Glossary

Account Balance

The sum of a member’s PERA contributions plus interest.

Active Member

A member employed in a PERA-covered job who is actively working, on an authorized leave of absence, or on an authorized temporary layoff.

Actuarial

Relating to the work of an actuary. Computations using compound interest, mortality tables and other factors in the field of actuarial science are called actuarial computations.

Actuarial Buyback

Actuarial purchase of service for periods when no deductions were reported.

Actuarial Equivalent

If the present value of two series of payments is equal, taking into account a given interest rate and mortality according to a given table, the two series are said to be actuarially equivalent. A benefit having the same present value as the benefit it replaces. Of equal actuarial present value.

Actuarial Military Purchase

An optional payment made by a member to purchase service credit for military leave period(s) that occurred 1) before becoming a public employee, or 2) during PERA -covered public employment if the member missed the original purchase timeframe.

Actuarial Reduction

The reduction in the normal retirement benefit calculation that offsets a cost increase to the plan when a participant retires before their plan’s full retirement age. PERA uses tables prepared by its actuary to determine early retirement reduction factors and survivor option benefit reduction factors. Reductions are not fixed percentages: early retirement factors are based on life expectancy of the member; survivor options are calculated on the life expectancies of both the member and survivor designee.

Actuary

A person/agency professionally trained in the technical and mathematical aspects of insurance, pensions and related fields. The actuary estimates how much money must be contributed to a pension fund each year to support the benefits that will become payable in the future, as well as how much a benefit recipient is expected to receive monthly following retirement.

Administrative Law Judge

An official who presides at an administrative trial-type hearing to resolve a dispute between a government agency (PERA ) and someone affected by a decision of that agency (PERA members, beneficiaries/survivors of PERA members, and PERA -covered employers).

Annual Benefit Increases

After passing the waiting period, benefit recipients may receive annual benefit increases each January to help keep up with cost of living.

Annual Earnings Limits

PERA retirees who return to work in a PERA -covered position prior to full Social Security retirement age are subject to earnings limitations. If the limits are exceeded, their PERA pension may be reduced or suspended. OR : The maximum amount of yearly earnings that a PERA retiree is allowed to make in a PERA -covered position while under the full Social Security retirement age. If the limits are exceeded, their PERA pension may be reduced or suspended.

Annuitant

A retired member or disabilitant who is receiving monthly payments from PERA, or the person receiving a joint and survivor option after the retiree’s or disabilitant’s death.

Annuity

A contract that provides a person with periodic payments for a specified period of time such as a number of years or for life. Often used synonymously with pension.

Appeal Process

The process in which a disability applicant whose application has been denied can appeal the decision by asking for a higher court to reexamine and reconsider their application. 

Authorized Leave of Absence

Period during which a member is authorized by their employer to refrain from active employment, with or without pay.

Basic Plan

PERA ’s original retirement plan, which was established 1931 and closed to new membership in 1968. The Basic Plan is not coordinated with Social Security.

Beneficiary

The person(s) or organization designated by a PERA member to receive a lump-sum refund of their account balance after death.

Benefit

The monthly payments made to a retired or disabled member or to the survivor(s) of a deceased member.

Benefit Effective Date

The day a PERA retiree’s benefit begins, typically the first day of the month following a member’s termination of public employment.

Benefit Estimate

A document that provides an approximate calculation of a member’s future monthly retirement benefit based on the member’s years of service, highest average salary, and age at retirement.

Benefit Formula

The calculation used to determine a monthly benefit. The benefit formula is: (the plan multiplier) x (years
and months of service) x (highest average salary) x (reduction factor if retiring early).

Benefit Offset

A provision that can affect PERA disabilitants who are also receiving worker’s compensation and/or re-employment earnings if the total amount of compensation exceeds the salary they were earning before the disability (or the salary currently being paid for a similar position, whichever is higher).

Benefit Recipient

A PERA member or survivor of a deceased member who has received or is currently receiving a monthly retirement, disability, survivor benefit or split payment.

Board of Trustees

A committee of 11 members who is responsible for administering funds in accordance with statutes and has a fiduciary obligation to PERA ’s members, their governmental employers, the state, and its taxpayers.

Bounce Back

When member selects a Survivor Option and the designated survivor dies before the member, the amount of the pension will increase (bounce back) to the level of the single-life pension amount (the amount the member would have received had he/ she not chosen protection for a second individual).

Buyback

Purchase of service for periods when no deductions were reported, such as CETA Service or actuarial purchases.

Combined Service Annuity (CSA)

A law that requires Minnesota public pension plans to work together so all state government service can be combined to help members meet vesting requirements, maximize their high-five salary, and increase service credit.

