HomeMy WebLinkAboutMinnesota State Retirement System - Public Financial Reportupdated 8.26.19
2021
Pension Trust Funds of the State of Minnesota
Popular Annual
Financial Report
• For the Fiscal Year Ended June 30, 2021 •
Minnesota State Retirement System
The Popular Annual Report (PAFR) is a summary of the Annual
Comprehensive Financial Report (ACFR) for the year ended June 30, 2021. Both are consistent with
generally accepted accounting principles and guidelines established by the Governmental Accounting
Standards Board and can be found online at: www.msrs.state.mn.us/annual-reports-fy-2021.
From the Executive Director
It is my pleasure to share the Minnesota State Retirement System (MSRS)
Popular Annual Financial Report for the fiscal year ending June 30, 2021.
This report provides a snapshot of the performance of your retirement funds.
While fiscal year 2021 continued to have many challenges, it was a positive
year for MSRS. The funding status of MSRS’ largest retirement plan,
the General Employees Retirement Plan, improved to over 111 percent
(calculated on the market value of assets) as of June 30, 2021. This is
largely due higher than expected investment returns. An investment return
of 4.2 percent in fiscal year 2020 was followed by an impressive 30.3
percent investment return in fiscal year 2021. MSRS’ fiduciary net position
as of June 30, 2021, totaling over $32 billion, increased over 25 percent
from the prior year.
MSRS accomplished many administrative goals. Continuing to carry out
initiatives identified in our Strategic Plan, MSRS is progressing in our
vision to be a nationally recognized leader in public retirement by:
• Attracting, hiring, developing, empowering and retaining an
engaged workforce
• Enhancing customer service to each other and our customers
• Increasing retirement readiness of Minnesota public employees
• Ensuring the long-term viability of MSRS pension plans
MSRS continued to implement numerous processes to provide services
to our members and keep our employees safe during the COVID-19
pandemic. Enhancing our virtual member counseling, providing safe
in-person counseling, live streaming seminars, updating our website
design and functionality so our online presence is modern, unified, and
more integrated with our recordkeeper and many additional actions were
established to ensure we met the needs of our stakeholders.
We are excited for the future and committed to our mission to empower
Minnesota public employees to build a strong foundation for retirement.
Erin Leonard, Executive Director
PG. 2
Letter from theExecutive Director
PG. 3
Pension Plans
PG. 4
Defined Contribution Plans
PG. 5
Summary Statement & Funding
PG. 6
State Board of Investment
TABLE OF
CONTENTS
82%
OF MSRS RETIREES
ARE MINNESOTA
RESIDENTS
$1.1 Billion
MSRS PENSION
BENEFITS PAID
ANNUALLY
51 Thousand
MSRS PENSION
BENEFIT RECIPIENTS
30.3%
INVESTMENT
RETURN
FY
Pension Plans
Employees and employers contribute to a defined benefit plan throughout the working years of
the member. At retirement, the member will receive a guaranteed ongoing monthly distribution,
with the amount based on years of service, average salary, plan provisions and the distribution
option selected by the member.
3
NET POSITION1TOTAL MEMBERSHIP
State Employees (General) Plan
FY21 123,198 $17.4 billion
FY20 122,664 13.9 billion
Change 534 member increase $3.5 billion increase
% Change 0.44% 25.18%
State Patrol Plan
FY21 2,138 $957.9 million
FY20 2,137 757.6 million
Change 1 member increase $200.3 million increase
% Change 0.05% 26.44%
Judges Plan
FY21 733 $276.6 million
FY20 729 216.7 million
Change 4 member increase $59.9 million increase
% Change 0.55% 27.64%
Legislators Plan
FY21 396 No assets. This is a
FY20 408 closed plan funded
Change 12 member decrease by a General Fund
% Change 2.94%Appropriation.
1 Increases in member and employer contributions as well as a 30.3% investment return led to the net position increases in fiscal year 2021. Net position
can be defined as assets available to pay benefits.
Correctional Employees Plan
FY21 10,728 $1.6 billion
FY20 10,543 1.2 billion
Change 185 member increase $400 million increase
% Change 1.75% 33.33%
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NET POSITION1TOTAL MEMBERSHIP
MSRS Defined Contribution PlansDefined Contribution Plans
Employees invest a portion of their salary in a defined contribution plan throughout their career.
The balance of the member account is available for withdrawal in a variety of distribution options
after employment ends. The funds are distributed until they have been depleted. Each plan is
unique and has its own qualifications and limits. Not all employees are eligible for each plan.
MSRS is committed to empowering Minnesota public
employees to build a strong foundation for retirement.
