Hennepin cmr. seeks pension switch; critics cry foul

The longest serving commissioner in Hennepin County is seeking special legislative approval to opt out of his 401(k)-style plan and buy into the traditional public pension system.

Hennepin County Commissioner Randy Johnson wants to move from a defined contribution plan and into the traditional pension, which pays defined benefits once a person retires.

Pension administrators say Johnson's request is unprecedented. Critics note that he's turned down the chance to join the traditional defined plan multiple times over the last four decades.

Now 67, Johnson said the traditional pension, securing monthly, lifetime payments for him and his wife, "works better with joint survivorship with my wife ... defined benefit with the monthly payments works better for us."

If the bill becomes law, retirement officials estimate Johnson would receive a monthly benefit of roughly $4,500 a month. Payments would also continue to be made to Johnson's wife if Johnson dies before she does.

To join the fund, Johnson would transfer about $615,000 from his 401(k)-style fund to the traditional pension system. The bill would also require him to pay more into the system if the plan changes life expectancy or interest rate assumptions before 2018.

While the Legislature has let employees buy back years of service to correct a mistake, it's never allowed anyone to join a pension after earlier electing to opt out of the plan, said Mary Most Vanek, executive director of the Public Employee Retirement Association of Minnesota.

"Our concern is that if it's done in this case that there are others who can come forward and make a case as to why they should be allowed to do the same," Vanek said.

An analysis found Johnson would fare far better by joining the public pension than if he opted to buy an annuity on the private marketplace Vanek added.

Johnson and the chief backers of the bill, however, say the Legislature routinely grants these kinds of exemptions.

Anyone willing to pay the cost of the change should be allowed to do so, said Rep. Phyllis Kahn, DFL-Minneapolis. "If fits in with the basic principle in that we can do things that help people as long as they do not cost the pension fund," she said.

The Legislature appears to be moving forward with Johnson's request despite Vanek's opposition. The House and Senate both passed bills that would allow Johnson to make the switch and the houses are currently negotiating their differences.

A bipartisan group of lawmakers, however, is questioning the decision.

Johnson should not be allowed to join the pension plan after declining the option, said Rep. Tim O'Driscoll, R-Sartell. "It's akin to betting on the game when you know the final results," he said, adding that he worries the request will cost taxpayer money.

Johnson said his desire to buy into the plan should not cost the state anything. That depends, however, on how long he and his wife live. In about a dozen years they could begin taking more in pension than they paid in.

Johnson said he's not gaming the system.

"It's only gaming the system if you know exactly how long you're going to live," he said. "I don't know how long that's going to be. No legislator knows how long that's going to be."