| -EXPLANATION AND DISCUSSION- |
| �1968-69 Teachers� is the defined class of teachers who, under the provisions of the Teacher Retirement Act of 1969, were given ONE irrevocable choice from five pension plan options as shown on the 1968-69 ballot (See Exhibit A). �Pre-1969 Teachers� (approximately 4,100 teachers) is a subset of the defined class of 1968-69 teachers who were denied the benefit of the 1973 legislative action (MSA 354.55 subd. 17-�savings clause�) that allowed other members in the defined class of 1968-69 teachers to have the choice of TWO pension plans at the time of retirement. �IMP� is the Improved Money Purchase pension program that is described in MSA 354.44, subd. 2. �High 5 Formula� is the pension program described in MSA 354.44, subd. 6. �TRA Active Fund� as defined in MSA 354.42 is composed of equal money contributions (deductions) from both the employee and the employer (school district). �TRA Post Retirement Investment Fund (PRIF)� as defined in MSA 11A.18 provides the investment vehicle for the transferred reserves from the TRA Active Fund to be held and invested by the State Board of Investment (SBI) in order to pay out future retirement annuities and benefits payable to eligible TRA members. |
 |
| Definitions: |
| Discussion: |
| The following text is intended to clarify the effect of S.F. 543/S.F. 838 and H.F. 914, upon the TRA Active Fund and the TRA Post Retirement Investment Fund. This presentation assumes that the reader is familiar with the purpose of S.F. 543/S.F. 838 and H.F. 914, which is to correct an inequity that was created by the failure of the Legislature to include a savings clause for all members of the class of 1968-69 teachers who were mandatorily transferred to the High 5 formula pension plan. Only those who had selected the IMP plan were protected by the following savings clause included in MSA 354.55 subd. 17: �Teachers who retire after June 30, 1973 and who failed to make an election pursuant to Minnesota Statutes 1971, section 354.145, subd. 1, clause (1) and subd. 2, clause (1) shall have their annuity at retirement computed under section 354.44, subd. 2 or 6, whichever is larger.� The equity issue can be easily stated. All members of the defined class of 1968-69 teachers were legislatively deprived of their original pension choices. Accompanying a legislatively mandated pension plan change with a savings clause is a common practice. Only some members of the defined class of 1968-69 teachers, namely those who had selected the IMP option, were given a savings clause when they were transferred. The remaining members of the defined class of 1968-69 teachers were subsequently transferred without an accompanying savings clause, thus depriving them of the option of choosing their original, irrevocable choice instead of the High 5 formula plan(created after the original selection process was concluded) at the time of retirement. Thus, the equity issue is that one group within the defined class of 1968-69 teachers received two pension options at the point of retirement, one of which was their original �irrevocable� election choice, while the rest of this class received only one pension option at the point of retirement, which was not their original �irrevocable� election choice. S.F. 543/S.F. 838 and H.F. 914 provide that Pre-1969 Teachers shall receive a monthly benefit increase equal to 45% of the positive difference between the IMP program and the High 5 Formula program as calculated at the time of each eligible teacher�s retirement (See Exhibit C). |
 |