When a member who has service in more than one Minnesota public pension plan retires, they will receive a benefit payment from each plan. However, the plans will work together by combining service credits and will calculate the benefit payments based on the member’s five highest-paid consecutive years of salary, no matter which plan it was earned in.

Contribution Rate

A percentage of a member’s eligible gross salary that both an employee and their employer pay. The contributions are pooled together and invested with other members’ contributions to help fund the pension.

Coordinated Plan Multiplier

The multiplier is one of the factors used to determine the percentage of a member’s salary that they will receive in retirement.

Cost to Recover

A calculation on how long it will take to recover the cost of repaying a refund or purchasing missed service credit/salary from an unpaid leave.

Court Order

The determination of a court or other legal entity for a judgment against a member’s account. Examples may include child support, divorce decree, IRS levy, or spousal support.

DD Form 214

An official document verifying a veteran’s military service. Also referred to as Certificate of Release or Discharge from Active Duty.

Death Benefit Recipient

A person selected by the member at the time of retirement or disability to collect 25, 50, 75 or 100% of the benefit received by the member upon their death.

Death Benefit Designee (DBD)

An individual named to receive payments that are due upon a member’s death.

Deferred Pension

When a vested member who is between the ages of 55 and full retirement age terminates public service and decides to postpone drawing their pension until reaching full retirement age.

Deferred Benefit

When a vested member who is younger than age 55 terminates public service, they may leave their contributions with PERA until they reach age 55 or older, when they are eligible to begin drawing their pension.

Deferred Interest

The account balance of a terminated member who leaves their contributions with PERA may continue to accrue interest. Deferred interest is added to the benefit amount from the member’s last termination date until the member chooses to begin to draw the benefit.

Deferred Member

Employee who terminates from public service but leaves their contributions with PERA rather than immediately begin drawing their benefit.

Defined Benefit Plan (DBP)

A pension plan in which benefits are based on a set formula based on: years of allowable service, highest five consecutive years’ average salary, and age at retirement.

Dependent Child

For the purpose of survivor benefit eligibility, “dependent child” means a biological or adopted child of a deceased member who is unmarried and under the age of 23.

Disabilitant

A member whose disability application has been approved by PERA and has received/is currently receiving a monthly 
disability payment.

Disability Benefit

A monthly payment payable to disabled members.

Disability Estimate 

A document that provides a preliminary estimate of a member’s monthly disability benefit based on their years of service, highest average salary, and under the assumption that the disability claim is approved.

Divorce Estimate 

A document estimating the division of a member’s PERA pension between the member and their former spouse.

Early Retirement

When a member retires and begins drawing their benefit before reaching full retirement age, the monthly amount is actuarially reduced.

Early Retirement Age

An age that is earlier than full retirement age at which a member may retire and receive reduced benefits.

Earnings Threshold

See “Monthly Salary Threshold” definition.

Elected Non-Governing-Body Official

An elected official whose position doesn’t involve the responsibility nor the authority to govern the actions and conduct of a group. Examples include: city or county auditors, treasurers, attorneys, and clerks. Elected non-governing-body officials who earn more than $425 per month may join the Coordinated Plan instead of the DCP.

Elected Official

An elected governmental official or person appointed to fill an elected position. Elected non-governing-body officials who earn more than $425 per month may join the Coordinated Plan instead of the DCP.

Eligibility Requirements

Conditions that an employee must satisfy to participate in a plan and/or obtain a benefit.

Employer Contributions

Payments made by the employer on behalf of their employees to PERA. Employer contributions are not placed in an individual member’s account and are never refundable to members. Instead, they are placed in the general fund, invested, and used to fund benefits for members.

Employer-Sponsored Leave

See “Furlough” definition.

Employment Status

A status for a member during a particular period of time in employment. Some examples include: active, layoff, medical leave, terminated, FMLA, and military leave.

Escrow Funds

Funds that are temporarily held by PERA in a non-interest bearing account until certain conditions are met.

Excluded Employees

Public employees who are not eligible for PERA membership due to insufficient salary, employment position, or other factors as listed in Minnesota Statutes.

First Banking Day

The first business day of the month. This is usually the first of the month, unless the first happens to fall on a holiday or weekend. Benefit recipients receive their monthly payment on the first banking day.

Fiscal Year (FY)

A one-year accounting period that can differ from a calendar year. PERA’s fiscal year is July through June. Example: FY 2024 begins July 1, 2023 and ends June 30, 2024.

Forfeited Service

Previous years of service for which a member will not receive any service credit for as a result of the member taking a lump-sum refund of their employee contributions.

