1.1                          A bill for an act 
  1.2             relating to retirement; increasing employer and 
  1.3             employee contributions and annuities payable by the 
  1.4             Minnesota state retirement system and the public 
  1.5             employees retirement association; amending Minnesota 
  1.6             Statutes 1994, sections 352.04, subdivisions 2 and 3; 
  1.7             352.115, subdivision 3; 353.27, subdivision 2; 353.29, 
  1.8             subdivision 3; and 356.30, subdivision 1.  
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1994, section 352.04, 
  1.11  subdivision 2, is amended to read: 
  1.12     Subd. 2.  [EMPLOYEE CONTRIBUTIONS.] The employee 
  1.13  contribution to the fund must be equal to 4.07 4.60 percent of 
  1.14  salary.  These contributions must be made by deduction from 
  1.15  salary as provided in subdivision 4. 
  1.16     Sec. 2.  Minnesota Statutes 1994, section 352.04, 
  1.17  subdivision 3, is amended to read: 
  1.18     Subd. 3.  [EMPLOYER CONTRIBUTIONS.] (a) The employer 
  1.19  contribution to the fund must be equal to 4.2 4.75 percent of 
  1.20  salary. 
  1.21     (b) By January 1 of each year, the board of directors shall 
  1.22  report to the legislative commission on pensions and retirement, 
  1.23  the chair of the committee on appropriations of the house of 
  1.24  representatives, and the chair of the committee on finance of 
  1.25  the senate on the amount raised by the employer and employee 
  1.26  contribution rates in effect and whether the total amount is 
  1.27  less than, the same as, or more than the actuarial requirement 
  2.1   determined under section 356.215. 
  2.2      (c) If the legislative commission on pensions and 
  2.3   retirement, based on the most recent valuation performed by its 
  2.4   actuary, determines that the total amount raised by the employer 
  2.5   and employee contributions under subdivision 2 and paragraph (b) 
  2.6   is less than the actuarial requirements determined under section 
  2.7   356.215, the employer and employee rates must be increased by 
  2.8   equal amounts as necessary to meet the actuarial requirements.  
  2.9   The employee rate may not exceed 4.15 percent of salary and the 
  2.10  employer rate may not exceed 4.29 percent of salary.  The 
  2.11  increases are effective on the next January 1 following the 
  2.12  determination by the commission.  The executive director of the 
  2.13  Minnesota state retirement system shall notify employing units 
  2.14  of any increases under this paragraph. 
  2.15     Sec. 3.  Minnesota Statutes 1994, section 352.115, 
  2.16  subdivision 3, is amended to read: 
  2.17     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
  2.18  in conjunction with section 352.116, subdivision 1, applies to a 
  2.19  person who became a covered employee or a member of a pension 
  2.20  fund listed in section 356.30, subdivision 3, before July 1, 
  2.21  1989, unless paragraph (b), in conjunction with section 352.116, 
  2.22  subdivision 1a, produces a higher annuity amount, in which case 
  2.23  paragraph (b) will apply.  The employee's average salary, as 
  2.24  defined in subdivision 2, multiplied by one 1.13 percent per 
  2.25  year of allowable service for the first ten years and 1.5 1.63 
  2.26  percent for each later year of allowable service and pro rata 
  2.27  for completed months less than a full year shall determine the 
  2.28  amount of the retirement annuity to which the employee is 
  2.29  entitled. 
  2.30     (b) This paragraph applies to a person who has become at 
  2.31  least 55 years old and first became a covered employee after 
  2.32  June 30, 1989, and to any other covered employee who has become 
  2.33  at least 55 years old and whose annuity amount, when calculated 
  2.34  under this paragraph and in conjunction with section 352.116, 
  2.35  subdivision 1a, is higher than it is when calculated under 
  2.36  paragraph (a), in conjunction with section 352.116, subdivision 
  3.1   1.  The employee's average salary, as defined in subdivision 2, 
  3.2   multiplied by 1.5 1.63 percent for each year of allowable 
  3.3   service and pro rata for months less than a full year shall 
  3.4   determine the amount of the retirement annuity to which the 
  3.5   employee is entitled. 
  3.6      Sec. 4.  Minnesota Statutes 1994, section 353.27, 
  3.7   subdivision 2, is amended to read: 
  3.8      Subd. 2.  [EMPLOYEE CONTRIBUTION.] The employee 
  3.9   contribution shall be an amount (a) for a "basic member" equal 
  3.10  to 8.23 .... percent of total salary; and (b) for a "coordinated 
  3.11  member" equal to 4.23 .... percent of total salary.  These 
  3.12  contributions shall be made by deduction from salary in the 
  3.13  manner provided in subdivision 4.  Where any portion of a 
  3.14  member's salary is paid from other than public funds, such 
  3.15  member's employee contribution shall be based on the total 
  3.16  salary received from all sources. 
  3.17     Sec. 5.  Minnesota Statutes 1994, section 353.29, 
  3.18  subdivision 3, is amended to read: 
  3.19     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
  3.20  in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 
  3.21  1c, applies to any member who first became a public employee or 
  3.22  a member of a pension fund listed in section 356.30, subdivision 
  3.23  3, before July 1, 1989, unless paragraph (b), in conjunction 
  3.24  with section 353.30, subdivision 5, produces a higher annuity 
  3.25  amount, in which case paragraph (b) will apply.  The average 
  3.26  salary as defined in subdivision 2, multiplied by two 2.13 
  3.27  percent for each year of allowable service for the first ten 
  3.28  years and thereafter by 2.5 2.63 percent per year of allowable 
  3.29  service and completed months less than a full year for the 
  3.30  "basic member," and one 1.13 percent for each year of allowable 
  3.31  service for the first ten years and thereafter by 1.5 1.63 
  3.32  percent per year of allowable service and completed months less 
  3.33  than a full year for the "coordinated member," shall determine 
  3.34  the amount of the "normal" retirement annuity. 
