1.1                          A bill for an act 
  1.2             relating to retirement; modifying calculation of 
  1.3             postretirement adjustment provisions for the Minnesota 
  1.4             postretirement investment fund; amending Minnesota 
  1.5             Statutes 2000, section 11A.18, subdivision 9. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  Minnesota Statutes 2000, section 11A.18, 
  1.8   subdivision 9, is amended to read: 
  1.9      Subd. 9.  [CALCULATION OF POSTRETIREMENT ADJUSTMENT.] (a) 
  1.10  Annually, following June 30, the state board shall use the 
  1.11  procedures in paragraphs (b), (c), and (d) to determine whether 
  1.12  a postretirement adjustment is payable and to determine the 
  1.13  amount of any postretirement adjustment. 
  1.14     (b) If the Consumer Price Index for urban wage earners and 
  1.15  clerical workers all items index published by the Bureau of 
  1.16  Labor Statistics of the United States Department of Labor 
  1.17  increases from June 30 of the preceding year to June 30 of the 
  1.18  current year, the state board shall certify the percentage 
  1.19  increase.  The amount certified must not exceed the lesser of 
  1.20  the difference between the preretirement interest assumption and 
  1.21  postretirement interest assumption in section 356.215, 
  1.22  subdivision 4d, paragraph (a), or 2.5 percent.  For the 
  1.23  Minneapolis employees retirement fund, the amount certified must 
  1.24  not exceed 3.5 percent. 
  1.25     (c) In addition to any percentage increase certified under 
  2.1   paragraph (b), the board shall use the following procedures to 
  2.2   determine if a postretirement adjustment is payable under this 
  2.3   paragraph: 
  2.4      (1) The state board shall determine the market value of the 
  2.5   fund on June 30 of that year; 
  2.6      (2) The amount of reserves required for the annuity or 
  2.7   benefit payable to an annuitant and benefit recipient of the 
  2.8   participating public pension plans or funds must be determined 
  2.9   by the commission-retained actuary as of the current June 30.  
  2.10  An annuitant or benefit recipient who has been receiving an 
  2.11  annuity or benefit for at least 12 full months as of the current 
  2.12  June 30 is eligible to receive a full postretirement 
  2.13  adjustment.  An annuitant or benefit recipient who has been 
  2.14  receiving an annuity or benefit for at least one full month, but 
  2.15  less than 12 full months as of the current June 30, is eligible 
  2.16  to receive a partial postretirement adjustment.  Each fund shall 
  2.17  report separately the amount of the reserves for those 
  2.18  annuitants and benefit recipients who are eligible to receive a 
  2.19  full postretirement benefit adjustment.  This amount is known as 
  2.20  "eligible reserves."  Each fund shall also report separately the 
  2.21  amount of the reserves for those annuitants and benefit 
  2.22  recipients who are not eligible to receive a postretirement 
  2.23  adjustment.  This amount is known as "noneligible reserves."  
  2.24  For an annuitant or benefit recipient who is eligible to receive 
  2.25  a partial postretirement adjustment, each fund shall report 
  2.26  separately as additional "eligible reserves" an amount that 
  2.27  bears the same ratio to the total reserves required for the 
  2.28  annuitant or benefit recipient as the number of full months of 
  2.29  annuity or benefit receipt as of the current June 30 bears to 12 
  2.30  full months.  The remainder of the annuitant's or benefit 
  2.31  recipient's reserves must be separately reported as additional 
  2.32  "noneligible reserves."  The amount of "eligible" and 
  2.33  "noneligible" required reserves must be certified to the board 
  2.34  by the commission-retained actuary as soon as is practical 
  2.35  following the current June 30; 
  2.36     (3) The state board shall determine the percentage increase 
  3.1   certified under paragraph (b) multiplied by the eligible 
  3.2   required reserves, as adjusted for mortality gains and losses 
  3.3   under subdivision 11, determined under clause (2); 
  3.4      (4) The state board shall add the amount of reserves 
  3.5   required for the annuities or benefits payable to annuitants and 
  3.6   benefit recipients of the participating public pension plans or 
  3.7   funds as of the current June 30 to the amount determined under 
  3.8   clause (3); 
  3.9      (5) The state board shall subtract the amount determined 
  3.10  under clause (4) from the market value of the fund determined 
