HF 3100

2nd Engrossment - 93rd Legislature (2023 - 2024) Posted on 05/20/2023 10:45am

A bill for an act
relating to retirement; reducing the actuarial assumption for investment rate of
return; eliminating the delay to normal retirement age on the commencement of
postretirement adjustments and reducing the vesting requirement for the general
employees retirement plans of the Minnesota State Retirement System and the
Public Employees Retirement Association; modifying the postretirement adjustment
for the local government correctional service retirement plan; providing a onetime
postretirement adjustment to all pension plan members; temporarily reducing the
employee contribution rate for the general state employees retirement plan;
modifying the expiration date for supplemental employer contributions to the State
Patrol and correctional state employees plans and for the state aid to the judges
plan; providing for an unreduced retirement annuity upon reaching age 62 with
30 years of service and increasing the employee contribution rate for the St. Paul
Teachers Retirement Fund Association; appropriating money for onetime direct
state aids to the pension plans, an incentive program for paying monetary incentives
to join the statewide volunteer firefighter plan, and the Legislative Commission
on Pensions and Retirement for actuarial services to assess the actuarial cost of
pension legislation; amending Minnesota Statutes 2022, sections 352.04,
subdivision 2; 352.115, subdivision 1; 352.92, subdivision 2a; 352B.02, subdivision
1c; 353.01, subdivision 47; 354A.12, subdivision 1; 354A.31, subdivision 7, by
adding a subdivision; 356.215, subdivision 8; 356.415, subdivisions 1, 1b, 1g;
356.59; 490.123, subdivision 5.

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

ARTICLE 1

REDUCTION OF INTEREST RATES

Section 1.

Minnesota Statutes 2022, section 356.215, subdivision 8, is amended to read:

Subd. 8.

Actuarial assumptions.

(a) The actuarial valuation must use the applicable
following investment return assumption:

plan	investment return assumption
general state employees retirement plan	deleted text begin 7.5% deleted text end new text begin 7% new text end
correctional state employees retirement plan	deleted text begin 7.5 deleted text end new text begin 7 new text end
State Patrol retirement plan	deleted text begin 7.5 deleted text end new text begin 7 new text end
legislators retirement plan, and for the constitutional officers calculation of total plan liabilities	0
judges retirement plan	deleted text begin 7.5 deleted text end new text begin 7 new text end
general public employees retirement plan	deleted text begin 7.5 deleted text end new text begin 7 new text end
public employees police and fire retirement plan	deleted text begin 7.5 deleted text end new text begin 7 new text end
local government correctional service retirement plan	deleted text begin 7.5 deleted text end new text begin 7 new text end
teachers retirement plan	deleted text begin 7.5 deleted text end new text begin 7 new text end
St. Paul teachers retirement plan	deleted text begin 7.5 deleted text end new text begin 7 new text end
Bloomington Fire Department Relief Association	6
local monthly benefit volunteer firefighter relief associations	5
monthly benefit retirement plans in the statewide volunteer firefighter retirement plan	6

(b) The actuarial valuation for each of the covered retirement plans listed in section
356.415, subdivision 2, and the St. Paul Teachers Retirement Fund Association must take
into account the postretirement adjustment rate or rates applicable to the plan as specified
in section 354A.29, subdivision 7, or 356.415, whichever applies.

(c) The actuarial valuation must use the applicable salary increase and payroll growth
assumptions found in the appendix to the standards for actuarial work adopted by the
Legislative Commission on Pensions and Retirement pursuant to section 3.85, subdivision
10. The appendix must be updated whenever new assumptions have been approved or
deemed approved under subdivision 18.

(d) The assumptions set forth in the appendix to the standards for actuarial work continue
to apply, unless a different salary assumption or a different payroll increase assumption:

(1) has been proposed by the governing board of the applicable retirement plan;

(2) is accompanied by the concurring recommendation of the actuary retained under
section 356.214, subdivision 1, if applicable, or by the approved actuary preparing the most
recent actuarial valuation report if section 356.214 does not apply; and

(3) has been approved or deemed approved under subdivision 18.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective June 30, 2023.
new text end

Sec. 2.

Minnesota Statutes 2022, section 356.59, is amended to read:

356.59 INTEREST RATES.

Subdivision 1.

Applicable interest rates.

Whenever the payment of interest is required
with respect to any payment, including refunds, remittances, shortages, contributions, or
repayments, the rate of interest is the rate or rates specified in subdivisions 2 to 5 for each
public retirement plan.

Subd. 2.

Minnesota State Retirement System.

