US - The merger of the Minneapolis Teachers Retirement Fund Association (MTRFA) into the Minnesota Teachers Retirement Association (TRA) has been approved after years of discussion.
The dire financial situation of the MTRFA has long been an issue for the region, being only 45% funded and with an unfunded actuarial liability of nearly US$1bn, and its merger into the larger TRA was seen as an ideal solution.
But how welcome news of the merger would come to the TRA remained to be seen. In 2004, TRA president Curtis Hutchens said: “The TRA board of trustees is very concerned about the MTRFA funding problem and would like to see it resolved. However, the board has consistently stood by its principle that TRA assets must not be used to solve the Minneapolis problem and their financial shortfall should not be shouldered by our members and employer units.”
As part of the merger, MTRFA retirees will be transferred to the fund on July 1, 2006 and provided the same annual adjustments as TRA retirees.
The TRA employer contribution rate will increase by 0.5% to 5.5% on July 1, 2007, while TRA member contribution rates increase 0.5% on July 1, 2006 to fund the benefit increase portion of the package.
The TRA will also receive an additional employer contribution of 3.64% of salary from the Minneapolis School District for teachers employed by the Minneapolis School District.
The pension bills regarding the merger will now be presented to Governor Pawlenty for his approval, after which MTRFA assets will be transferred to the TRA on June 30.
By Damian Clarkson
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