1.1 	A bill for an act
1.2 	relating to retirement; Public Employees Retirement
1.3 	Association; modifying augmentation rates for covered
1.4 	members; amending Minnesota Statutes 2004, section
1.5 	353.71, subdivision 2.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2004, section 353.71,
1.8 	subdivision 2, is amended to read:
1.9 		Subd. 2.Deferred annuity computation; augmentation.  (a)
1.10 	The deferred annuity accruing under subdivision 1, or under
1.11 	sections 353.34, subdivision 3, and 353.68, subdivision 4, must
1.12 	be computed on the basis of allowable service prior to the
1.13 	termination of public service and augmented as provided in this
1.14 	paragraph.  The required reserves applicable to a deferred
1.15 	annuity, or to any deferred segment of an annuity must be
1.16 	determined as of the first day of the month following the month
1.17 	in which the former member ceased to be a public employee, or
1.18 	July 1, 1971, whichever is later.  These required reserves must
1.19 	be augmented as follows:
1.20 	(1) at the rate of five percent annually compounded
1.21 	annually until January 1, 1981, and ;
1.22 	(2) for members who terminate public service after January
1.23 	1, 1981, and before May 16, 1989, at the rate of three percent;
1.24 	(3) for members who terminate on or after May 17, 1989, and
1.25 	before January 1, 2006,at the rate of three percent thereafter
2.1 	until January 1 of the year following the year in which the
2.2 	former member attains age 55., and from that date to the
2.3 	effective date of retirement, at the rate is of five percent
2.4 	compounded annually; and 
2.5 	(4) for members who terminate public service on or after
2.6 	January 1, 2006, at the rate of 2.5 percent until the first of
2.7 	the month following the month in which the former member attains
2.8 	age 55.
2.9 	If a person has more than one period of uninterrupted
2.10 	service, the required reserves related to each period must be
2.11 	augmented as specified in this paragraph.  The sum of the
2.12 	augmented required reserves is the present value of the
2.13 	annuity.  Uninterrupted service for the purpose of this
2.14 	subdivision means periods of covered employment during which the
2.15 	employee has not been separated from public service for more
2.16 	than two years.  If a person repays a refund, the restored
2.17 	service must be considered as continuous with the next period of
2.18 	service for which the employee has credit with this association.
2.19 	This section must not reduce the annuity otherwise payable under
2.20 	this chapter.  This paragraph applies to individuals who become
2.21 	deferred annuitants on or after July 1, 1971.  For a member who
2.22 	became a deferred annuitant before July 1, 1971, the paragraph
2.23 	applies from July 1, 1971, if the former active member applies
2.24 	for an annuity after July 1, 1973.
2.25 	(b) The retirement annuity or disability benefit of, or the
2.26 	survivor benefit payable on behalf of, a former member who
2.27 	terminated service before July 1, 1997, or the survivor benefit
2.28 	payable on behalf of a basic or police and fire member who was
2.29 	receiving disability benefits before July 1, 1997, which is
2.30 	first payable after June 30, 1997, must be increased on an
2.31 	actuarial equivalent basis to reflect the change in the
2.32 	postretirement interest rate actuarial assumption under section
2.33 	356.215, subdivision 8, from five percent to six percent under a
2.34 	calculation procedure and tables adopted by the board and
2.35 	approved by the actuary retained by the Legislative Commission
2.36 	on Pensions and Retirement.

3.1 	Sec. 2. EFFECTIVE DATE.
 3.2 	Section 1 is effective January 1, 2006.