The interest rates for all retirement plans
administered by the Minnesota State Retirement System are as follows:

			Annual		Monthly
	before July 1, 2015	8.5 percent		0.71 percent
	from July 1, 2015, to June 30, 2018	8.0 percent		0.667 percent
	deleted text begin after June 30 deleted text end new text begin from July 1 new text end , 2018 new text begin , to June 30, 2023 new text end	7.5 percent		0.625 percent
	new text begin after June 30, 2023 new text end	new text begin 7.0 percent new text end		new text begin 0.583 percent new text end

Subd. 3.

Public Employees Retirement Association.

The interest rates for all retirement
plans administered by the Public Employees Retirement Association are as follows:

	before July 1, 2015	8.5 percent
	from July 1, 2015, to June 30, 2018	8.0 percent
	deleted text begin after June 30 deleted text end new text begin from July 1 new text end , 2018 new text begin , to June 30, 2023 new text end	7.5 percent
	new text begin after June 30, 2023 new text end	new text begin 7.0 percent new text end

Subd. 4.

Teachers Retirement Association.

The interest rates for the retirement plan
administered by the Teachers Retirement Association are as follows:

			Annual		Monthly
	before July 1, 2018	8.5 percent		0.71 percent
	deleted text begin after June 30 deleted text end new text begin from July 1 new text end , 2018 new text begin , to June 30, 2023 new text end	7.5 percent		0.625 percent
	new text begin after June 30, 2023 new text end	new text begin 7.0 percent new text end		new text begin 0.583 percent new text end

Subd. 5.

St. Paul Teachers Retirement Fund Association.

The interest rates for the
retirement plan administered by the St. Paul Teachers Retirement Fund Association are as
follows:

			Annual		Monthly
	before July 1, 2015	8.5 percent		0.71 percent
	from July 1, 2015, to June 30, 2018	8.0 percent		0.667 percent
	deleted text begin after June 30 deleted text end new text begin from July 1 new text end , 2018 new text begin , to June 30, 2023 new text end	7.5 percent		0.625 percent
	new text begin after June 30, 2023 new text end	new text begin 7.0 percent new text end		new text begin 0.583 percent new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective June 30, 2023.
new text end

ARTICLE 2

COLAS

Section 1.

Minnesota Statutes 2022, section 356.415, subdivision 1, is amended to read:

Subdivision 1.

Annual postretirement adjustments; Minnesota State Retirement
System general state employees retirement plan, legislators retirement plan, and
unclassified state employees retirement program.

(a) deleted text begin Except as set forth in paragraph
(c), deleted text end Recipients of a retirement annuity, disability benefit, or survivor benefit from the general
state employees retirement plan, the legislators retirement plan, or the unclassified state
employees retirement program are entitled to an annual postretirement adjustment, effective
as of each January 1, as follows:

(1) effective January 1, 2019, through December 31, 2023, a postretirement increase of
one percent must be applied each year to the amount of the monthly annuity or benefit of
each annuitant or benefit recipient who has been receiving an annuity or a benefit for at
least 12 full months as of the June 30 of the calendar year immediately before the adjustment;

(2) effective January 1, 2019, through December 31, 2023, for each annuitant or benefit
recipient who has been receiving an annuity or a benefit for at least one full month, but less
than 12 full months as of the June 30 of the calendar year immediately before the adjustment,
a postretirement increase of 1/12 of one percent for each month that the person has been
receiving an annuity or benefit must be applied to the amount of the monthly annuity or
benefit of the annuitant or benefit recipient;

(3) effective January 1, 2024, and thereafter, a postretirement increase of 1.5 percent
must be applied each year to the amount of the monthly annuity or benefit of each annuitant
or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months
as of the June 30 of the calendar year immediately before the adjustment; and

(4) effective January 1, 2024, and thereafter, for each annuitant or benefit recipient who
has been receiving an annuity or a benefit for at least one full month, but less than 12 full
months as of the June 30 of the calendar year immediately before the adjustment, an annual
postretirement increase of 1/12 of 1.5 percent for each month that the person has been
receiving an annuity or benefit must be applied to the amount of the monthly annuity or
benefit of the annuitant or benefit recipient.

(b) An increase in annuity or benefit payments under this subdivision must be made
automatically unless written notice is filed by the annuitant or benefit recipient with the
executive director of the covered retirement plan requesting that the increase not be made.

