The court has ruled that Minneapolis taxpayers are being illegally overcharged by two closed pension funds. Tell our state legislators that it's time for the Legislature to take action to bring down property taxes and merge those two funds into the State retirement system on the terms that the court has set.

 

 

Thirty years ago, we believe City leaders made a mistake by agreeing to unusal benefits and terms on two pension funds (the Minneapolis Police Relief Association, or MPRA, and Minneapolis Fire Relief Association, or MFRA) and by not merging them into the State's retirement systems (the Public Employees Retirement Association, or PERA).  Since then, because of these funds, costs to Minneapolis taxpayers have skyrocketed.

 

 

The court has ruled that the two closed pension funds have illegally overcharged Minneapolis taxpayers at least $50 million in recent years.

 

 

The closed pension funds not only overcharge taxpayers, they are mismanaged and unaccountable:  Administrative expenses are 40-80 times higher than average fees for State managed funds.

 

 

These pension funds guaranty a minimum of six percent returns on investment to retirees, regardless of investment performance.  Yet, the unions choose the fund managers, not the city.  Higher returns in good years do not offset lower returns in bad years (taxpayers have to cover loss years with the guaranteed returns), which encourages aggressive, high risk investing.

 

 

Benefits are based on current workers' compensation, not compensation earned by the retirees when they were working.  In other words, they can make more after they retire than they did when they were working.

 

 

The City of Minneapolis has no control over these closed funds, but under State law, taxpayers in Minneapolis have been forced to pay these overcharges and investment losses, which have resulted in higher taxes and fewer services for residents.

 

 

It is time to merge these two closed pensions into the State retirement system on the terms that the court has set, where they will be subject to public scrutiny and accountability.