1.1 	A bill for an act
1.2 	relating to retirement; statewide and major public
1.3 	pension plans; defining final average salary; amending
1.4 	Minnesota Statutes 2004, sections 352.01, by adding a
1.5 	subdivision; 352.115, subdivisions 2, 3; 352.87,
1.6 	subdivision 3; 352.93, subdivision 1; 352C.021, by
1.7 	adding a subdivision; 353.01, by adding a subdivision;
1.8 	353.29, subdivision 3; 353.33, subdivision 3; 353.651,
1.9 	subdivision 3; 353.656, subdivision 1; 354.05, by
1.10 	adding a subdivision; 354.44, subdivision 6; 354A.011,
1.11 	by adding a subdivision; 354A.31, subdivisions 4, 4a;
1.12 	422A.01, by adding a subdivision; 422A.15, subdivision
1.13 	1; 422A.16, subdivision 9; 490.121, subdivision 21;
1.14 	repealing Minnesota Statutes 2004, sections 352C.031,
1.15 	subdivision 3; 353.29, subdivision 2; 353.651,
1.16 	subdivision 2.
1.17 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.18 	Section 1. Minnesota Statutes 2004, section 352.01, is
1.19 	amended by adding a subdivision to read:
1.20 		Subd. 14a.Average salary. (a) "Average salary" means
1.21 	the average of the highest five successive years of salary upon
1.22 	which the employee has made contributions to the retirement fund
1.23 	by payroll deductions.  Average salary must be based upon all
1.24 	allowable service if this service is less than five years.
1.25 	(b) "Average salary" does not include the payment of
1.26 	accrued unused annual leave or overtime paid at time of final
1.27 	separation from state service if paid in a lump sum nor does it
1.28 	include the reduced salary, if any, paid during the period the
1.29 	employee is entitled to workers' compensation benefit payments
1.30 	for temporary disability.
1.31 	(c) For an employee covered by the correctional state
2.1 	employees retirement plan, "average salary" means the average of
2.2 	the monthly salary during the employee's highest five successive
2.3 	years of salary as an employee covered by the general state
2.4 	employees retirement plan, or the correctional state employees
2.5 	retirement plan, or by a combination of the two.  If the total
2.6 	of the covered service is less than five years, the
2.7 	determination of average salary must be based on all allowable
2.8 	service.

2.9 	Sec. 2. Minnesota Statutes 2004, section 352.115,
2.10 	subdivision 2, is amended to read:
2.11 		Subd. 2.average salary normal retirement annuity.  The
2.12 	retirement annuity hereunder payable at normal retirement age or
2.13 	thereafter must be computed in accordance with the applicable
2.14 	provisions of the formula stated in subdivision 3, on the basis
2.15 	of the employee's average salary for the period of allowable
2.16 	service.  This retirement annuity is known as the "normal"
2.17 	retirement annuity.
2.18 	For each year of allowable service, "average salary" of an
2.19 	employee in determining a retirement annuity means the average
2.20 	of the highest five successive years of salary upon which the
2.21 	employee has made contributions to the retirement fund by
2.22 	payroll deductions.  Average salary must be based upon all
2.23 	allowable service if this service is less than five years.
2.24 	"Average salary" does not include the payment of accrued
2.25 	unused annual leave or overtime paid at time of final separation
2.26 	from state service if paid in a lump sum nor does it include the
2.27 	reduced salary, if any, paid during the period the employee is
2.28 	entitled to workers' compensation benefit payments for temporary
2.29 	disability.