deleted text begin (c) Members who retire on or after January 1, 2024, under the general state employees
retirement plan, the legislators retirement plan, or the unclassified state employees retirement
program are entitled to an annual postretirement adjustment of the member's retirement
annuity, effective as of each January 1, beginning with the year following the year in which
the member attains normal retirement age, as follows:
deleted text end

deleted text begin (1) if a member has been receiving an annuity for at least 12 full months as of the June
30 of the calendar year immediately before the date of the adjustment, a postretirement
increase equal to the percentage specified in paragraph (a), clause (3), must be applied,
effective on January 1, to the amount of the member's monthly annuity;
deleted text end

deleted text begin (2) if a member has been receiving an annuity for at least one full month, but less than
12 full months as of the June 30 of the calendar year immediately before the date of
adjustment, a postretirement increase of 1/12 of the percentage specified in paragraph (a),
clause (4), for each month that the member has been receiving an annuity must be applied,
effective on January 1, to the amount of the member's monthly annuity; or
deleted text end

deleted text begin (3) if a member has been receiving an annuity for fewer than seven months before the
date of adjustment, a postretirement increase shall not be applied until the next January 1
and the amount of the adjustment shall be the amount determined under clause (2).
deleted text end

deleted text begin (d) Paragraph (c) does not apply to members who retire under section 352.116,
subdivision 1, paragraph (c).
deleted text end

Sec. 2.

Minnesota Statutes 2022, section 356.415, subdivision 1b, is amended to read:

Subd. 1b.

Annual postretirement adjustments; PERA; general employees retirement
plan.

(a) Annuities, disability benefits, and survivor benefits being paid from the general
employees retirement plan of the Public Employees Retirement Association shall be increased
effective each January 1 by the percentage of increase determined under this subdivision.
The increase to the annuity or benefit shall be determined by multiplying the monthly amount
of the annuity or benefit by the percentage of increase specified in paragraph (b), after taking
into account any reduction to the percentage of increase required under paragraph (c).

(b) The percentage of increase shall be one percent unless the federal Social Security
Administration has announced a cost-of-living adjustment pursuant to United States Code,
title 42, section 415(i), in the last quarter of the preceding calendar year that is greater than
two percent. If the cost-of-living adjustment announced by the federal Social Security
Administration is greater than two percent, the percentage of increase shall be 50 percent
of the cost-of-living adjustment announced by the federal Social Security Administration,
but in no event may the percentage of increase exceed 1.5 percent.

(c)(1) If the recipient of an annuity, disability benefit, or survivor's benefit has been
receiving the annuity or benefit for at least 12 full months as of the June 30 of the calendar
year immediately before the effective date of the increase, there is no reduction in the
percentage of increase.

(2) If the recipient of an annuity, disability benefit, or survivor's benefit has been receiving
the annuity or benefit for at least one month, but less than 12 full months, as of the June 30
of the calendar year immediately preceding the effective date of the increase, the percentage
of increase is multiplied by a fraction, the numerator of which is the number of months the
annuity or benefit was received as of June 30 of the preceding calendar year and the
denominator of which is 12.

deleted text begin (d) Effective for members who retire on or after January 1, 2024, annuities shall not be
increased under paragraphs (a) to (c) until January 1 of the year following the year in which
the member reaches normal retirement age. January 1 of the year following the year in
which the member reaches normal retirement age shall be considered the effective date of
the increase under paragraph (c). If a member has been receiving an annuity for fewer than
seven months as of the January 1 of the year following the year in which the member reaches
normal retirement age, no increase shall be paid until January 1 of the next year.
deleted text end

deleted text begin (e) deleted text end new text begin (d) new text end An increase in annuity or benefit payments under this section must be made
automatically unless written notice is filed by the recipient with the executive director of
the Public Employees Retirement Association requesting that the increase not be made.

deleted text begin (f) Paragraph (d) does not apply to members who retire under section 353.30, subdivision
1a.
deleted text end

Sec. 3.

Minnesota Statutes 2022, section 356.415, subdivision 1g, is amended to read:

Subd. 1g.

Annual postretirement adjustments; PERA local government correctional
retirement plan.

(a) Annuities, disability benefits, and survivor benefits being paid from
the local government correctional retirement plan of the Public Employees Retirement
Association shall be increased effective each January 1 by the percentage of increase
determined under this subdivision. The increase to the annuity or benefit shall be determined
by multiplying the monthly amount of the annuity or benefit by the percentage of increase
specified in paragraph (b), after taking into account any reduction to the percentage of
increase required under paragraph deleted text begin (c) deleted text end new text begin (d) new text end .

(b) new text begin As of each January 1, new text end the percentage of increase deleted text begin shall deleted text end new text begin must new text end be one percent unless
the federal Social Security Administration has announced a cost-of-living adjustment
pursuant to United States Code, title 42, section 415(i), in the last quarter of the preceding
calendar year that is greater than one percent. If the cost-of-living adjustment announced
by the federal Social Security Administration is greater than one percent, the percentage of
increase deleted text begin shall deleted text end new text begin must new text end be the same as the cost-of-living adjustment announced by the federal
Social Security Administration, but in no event may the percentage of increase exceed the
applicable maximum percentage new text begin in effect on January 1 under paragraph (c) new text end .

