as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to retirement; modifying the computation of 1.3 the retirement annuity formula for certain hirees 1.4 covered by the Minnesota state retirement system, the 1.5 public employee retirement association, and the 1.6 teachers retirement association; amending Minnesota 1.7 Statutes 1998, sections 352.01, subdivision 25; 1.8 352.115, subdivision 3; 352.116, subdivisions 1 and 1.9 1a; 353.01, subdivision 37; 353.29, subdivision 3; 1.10 353.30, subdivisions 1, 1a, 1b, and 1c; 354.05, 1.11 subdivision 38; and 354.44, subdivision 6. 1.12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.13 Section 1. Minnesota Statutes 1998, section 352.01, 1.14 subdivision 25, is amended to read: 1.15 Subd. 25. [NORMAL RETIREMENT AGE.] Unless another age is 1.16 specified elsewhere in law, "normal retirement age" means age 65 1.17 for a person whofirst becameis a covered employee or who has 1.18 service credit as a covered employee and who is a member of a 1.19 pension fund listed in section 356.30, subdivision 3, before1.20July 1, 1989. For a person who first becomes a covered employee1.21after June 30, 1989, normal retirement age means the higher of1.22age 65 or "retirement age," as defined in United States Code,1.23title 42, section 416(l), as amended, but not to exceed age 66. 1.24 Sec. 2. Minnesota Statutes 1998, section 352.115, 1.25 subdivision 3, is amended to read: 1.26 Subd. 3. [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 1.27 in conjunction with section 352.116, subdivision 1, applies to a 1.28 person whobecameis a covered employee or who has service 2.1 credit as a covered employee and who is a member of a pension 2.2 fund listed in section 356.30, subdivision 3,before July 1,2.31989,unless paragraph (b), in conjunction with section 352.116, 2.4 subdivision 1a, produces a higher annuity amount, in which case 2.5 paragraph (b) will apply. The employee's average salary, as 2.6 defined in subdivision 2, multiplied by the percent specified in 2.7 section 356.19, subdivision 1, per year of allowable service for 2.8 the first ten years and the percent specified in section 356.19, 2.9 subdivision 2, for each later year of allowable service and pro 2.10 rata for completed months less than a full year shall determine 2.11 the amount of the retirement annuity to which the employee is 2.12 entitled. 2.13 (b) This paragraph applies toa person who has become at2.14least 55 years old and first became a covered employee after2.15June 30, 1989, and toanyothercovered employee who has become 2.16 at least 55 years old and whose annuity amount, when calculated 2.17 under this paragraph and in conjunction with section 352.116, 2.18 subdivision 1a, is higher than it is when calculated under 2.19 paragraph (a), in conjunction with section 352.116, subdivision 2.20 1. The employee's average salary, as defined in subdivision 2, 2.21 multiplied by the percent specified in section 356.19, 2.22 subdivision 2, for each year of allowable service and pro rata 2.23 for months less than a full year shall determine the amount of 2.24 the retirement annuity to which the employee is entitled. 2.25 Sec. 3. Minnesota Statutes 1998, section 352.116, 2.26 subdivision 1, is amended to read: 2.27 Subdivision 1. [REDUCED ANNUITY BEFORE NORMAL RETIREMENT 2.28 AGE.] (a) This subdivision appliesonlyto a person whofirst2.29becameis a covered employee or who has service credit as a 2.30 covered employee and who is a member of a pension fund listed in 2.31 section 356.30, subdivision 3,before July 1, 1989,and whose 2.32 annuity is higher when calculated under section 352.115, 2.33 subdivision 3, paragraph (a), in conjunction with this 2.34 subdivision than when calculated under section 352.115, 2.35 subdivision 3, paragraph (b), in conjunction with subdivision 1a. 2.36(a)(b) Anyemployeeperson specified in paragraph (a) who 3.1 is eligible for a retirement annuity under section 352.115, 3.2 subdivision 1, and who retires before normal retirement age with 3.3 credit for at least three but less than 30 years of allowable 3.4 service shall be paid the normal retirement annuity provided in 3.5 section 352.115, subdivisions 2 and 3, paragraph (a), reduced by 3.6 one-quarter of one percent for each month that theemployee3.7 person is under normal retirement age at the time of 3.8 retirement.An employeeA person specified in paragraph (a) who 3.9 is eligible for a retirement annuity under section 352.115, 3.10 subdivision 1, and who retires prior to age 62 with credit for 3.11 at least 30 years of allowable service shall be paid the normal 3.12 retirement annuity provided in section 352.115, subdivisions 2 3.13 and 3, paragraph (a), reduced by one-quarter of one percent for 3.14 each month that theemployeeperson is under age 62 at the time 3.15 of retirement. 