HF 2230

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to retirement; statewide and major local
retirement plans; modifying the manner for dividing
public pension benefits as marital property in a
marriage dissolution action; amending Minnesota
Statutes 2004, sections 356.20, subdivision 4;
356.215, subdivision 13; 518.58, subdivision 4;
proposing coding for new law in Minnesota Statutes,
chapter 356.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2004, section 356.20,
subdivision 4, is amended to read:

Subd. 4.

Contents of financial report.

(a) The financial
report required by this section must contain financial
statements and disclosures that indicate the financial
operations and position of the retirement plan and fund. The
report must conform with generally accepted governmental
accounting principles, applied on a consistent basis. The
report must be audited. The report must include, as part of its
exhibits or footnotes, an actuarial disclosure item based on the
actuarial valuation calculations prepared by the
commission-retained actuary or by the actuary retained by the
retirement fund or plan, if applicable, according to applicable
actuarial requirements enumerated in section 356.215, and
specified in the most recent standards for actuarial work
adopted by the Legislative Commission on Pensions and
Retirement. The accrued assets, the accrued liabilities,
including accrued reserves, and the unfunded actuarial accrued
liability of the fund or plan must be disclosed. The disclosure
item must contain a declaration by the actuary retained by the
Legislative Commission on Pensions and Retirement or the actuary
retained by the fund or plan, whichever applies, specifying that
the required reserves for any retirement, disability, or
survivor benefits provided under a benefit formula are computed
in accordance with the entry age actuarial cost method and with
the most recent applicable standards for actuarial work adopted
by the Legislative Commission on Pensions and Retirement.

(b) Assets of the fund or plan contained in the disclosure
item must include the following statement of the actuarial value
of current assets as defined in section 356.215, subdivision 1:

Value Value

at cost at market

Cash, cash equivalents, and

short-term securities ......... .........

Accounts receivable ......... .........

Accrued investment income ......... .........

Fixed income investments ......... .........

Equity investments other

than real estate ......... .........

Real estate investments ......... .........

Equipment ......... .........

Equity in the Minnesota

postretirement investment

fund ......... .........

Other ......... .........

Total assets

Value at cost .........

Value at market .........

Value of current assets .........

(c) The unfunded actuarial accrued liability of the fund or
plan contained in the disclosure item must include the following
measures of unfunded actuarial accrued liability, using the
value of current assets:

(1) unfunded actuarial accrued liability, determined by
subtracting the current assets and the present value of future
normal costs from the total current and expected future benefit
obligations; and

(2) unfunded pension benefit obligation, determined by
subtracting the current assets from the actuarial present value
of credited projected benefits.

If the current assets of the fund or plan exceed the
actuarial accrued liabilities, the excess must be disclosed and
indicated as a surplus.

(d) The pension benefit obligations schedule included in
the disclosure must contain the following information on the
benefit obligations:

(1) the pension benefit obligation, determined as the
actuarial present value of credited projected benefits on
account of service rendered to date, separately identified as
follows:

(i) for annuitants;
retirement annuities new text begin for retired members;
retirement annuities for alternate payees new text end ;
disability benefits;
surviving spouse and child benefits;
(ii) for former members without vested rights;
(iii) for deferred annuitants' benefits, including
any augmentation;
(iv) for active employees;
accumulated employee contributions,
including allocated investment income;
employer-financed benefits vested;
employer-financed benefits nonvested;
total pension benefit obligation; and

(2) if there are additional benefits not appropriately
covered by the foregoing items of benefit obligations, a
separate identification of the obligation.

(e) Any additional statements or exhibits or more detailed
or subdivided itemization of a disclosure item that will enable
the management of the fund to portray a true interpretation of
the fund's financial condition must be included in the
additional statements or exhibits.

Sec. 2.

Minnesota Statutes 2004, section 356.215,
subdivision 13, is amended to read:

Subd. 13.

Membership tabulation.

(a) The actuarial
valuation must contain a tabulation of active membership and
annuitants in the fund. If the membership of a fund is under
more than one general benefit program, a separate tabulation
must be made for each general benefit program.

