HF 2448

as introduced - 88th Legislature (2013 - 2014) Posted on 02/27/2014 03:42pm

A bill for an act
relating to retirement; general employees retirement plan of the Public
Employees Retirement Association; modifying coordinated program employee
and employer contribution rates; amending Minnesota Statutes 2012, section
353.27, subdivisions 2, 3, 3b.

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

Section 1.

Minnesota Statutes 2012, section 353.27, subdivision 2, is amended to read:

Subd. 2.

General employees retirement plan; employee contribution.

(a) For
a basic member of the general employees retirement plan of the Public Employees
Retirement Association, the employee contribution is 9.10 percent of salary. For a
coordinated member of the general employees retirement plan of the Public Employees
Retirement Association, the employee contribution is the following percentage of salary
plus any contribution rate adjustment under subdivision 3b:

	deleted text begin Effective before January 1, 2011 deleted text end	deleted text begin 6.00 deleted text end
	Effective after December 31, 2010	6.25
	new text begin Effective January 1, 2015 new text end	new text begin 6.50 new text end

(b) These contributions must be made by deduction from salary as defined in section
353.01, subdivision 10, in the manner provided in subdivision 4. If any portion of a
member's salary is paid from other than public funds, the member's employee contribution
must be based on the total salary received by the member from all sources.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2.

Minnesota Statutes 2012, section 353.27, subdivision 3, is amended to read:

Subd. 3.

General employees retirement plan; employer contribution.

(a) For
a basic member of the general employees retirement plan of the Public Employees
Retirement Association, the employer contribution is 9.10 percent of salary. For a
coordinated member of the general employees retirement plan of the Public Employees
Retirement Association, the employer contribution is the following percentage of salary
plus any contribution rate adjustment under subdivision 3b:

	deleted text begin Effective before January 1, 2011 deleted text end	deleted text begin 6.00 deleted text end
	Effective after December 31, 2010	6.25
	new text begin Effective January 1, 2015 new text end	new text begin 6.5 new text end

(b) This contribution must be made from funds available to the employing
subdivision by the means and in the manner provided in section 353.28.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

Minnesota Statutes 2012, section 353.27, subdivision 3b, is amended to read:

Subd. 3b.

Change in employee and employer contributions in certain instances.

(a) For purposes of this section:

(1) a contribution sufficiency exists if the total of the employee contribution under
subdivision 2, the employer contribution under subdivision 3, the additional employer
contribution under subdivision 3a, and any additional contribution previously imposed
under this subdivision exceeds the total of the normal cost, the administrative expenses,
and the amortization contribution of the general employees retirement plan as reported in
the most recent actuarial valuation of the retirement plan prepared by the actuary retained
under section 356.214 and prepared under section 356.215 and the standards for actuarial
work of the Legislative Commission on Pensions and Retirement; and

(2) a contribution deficiency exists if the total of the employee contributions under
subdivision 2, the employer contributions under subdivision 3, the additional employer
contribution under subdivision 3a, and any additional contribution previously imposed
under this subdivision is less than the total of the normal cost, the administrative expenses,
and the amortization contribution of the general employees retirement plan as reported in
the most recent actuarial valuation of the retirement plan prepared by the actuary retained
under section 356.214 and prepared under section 356.215 and the standards for actuarial
work of the Legislative Commission on Pensions and Retirement.

(b) Employee and employer contributions to the general employees retirement plan
under subdivisions 2 and 3 must be adjusted:

(1) if deleted text begin , on or after July 1, 2010, deleted text end the regular actuarial valuation of the general employees
retirement plan of the Public Employees Retirement Association under section 356.215
indicates that there is a contribution sufficiency under paragraph (a) greater than one
percent of covered payroll and that the sufficiency has existed for at least two consecutive
years, the coordinated program employee and employer contribution rates must be
decreased as determined under paragraph (c) to a level such that the sufficiency is no
greater than one percent of covered payroll based on the most recent actuarial valuation; or

(2) if deleted text begin , on or after July 1, 2010, deleted text end the regular actuarial valuation of the general
employees retirement plan of the Public Employees Retirement Association under section
356.215 indicates that there is a contribution deficiency equal to or greater than 0.5 percent
of covered payroll and that the deficiency has existed for at least two consecutive years,
the coordinated program employee and employer contribution rates must be increased
as determined under paragraph (d) to a level such that no deficiency exists based on the
most recent actuarial valuation.