3.16(b)(c) Any person specified in paragraph (a) whose 3.17 attained age plus credited allowable service totals 90 years is 3.18 entitled, upon application, to a retirement annuity in an amount 3.19 equal to the normal annuity provided in section 352.115, 3.20 subdivisions 2 and 3, paragraph (a), without any reduction by 3.21 reason of early retirement. 3.22 Sec. 4. Minnesota Statutes 1998, section 352.116, 3.23 subdivision 1a, is amended to read: 3.24 Subd. 1a. [ACTUARIAL REDUCTION FOR EARLY RETIREMENT.] This 3.25 subdivision applies to a person who is a covered employee, or 3.26 who has service credit as a covered employee and who is a member 3.27 of a pension fund listed in section 356.30, subdivision 3, who 3.28 has become at least 55 years oldand first became a covered3.29employee after June 30, 1989, and to any other covered employee3.30who has become at least 55 years oldand whose annuity is higher 3.31 when calculated under section 352.115, subdivision 3, paragraph 3.32 (b), in conjunction with this subdivision than when calculated 3.33 under section 352.115, subdivision 3, paragraph (a), in 3.34 conjunction with subdivision 1. Acovered employeeperson 3.35 specified in this subdivision who retires before the normal 3.36 retirement age shall be paid the normal retirement annuity 4.1 provided in section 352.115, subdivisions 2 and 3, paragraph 4.2 (b), reduced so that the reduced annuity is the actuarial 4.3 equivalent of the annuity that would be payable to the employee 4.4 if the employee deferred receipt of the annuity and the annuity 4.5 amount were augmented at an annual rate of three percent 4.6 compounded annually from the day the annuity begins to accrue 4.7 until the normal retirement age. 4.8 Sec. 5. Minnesota Statutes 1998, section 353.01, 4.9 subdivision 37, is amended to read: 4.10 Subd. 37. [NORMAL RETIREMENT AGE.] Unless another age is 4.11 specified elsewhere in law, "normal retirement age" means age 65 4.12 for a person whofirst becameis a public employee as defined in 4.13 subdivisions 2 and 2a or who has service credit as a public 4.14 employee and who is a member of a pension fund listed in section 4.15 356.30, subdivision 3, before July 1, 1989. For a person who4.16first becomes a public employee after June 30, 1989, "normal4.17retirement age" means the higher of age 65 or "retirement age,"4.18as defined in United States Code, title 42, section 416(l), as4.19amended, but not to exceed age 66. 4.20 Sec. 6. Minnesota Statutes 1998, section 353.29, 4.21 subdivision 3, is amended to read: 4.22 Subd. 3. [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 4.23 in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 4.24 1c, applies to any member whofirst becameis a public 4.25 employee as defined in section 353.01, subdivisions 2 and 2a, or 4.26 who has service credit as a public employee and who is a member 4.27 of a pension fund listed in section 356.30, subdivision 4.28 3,before July 1, 1989,unless paragraph (b), in conjunction 4.29 with section 353.30, subdivision 5, produces a higher annuity 4.30 amount, in which case paragraph (b) will apply. The average 4.31 salary as defined in subdivision 2, multiplied by the percent 4.32 specified in section 356.19, subdivision 3, for each year of 4.33 allowable service for the first ten years and thereafter by the 4.34 percent specified in section 356.19, subdivision 4, per year of 4.35 allowable service and completed months less than a full year for 4.36 the "basic member," and the percent specified in section 356.19, 5.1 subdivision 1, for each year of allowable service for the first 5.2 ten years and thereafter by the percent specified in section 5.3 356.19, subdivision 2, per year of allowable service and 5.4 completed months less than a full year for the "coordinated 5.5 member," shall determine the amount of the "normal" retirement 5.6 annuity. 5.7 (b) This paragraph appliesto a member whoif the eligible 5.8 individual has become at least 55 years old andfirst became a5.9public employee after June 30, 1989, and to any other member5.10whoseif the annuity amount, when calculated under this 5.11 paragraph and in conjunction with section 353.30, subdivision 5, 5.12 is higher than it is when calculated under paragraph (a), in 5.13 conjunction with section 353.30, subdivisions 1, 1a, 1b, and 5.14 1c. The average salary, as defined in subdivision 2, multiplied 5.15 by the percent specified in section 356.19, subdivision 4, for 5.16 each year of allowable service and completed months less than a 5.17 full year for a basic member and the percent specified in 5.18 section 356.19, subdivision 2, per year of allowable service and 5.19 completed months less than a full year for a coordinated member, 5.20 shall determine the amount of the normal retirement annuity. 