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HF 5031

Career rule for teachers aged 60 with 30 years of service created.

2025-2026 Regular Session Introduced by Ben Bakeberg and 17 co-sponsors

HF 5031 creates a career rule for teachers 60+ with 30+ years, allowing a reduced annuity with possible augmentation if retirement is deferred to normal age.

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Bill Summary · HF 5031

Legislative Bill Summary — HF 5031 (2025-2026, Minnesota)

Title

Career rule for teachers aged 60 with 30 years of service created

Purpose and intent

HF 5031 proposes creating a targeted “career rule” for a subset of teachers who are at least 60 years old and have 30 or more years of service. The bill modifies retirement and pension-related provisions to allow an eligible employee to receive a reduced retirement annuity that reflects early retirement with enhanced terms tied to a deferral/augmentation mechanism. The changes affect multiple sections of Minnesota pension statutes and related employer contribution rules.

Key provisions and changes

  • Section 1 — Pension adjustment revenue (126C.10, subd. 37)

    • Maintains the computation framework for school district pension adjustment revenue but adjusts the relevant rate structure:
    • For Independent School District No. 625 (St. Paul), pension adjustment rates are set at 3.25% for fiscal year 2026 and later.
    • Other districts use a different rate schedule (1.25% for 2025 and 2.31% for 2026 and later).
    • The bill includes annual calculations for district pension adjustment revenue and specifies how to prorate during certain fiscal years (2025–2027) and how to handle cooperative units for pension adjustment revenue.

  • Section 2 — Minnesota Statutes 354.42, subdivision 3 (employer contributions to the retirement fund)

    • Reaffirms and specifies employer contribution percentages to the Teachers Retirement Association (TRA) and other retirement funds:
    • Special School District No. 1, Minneapolis: regular employer contribution plus an additional 3.64% for certain teachers.
    • Independent School District No. 709, Duluth: applicable percentage for coordinated or old/new law coordinated members.
    • All other employers: 9.81% of coordinated members and 13.81% of basic members.
    • Changes become effective with the first payroll cycle when the new rate applies for a fiscal year.

  • Section 3 — Minnesota Statutes 354.44, subdivision 6 (computation of formula retirement annuity)

    • Maintains the standard formula-based approach for retirement annuities but includes specific adjustments for early retirement scenarios, and the higher-earning arrangement for periods before and after July 1, 2006.
    • Details specific age/years-of-service bands and corresponding percentages used to calculate annuities:
    • For service before July 1, 2006: various percentages per year of service (1.2%-1.7% for coordinated members; 2.2%-2.7% for basic members).
    • For service after July 1, 2006 (and certain Duluth-related grandfathered cases): different rates (1.4%-1.9% coordinated; 2.2%-2.7% basic).
    • Early retirement provisions (Section 3, subsections (e) and (f)) specify:
    • If an employee is at least 60 with 30 years of service, the annuity is the normal annuity reduced by 5% for each year the retirement age precedes normal retirement age.
    • Additional adjustment for deferral augmentation: if retirement occurs after early retirement but deferral occurred (retiring early and deferring), the annuity is augmented during the deferral period (2.5% per year for post-2006 hires, 3% for pre-2006 hires) compounded annually.
    • For those under age 60 or with fewer than 30 years, early-reduction factors apply as described (4% per year from age 55–58; 7% per year at ages 59 to before normal retirement age), with similar augmentation mechanics for deferral.
    • Cap: No retirement annuity payable to employees with salary exceeding 95% of the governor’s salary unless salary audit confirms compliance.

  • Section 1 excerpt notes a potential “career rule” incentive by enabling a reduced annuity under a specific eligibility window (60 years old with 30 years of service) with heightened augmentation if deferral occurred.

Who is affected

  • Teachers who are members of TRA or related retirement funds.
  • School districts, including district-level administrations and cooperative units (per 2.11–2.14), which administer pension adjustment revenue allocations.
  • Employer units (school districts and, in some cases, Minneapolis Special School District) responsible for regular and additional employer contributions to the TRA/related funds.
  • Retirees or near-retirees who meet the age/years-of-service criteria and may elect early retirement under the career rule, subject to the specified reductions and augmentation.

Procedural and timeline aspects

  • Introduction and first reading on 04/20/2026; referred to the Committee on State Government Finance and Policy.
  • The bill includes phased or prorated treatment for pension adjustment revenue in fiscal years 2025–2027, with no prorating required for 2026–2027 and re-proration rules for 2028 onward.
  • Changes to employer contribution rates take effect with the first payroll cycle of the fiscal year.
  • The bill revises calculations for formula retirement annuities, with explicit age/years-of-service bands and an augmentation mechanism tied to deferral periods, affecting benefits for members who elect early retirement under the career rule.

Summary assessment

HF 5031 introduces a targeted career rule for seasoned teachers (60+, 30+ years) that allows for a reduced initial annuity with potential augmentation if the member defers retirement to normal retirement age, coupled with explicit adjustments to pension adjustment revenue and employer contribution rates. The provisions impact benefit computations, district funding allocations, and eligibility rules for early retirement under Minnesota pension law. The measure is designed to manage workforce transitions and provide an alternative retirement pathway for veteran educators while controlling cost through structured reductions and augmentation.

Compiled from official sources — confirm details with the bill’s official record.

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