  3.11  under clause (1); 
  3.12     (6) The state board shall adjust the amount determined 
  3.13  under clause (5) by the cumulative current balance determined 
  3.14  pursuant to clause (8) and any negative balance carried forward 
  3.15  under clause (9); 
  3.16     (7) A positive amount resulting from the calculations in 
  3.17  clauses (1) to (6) is the excess market value.  A negative 
  3.18  amount is the negative balance; 
  3.19     (8) The state board shall allocate one-fifth of the excess 
  3.20  market value or one-fifth of the negative balance to each of 
  3.21  five consecutive years, beginning with the fiscal year ending 
  3.22  the current June 30 until there is a negative balance resulting 
  3.23  from the calculation in clause (7) for the current June 30, at 
  3.24  which time the state board shall allocate one-seventh of the 
  3.25  excess market value or one-seventh of the negative balance to 
  3.26  each of the next seven consecutive years, beginning with the 
  3.27  fiscal year ending the current June 30.  The state board shall 
  3.28  continue to allocate one-seventh of the excess market value or 
  3.29  one-seventh of the negative balance for at least seven fiscal 
  3.30  years and until a negative balance occurs.  After seven years 
  3.31  are completed and beginning with the first year for which a 
  3.32  negative balance resulting from the calculation in clause (7) 
  3.33  occurs for the fiscal year ending June 30, the state board shall 
  3.34  allocate one-tenth of the excess value or one-tenth of the 
  3.35  negative balance to each of the next ten consecutive years; and 
  3.36     (9) To calculate the postretirement adjustment under this 
  4.1   paragraph based on investment performance for a fiscal year, the 
  4.2   state board shall add together all excess market value allocated 
  4.3   to that year and subtract from the sum all negative balances 
  4.4   allocated to that year.  If this calculation results in a 
  4.5   negative number, the entire negative balance must be carried 
  4.6   forward and allocated to the next year.  If the resulting amount 
  4.7   is positive, a postretirement adjustment is payable under this 
  4.8   paragraph.  The board shall express a positive amount as a 
  4.9   percentage of the total eligible required reserves certified to 
  4.10  the board under clause (2).  
  4.11     (d) The state board shall determine the amount of any 
  4.12  postretirement adjustment which is payable using the following 
  4.13  procedure: 
  4.14     (1) The total "eligible" required reserves as of the first 
  4.15  of January next following the end of the fiscal year for the 
  4.16  annuitants and benefit recipients eligible to receive a full or 
  4.17  partial postretirement adjustment as determined by clause (2) 
  4.18  must be certified to the state board by the commission-retained 
  4.19  actuary.  The total "eligible" required reserves must be 
  4.20  determined by the commission-retained actuary on the assumption 
  4.21  that all annuitants and benefit recipients eligible to receive a 
  4.22  full or partial postretirement adjustment will be alive on the 
  4.23  January 1 in question; and 
  4.24     (2) The state board shall add the percentage certified 
  4.25  under paragraph (b) to any positive percentage calculated under 
  4.26  paragraph (c).  The board shall not subtract from the percentage 
  4.27  certified under paragraph (b) any negative amount calculated 
  4.28  under paragraph (c).  The sum of these percentages must be 
  4.29  carried to five decimal places and must be certified to each 
  4.30  participating public pension fund or plan as the full 
  4.31  postretirement adjustment percentage.  
  4.32     (e) A retirement annuity payable in the event of retirement 
  4.33  before becoming eligible for social security benefits as 
  4.34  provided in section 352.116, subdivision 3; 353.29, subdivision 
  4.35  6; or 354.35 must be treated as the sum of a period certain 
  4.36  retirement annuity and a life retirement annuity for the 
  5.1   purposes of any postretirement adjustment.  The period certain 
  5.2   retirement annuity plus the life retirement annuity must be the 
  5.3   annuity amount payable until age 62 or 65, whichever applies.  A 
  5.4   postretirement adjustment granted on the period certain 
  5.5   retirement annuity must terminate when the period certain 
  5.6   retirement annuity terminates. 
  5.7      Sec. 2.  [EFFECTIVE DATE.] 
  5.8      Section 1 is effective the day following final enactment.