Former Member

An individual who previously worked under a PERA-covered employer and had contributions taken from their paycheck that has since left PERA-covered employment.

Full Retirement Age

The age a member must be when beginning their benefit to receive their full, unreduced pension. This varies by plan.

Full Vesting

Full vesting means you have worked enough years in public service to qualify for retirement benefits at the minimum allowable age. This varies by plan.

Furlough

A temporary leave of absence—usually imposed as a cost saving measure so that the employer can avoid terminating employees—that can last as long as an employer wishes. Furloughed employees may be required to take a certain number of unpaid hours off over a number of weeks, take a specified number of unpaid days or hours throughout the year, or take a single block of unpaid time off.

General Plan

PERA’s largest pension plan, which includes members of the Coordinated Plan, the Basic Plan, and former members of the Minneapolis Employees Retirement Fund (MERF).

Governmental Employer

A public body established under state or local authority that 1) has a governmental purpose, 2) is under public control, 3) is responsible for the employment and payment of the salaries of employees of the entity, and 4) receives a major portion of its revenues from taxation, fees, assessments or from other public sources.

Highest Average Salary

The 60 consecutive months during which your earnings are the greatest. This is not determined by calendar or fiscal years. Typically, this is the five years just prior to retirement. Previously referred to as High Five Salary.

Independent Contractor

A self-employed person or freelancer contracted to perform services for another entity as a non-employee.

Individual Counseling

A educational option for members who are ready to apply for retirement and need one-on-one assistance, or members who have unique situations, such as service with more than one fund, disability, or when divorce impacts their pension. An estimate will be prepared for you and a benefit counselor will call you to review your estimate and the retirement process.

Leave of Absence

When an employee takes time off from work for medical or personal reasons.

Leave Purchase

An optional payment made by a member of missing employee and employer contributions plus interest to restore service or salary lost during your leave, which could result in a larger benefit. Interest wilw accrue up until the leave is paid.

Leave Purchase Estimate

A document that calculates the cost of the purchase and the impact to your monthly pension.

Legislation

The preparation and enactment of laws by a governing body. The legislative process includes evaluating, amending, and voting on proposed laws and is concerned with the words used in the bill to communicate the values, judgments, and purposes of the proposal.

Level Formula

The most common formula used to calculate your pension in which you earn 1.7% of your high-five salary for each year for of service. All Coordinated members who were first hired into Minnesota public service after July 1, 1989 will have their pension calculated with the level formula. Also commonly referred to as “Method 2”.

Long-Continued and Indefinite Duration

A period of at least one year.

Lump-Sum Payment

An amount of money that is paid in a single large payment rather than in installments.

Managed Medical Review Organization (MMRO)

A third-party company that PERA contracts with to review disability applicants’ medical records and recommend approval or denial based on the evidence.

Marital Period

The period of time during which a member was married and accumulating pension benefits.

Marital Portion

The portion of a member’s pension benefit that is considered marital property—typically the service credit earned during which the member and spouse were legally married.

Marital Property

Any property or assets acquired by spouses during their marriage, no matter whose name it is acquired under.

Medical Leave of Absence

A period during which an employee takes extended leave from work due to a physical or mental health condition.

Member

A public employee who has met PERA’s membership eligibility requirements, and whose member contributions are deducted from each paycheck.

Member Service Center

A resource available to members and benefit recipients to answer specific questions, request estimates, schedule one-on-one phone counseling appointments, and more.

Military Leave

A period during which an employee takes extended leave from work due to military service.

Military Purchase

A type of leave purchase available for members who 1) took a military leave during their public service career, and 2) returned to work with the same public employer upon an honorable discharge. The member pays for the missing employee contributions and the employer pays for the missing employer contributions.

Minnesota Court of Appeals

Minnesota’s intermediate appellate court. Provides citizens of Minnesota with prompt and deliberate review of all final decisions of the trial courts, state agencies, and local governments. Disability decisions can be contested in the Minnesota Court of appeals.

Minnesota State Board of Investment (SBI)

The agency responsible for the investment management of various retirement funds, other public retirement savings plans, tax advantaged savings plans, and non-retirement assets.

Minnesota State Retirement System (MSRS)

Retirement system that provides retirement, survivor, and disability benefit coverage for Minnesota state employees as well as employees of the Metropolitan Council and many non-faculty employees at the University of Minnesota. They also administer the State of Minnesota Deferred Compensation Plan and the Health Care Savings Plan.

Monthly Salary Threshold

The minimum dollar amount that a public employee must earn before gaining PERA membership. The salary threshold for most members is $425 in gross earnings in a month.

myPERA

A secure online resource for members to access, view, and manage current personal account information.