  3.35     (b) This paragraph applies to a member who has become at 
  3.36  least 55 years old and first became a public employee after June 
  4.1   30, 1989, and to any other member whose annuity amount, when 
  4.2   calculated under this paragraph and in conjunction with section 
  4.3   353.30, subdivision 5, is higher than it is when calculated 
  4.4   under paragraph (a), in conjunction with section 353.30, 
  4.5   subdivisions 1, 1a, 1b, and 1c.  The average salary, as defined 
  4.6   in subdivision 2, multiplied by 2.5 2.63 percent for each year 
  4.7   of allowable service and completed months less than a full year 
  4.8   for a basic member and 1.5 1.63 percent per year of allowable 
  4.9   service and completed months less than a full year for a 
  4.10  coordinated member, shall determine the amount of the normal 
  4.11  retirement annuity. 
  4.12     Sec. 6.  Minnesota Statutes 1994, section 356.30, 
  4.13  subdivision 1, is amended to read: 
  4.14     Subdivision 1.  [ELIGIBILITY; COMPUTATION OF ANNUITY.] (1) 
  4.15  Notwithstanding any provisions to the contrary of the laws 
  4.16  governing the funds enumerated in subdivision 3, a person who 
  4.17  has met the qualifications of clause (2) may elect to receive a 
  4.18  retirement annuity from each fund in which the person has at 
  4.19  least six months allowable service, based on the allowable 
  4.20  service in each fund, subject to the provisions of clause (3).  
  4.21     (2) A person may receive upon retirement a retirement 
  4.22  annuity from each fund in which the person has at least six 
  4.23  months allowable service, and augmentation of a deferred annuity 
  4.24  calculated under the laws governing each public pension plan or 
  4.25  fund named in subdivision 3, from the date the person terminated 
  4.26  all public service if: 
  4.27     (a) the person has allowable service totaling an amount 
  4.28  that allows the person to receive an annuity in any two or more 
  4.29  of the enumerated funds; and 
  4.30     (b) the person has not begun to receive an annuity from any 
  4.31  enumerated fund or the person has made application for benefits 
  4.32  from all funds the effective dates of the retirement annuity 
  4.33  with each fund under which the person chooses to receive an 
  4.34  annuity are within a one-year period.  
  4.35     (3) The retirement annuity from each fund must be based 
  4.36  upon the allowable service in each fund, except that:  
  5.1      (a) The laws governing annuities must be the law in effect 
  5.2   on the date of termination from the last period of public 
  5.3   service under a covered fund with which the person earned a 
  5.4   minimum of one-half year of allowable service credit during that 
  5.5   employment.  
  5.6      (b) The "average salary" on which the annuity from each 
  5.7   covered fund in which the employee has credit in a formula plan 
  5.8   shall be based on the employee's highest five successive years 
  5.9   of covered salary during the entire service in covered funds.  
  5.10     (c) The formula percentages to be used by each fund must be 
  5.11  those percentages prescribed by each fund's formula as continued 
  5.12  for the respective years of allowable service from one fund to 
  5.13  the next, recognizing all previous allowable service with the 
  5.14  other covered funds.  
  5.15     (d) Allowable service in all the funds must be combined in 
  5.16  determining eligibility for and the application of each fund's 
  5.17  provisions in respect to actuarial reduction in the annuity 
  5.18  amount for retirement prior to normal retirement.  
  5.19     (e) The annuity amount payable for any allowable service 
  5.20  under a nonformula plan of a covered fund must not be affected 
  5.21  but such service and covered salary must be used in the above 
  5.22  calculation.  
  5.23     (f) This section shall not apply to any person whose final 
  5.24  termination from the last public service under a covered fund is 
  5.25  prior to May 1, 1975.  
  5.26     (g) For the purpose of computing annuities under this 
  5.27  section the formula percentages used by any covered fund, except 
  5.28  the public employees police and fire fund and the formula 
  5.29  applied to basic members of the public employees retirement 
  5.30  association, must not exceed 2-1/2 percent per year of service 
  5.31  for any year of service or fraction thereof.  The formula 
  5.32  percentage used by the public employees police and fire fund 
  5.33  must not exceed 2.65 percent and the formula applied to basic 
  5.34  members of the public employees retirement association must not 
  5.35  exceed 2.63 percent per year of service for any year of service 
  5.36  or fraction thereof.  
  6.1      (h) Any period of time for which a person has credit in 
  6.2   more than one of the covered funds must be used only once for 
  6.3   the purpose of determining total allowable service.  
  6.4      (i) If the period of duplicated service credit is more than 
  6.5   six months, or the person has credit for more than six months 
  6.6   with each of the funds, each fund shall apply its formula to a 
  6.7   prorated service credit for the period of duplicated service 
  6.8   based on a fraction of the salary on which deductions were paid 
  6.9   to that fund for the period divided by the total salary on which 
  6.10  deductions were paid to all funds for the period.  
  6.11     (j) If the period of duplicated service credit is less than 
  6.12  six months, or when added to other service credit with that fund 
  6.13  is less than six months, the service credit must be ignored and 
  6.14  a refund of contributions made to the person in accord with that 
  6.15  fund's refund provisions.  
  6.16     Sec. 7.  [EFFECTIVE DATE.] 
  6.17     Sections 1, 2, and 4 are effective the first full pay 
  6.18  period after July 1, 1995.  Sections 3, 5, and 6 are effective 
  6.19  July 1, 1995.