merge and then be faced with further contribution increases and benefit cuts.
Read More.


Why am I mailed a Statement of Account/Estimate, with my earnings, contributions and service reported through “June 30”?
And why do I not get this information until six months later?

June 30th is the end of our fiscal year. The State of Minnesota audits our financials and this process is not complete until December. Waiting until the finalization of our audit to mail out your account details ensures that you are receiving the correct information.

Why can’t the Plan deposit the monthly annuity benefit such that it is credited on the First of each month rather than on the first Business Day of the month?
The Plan’s Master Custodian is US Bank, here in St. Paul. Benefit payments are issued electronically through direct deposit (ACH). Operationally, US Bank is open Monday through Friday. It is unable to credit accounts or undertake any business in member accounts when the bank is closed for business, which includes holidays. Each month, in which the “First” falls on a Monday through Friday, your benefit check is credited, through direct deposit, on that date. This generally occurs eight or nine months of any year. However, when the first day of the month falls on a Saturday or Sunday, the benefit payment is deposited the following Monday, which could be the second or third calendar day. The Board is aware that spread over a year’s time, this may result in the loss of five to six days of interest. The Board has reviewed this matter and believes the present system of payment on the first business day of each month should not be changed and best complies with State statute. Read More.

 

Why does my projected benefit estimate continue to change?
There are two reasons you may notice a change. Firstly, estimates were at one time projected on future salary increase assumptions of 3.5%. Currently we use a 1.0% increase which reflects the actual contracted salary increase. Secondly, the new Early Retirement Factors (ERF) approved and signed by the Governor on May 23, 2013, became effective on and after 7-1-2013. The ERF adjusted benefit amounts in favor of career teachers who retire after 62 with 30 or more years of service.

 

Why is SPTRFA changing the reduction for early retirement benefits?
Legislation that was accepted by the 2013 legislature mandated that SPTRFA make these changes to early retirement benefit calculations. Every four years SPTRFA’s actuaries perform an extensive review of the assumptions used to estimate funded status and the liabilities associated with member benefits. The most recent assumption review, called an experience study, required a change in early-retirement reductions based on SPTRFA participants living longer lives than in the past. This means that if a member chooses to begin drawing a benefit early, before normal retirement age, the benefit must be reduced sufficiently to recognize that the individual is expected to receive the lifetime benefit for a longer period of time. Rule of 90 not affected by new early-retirement calculations. Read More.

Please note that our office has recently relocated and our new address is: 2550 University Ave W STE 312 N Saint Paul, MN 55114.

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