2.30 	Sec. 3. Minnesota Statutes 2004, section 352.115,
2.31 	subdivision 3, is amended to read:
2.32 		Subd. 3.Retirement annuity formula.  (a) This paragraph,
2.33 	in conjunction with section 352.116, subdivision 1, applies to a
2.34 	person who became a covered employee or a member of a pension
2.35 	fund listed in section 356.30, subdivision 3, before July 1,
2.36 	1989, unless paragraph (b), in conjunction with section 352.116,
3.1 	subdivision 1a, produces a higher annuity amount, in which case
3.2 	paragraph (b) will apply.  The employee's average salary, as
3.3 	defined in section 352.01,subdivision 2 14a, multiplied by the
3.4 	percent specified in section 356.315, subdivision 1, per year of
3.5 	allowable service for the first ten years and the percent
3.6 	specified in section 356.315, subdivision 2, for each later year
3.7 	of allowable service and pro rata for completed months less than
3.8 	a full year shall determine the amount of the retirement annuity
3.9 	to which the employee is entitled.
3.10 	(b) This paragraph applies to a person who has become at
3.11 	least 55 years old and first became a covered employee after
3.12 	June 30, 1989, and to any other covered employee who has become
3.13 	at least 55 years old and whose annuity amount, when calculated
3.14 	under this paragraph and in conjunction with section 352.116,
3.15 	subdivision 1a, is higher than it is when calculated under
3.16 	paragraph (a), in conjunction with section 352.116, subdivision
3.17 	1.  The employee's average salary, as defined in section 352.01,
3.18 	subdivision 2 14a, multiplied by the percent specified in
3.19 	section 356.315, subdivision 2, for each year of allowable
3.20 	service and pro rata for months less than a full year shall
3.21 	determine the amount of the retirement annuity to which the
3.22 	employee is entitled.

3.23 	Sec. 4. Minnesota Statutes 2004, section 352.87,
3.24 	subdivision 3, is amended to read:
3.25 		Subd. 3.Retirement annuity formula.  A person specified
3.26 	in subdivision 1 will have is entitled to receive a retirement
3.27 	annuity applicable for allowable service credit under this
3.28 	section calculated by multiplying the employee's average salary,
3.29 	as defined in section 352.115 352.01, subdivision 2 14a, by the
3.30 	percent specified in section 356.315, subdivision 2a, for each
3.31 	year or portions of a year of allowable service credit.  No
3.32 	reduction for retirement prior to before the normal retirement
3.33 	age, as specified in section 352.01, subdivision 25, applies to
3.34 	service to which this section applies.

3.35 	Sec. 5. Minnesota Statutes 2004, section 352.93,
3.36 	subdivision 1, is amended to read:
4.1 		Subdivision 1.Basis of annuity; when to apply.  After
4.2 	separation from state service, an employee covered under section
4.3 	352.91 who has reached age 55 years and has credit for at least
4.4 	three years of covered correctional service or a combination of
4.5 	covered correctional service and regular Minnesota general
4.6 	employees state retirement System plan service is entitled upon
4.7 	application to a retirement annuity under this section,based
4.8 	only on covered correctional employees' service.  Application
4.9 	may be made no earlier than 60 days before the date the employee
4.10 	is eligible to retire by reason of both age and service
4.11 	requirements.
4.12 	In this section, "average salary" means the average of the
4.13 	monthly salary during the employee's highest five successive
4.14 	years of salary as an employee covered by the Minnesota State
4.15 	Retirement System.  Average salary must be based upon all
4.16 	allowable service if this service is less than five years.

4.17 	Sec. 6. Minnesota Statutes 2004, section 352C.021, is
4.18 	amended by adding a subdivision to read:
4.19 		Subd. 1a.Average salary. "Average salary," for purposes
4.20 	of calculating the normal retirement annuity under section
4.21 	352C.031, subdivision 4, means the average of the highest five
4.22 	successive years of salary upon which contributions have been
4.23 	made under section 352C.09.

4.24 	Sec. 7. Minnesota Statutes 2004, section 353.01, is
4.25 	amended by adding a subdivision to read:
4.26 		Subd. 17a.Average salary. (a) "Average salary," for
4.27 	purposes of calculating a retirement annuity under section
4.28 	353.29, subdivision 3, means an amount equivalent to the average
4.29 	of the highest salary of the member, police officer, or
4.30 	firefighter, whichever applies, upon which employee
4.31 	contributions were paid for any five successive years of
4.32 	allowable service, based on dates of salary periods as listed on
4.33 	salary deduction reports.  Average salary must be based upon all
4.34 	allowable service if this service is less than five years.
4.35 	(b) "Average salary" may not include any reduced salary
4.36 	paid during a period in which the employee is entitled to
5.1 	benefit payments from workers' compensation for temporary
5.2 	disability, unless the average salary is higher, including this
5.3 	period.