Non-Taxable

Income that is not subject to federal and/or state taxes.

Notarized Signature

A signature on a document that is witnessed and certified by a notary public to verify its authenticity.

Overlap of Service

When a member has service in more than one Minnesota public pension plan in the same time period.

Paid Leave of Absence

An authorized leave of absence that is fully covered by a member’s employee’s sick, vacation, or other paid time off.

PERA-Covered Employer

Employers who offer PERA retirement plan membership to eligible employees.

PERA ID Number

A six or seven-digit number assigned to a PERA member.

Personal Benefit Statement (PBS)

An annual statement for members that provides information on their PERA service credit, total contributions received, designated beneficiary(ies), as well as retirement, disability, and survivor benefit estimates.

Phased Retirement Option (PRO)

An option that allows Coordinated members age 62 and over to begin drawing their PERA pension while gradually cutting back on work hours instead of formally resigning from their position. Participation is at the discretion of the employer.

Post-Retirement Earnings Limits

See “Annual Earnings Limits” definition

Pre-89 Service

Members who have public service or were a member of a Minnesota public pension plan prior to July 1, 1989 qualify for additional options that allow them to retire at an earlier age with less reductions to their monthly benefit.

Primary Beneficiary

The persons, entities, or trusts that will—upon your death—receive the remaining balance of your PERA account if no survivor benefits are payable.

Privatization

When a public, PERA-covered medical facility is sold to a private, non-government party, causing its employees to 1) no longer be considered public employees and 2) lose active membership in PERA.

Private-Sector Employment

Paid or volunteer services to businesses owned by individuals, corporations, or other non-government agencies. 

Privatized Former Public Employer

A PERA medical facility that privatized under Minn. Stat. ch. 353F.

Privatized Former Public Employee

A person who: 1. was employed by the privatized former public employer on the day before the effective date of privatization; or 2. terminated employment with the privatized former public employer on the day before the effective date; and 3. was a participant in PERA’s Coordinated Plan at the time of termination of employment with the privatized former public employer.

Privatized Member

See “Privatized Former Public Employee” definition.

Prorate

To divide or distribute something in a proportional way, based on time.

Public Employee

A governmental employee or a public officer performing personal services for a governmental subdivision, whose salary is paid—in whole or in part—from revenue derived from taxation, fees, assessments, or from other sources.

Public Employment

Paid or volunteer services to any Minnesota government employer (e.g., schools, cities, counties, townships, universities or state agencies) in which salary is funded by tax-payers.

Purchase Period

The time frame in which a member is eligible to make a payment to restore service credit and/or salary from an unpaid leave.

Qualified Rehabilitation Consultant (QRC)

A professional who assists individuals with physical, mental, or other difficulties that impair their ability to function in the workplace, and works with PERA members whose disability applications have been denied.

Reduction Factors

A set of factors that a benefit is reduced by for members who begin drawing their pension prior to their plan’s full retirement age.

Refund

The reimbursement of funds; usually referring to a member taking a lump-sum payment from PERA of all of their contributions plus accrued interest.

Refund Repayment

Members who took a refund of their PERA account balance when they left public service may later repay the refund (plus interest) to restore lost service credit after they have returned to public service for a minimum of six months.

Required Minimum Distribution (RMD)

The minimum amount of money that a member of a certain age must withdraw from their retirement account each year. In 2023, the age at which one must begin taking RMD’s changed to 73.

Retirement Calculator

A tool used to estimate a member’s monthly pension payment based on their years of service credit, highest average salary, and age at retirement.

Retirement Estimate

See “Benefit Estimate” definition.

Retroactive Benefit

Disability benefits are paid the day following your last date paid, or retroactively up to 90 days from receipt of your application, whichever is later.

Rollover

A tax-free reinvestment of funds from one qualified retirement plan into another, done within a specific time frame of 60 days.

Rule of 90

Benefit provision under which a member hired prior to June 30, 1989 may collect an unreduced pension when age plus years of service total 90 or more.

St. Paul Teachers Association (SPTRA)

A retirement association for St. Paul Teachers that provides members and their beneficiaries with retirement, survivor and disability benefits.

Seasonal Position

An employment position where the nature of the work or its duration are related to a specific season or seasons of the year, regardless of whether or not the employing agency anticipates that the same employee will return to the position each season in which it becomes available.

Secondary Beneficiary

A secondary beneficiary who is eligible for a payment if the primary beneficiary is deceased, unable to be located, or refuses the inheritance.

Service Credit

One of the factors used to calculate your pension. You earn one service credit for each month you work in public service, for a maximum of 12 service credits per year.

