Pension basics : Teachers Retirement Association (TRA) (2024)

What is TRA?

TRA is a defined-benefit (“DB”) pension plan.

During your career, you and your employer make mandatory payroll contributions to TRA. The funds are pooled and managed by the State Board of Investment to pay your eventual benefit.

• 73 percent of Minnesota pension system revenue comes from investment earnings*,
• 27 percent comes from contributions (combined employee and employer)

*Based on a 20-year average

What is a pension?

Beware Financial Entities Claiming Affiliation With TRA

TRA is not affiliated with, nor do we endorse, any commercial companies selling retirement savings products. Occasionally, financial planning companies will use “TRA” in their advertising or presentation materials or otherwise imply that they represent TRA or can provide you with your personal TRA retirement information. However, if you receive any solicitations from third parties that appear to indicate that they have a connection with us, beware.

• TRA never grants permission for theuse of our name or materials in any sales solicitations orpresentations by financial planners or commercial entities. When we learn of the unauthorized use of our name or materials, we immediately contact the offender and advise them to modify their materials so that they in no way suggest that the information has been supplied, approved, sponsored or endorsed by us.

• TRA does not share your personal data with financial planners or firms. Your account data is confidential; we will provide it only to you or someone authorized by you, and only after we have verified your identity or your representative’s identity.

• TRA may only provide your name, benefit amount and benefit type to the public, according to Minnesota public data laws governing TRA.

If you ever receive a solicitation from a company offering to sell you financial services and claiming to have a connection with TRA or have access to your personal TRA data, first, be cautious. Second, call us at 800-657-3669.

TRA math

Here’s how we translate the statistics of your career into retirement income later.

Years of service multiplied by high-five average salary multiplied by formula percentage equals benefit amount.

Contribution Rates

During your teaching years, a percentage is deducted from every paycheck for your retirement. The current employee contribution rate is 7.75 percent. Your TRA contributions are pretax, reducing your current taxable income. Your TRA paycheck deductions are determined by Minnesota law and are subject to change.

Vesting

You are vested when you have earned enough service credit to be eligible for a monthly lifetime retirement benefit, or pension. Vested members are also eligible for disability and survivor benefits. Current members are vested with at least three years of service credit. If your last service was before 1989, your vesting requirement might be five or 10 years. If you have service with another Minnesota pension fund or funds, a combined five years may be required based on the other funds’ vesting requirements.

Service Credit

Service credit is used for vesting and to calculate monthly benefits. Paid sick leave, vacation days and required attendance days count toward service credit. You cannot earn more than one year of service during any fiscal year. Service credit for part-time teaching, extracurricular pay, retro pay, and summer pay is prorated. Minnesota State service credit is determined by the full-time equivalent as defined in the Minnesota State bargaining agreement. For example, if a Minnesota State employee works 0.5 FTE during the fiscal year, 0.5 (one half) year of service credit is earned.

High-Five Average

Monthly benefits are based on the average of your highest annual salary over five successive years of formula service credit.

Formula

Step and Level formulas

If you were first employed and earned service credit before July 1, 1989, and your age plus allowable service credit equals 90 or more, you may retire under the Rule of 90. Eligible members retiring under the Rule of 90 receive benefits under the Step formula without any reduction for early retirement. If you were first employed and earned service credit before July 1, 1989, your retirement benefit will be calculated under both the Step and Level formulas. At retirement, you will automatically receive the greater of these two benefits. If you were first employed after June 30, 1989, your retirement benefit will be calculated under the Level formula.

Step formula

• First 10 years of service prior to July 1, 2006, 1.2 percent per year
• First 10 years of service on or after July 1, 2006, 1.4 percent per year
• Years 11 and thereafter earned prior to July 1, 2006, 1.7 percent per year
• Years 11 and thereafter earned on or after July 1, 2006, 1.9 percent per year

Normal retirement age for Tier I members (those hired before July 1, 1989) under the Step formula is age 65 with less than 30 years of allowable service, and age 62 with 30 or more years of allowable service.

Level formula

• All years of service prior to July 1, 2006, 1.7 percent per year
• All years of service on or after July 1, 2006, 1.9 percent per year

Normal retirement age for Tier I members under the Level formula is age 65. Normal retirement age for Tier II members (those hired after June 30, 1989) who deferred or retired before July 1, 2024 is age 66. Beginning July 1, 2024, the normal retirement age for all active and eligible deferred members will be 65.

Reduction Factor
You can retire as early as age 55, but a reduction factor for early retirement will be applied to your monthly benefit.

All this information is available in our brochure Pension basics for new teachers.

Information on your Social Security Normal Retirement Age (By Year of Birth)

All about early retirement

You might be considering retiring early. If you do, your benefit must be reduced because you will be receiving monthly payments for a longer period of time.

“Early retirement” is any age earlier than your normal retirement age, and the younger you retire before your normal retirement age, the higher the reduction — similar to Social Security.

Learn more about early retirement