43
Unclassified Employees Plan
FY21 3,321 $401.6 million
FY20 3,298 330.7 million
Change 23 member increase $70.9 million increase
% Change 0.70% 21.44%➔
Health Care Savings Plan
FY21 143,205 $1.6 billion
FY20 137,160 1.3 billion
Change 6,045 member increase $300.0 million increase
% Change 4.41% 23.08%➔➔
Minnesota Deferred Compensation Plan (MNDCP)
FY21 95,181 $9.7 billion
FY20 93,638 7.7 billion
Change 1,543 member increase $2.0 billion increase
% Change 1.65% 25.97%➔➔
Hennepin County Supplemental Plan
FY21 1,052 $190.5 million
FY20 1,130 159.8 million
Change 78 member decrease $30.7 million increase
% Change 6.90%19.21%➔➔
1 Changes in the defined contribution funds net position were affected by the same investment market conditions that impacted the MSRS defined benefit
retirement funds.
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30%
40%
50%
60%
70%
80%
90%
100%
Fu
n
d
e
d
R
a
t
i
o
96.6%
89.3%
70.7%
111.5%
2021201420122013201620182015201720192020
Judges PlanState Employees General Plan Correc�onal Employees PlanState Patrol Plan
Funding
The funded ratio, which is the value of a plan’s assets in proportion to the pension liability, is measured on
June 30th of each year. Funding for pension plans consists of investment returns, employee contributions
and employer contributions.
Summary Statement - Changes in Net Position
This chart shows changes in net position for all MSRS pension trust funds for the fiscal years ended
June 30, 2021, and 2020. Dollars shown in thousands.
• Total additions increased 295.33% primarily due to higher investment returns.
• Total deductions increased 6.84% largely due to the result of post‑retirement benefit increases and the growth in the number of benefit recipients.
Additions (by Major Source)FY 2021 FY 2020 Change % Change
Plan Member Contributions $ 762,464 $ 717,975 $ 44,489 6.20%
Employer Contributions 299,452 289,327 10,125 3.50
Investment Income (Net)7,152,042 1,036,600 6,115,442 589.95
Other 58,491 48,666 9,825 20.19
Total Additions $ 8,272,449 $ 2,092,568 $ 6,179,881 295.33%
Deductions (by Type)
Benefits, Withdrawals & Reimbursements $ 1,261,730 $ 1,215,822 $ 45,908 3.78%
Refunds 393,224 338,586 54,638 16.14
Recordkeeper Expenses 3,715 4,836 (1,121) (23.18)
Administrative Expenses 20,102 19,245 857 4.45
Other 43,419 33,516 9,903 29.55
Total Deductions $ 1,722,190 $ 1,612,005 $ 110,185 6.84%
Net Increase in Net Position Restricted
for Pensions $ 6,550,259 $ 480,563 $ 6,069,696 1,263.04%
5
12.6%
10.1%
7.9%
9.0%
28.8%
9.3%
10.4%
30.3%
13.1%
8.1%
1Year
5 Years
10Years
20 Years
30 Years
1.3%GLOBALEQUITY
25.7%PRIVATEMARKETS
9.7%TREASURIES
33.0%DOMESTICEQUITY
15.7%INTERNATIONALEQUITY
14.6%BONDS
BOA R D O F DIRECT
O
R
S
State Board of Investment (SBI)
The SBI is responsible for the investment management of all funds for the State of Minnesota,
including MSRS assets. On June 30, 2021, the market value of all assets under SBI management
was $129.2 billion. The combined funds of various retirement systems, including MSRS, totaled
$89.5 billion. Below is a breakdown of the combined retirement assets and how they are allocated,
as well as a historical breakdown of annualized returns.
Asset Allocation June 30, 2021Historical Annualized Returns
Questions? Contact Us!1-800-657-5757 or 651-296-2761 | www.msrs.state.mn.us
60 Empire Drive, Suite 300 | St. Paul, MN 55103-3000
The MSRS Popular Annual Financial Report can be made available in alternative formats upon request to ensure
that it is accessible to people with disabilities. Contact MSRS to obtain this document in an alternate format.
How We Work
MSRS is governed by an eleven-member Board of
Directors. The distribution of membership is:
• 3 Governor appointees
• 4 members elected by the General and
Unclassified Plan
• 1 member elected by the Correctional Plan
• 1 member elected by the State Patrol Plan
• 1 member elected by retirees
• 1 member representing the Metropolitan
Council Transit Operations
The MSRS Board has a fiduciary responsibility to
act in the exclusive interest of the members and
beneficiaries of all MSRS plans, the taxpayers
and the State of Minnesota.
Set policies,
approve the
operating budget
and advise the
MSRS Executive
Director
Consider
disability and
other benefit
appeals
Oversee
administration
of all retirement
plans offered
by MSRS
Investment Benchmarks