5.21 Sec. 7. Minnesota Statutes 1998, section 353.30, 5.22 subdivision 1, is amended to read: 5.23 Subdivision 1. Upon separation from public service, any 5.24 person whofirst becameis a public employee or who has service 5.25 credit as a public employee and who is a member of a pension 5.26 fund listed in section 356.30, subdivision 3,before July 1,5.271989,and who has become at least 58 years old but not more than 5.28 normal retirement age and who received credit for not less than 5.29 20 years of allowable service is entitled upon application to a 5.30 retirement annuity in an amount equal to the normal annuity 5.31 provided in section 353.29, subdivisions 2 and 3, paragraph (a), 5.32 reduced by one-quarter of one percent for each month that the 5.33 member is under normal retirement age at the time of retirement. 5.34 Sec. 8. Minnesota Statutes 1998, section 353.30, 5.35 subdivision 1a, is amended to read: 5.36 Subd. 1a. Any person who first became a public employee or 6.1 who has service credit as a public employee and who is a member 6.2 of a pension fund listed in section 356.30, subdivision 6.3 3,before July 1, 1989,and whose attained age plus credited 6.4 allowable service totals 90 years is entitled upon application 6.5 to a retirement annuity in an amount equal to the normal annuity 6.6 provided in section 353.29, subdivisions 2 and 3, paragraph (a), 6.7 without any reduction in annuityby reason of suchdue to early 6.8 retirement. 6.9 Sec. 9. Minnesota Statutes 1998, section 353.30, 6.10 subdivision 1b, is amended to read: 6.11 Subd. 1b. Any person who first became a public employee or 6.12 who has service credit as a public employee and who is a member 6.13 of a pension fund listed in section 356.30, subdivision 6.14 3,before July 1, 1989,with 30 years or more of allowable 6.15 service credit, who elects early retirement under subdivision 1, 6.16 shall receive an annuity in an amount equal to the normal 6.17 annuity provided under section 353.29, subdivisions 2 and 3, 6.18 paragraph (a), reduced by one-quarter of one percent for each 6.19 month that the member is under age 62 at the time of retirement. 6.20 Sec. 10. Minnesota Statutes 1998, section 353.30, 6.21 subdivision 1c, is amended to read: 6.22 Subd. 1c. Any person who first became a public employee or 6.23 who has service credit as a public employee and who is a member 6.24 of a pension fund listed in section 356.30, subdivision 6.25 3,before July 1, 1989,and who has received credit for at least 6.26 30 years of allowable service or who has become at least 55 6.27 years old but not normal retirement age, and has received credit 6.28 for at least three years of allowable service is entitled upon 6.29 application to a retirement annuity in an amount equal to the 6.30 normal annuity provided in section 353.29, subdivisions 2 and 3, 6.31 paragraph (a), reduced by one-quarter of one percent for each 6.32 month that the member is under normal retirement age at the time 6.33 of retirement, except that for any member who has 30 or more 6.34 years of allowable service the reduction shall be applied only 6.35 for each month that the member is under age 62 at the time of 6.36 retirement. 7.1 Sec. 11. Minnesota Statutes 1998, section 354.05, 7.2 subdivision 38, is amended to read: 7.3 Subd. 38. [NORMAL RETIREMENT AGE.] "Normal retirement age" 7.4 means age 65 for a person whofirst becameis a member of the 7.5 association or who has service credit as a member of the 7.6 association and who is a member of a pension fund listed in 7.7 section 356.30, subdivision 3, before July 1, 1989. For a7.8person who first becomes a member of the association after June7.930, 1989, normal retirement age means the higher of age 65 or7.10"retirement age," as defined in United States Code, title 42,7.11section 416(l), as amended, but not to exceed age 66. 7.12 Sec. 12. Minnesota Statutes 1998, section 354.44, 7.13 subdivision 6, is amended to read: 7.14 Subd. 6. [COMPUTATION OF FORMULA PROGRAM RETIREMENT 7.15 ANNUITY.](1)(a) The formula retirement annuity must be 7.16 computedin accordance with the applicable provisions of the7.17formulas stated in clause (2) or (4)as specified in this 7.18 subdivision on the basis of each member's average salaryfor the7.19period of the member's formula service credit. 7.20 For all years of formula service credit, "average salary," 7.21 for the purpose of determining the member's retirement annuity, 7.22 means the average salary upon which contributions were made and 7.23 upon which payments were made to increase the salary limitation 7.24 provided in Minnesota Statutes 1971, section 354.511, for the 7.25 highest five successive years of formula service credit 7.26 provided, however, that such "average salary" shall not include 7.27 any more than the equivalent of 60 monthly salary payments. 