new text begin (c) new text end The applicable maximum percentage new text begin in effect on January 1 new text end is 2.5 percent, deleted text begin until deleted text end new text begin unless
new text end either of the following deleted text begin occurs deleted text end new text begin is true new text end , in which case the applicable maximum percentage is
1.5 percent deleted text begin and remains at 1.5 percent thereafter deleted text end :

(1) the market value of assets equals or is less than 85 percent of the actuarial accrued
liabilities as reported by the plan's actuary in new text begin the most recent new text end two consecutive annual actuarial
valuations; or

(2) the market value of assets equals or is less than 80 percent of the actuarial accrued
liabilities as reported by the plan's actuary in the most recent annual actuarial valuation. new text begin If,
on January 1 after a year during which the applicable maximum percentage was 1.5 percent,
neither clause (1) or (2) is true, then the applicable maximum percentage is 2.5 percent.
new text end

deleted text begin (c) deleted text end new text begin (d) new text end (1) If the recipient of an annuity, disability benefit, or survivor's benefit has been
receiving the annuity or benefit for at least 12 full months as of the June 30 of the calendar
year immediately before the effective date of the increase, there is no reduction in the
percentage of increase.

(2) If the recipient of an annuity, disability benefit, or survivor's benefit has been receiving
the annuity or benefit for at least one month, but less than 12 full months, as of the June 30
of the calendar year immediately preceding the effective date of the increase, the percentage
of increase is multiplied by a fraction, the numerator of which is the number of months the
annuity or benefit was received as of June 30 of the preceding calendar year and the
denominator of which is 12.

deleted text begin (d) deleted text end new text begin (e) new text end An increase in annuity or benefit payments under this section must be made
automatically unless written notice is filed by the recipient with the executive director of
the Public Employees Retirement Association requesting that the increase not be made.

Sec. 4. new text begin POSTRETIREMENT ADJUSTMENT FOR CALENDAR YEAR 2024 FOR
COORDINATED MEMBERS.
new text end

new text begin (a) Notwithstanding Minnesota Statutes, sections 354A.29, subdivision 7, and 356.415,
subdivisions 1 to 1b, 1d, and 1f, the postretirement adjustment for the year beginning January
1, 2024, and ending December 31, 2024, must be 2.5 percent for eligible recipients of a
retirement annuity, disability benefit, or survivor benefit from the Minnesota State Retirement
System, Public Employees Retirement Association, Teachers Retirement Association, or
St. Paul Teachers Retirement Fund Association.
new text end

new text begin (b) A recipient is an eligible recipient if:
new text end

new text begin (1) the recipient's annuity or benefit is attributable to service as a member of the legislators
plan, as a coordinated member of a pension plan administered by the Minnesota State
Retirement System, Public Employees Retirement Association, Teachers Retirement
Association, or the St. Paul Teachers Retirement Fund Association, and is not from the
public employees police and fire plan or the State Patrol retirement plan; and
new text end

new text begin (2) the recipient has received monthly benefits for at least 12 full months as of June 30,
2023.
new text end

new text begin (c) This adjustment must not be compounded and is in effect for calendar year 2024
only.
new text end

new text begin (d) The increase in excess of the current statutory postretirement adjustment for calendar
year 2024 must be distributed to each recipient in a lump sum payment as soon as
administratively practicable but no later than March 31, 2024.
new text end

Sec. 5. new text begin POSTRETIREMENT ADJUSTMENT FOR CALENDAR YEAR 2024 FOR
BASIC MEMBERS.
new text end

new text begin (a) Notwithstanding Minnesota Statutes, sections 354A.29, subdivision 7, and 356.415,
subdivisions 1b to 1e, the postretirement adjustment for the year beginning January 1, 2024,
and ending December 31, 2024, must be four percent for eligible recipients of a retirement
annuity, disability benefit, or survivor benefit from the Minnesota State Retirement System,
Public Employees Retirement Association, Teachers Retirement Association, or St. Paul
Teachers Retirement Fund Association.
new text end

new text begin (b) A recipient is an eligible recipient if:
new text end

new text begin (1) the recipient's annuity or benefit is attributable to service as a basic member of the
Public Employees Retirement Association general employees retirement plan, the Teachers
Retirement Association, or the St. Paul Teachers Retirement Fund Association or is an
annuity or benefit from the public employees police and fire plan or the State Patrol
retirement plan; and
new text end

new text begin (2) the recipient has received monthly benefits for at least twelve full months as of June
30, 2023.
new text end

new text begin (c) This adjustment must not be compounded and is in effect for calendar year 2024
only.
new text end

new text begin (d) The increase in excess of the current statutory postretirement adjustment for calendar
year 2024 must be distributed to each recipient in a lump sum payment as soon as
administratively practicable but no later than March 31, 2024. For the purpose of providing
a postretirement adjustment for members of the public employees police and fire plan who
have received monthly benefits for at least 12 full months as of June 30, 2023, but have not
yet begun to receive a postretirement adjustment, the increase in excess of the current
statutory postretirement adjustment for calendar year 2024 is three percent.
new text end

ARTICLE 3

MINNESOTA STATE RETIREMENT SYSTEM

Section 1.

