Legislature Passes Omnibus Pensions Bill With Significant Fire Relief Provisions

May 18, 2020

Collectively, the changes made in the bill recognize the changing nature of fire service delivery in the state.

In the waning days of the 2020 legislative session, the Legislative Commission on Pensions and Retirement (LCPR) passed an omnibus pensions and retirement bill that includes several fire relief-related provisions recommended by multiple working groups.

The measure, HF 3903 (Rep. Mary Murphy, DFL-Hermantown) and SF 3808 (Sen. Julie Rosen, R-Vernon Center), passed off the House floor on a vote of 133-0 and off the Senate floor on a vote of 67-0. Gov. Tim Walz is expected to sign the package when it reaches his desk.

The bill contains dozens of provisions pertaining to retirement plans in Minnesota. The provisions that will have the most impact on cities are those related to fire relief associations.

Since 2018, multiple stakeholders, including the League, have been involved in discussions around making changes to fire relief laws. Collectively, the changes made in the bill recognize the changing nature of fire service delivery in the state.

Key provisions for cities

Key changes are outlined below. They will be described in more detail in the 2020 Law Summaries, which will likely be published by the League toward the end of June.

  • Flexible use of fire state aid. Existing law provides that if a municipality has a fire relief association with volunteer/paid on-call members, all fire state aid must go to pay for retirement benefits provided by the relief association. The bill allows municipalities with combined (full-time and volunteer/paid on-call) departments to allocate their fire state aid between their volunteer firefighters and career firefighters, but only if the amount allocated to the career firefighters is agreed to by the relief association. Funds must be used for contributions to firefighter pensions.
  • Dissolution process provided. The bill contains a new set of procedures and requirements for dissolving a relief association and terminating its retirement plan. Steps in the process include:
    • Fully vesting all members in their retirement benefits.
    • Authority to increase the lump sum amount or monthly benefit amount to reduce any surplus and pay the surplus to firefighters in the form of larger retirement benefits.
    • A requirement that the board of trustees transfer any remaining surplus to the affiliated municipality up to the amount of required contributions made by the municipality during the preceding 10 years, and thereafter, split any remaining surplus equally between the relief association and the municipality.
    • A requirement that payment of all retirement benefits be made within 210 days of the effective date of plan termination, thereby allowing firefighters to receive their benefits immediately, rather than waiting until they reach age 50.
  • Plan conversions authorized. The bill provides new procedures for relief associations that are defined benefit relief associations to convert their defined benefit plan to a defined contribution plan.
  • Maximum lump sum increased. The bill increases the maximum lump-sum pension amount that is multiplied by years of service to compute lump-sum benefits under a defined benefit relief association. The bill increases the maximum from $10,000 to $15,000 and adds incremental amounts between $10,000 and $15,000.

Other provisions

Additional fire relief provisions in the package include technical changes recommended by the State Auditor’s Fire Relief Association Working Group and the advisory group to the Statewide Volunteer Firefighter Retirement Plan administered by the Public Employees Retirement Association.

The bill also contains several provisions pertaining to individual cities, including Austin, Brooklyn Park, Eagan, Hibbing, Maplewood, Plymouth, Ramsey, and St. Paul.