(b) The tabulations must be prepared by the administration
of the pension fund and must contain the following information:

(1) Active members Number
As of last valuation date
New entrants
Total
Separations from active service
Refund of contributions
Separation with deferred annuity
Separation with neither refund
nor deferred annuity
Disability
Death
Retirement with service annuity

Total separations
As of current valuation date
(2) Annuitants Number
As of last valuation date
New deleted text begin entrants deleted text end new text begin annuitants
new text end Total
Terminations
Deaths
Other

Total terminations
As of current valuation date

(c) The tabulation required under paragraph (b), clause
(2), must be made separately for each of the following classes
of benefit recipients:

(1) service retirement annuitants;

(2) new text begin alternate payee annuitants;
new text end

new text begin (3) new text end disability benefit recipients;

deleted text begin (3) deleted text end new text begin (4) new text end survivor benefit recipients; and

deleted text begin (4) deleted text end new text begin (5) new text end deferred annuitants.

Sec. 3.

new text begin [356.48] MARRIAGE DISSOLUTION PUBLIC RETIREMENT
ANNUITY DIVISION.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this
section, the terms defined in this subdivision have the meanings
given them, unless the context clearly indicates otherwise.
new text end

new text begin (b) "Alternate payee" means the person designated in a
domestic relations order as a person to whom a portion or all of
a participant's retirement annuity or service pension under the
retirement plan is payable.
new text end

new text begin (c) "Domestic relations order" means a judgment, decree, or
order issued by a court of competent jurisdiction under a
domestic relations law of any state or territory of the United
States relating to a marriage that terminated after July 1,
2005, and conforms to the requirements of subdivision 2.
new text end

new text begin (d) "Participant" means an active member, a retired member,
or a deferred member of a covered retirement plan.
new text end

new text begin (e) "Retirement plan" means a covered retirement plan under
subdivision 6.
new text end

new text begin Subd. 2. new text end

new text begin Domestic relations order requirements. new text end

new text begin A
domestic relations order must:
new text end

new text begin (1) relate to a marriage that terminates after July 1,
2005, except as provided in section 5;
new text end

new text begin (2) assign all or a portion of the value of a participant's
accumulated retirement coverage credited in a retirement plan
under this section to a former spouse to satisfy a marriage
dissolution marital property division obligation;
new text end

new text begin (3) name the retirement plan and be submitted to the chief
administrative officer of the retirement plan;
new text end

new text begin (4) clearly specify the following information:
new text end

new text begin (i) the name, last known mailing address, date of birth,
and tax reporting identification numbers of the participant and
the alternate payee; and
new text end

new text begin (ii) the percentage of the participant's benefits to be
paid to the alternate payee, but not to exceed 100 percent;
new text end

new text begin (5) not require a form of payment or any other benefit to
the alternate payee that is not otherwise provided under the
retirement plan;
new text end

new text begin (6) not require the payment of benefits to an alternate
payee which are required by a prior domestic relations order to
be paid to another alternate payee or another person; and
new text end

new text begin (7) satisfy the requirements of an applicable rule
established by the governing board of the retirement plan under
chapter 14.
new text end

new text begin Subd. 3. new text end

new text begin Domestic relations review order. new text end

new text begin (a) When the
chief administrative officer of the retirement plan receives a
domestic relations order, the administrative officer shall
determine whether or not the document is a qualified domestic
relations order. The administrative officer shall promptly
notify the participant and the alternate payee of that
determination.
new text end

new text begin (b) The chief administrative officer may place a
restrictive hold on a participant's account for up to 90 days
while the administrator determines the validity of the domestic
relations order and processes the order. The restrictive hold
functions as a delay in processing any refund application or
retirement annuity application.
new text end

new text begin (c) The governing body of the retirement plan, the
participant's employer, and the chief administrative officer of
the retirement plan and any of their employees or agents are
immune from civil liability for any act or omission directly
resulting from implementing a domestic relations order and
consistent with the order.
new text end

new text begin Subd. 4. new text end

new text begin Division of benefits. new text end

new text begin (a) Notwithstanding any
provision of law to the contrary, a participant's accumulated
rights and benefits in a retirement plan may be divided by a
court of competent jurisdiction under a qualified domestic
relations order. The qualified domestic relations order must
provide for a division of marital property in connection with a
marriage dissolution only as specified in this section.
new text end

