Minnesota Pension Law Reform First Baby Step

The Fight Against Tier 2 Pension

MN Educators for Pension Reform Leader Maggie Temple

The Minnesota State Legislature passed a Pension Reform Tier Two Law that decreases penalties for teachers who want to retire before 65.

A Minnesota teacher who wants to retire at 60 with 30 years experience will now only be penalized 13 percent, down from a whopping 35 percent. A MN teacher who retires at 61 with 30 years experience will be penalized now at 9 percent.

This means MN teachers who retire early will see a reduction in their pension payout.

MN teachers currently can receive their full pension at 65.

“It’s a good first step,” said MN history teacher Maggie Temple. “But the problem is if you retire at 60 there are no COLA (Cost of Living Adjustment) increases until 65. So it did not cost the state a whole lot to give what we got.”

IL teachers and all state workers under the Tier 2 Law passed in 2011 cannot retire until 67.

Temple told Second City Teachers that they wanted an unreduced pension at 60 with 30 years experience. She said they got this first pension reform bill passed from pressure that teachers are leaving the profession due to the poor pension.

“It’s helpful for people 60 and 61, but it doesn’t help teachers who went into this job as a second career or teachers who get sick,” she said. “I think they did this because they think it will shut us up, but it won’t.”

Temple is one of the leaders of the MN Educators for Pension Reform Facebook group with over 21k members. They were able to put pressure on their union and legislators to pass some type of pension reform relief via this very active social media group.

This pension reform law is not retroactive, and if a person was not actively teaching in the last six months, they would not be eligible to collect an earlier retirement at the reduced penalty, Temple said. They would have to wait or pay huge penalties.

“It's not ideal for a lot of people,” she said. “It's the first movement we've seen in 35 years. We had bipartisan report. Every Democrat and Republican except one voted for it.”

Maggie Temple is 55 and has taught 31 years, but she must wait until she is 60 to qualify under this new law, and take a cut in her pension to do so. So after teaching for 36 years she would still get a 13 percent pension cut.

Temple said Illinois and Minnesota have the worst teacher pensions in the Midwest. IL, in fact, is now the worst in the country because teachers and state workers cannot pay a penalty to retire before 67.

Temple said it is going to cost the states billions more to pay veteran teachers rather than let them retire for newer and less expensive teachers. She noted that a Republican came up with this reform bill, while the Democrats changed it a bit and then called it their own. Gov. Tom Waltz (VP candidate with Kamala Harris) was seen prancing across the legislative floor after signing the bill.

The MN Teachers FB page has helped them to organize and lobby politicians. They were able to elect five of their people from their FB group to the MN Teachers Union Governing Board, Temple said. There are 40 members on the Board.

“(The Union) claimed pensions were not an issue and we said it was an issue and they were all elected,” Temple said. “They all beat incumbents. There were a couple of close races. We are very slowly making inroads to reform, but it's taking longer than expected.”

Temple said her active group got in hot water with the MN Teachers Union when they endorsed candidates for the election. The Union threatened to disqualify their candidates if they didn’t revoke their endorsement.

“They said we were a group and we couldn’t advocate,” Temple said. “They got the lawyers involved and said I had to apologize and take it down.”

Temple noted that their union is not big on the bread and butter issues facing teachers and therefore they are losing members. They recently incorporated paraprofessionals into their union.

The MN Educators for Pension Reform could endorse candidates to their pension fund the Teacher Retirement Association. They allowed all candidates to promote their platforms on the FB page, but they really pushed their own to get two elected and push for better laws and advocate for Tier 2.

“We have to be fiduciaries because the Pension Fund is in the hole,” Temple said.

The MN Teachers Retirement Assoc Pension is about 76 percent funded. The Chicago Teachers’ Pension Fund is only 48 percent funded.

Temple laments that the Tier 2 people are paying for the Tier 1 people who were able to retire at a much earlier age, similar to Illinois. She said the Tier 2 teachers in MN pay 16 percent and receive only 11 percent in return. “So we pay an additional 5 percent for the state’s debt for Tier 1.”

“I have more than paid for my pension, (so) I should be able to retire right now with the formula we have, but they don't want me to retire because I'm paying off the debt. Just (let the) teachers pay it off,” she said.

Like CTPF, the MN teachers once had a 100 percent funded pension, but corruption and poor management resulted in the current funding level.

Temple said she pays 8 percent of her salary into the pension fund, and her employer pays 8 percent and the state kicks in 2 percent. Chicago teachers pay 2 percent and the Chicago Pubic Schools pay 7 percent.

Public Pension Fund Forensic Audit Expert Ted Siedle who wrote the book Who Stole My Pension, told Maggie that MN could have funded a career rule (retire at 60 with 30 years experience and no penalty) if the money managers didn't take out billions in fees. The longer it goes on, the worse it will get.

Temple said they are still waiting for the State Board of Investments (SBI) which oversees the investments of the MN teachers pension fund to release requested documents. Siedle’s audit showed that SBI under-reported $400 million in investment fees.

“They're all in cahoots,” Temple said. “The Democrats and Republicans and Wall Street are collecting on both sides. We are the fools funding all this stuff and they're screwing us.”

The MN FB page organizing has made a difference, but the road is still long. Temple said she believes social media can give power to the people more than any other institution. They can run people for office and not have to pay thousands in donations.

“I've made a lot of enemies in my union, it's come at a cost, but it's the right thing to do,” Temple said.