Public Pension Profiles: Minnesota State Retirement System Executive Director, Erin Leonard

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• On: 06/14/2023 10:33:36
• In: Public Pension Profiles
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By Lizzy Lees, NCPERS

As part of an ongoing series of public pension executive profiles, NCPERS spoke with Erin Leonard, executive director of the Minnesota State Retirement System.

Please note: This interview has been edited for clarity. If you would like to participate in a public pension profile interview, please contact communications@ncpers.org.

Tell me a little about the Minnesota State Retirement System (MSRS) and the members you serve.
The Minnesota State Retirement System is one of three large statewide retirement systems in the state of Minnesota. In total, we have over $29 billion in assets and serve a broad base of all types of public employees around the state. We have approximately 141,000 members participating in our defined benefit (DB) plans and over 250,000 in our defined contribution (DC) plans. It's very satisfying to help all different kinds of people throughout the state.

We administer five defined benefit (DB) pension plans for state employees and four defined contribution (DC) plans for various groups. Our deferred compensation plan is a 457 plan that is available to all public employees in Minnesota. We have almost 100,000 participants. Over 120,000 public employees in the state participate in our health care savings plan. It's a unique health care arrangement that allows people to save for expenses post-retirement, participation is bargained and mandatory so it's tax free.

We also have an unclassified plan which is available to state employees. It is a defined contribution plan with some DB features for employees such as commissioners, appointees, or legislative staffers. Then we administer a Hennepin County supplemental plan. It's an unqualified plan that was closed in 1983, so we just do the administration for the county.

Since the ‘Great Resignation,' staff recruitment and retention has been a challenge across industries. How important do you think offering retirement and health benefits—such as a defined benefit program—are for retaining and attracting quality employees?
I think retirement and health benefits are one component—and a valuable component—of retention and recruitment. Knowing that they have a defined benefit pension in the future helps a lot with retaining staff, especially in positions where the salary might not be very high but there are education requirements.

In offering those benefits, people see the opportunity for a secure financial future that they don't have to worry about throughout their career, particularly those in human services industries and police and fire. I think a lot of employees with lower salaries appreciate having that defined benefit as they approach retirement because they may not be able to save on their own without that disciplined mandatory approach.

What changes have you seen in the public pension landscape in your nearly 20 years at the MSRS?
I've seen a shift in how public pensions view risk and risk mitigation, which has been influenced by outside regulations and external organizations. For example, GASB has changed some standards that have forced public pension plans to look at how to manage risk a little bit better and not just look at current funding status. Similarly, rating agencies have had a stronger interest in the funding status of public pension plans from a rating perspective for bonds for the state. Those influences have required our industry to be more mindful of the impact we have not just on our membership, but on other areas of government and regulation.

What initially drew you to working in the public pension space? And what do you enjoy most about working for the MSRS?
Before working for MSRS, I worked in benefits at the legislature, which is where I started learning about pensions. I really liked the mission of pensions—the idea of building that strong foundation for the financial futures of public employees. Their job is to care for other people, so it's our job to make sure they're cared for when they get to retirement.

Working for the MSRS seemed like the perfect way to help people while working in an area that interests me. Pensions are fascinating, and they're always changing so you're never bored. It's an area where you don't really stagnate, which was one of the initial draws.

While working at the legislature, I did an informational interview with my predecessor which further inspired me to pursue this path. He and I worked together that whole time before he retired, and he was a great mentor and advocate to help build capacity within our team.

As a faculty advisor for the 2023 Chief Officers Summit, what are you looking forward to most this year?
This will be my first Chief Officers Summit, and I'm really looking forward to the networking aspect. When you're in this type of role, you don't necessarily have the opportunity to connect with your peers as often as you'd like.

I'm looking forward to hearing how people are navigating this new normal after the pandemic, discussing the challenges with the markets, but also just making those connections with peers. That basic networking is something that I really have grown to value and appreciate.