Minnesota Statutes 2022, section 352.04, subdivision 2, is amended to read:

Subd. 2.

Employee contributions.

(a) The employee contribution to the fund must be
equal to the following percent of salary:

	from July 1, 2014, to June 30, 2018	5.5
	from July 1, 2018, to June 30, 2019	5.75
	deleted text begin after June 30 deleted text end new text begin from July 1 new text end , 2019 new text begin , to June 30, 2023 new text end	6
	new text begin from July 1, 2023, to June 30, 2025 new text end	new text begin 5.5 new text end
	new text begin after June 30, 2025 new text end	new text begin 6 new text end

(b) These contributions must be made by deduction from salary as provided in subdivision
4.

(c) Contribution increases under paragraph (a) must be paid starting the first day of the
first full pay period after the effective date of the increase.

Sec. 2.

Minnesota Statutes 2022, section 352.115, subdivision 1, is amended to read:

Subdivision 1.

Age and service requirements.

After separation from state service, any
employee deleted text begin (1) deleted text end who has attained the age of at least 55 years deleted text begin and who deleted text end is entitled new text begin , upon
application, new text end to new text begin a retirement annuity if the employee:
new text end

new text begin (1) has received new text end credit for at least three years new text begin of new text end allowable service deleted text begin if deleted text end new text begin and was new text end employed
before July 1, 2010 deleted text begin , or after deleted text end new text begin ;
new text end

new text begin (2) has received credit for at least new text end five deleted text begin or more deleted text end years of allowable service if employed
after June 30, 2010, deleted text begin or (2) who deleted text end new text begin and terminated employment before July 1, 2023;
new text end

new text begin (3) was actively employed on July 1, 2023, and has earned three years of allowable
service prior to the employee's retirement application;
new text end

new text begin (4) has three or more years of allowable service if employed after June 30, 2023; or
new text end

new text begin (5) new text end has received credit for at least 30 years new text begin of new text end allowable service regardless of age deleted text begin , is
entitled upon application to a retirement annuity deleted text end .

Sec. 3.

Minnesota Statutes 2022, section 352.92, subdivision 2a, is amended to read:

Subd. 2a.

Supplemental employer contribution.

(a) Effective July 1, 2019, the employer
shall pay a supplemental contribution. The supplemental contribution is 1.45 percent of
salary for covered correctional employees from July 1, 2019, through June 30, 2020; 2.95
percent of salary for covered correctional employees from July 1, 2020, through June 30,
2021; and 4.45 percent of salary for covered correctional employees thereafter. The
supplemental contribution rate of 4.45 percent remains in effect until new text begin , for three consecutive
years, new text end the market value of the assets of the correctional state employees retirement plan of
the Minnesota State Retirement System equals or exceeds the actuarial accrued liability of
the plan as determined by the actuary retained under section 356.214. The expiration of the
supplemental employer contribution is effective the first day of the first full pay period of
the fiscal year immediately following the issuance of the new text begin third new text end actuarial valuation upon
which the expiration is based.

(b) The supplemental contribution under paragraph (a) must be paid starting the first
day of the first full pay period after June 30, 2018.

Sec. 4.

Minnesota Statutes 2022, section 352B.02, subdivision 1c, is amended to read:

Subd. 1c.

Employer contributions and supplemental employer contribution.

(a) In
addition to member contributions, department heads shall pay a sum equal to the specified
percentage of the salary upon which deductions were made, which constitutes the employer
contribution to the fund as follows:

	from July 1, 2014, to June 30, 2016	20.1
	from July 1, 2016, to June 30, 2018	21.6
	from July 1, 2018, to June 30, 2019	22.35
	after June 30, 2019	23.1

(b) Department contributions must be paid out of money appropriated to departments
for this purpose.

(c) Contribution increases under paragraph (a) must be paid starting the first day of the
first full pay period after the effective date of the increase.