Simplified General Rule

A tax rule that allows retirees to recover any already-taxed contributions they made to the plan over their life expectancy. This would make a portion of the retiree’s monthly benefit tax-free until they have recovered all pretax funds.

Single-Life Benefit

A lifetime benefit option that pays out the largest monthly amount to only one person, and ceases upon their death.

State Board of Investments (SBI)

The Minnesota State Board of Investment is the State agency responsible for the investment management of various retirement funds, trust funds, and cash accounts.

Step-Rate Formula

Also commonly referred to as “Method 1”. A formula used to calculate pensions in which you earn 1.2% of your high-five salary for each of your first 10 years of service, and 1.7% of your high-five salary for each additional year for of service. This formula is only an option for Coordinated members who were first hired into Minnesota public employment prior to July 1, 1989.

Substantial Gainful Activity

The level of work activity and earnings that an individual is allowed while still qualifying for PERA disability benefits.

Supplemental Needs Trust

A type of trust created for minor and/or severely disabled beneficiaries which supplements government benefits. PERA retirees and disabilitants may name a Supplemental Needs Trust as their survivor.

Surviving Child

Any biological or adopted child of a deceased member—including a child who is conceived during the member’s lifetime and born after their death—who has not reached the age of 23 and is dependent for more than one-half of the member’s support.

Surviving Spouse

The spouse of a deceased member or disabilitant who was legally married to the member at the time of death.

Survivor

An individual eligible for monthly benefits from your account upon your death. You can choose anyone you want as your survivor, regardless of age or relation, and you can only choose one.

Survivor Benefit

A lifetime monthly benefit that is payable to a survivor, beginning upon the member’s death.

Survivor Option

A lifetime benefit option that pays out a reduced monthly amount to the member, and upon their death pays out a monthly amount to a survivor chosen by the member. The benefit ceases upon the survivor’s death.

Tax Calculator

A tool in myPERA used to estimate the amount of federal and Minnesota state taxes that will be taken out of your monthly pension payment.

Tax-Qualified Account

A retirement plan that is funded with pre-tax dollars, essentially reducing the taxable income of the account holder by the amount of their contributions for the year. The contributions and earnings then grow tax deferred until withdrawal. Once a member begins drawing their benefit, both state and federal tax will be owed.

Tax Withholding

The amount of state and federal income tax withheld from your paycheck or pension check.

Teachers Retirement Association (TRA)

A Minnesota statewide public pension fund that provides retirement, disability and death benefits to Minnesota public school teachers, administrators, college faculty, retirees, their families and beneficiaries.

Temporary Layoff

When an employee is separated from their job due to lack of work and is expected to return to work within eight weeks of the separation.

Temporary Disability

A disability that prevents an individual from working for a period of time, expected to last less than one year.

Temporary Position

An employment position that is predetermined by the employer at the time of hiring to be a period of six months or less.

Term-Certain Benefit

A benefit option for surviving spouses of vested members who die while actively employed in a PERA-covered job. This option provides monthly payments of a predetermined amount for a fixed term: 10, 15, or 20 years.

Termination Date

The last day a member is considered a public employee. May be the last day worked. Last day member is paid when you no longer receive sick, vacation, or other salary payments.

Termination of Public Service

When a member resigns or is dismissed from public service, or when a member’s position ends and they are not considered to be on a temporary layoff.

Termination Requirements

To qualify for a retirement benefit, a PERA member must 1) terminate from public service prior to their benefit begin date, 2) remain out of public employment for the following 30 calendar days, and 3) avoid making arrangements to work for any governmental subdivision until the 30-day separation period has passed.

Total and Permanent Disability

The inability to engage in any substantial gainful activity due to a physical or mental disability which is expected to last for at least one year or longer.

Trial Work Period

A trial period of up to six months in which a disabilitant—who remains totally and permanently disabled—may return to governmental employment to test their ability to work while continuing to receive disability benefits.

Unpaid Leaves

An authorized leave of absence that isn’t fully covered by a member’s sick, vacation, or other paid time off. Unpaid leaves may negatively affect your future monthly benefit amount.

Vacation Out

When a terminating employee with accumulated vacation leave stays on the payroll in an active status until the accrued leave is fully used and paid out. In this case, the employee’s termination date is the day their accrued leave is exhausted rather than the last day worked.

Vested Member

When a member has earned enough years of service credit to qualify for a monthly pension when they reach retirement age.

Workers’ Compensation

A form of insurance that provides wage replacement and medical benefits to employees injured on the job. Workers’ compensation typically replaces 2/3 of an employee’s salary.