Legislative Commission on Pensions and Retirement

What is "augmentation" and why would the 2018 omnibus pension and retirement bill include amendments that end it?

Susan Lenczewski, Executive Director
April 13, 2018

We are frequently asked about augmentation. Under the Minnesota statutes that govern pension benefits for public employees, 'augmentation' is an automatic annual increase in the pension benefit accrued by a member who is no longer in public service, but has not yet reached retirement age. These members are sometimes referred to as deferred vested members because, while they have a vested pension benefit, they are having to 'defer' starting their pension benefit until they reach retirement age.

Augmentation is a set percentage that is applied to the amount of the accrued benefit and increases that benefit, which continues to grow until the member elects to start taking it. For example, if an MSRS or TRA member leaves public employment after having accrued a pension benefit of $1,000 per month, the member's benefit increases each year by 2%. One year after leaving employment, the monthly benefit increases to $1,020; two years, $1,040; three years, $2,061; four years, $1,082; five years, $1,104; six years, $1,126; and so on, until the member reaches retirement age and elects to begin taking his or her pension benefit.

One of the cost-saving benefit reforms in the 2018 omnibus pension and retirement bill is to eliminate augmentation prospectively. Why augmentation?

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