(d) Effective July 1, 2018, department heads shall pay a supplemental employer
contribution. The supplemental contribution is 1.75 percent of the salary upon which
deductions are made from July 1, 2018, through June 30, 2019; three percent of the salary
upon which deductions are made from July 1, 2019, through June 30, 2020; five percent of
the salary which deductions are made from July 1, 2020, through June 30, 2021; and seven
percent of the salary upon which deductions are made thereafter. The supplemental
contribution must be paid starting the first day of the first full pay period after June 30,
2018. The supplemental contribution rate of seven percent remains in effect until new text begin , for three
consecutive years, new text end the market value of the assets of the State Patrol retirement plan of the
Minnesota State Retirement System equals or exceeds the actuarial accrued liability of the
plan as determined by the actuary retained under section 356.214. The expiration of the
supplemental employer contribution is effective the first day of the first full pay period of
the fiscal year immediately following the issuance of the new text begin third new text end actuarial valuation upon
which the expiration is based.

Sec. 5.

Minnesota Statutes 2022, section 490.123, subdivision 5, is amended to read:

Subd. 5.

Direct state aid.

(a) The state shall pay $6,000,000 annually to the judges'
retirement fund. The aid is payable each July 1. The amount required is annually appropriated
from the general fund to the judges' retirement fund.

(b) The aid under paragraph (a) continues until the earlier of:

(1) the first day of the fiscal year following deleted text begin the deleted text end new text begin three consecutive new text end fiscal deleted text begin year deleted text end new text begin years new text end in
which the actuarial value of assets of the fund equals or exceeds 100 percent of the actuarial
accrued liabilities as reported by the actuary retained under section 356.214 in the annual
actuarial valuation prepared under section 356.215; or

(2) July 1, 2048.

ARTICLE 4

PUBLIC EMPLOYEES RETIREMENT ASSOCIATION

Section 1.

Minnesota Statutes 2022, section 353.01, subdivision 47, is amended to read:

Subd. 47.

Vesting.

(a) "Vesting" means obtaining a nonforfeitable entitlement to an
annuity or benefit from a retirement plan administered by the Public Employees Retirement
Association by having credit for sufficient allowable service under paragraph (b), (c), or
(d), whichever applies.

(b) For purposes of qualifying for an annuity or benefit as a basic or coordinated plan
member of the general employees retirement plan of the Public Employees Retirement
Association deleted text begin :(1) deleted text end new text begin , new text end a public employee deleted text begin who first became a member of the association before
July 1, 2010, deleted text end is 100 percent vested when the person has accrued credit for not less than three
years of allowable service in the general employees retirement plan deleted text begin ; and deleted text end new text begin .
new text end

deleted text begin (2) a public employee who first becomes a member of the association after June 30,
2010, is 100 percent vested when the person has accrued credit for not less than five years
of allowable service in the general employees retirement plan.
deleted text end

(c) For purposes of qualifying for an annuity or benefit as a member of the local
government correctional service retirement plan:

(1) a public employee who first became a member of the association before July 1, 2010,
is 100 percent vested when the person has accrued credit for not less than three years of
allowable service in the local government correctional service retirement plan; and

(2) a public employee who first becomes a member of the association after June 30,
2010, is vested at the following percentages when the person has accrued credit for allowable
service in the local government correctional service retirement plan, as follows:

(i) 50 percent after five years;

(ii) 60 percent after six years;

(iii) 70 percent after seven years;

(iv) 80 percent after eight years;

(v) 90 percent after nine years; and

(vi) 100 percent after ten years.

(d) For purposes of qualifying for an annuity or benefit as a member of the public
employees police and fire retirement plan:

(1) a public employee who first became a member of the association before July 1, 2010,
is 100 percent vested when the person has accrued credit for not less than three years of
allowable service in the public employees police and fire retirement plan;

(2) a public employee who first becomes a member of the association after June 30,
2010, and before July 1, 2014, is vested at the following percentages when the person has
accrued credited allowable service in the public employees police and fire retirement plan,
as follows:

(i) 50 percent after five years;

(ii) 60 percent after six years;

(iii) 70 percent after seven years;

(iv) 80 percent after eight years;

(v) 90 percent after nine years; and

(vi) 100 percent after ten years; and

(3) a public employee who first becomes a member of the association after June 30,
2014, is vested at the following percentages when the person has accrued credit for allowable
service in the public employees police and fire retirement plan, as follows:

(i) 50 percent after ten years;

(ii) 55 percent after 11 years;

(iii) 60 percent after 12 years;

(iv) 65 percent after 13 years;

(v) 70 percent after 14 years;

(vi) 75 percent after 15 years;

(vii) 80 percent after 16 years;

(viii) 85 percent after 17 years;

(ix) 90 percent after 18 years;

(x) 95 percent after 19 years; and

(xi) 100 percent after 20 or more years.

ARTICLE 5

ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION

Section 1.

Minnesota Statutes 2022, section 354A.12, subdivision 1, is amended to read:

Subdivision 1.

Employee contributions.

