Proposed 2026 Legislation

Minnesota’s 2026 legislative session began Tuesday, February 17 and is scheduled to end Monday, May 18. PERA has proposed changes to statutes related to the Correctional Plan and to salary eligibility for authorized leaves.

Correctional Plan Rates and Post-Retirement Maximum

In 2024 legislation, Correctional Plan contribution rates were increased on pay issued on or after July 1, 2025, to support an increase to the plan’s benefit multiplier. Each year we monitor the plan’s funding status and contribution levels. The most recent valuation shows that the Correctional Plan is 105% funded and has strong sufficiency.

The proposed changes are to decrease the contribution rates and to increase the post-retirement maximum. With the proposed changes, the Correctional Plan is anticipated to remain fully funded with a sufficiency.

The decreased rates proposed in the current legislation are still higher than the rates that were in effect July 1, 1999, to June 30, 2025. But the proposed rates would be a decrease from the rates that have been in effect since July 1, 2025.

Correctional Plan Contribution Rate History

• For pay issued July 1, 1999, to June 30, 2025, the rates were 5.83% for members and 8.75% for employers.
• For pay issued July 1, 2025, to current, the rates have been 6.83% for members and 10.25% for employers.
• For pay issued on or after January 1, 2027, PERA is proposing rates of 6% for members and 9% for employers.

Higher Post-Retirement Maximum

• The proposed increase of the post-retirement maximum from 2.5% to 3% would go into effect on January 1, 2027

Salary Eligibility for Authorized Leaves

PERA is proposing legislative changes that affect two types of pay that an employee may receive during an authorized leave. The first change confirms that Paid Family and Medical Leave (PFML) payments are ineligible salary. The second change is proposed to eliminate thresholds that supplemental pay must meet to be eligible for PERA contributions.

PFML Payments are Ineligible Salary

According to statute, disability insurance payments and workers' compensation payments are ineligible salary, and because PFML payments are similar, employers must consider PFML payments as ineligible salary since January 1, 2026.

The proposed legislation would confirm PFML payments are ineligible salary in statute.

Supplemental Pay During Authorized Leaves

• When an employee does not use all their available PTO during a non-workers’ compensation leave, their pay must meet a certain percentage of their regular average salary for any supplemental pay to be eligible for PERA contributions.
  • The thresholds are 50% or more during a medical leave and 100% during a non-medical leave.
• The proposed legislation would eliminate the thresholds for pay during an authorized leave and would make supplemental pay during an authorized leave eligible for PERA contributions, as long as that pay is not greater than the employee’s regular average salary.
  • PERA is proposing that this change would start on July 1, 2026.

Do not change your processes until/unless legislation is approved. Currently, apply the thresholds to pay during an authorized leave to determine if supplemental pay is eligible for PERA contributions.