Minnesota teacher pensions are changing to allow earlier retirements

Minnesota teachers with decades of experience will get a boost to their pensions, allowing them to retire sooner with lower early retirement penalties.

That’s thanks to a pension reform measure approved by the Legislature that reduces inequity in pension benefits between state teachers hired before 1989 and those hired after. The bill, which provides about $80 million in pension funding for firefighters, police and teachers over the next two years, passed with broad bipartisan support. About half of that spending will go to the Minnesota Teachers Retirement Association.

“This is a great victory for Minnesota teachers,” said Denise Specht, president of Education Minnesota, the state teachers union, adding that pension improvements can help ease teacher shortages across the state.

Supporters also say pension reform efforts could bring short-term budget relief to school districts facing widespread budget shortfalls and layoffs. Replacing a longtime teacher with a new one is simply cheaper.

In a letter of support for even broader teacher pension changes, Anoka-Hennepin schools Superintendent Cory McIntyre wrote that “without meaningful reform, districts face rising salary costs as fewer educators are in a financial position to retire.”

He pointed to statistics from the Teachers Retirement Association about the aging education workforce and slowing cycle of younger teachers replacing older ones.

Currently, teachers hired before July 1, 1989, have a career “Rule of 90,” meaning they can retire with full pension benefits if their age plus years of service adds up to 90.

That benefit was restricted in 1989 as a cost-cutting measure, meaning that educators hired after that date face penalties for retiring and collecting a pension before age 65.

The state already had a provision allowing teachers to retire with a reduced pension at age 62 if they have 30 years of eligible public service. The new legislation reduces that to age 60.

Mark Haveman, executive director of the Minnesota Center for Fiscal Excellence, said the teachers hired after 1989 are now approaching retirement age, which is why the push to eliminate the “two tiers” of pension benefits has grown stronger in recent years.

As districts have wrestled with a teacher shortage, he said, unions have pointed to the pensions as a way to attract people to the profession.

“This will be a meaningful test of the whole teacher-attraction premise,” said Haveman, who also questioned why the overall health of the pension fund didn’t get more scrutiny from legislators.

As pensions become a rarer benefit, he said, “it’s the one thing that educators have in their quiver to go above and beyond what maybe the private sector may be offering.”

In recent years, Minnesota schools have started classes in the fall while still seeking to hire hundreds of teachers. Amid nationwide teacher shortages, they’ve started “Grow Your Own” training programs, offered bonuses and hired teachers from other countries.

Though pensions aren’t likely a top draw for aspiring teachers, they are a perk that can be a part of recruiting and retaining educators, said Ryan Fiereck, president of the St. Francis teachers union. Fiereck remembers his dad assuring him that teachers got good pensions when he first mentioned his goal of becoming an educator.

Joseph Wollersheim, a social studies teacher in the Rosemount-Apple Valley-Eagan district, said the legislation doesn’t help every teacher yet. But it’s a first step to providing more retirement flexibility in a profession that can have high levels of burnout.

“The solution to a teaching shortage can’t be, ‘We are going to try to handcuff these people financially to stay an extra two or three years,’” he said. “That’s a Band-Aid that’s bad for kids.”