(a) The contribution required to be paid by
each member deleted text begin of the St. Paul Teachers Retirement Fund Association deleted text end is the percentage of
total salary specified below for the applicable deleted text begin association and deleted text end program:

	Program	Percentage of Total Salary
	deleted text begin St. Paul Teachers Retirement Fund Association deleted text end
	basic program after June 30, 2016 new text begin , through June 30, 2023 new text end		10 percent
	basic program after June 30, 2023 new text begin , through June 30, 2025 new text end		10.25 percent
	new text begin basic program after June 30, 2025 new text end		new text begin 11.25 percent new text end
	coordinated program after June 30, 2016 new text begin , through June 30, 2023 new text end		7.5 percent
	coordinated program after June 30, 2023 new text begin , through June 30, 2025 new text end		7.75 percent
	new text begin coordinated program after June 30, 2025 new text end		new text begin 8.75 percent new text end

(b) Contributions must be made by deduction from salary and must be remitted directly
to the St. Paul Teachers Retirement Fund Association at least once each month.

(c) When an employee contribution rate changes for a fiscal year, the new contribution
rate is effective for the entire salary paid by the employer with the first payroll cycle reported.

Sec. 2.

Minnesota Statutes 2022, section 354A.31, is amended by adding a subdivision to
read:

new text begin Subd. 5a. new text end

new text begin Unreduced early retirement. new text end

new text begin If a member retires on or after July 1, 2023,
when the member is at least age 62 and has at least 30 years of service, the member is
entitled to receive a retirement annuity calculated using the retirement annuity formula
percentage in subdivision 4.
new text end

Sec. 3.

Minnesota Statutes 2022, section 354A.31, subdivision 7, is amended to read:

Subd. 7.

Reduction for early retirement.

(a) This subdivision applies to a person who
has become at least 55 years old and first becomes a coordinated member after June 30,
1989, and to any other coordinated member who has become at least 55 years old and whose
annuity is higher when calculated using the retirement annuity formula percentage in
subdivision 4, paragraph (d), in conjunction with this subdivision than when calculated
under subdivision 4, paragraph (c), in conjunction with subdivision 6. An employee who
retires under the formula annuity before the normal retirement age shall be paid the normal
annuity reduced as described in paragraph (b) if the person retires on or after July 1, 2019,
or in paragraph (c) if the person retires before July 1, 2019, as applicable.

(b) new text begin (1) Unless the member is eligible for an unreduced early retirement annuity under
subdivision 5a, new text end a coordinated member who retires before the normal retirement age and on
or after July 1, 2019, is entitled to receive a retirement annuity calculated using the retirement
annuity formula percentage in subdivision 4, paragraph (d), reduced as described in clause
deleted text begin (1) or deleted text end (2) deleted text begin , as applicable deleted text end .

deleted text begin (1) deleted text end new text begin (2) new text end If the member retires when the member is younger than age 62 or with fewer
than 30 years of service, the annuity must be reduced by an early reduction factor for each
year that the member's age of retirement precedes normal retirement age. The early reduction
factors are four percent per year for members whose age at retirement is at least 55 but not
yet 59 and seven percent per year for members whose age at retirement is at least 59 but
not yet normal retirement age. The resulting annuity must be further adjusted to take into
account augmentation as if the employee had deferred receipt of the annuity until normal
retirement age and the annuity were augmented at the applicable annual rate, compounded
annually, from the day the annuity begins to accrue until normal retirement age. The
applicable annual rate is the rate in effect on the employee's effective date of retirement and
shall be considered as fixed for the employee. The applicable annual rates are the following:

(i) until June 30, 2019, 2.5 percent;

(ii) a rate that changes each month, beginning July 1, 2019, through June 30, 2024, which
is determined by reducing the rate in item (i) to zero in equal monthly increments over the
five-year period; and

(iii) after June 30, 2024, zero percent.

After June 30, 2024, the reduced annuity commencing before normal retirement age
under this clause shall not take into account any augmentation.

deleted text begin (2) If the member retires when the member is at least age 62 or older and has at least 30
years of service, the member is entitled to receive a retirement annuity calculated using the
retirement annuity formula percentage in subdivision 4, paragraph (d), multiplied by the
applicable early retirement factor specified for members "Age 62 or older with 30 years of
service" in the table in paragraph (c).
deleted text end

(c) new text begin Unless the member is eligible for an unreduced early retirement annuity under
subdivision 5a, new text end a coordinated member who retires before the normal retirement age and
before July 1, 2019, is entitled to receive a retirement annuity calculated using the retirement
annuity formula percentage in subdivision 4, paragraph (d), multiplied by the applicable
early retirement factor specified below:

	Under age 62	Age 62 or older
	or less than 30 years of service	with 30 years of service

Normal retirement age:	65	66	65	66
Age at retirement
55	0.5376	0.4592
56	0.5745	0.4992
57	0.6092	0.5370
58	0.6419	0.5726
59	0.6726	0.6062
60	0.7354	0.6726
61	0.7947	0.7354
62	0.8507	0.7947	0.8831	0.8389
63	0.9035	0.8507	0.9246	0.8831
64	0.9533	0.9035	0.9635	0.9246
65	1.0000	0.9533	1.0000	0.9635
66		1.0000		1.0000

For normal retirement ages between ages 65 and 66, the early retirement factors must
be determined by linear interpolation between the early retirement factors applicable for
normal retirement ages 65 and 66.