new text begin (b) If the participant is an active member or deferred
member on the decree date, the division must be the percentages
specified by the court, but not to exceed 100 percent in total,
of the participant's allowable or formula service credit,
whichever applies, on the day before the decree date.
new text end

new text begin (c) If the participant is a retired member on the decree
date, the division must be the percentages specified by the
court, but not to exceed 100 percent in total, of the present
value of the participant's retirement annuity, retirement
allowance, or service pension, whichever applies, on the day
before the decree date, calculated on the basis of the
postretirement actuarial interest assumption and the retired
life mortality assumption applicable to the retirement plan.
new text end

new text begin (d) Upon division under this subdivision, the participant's
account in the retirement plan must be reduced by the service
credit amount or percent value amount transferred to the
applicable alternate payee for all purposes except for
eligibility to retire under section 352.116, subdivision 1,
paragraph (a) or (b); 353.30, subdivision 1a or 1b; 354.44,
subdivision 1 or 6, paragraph (c), clause (ii) or (iii); or
354A.31, subdivision 6, paragraph (a) or (b). An account must
be established by the retirement plan for the alternate payee.
The following must be credited to the alternate payee's account:
new text end

new text begin (1) the amount of service credit transferred; and
new text end

new text begin (2) the applicable final salary or final average salary
figure of the participant as of the day before the decree date
if the participant was an active or deferred member on the
decree date or the present value transferred if the participant
was a retired member on the decree date.
new text end

new text begin Subd. 5. new text end

new text begin Commencement of benefit payment to alternate
payee. new text end

new text begin (a) Upon filing of a written application for a refund of
member contributions, plus interest, the alternate payee is
entitled to receive a refund of the member contributions
attributable to the alternate payee under the domestic relations
order. If the domestic relations order does not allocate the
member contributions allocated to the alternate payee, the
contributions must be allocated for each fiscal year in the same
percentage division as the total pension benefits divided as
marital property.
new text end

new text begin (b) Upon filing a written application for a benefit on or
after the date on which the participant attains or would have
attained the minimum age for the commencement of an annuity,
allowance, or pension under the governing provisions of the
retirement plan, the alternate payee is eligible to receive a
benefit on the basis of the alternate payee's account.
new text end

new text begin (c) For an alternate payee where service credit has been
divided and transferred, the alternate payee's benefit must be
determined based on the present value of portions of the
participant's retirement annuity represented by the service
credit transferred to the alternate payee. For an alternate
payee where the present value of a current annuity has been
divided and transferred, the alternate payee's benefit must be
determined based on the present value figures transferred.
new text end

new text begin (d) Where service credit has been divided and transferred,
the present value determination of the transferred portion of
the participant's annuity, allowance, or pension must be made
under the retirement plan governing laws in effect on the date
of the domestic relations order, based on the final salary or
final average salary credited to the alternate payee, and is
subject to deferred annuity augmentation, if the retirement plan
so provides, from the date of the domestic relations order to
the date on which the benefit becomes payable, and based on the
age of the participant as of the date of the domestic relations
order.
new text end

new text begin (e) The alternate payee benefit under paragraph (c) or (d)
is payable as a single life annuity for the lifetime of the
alternate payee and the alternate payee may elect an actuarial
equivalent optional retirement annuity form. The optional
retirement annuity form must be one of the forms generally
provided by the plan to newly retiring members. Notwithstanding
section 518.58, subdivision 4, the alternate payee benefit under
paragraph (c) or (d) is also payable in a lump sum amount.
new text end

new text begin (f) All present value determinations must be made using the
postretirement actuarial interest assumptions applicable to the
retirement plan, the retired life mortality assumption
applicable to the retirement plan, and the alternate payee's age
on the decree date.
new text end

new text begin Subd. 6. new text end

new text begin Covered retirement plans. new text end

new text begin This section applies
to the following retirement plans:
new text end

new text begin (1) the general state employees retirement plan of the
Minnesota State Retirement System, established under chapter
352;
new text end

new text begin (2) the correctional state employees retirement plan of the
Minnesota State Retirement System, established under chapter
352;
new text end