(c) If the actuarially required contribution of the general employees retirement plan is
less than the total support provided by the combined employee and employer contribution
rates under subdivisions 2, 3, and 3a, by more than one percent of covered payroll,
the general employees retirement plan coordinated program employee and employer
contribution rates under subdivisions 2 and 3 must be decreased incrementally over one or
more years by no more than 0.25 percent of pay each for employee and employer matching
contribution rates to a level such that there remains a contribution sufficiency of at least one
percent of covered payroll. No contribution rate decrease may be made until at least two
years have elapsed since any adjustment under this subdivision has been fully implemented.

(d) If the actuarially required contribution exceeds the total support provided by the
combined employee and employer contribution rates under subdivisions 2, 3, and 3a,
the employee and matching employer contribution rates must be increased equally to
eliminate that contribution deficiency. If the contribution deficiency is:

(1) less than two percent, the incremental increase may be up to 0.25 percent for the
general employees retirement plan employee and matching employer contribution rates;

(2) greater than 1.99 percent and less than 4.01 percent, the incremental increase
may be up to 0.5 percent for the employee and matching employer contribution rates; or

(3) greater than four percent, the incremental increase may be up to 0.75 percent for
the employee and matching employer contribution.

(e) The general employees retirement plan contribution sufficiency or deficiency
determination under paragraphs (a) to (d) must be made without the inclusion of the
contributions to, the funded condition of, or the actuarial funding requirements of the
MERF division.

(f) Any recommended adjustment to the contribution rates must be reported to the
chair and the executive director of the Legislative Commission on Pensions and Retirement
by January 15 following new text begin the new text end receipt of the most recent annual actuarial valuation prepared
under section 356.215. If the Legislative Commission on Pensions and Retirement does
not recommend against the rate change or does not recommend a modification in the rate
change, the recommended adjustment becomes effective deleted text begin on the first day of the first full
payroll period in the fiscal year deleted text end new text begin for any salary paid on or after the January 1 next new text end following
deleted text begin receipt of the most recent actuarial valuation that gave rise to the adjustment deleted text end new text begin the legislative
session in which the Legislative Commission on Pensions and Retirement did not take any
action to disapprove or modify the Public Employees Retirement Association Board of
Trustees' recommendation to adjust the employee and employer rates new text end .

(g) A contribution sufficiency of up to one percent of covered payroll must be held in
reserve to be used to offset any future actuarially required contributions that are more than
the total combined employee and employer contributions under subdivisions 2, 3, and 3a.

(h) Before any reduction in contributions to eliminate a sufficiency in excess of one
percent of covered pay may be recommended, the executive director must review any
need for a change in actuarial assumptions, as recommended by the actuary retained under
section 356.214 in the most recent experience study of the general employees retirement
plan prepared under section 356.215 and the standards for actuarial work promulgated by
the Legislative Commission on Pensions and Retirement that may result in an increase
in the actuarially required contribution and must report to the Legislative Commission
on Pensions and Retirement any recommendation by the board to use the sufficiency
exceeding one percent of covered payroll to offset the impact of an actuarial assumption
change recommended by the actuary retained under section 356.214, subdivision 1, and
reviewed by the actuary retained by the commission under section 356.214, subdivision 4.

(i) No contribution sufficiency in excess of one percent of covered pay may be
proposed to be used to increase benefits, and no benefit increase may be proposed that
would initiate an automatic adjustment to increase contributions under this subdivision.
Any proposed benefit improvement must include a recommendation, prepared by the
actuary retained under section 356.214, subdivision 1, and reviewed by the actuary
retained by the Legislative Commission on Pensions and Retirement as provided under
section 356.214, subdivision 4, on how the benefit modification will be funded.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end