ARTICLE 6

APPROPRIATIONS

Section 1. new text begin APPROPRIATION; ONETIME DIRECT STATE AIDS.
new text end

new text begin Subdivision 1. new text end

new text begin Appropriation. new text end

new text begin $485,900,000 in fiscal year 2024 is appropriated from
the general fund to the commissioner of management and budget to transfer onetime state
aid to the fund for each pension plan as specified in subdivision 2 and pay onetime state aid
to St. Paul Teachers Retirement Fund Association in the amount specified in subdivision
2.
new text end

new text begin Subd. 2. new text end

new text begin Direct state aids new text end

new text begin On October 1, 2023, the commissioner must allocate the
amount appropriated in subdivision 1 among the funds for the pension plans as follows:
new text end

	new text begin Plan new text end		new text begin Amount new text end
	new text begin general state employees retirement plan new text end		new text begin $76,439,615 new text end
	new text begin correctional state employees retirement plan new text end		new text begin $10,446,018 new text end
	new text begin State Patrol retirement plan new text end		new text begin $11,970,568 new text end
	new text begin legislators retirement plan new text end		new text begin $90,714 new text end
	new text begin judges retirement plan new text end		new text begin $293,032 new text end
	new text begin general public employees retirement plan new text end		new text begin $170,093,422 new text end
	new text begin public employees police and fire retirement plan new text end		new text begin $19,397,371 new text end
	new text begin local government correctional service retirement plan new text end		new text begin $5,255,535 new text end
	new text begin Teachers Retirement Association new text end		new text begin $176,166,838 new text end
	new text begin St. Paul Teachers Retirement Fund Association new text end		new text begin $15,746,887 new text end

Sec. 2. new text begin STATEWIDE VOLUNTEER FIREFIGHTER PLAN INCENTIVE
PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this section:
new text end

new text begin (1) "association" means the Public Employees Retirement Association;
new text end

new text begin (2) "commission" means the Legislative Commission on Pensions and Retirement;
new text end

new text begin (3) "incentive program" means the program established by this section for paying
monetary incentives to join the statewide plan, to be deposited in the account of each fire
department joining the statewide plan and used to fund retirement benefits for the fire
department's volunteer firefighters;
new text end

new text begin (4) "relief association" means volunteer firefighter relief association; and
new text end

new text begin (5) "statewide plan" means the statewide volunteer firefighter plan.
new text end

new text begin Subd. 2. new text end

new text begin Statewide volunteer firefighter plan incentive program. new text end

new text begin (a) The executive
director of the association must prepare an outline of the incentive program. This outline
must be delivered to the members of the commission by January 5, 2024. The incentive
program must benefit fire departments joining the statewide plan on or after July 1, 2023,
and the first payments must be made no later than December 31, 2024.
new text end

new text begin (b) The executive director of the association must work with the staff of the commission
to prepare legislation to add a defined contribution component to the statewide plan and
make other statutory changes as appropriate to encourage fire departments and their affiliated
relief associations to join the statewide plan. The proposed legislation must be delivered to
members of the commission no later than January 5, 2024.
new text end

new text begin (c) The executive director of the association must prepare an annual report on the
incentive program to be delivered to the commission until the appropriation is expended.
new text end

new text begin Subd. 3. new text end

new text begin Account created; appropriation. new text end

new text begin The statewide volunteer firefighter incentive
account is created within the special revenue fund. Money in the account, including interest,
is appropriated to the commissioner of management and budget for deposit, at the direction
of the executive director of the association, into the plan account of each fire department
that joins the statewide volunteer firefighter plan.
new text end

new text begin Subd. 4. new text end

new text begin Transfer new text end

new text begin $5,000,000 in fiscal year 2024 is transferred from the general fund
to the statewide volunteer firefighter incentive account established under subdivision 3.
new text end

Sec. 3. new text begin APPROPRIATION; LEGISLATIVE COORDINATING COMMISSION.
new text end

new text begin $100,000 in fiscal year 2024 is appropriated from the general fund to the Legislative
Coordinating Commission for the Legislative Commission on Pensions and Retirement to
provide funding for additional independent actuarial cost assessments for the Legislative
Commission on Pensions and Retirement to make informed decisions on pension policy
and legislation.
new text end