Pension reform takes effect for new employees

The major prospective pieces of the most recent round of pension reforms take effect on April 2 for new public employees.

For employees hired after April 2, the changes include: an increased retirement age from 55 to 60 for most public employees; an increased age of eligibility to receive a full pension, from 65 to 67; basing an employee’s pension benefits on their highest five years of earnings instead of their highest three; and a proration of benefits for employees in more than one classification group.

The pension reform legislation, enacted last November, also created three commissions to study various aspects of the pension system: a Disability Pension Commission, a Pension Classification Commission, and an Other Post-Employment Benefits Commission. The MMA has designees on all three groups.

Communities are encouraged to talk to their counsel and local retirement boards for more information about the changes.