new text begin (3) the unclassified employees retirement program,
established under chapter 352D;
new text end

new text begin (4) the State Patrol retirement fund, established under
chapter 352B;
new text end

new text begin (5) the legislators retirement plan, established under
chapter 3A;
new text end

new text begin (6) the elective state officers retirement plan,
established under chapter 352C;
new text end

new text begin (7) the general employees retirement plan of the Public
Employees Retirement Association, established under chapter 353;
new text end

new text begin (8) the public employees police and fire retirement plan of
the Public Employees Retirement Association, established under
chapter 353;
new text end

new text begin (9) the local government correctional service retirement
plan of the Public Employees Retirement Association, established
under chapter 353E;
new text end

new text begin (10) the Teachers Retirement Association, established under
chapter 354;
new text end

new text begin (11) the Minneapolis Employees Retirement Fund, established
under chapter 422A;
new text end

new text begin (12) the Minneapolis Teachers Retirement Fund Association,
established under chapter 354A;
new text end

new text begin (13) the St. Paul Teachers Retirement Fund Association,
established under chapter 354A;
new text end

new text begin (14) the Duluth Teachers Retirement Fund Association,
established under chapter 354A;
new text end

new text begin (15) the judges' retirement fund, established by sections
490.121 to 490.132;
new text end

new text begin (16) the Bloomington Firefighters Relief Association,
established under Laws 1965, chapter 446, as amended;
new text end

new text begin (17) the Fairmont Police Relief Association, established
under Minnesota Statutes 2000, sections 423.41 to 423.62;
new text end

new text begin (18) the Minneapolis Firefighters Relief Association,
established under chapter 423C;
new text end

new text begin (19) the Minneapolis Police Relief Association, established
under chapter 423B; and
new text end

new text begin (20) the Virginia Fire Department Relief Association,
established under Laws 1953, chapter 399, as amended.
new text end

Sec. 4.

Minnesota Statutes 2004, section 518.58,
subdivision 4, is amended to read:

Subd. 4.

Pension plans.

(a) The division of marital
property that represents pension plan benefits or rights in the
form of future pension plan payments:

(1) is payable only to the extent of the amount of the
pension plan benefit payable under the terms of the plan;

(2) is not payable for a period that exceeds the time that
pension plan benefits are payable to the pension plan benefit
recipient;

(3) is not payable in a lump sum amount from pension plan
assets attributable in any fashion to a spouse with the status
of an active member, deferred retiree, or benefit recipient of a
pension plan;

(4) if the former spouse to whom the payments are to be
made dies prior to the end of the specified payment period with
the right to any remaining payments accruing to an estate or to
more than one survivor, is payable only to a trustee on behalf
of the estate or the group of survivors for subsequent
apportionment by the trustee; and

(5) in the case of public pension plan benefits or rights,
may not commence until the public plan member deleted text begin submits a valid
application for a public pension plan benefit and the benefit
becomes payable deleted text end new text begin attains the minimum age for receipt of a
retirement annuity and is divided under section 356.48 new text end .

(b) The individual retirement account plans established
under chapter 354B may provide in its plan document, if
published and made generally available, for an alternative
marital property division or distribution of individual
retirement account plan assets. If an alternative division or
distribution procedure is provided, it applies in place of
paragraph (a), clause (5).

Sec. 5. new text begin RETROACTIVE APPLICATION TO CERTAIN MARRIAGE
DISSOLUTIONS.
new text end

new text begin (a) Notwithstanding any provision of Minnesota Statutes,
section 356.48, to the contrary, the general state employees
retirement plan of the Minnesota State Retirement System shall
implement a domestic relations order from an eligible person
described in paragraph (b).
new text end

new text begin (b) An eligible person is a person:
new text end

new text begin (1) who was born on August 12, 1944;
new text end

new text begin (2) who resides in Edina, Minnesota; and
new text end

new text begin (3) whose marriage was dissolved on December 15, 1999.
new text end

new text begin (c) An eligible person must provide adequate written
documentation to the chief administrative officer to confirm
that the eligibility requirements in paragraph (b) are met.
new text end

Sec. 6. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 5 are effective July 1, 2005.
new text end