7.28 Average salary must be based upon all years of formula service 7.29 credit if this service credit is less than five years. 7.30(2) This clause, in conjunction with clause (3), applies to7.31a person who first became a member of the association or a7.32member of a pension fund listed in section 356.30, subdivision7.333, before July 1, 1989, unless clause (4), in conjunction with7.34clause (5), produces a higher annuity amount, in which case7.35clause (4) applies.(b) The average salary, as defined inclause7.36(1)paragraph (a), multiplied by the following percentages per 8.1 year of formula service creditshall determinedetermines the 8.2 amount of the annuity to which the qualifying memberqualifying8.3thereforis entitled, unless otherwise specified in this 8.4 subdivision: 8.5 Coordinated Member Basic Member 8.6 Each year of service the percent the percent 8.7 during first ten specified in specified in 8.8 section 356.19, section 356.19, 8.9 subdivision 1, subdivision 3, 8.10 per year per year 8.11 Each year of service the percent the percent 8.12 thereafter specified in specified in 8.13 section 356.19, section 356.19, 8.14 subdivision 2, subdivision 4, 8.15 per year per year 8.16(3)(i)(c) Thisclauseparagraph appliesonlyto a person 8.17 whofirst becameis a member of the association ora memberwho 8.18 has service credit as a member of the association and who is a 8.19 member of a pension fund listed in section 356.30, subdivision 8.20 3,before July 1, 1989,and whose annuity is higher when 8.21 calculated underclause (2)paragraph (b), in conjunction with 8.22 thisclauseparagraph than when calculated underclause8.23(4)paragraph (d), in conjunction withclause (5)paragraph 8.24 (e).(ii)Where any member retires prior to normal retirement 8.25 age under a formula annuity, the member shall be paid a 8.26 retirement annuity in an amount equal to thenormalannuity 8.27 provided inclause (2)paragraph (b) reduced by one-quarter of 8.28 one percent for each month that the member is under normal 8.29 retirement age at the time of retirement except that for any 8.30 member who has 30 or more years of allowable service credit, the 8.31 reduction shall be applied only for each month that the member 8.32 is under age 62.(iii)Any member whose attained age plus 8.33 credited allowable service totals 90 years is entitled, upon 8.34 application, to a retirement annuity in an amount equal to 8.35 thenormalannuity provided inclause (2)paragraph (b), without 8.36 any reductionby reason ofdue to early retirement. 9.1(4)(d) Thisclauseparagraph applies to a person who is 9.2 a member of the association, or who has service credit as a 9.3 member of the association and who is a member of a pension fund 9.4 listed in section 356.30, subdivision 3, who has become at least 9.5 55 years old andfirst became a member of the association after9.6June 30, 1989, and to any other member who has become at least9.755 years old andwhose annuity amount when calculated under this 9.8clauseparagraph and in conjunction withclause (5)paragraph 9.9 (e), is higher than it is when calculated underclause9.10(2)paragraph (b), in conjunction withclause (3)paragraph (c). 9.11 The average salary, as defined inclause (1)paragraph (a), 9.12 multiplied by the percent specified by section 356.19, 9.13 subdivision 4, for each year of service for a basic member and 9.14 by the percent specified in section 356.19, subdivision 2, for 9.15 each year of service for a coordinated member shall determine 9.16 the amount of the retirement annuity to which the member is 9.17 entitled. 9.18(5)(e) Thisclauseparagraph applies to aperson9.19 member who has become at least 55 years old andfirst becomes a9.20member of the association after June 30, 1989, and to any other9.21member who has become at least 55 years old andwhose annuity is 9.22 higher when calculated underclause (4)paragraph (d) in 9.23 conjunction with thisclauseparagraph than when calculated 9.24 underclause (2)paragraph (b), in conjunction withclause9.25(3)paragraph (c). An employee who retires under the formula 9.26 annuity before the normal retirement age shall be paid the 9.27 normal annuity provided inclause (4)paragraph (d) reduced so 9.28 that the reduced annuity is the actuarial equivalent of the 9.29 annuity that would be payable to the employee if the employee 9.30 deferred receipt of the annuity and the annuity amount were 9.31 augmented at an annual rate of three percent compounded annually 9.32 from the day the annuity begins to accrue until the normal 9.33 retirement age. 9.34 Sec. 13. [EFFECTIVE DATE.] 9.35 Sections 1 to 12 are effective May 16, 1999.