5.4 	Sec. 8. Minnesota Statutes 2004, section 353.29,
5.5 	subdivision 3, is amended to read:
5.6 		Subd. 3.Retirement annuity formula.  (a) This paragraph,
5.7 	in conjunction with section 353.30, subdivisions 1, 1a, 1b, and
5.8 	1c, applies to any member who first became a public employee or
5.9 	a member of a pension fund listed in section 356.30, subdivision
5.10 	3, before July 1, 1989, unless paragraph (b), in conjunction
5.11 	with section 353.30, subdivision 5, produces a higher annuity
5.12 	amount, in which case paragraph (b) will apply.  The average
5.13 	salary as defined in section 353.01,subdivision 2 17a,
5.14 	multiplied by the percent specified in section 356.315,
5.15 	subdivision 3, for each year of allowable service for the first
5.16 	ten years and thereafter by the percent specified in section
5.17 	356.315, subdivision 4, per year of allowable service and
5.18 	completed months less than a full year for the "basic member,"
5.19 	and the percent specified in section 356.315, subdivision 1, for
5.20 	each year of allowable service for the first ten years and
5.21 	thereafter by the percent specified in section 356.315,
5.22 	subdivision 2, per year of allowable service and completed
5.23 	months less than a full year for the "coordinated member," shall
5.24 	determine the amount of the "normal" retirement annuity.
5.25 	(b) This paragraph applies to a member who has become at
5.26 	least 55 years old and first became a public employee after June
5.27 	30, 1989, and to any other member whose annuity amount, when
5.28 	calculated under this paragraph and in conjunction with section
5.29 	353.30, subdivision 5, is higher than it is when calculated
5.30 	under paragraph (a), in conjunction with section 353.30,
5.31 	subdivisions 1, 1a, 1b, and 1c.  The average salary, as defined
5.32 	in section 353.01,subdivision 2 17a, multiplied by the percent
5.33 	specified in section 356.315, subdivision 4, for each year of
5.34 	allowable service and completed months less than a full year for
5.35 	a basic member and the percent specified in section 356.315,
5.36 	subdivision 2, per year of allowable service and completed
6.1 	months less than a full year for a coordinated member, shall
6.2 	determine the amount of the normal retirement annuity.

6.3 	Sec. 9. Minnesota Statutes 2004, section 353.33,
6.4 	subdivision 3, is amended to read:
6.5 		Subd. 3.Computation of benefits.  This disability
6.6 	benefit is an amount equal to the normal annuity payable to a
6.7 	member who has reached normal retirement age with the same
6.8 	number of years of allowable service and the same average
6.9 	salary, as provided in section 353.01, subdivision 17a, and 
6.10 	section 353.29, subdivisions 2 and subdivision 3.
6.11 	A basic member shall receive a supplementary monthly
6.12 	benefit of $25 to age 65 or the five-year anniversary of the
6.13 	effective date of the disability benefit, whichever is later.
6.14 	If the disability benefits under this subdivision exceed
6.15 	the average salary as defined in section 353.29 353.01,
6.16 	subdivision 2 17a, the disability benefits must be reduced to an
6.17 	amount equal to said the average salary.

6.18 	Sec. 10. Minnesota Statutes 2004, section 353.651,
6.19 	subdivision 3, is amended to read:
6.20 		Subd. 3.Retirement annuity formula.  The average salary
6.21 	as defined in section 353.01,subdivision 2 17a, multiplied by
6.22 	the percent specified in section 356.315, subdivision 6, per
6.23 	year of allowable service determines the amount of the normal
6.24 	retirement annuity.  If the member has earned allowable service
6.25 	for performing services other than those of a police officer or
6.26 	firefighter, the annuity representing such that service is must
6.27 	be computed under sections 353.29 and 353.30.

6.28 	Sec. 11. Minnesota Statutes 2004, section 353.656,
6.29 	subdivision 1, is amended to read:
6.30 		Subdivision 1.In line of duty; computation of benefits.
 6.31 	A member of the police and fire plan who becomes disabled and
6.32 	physically unfit to perform duties as a police officer,
6.33 	firefighter, or paramedic as defined under section 353.64,
6.34 	subdivision 10, as a direct result of an injury, sickness, or
6.35 	other disability incurred in or arising out of any act of duty,
6.36 	which has or is expected to render the member physically or
7.1 	mentally unable to perform the duties as a police officer,
7.2 	firefighter, or paramedic as defined under section 353.64,
7.3 	subdivision 10, for a period of at least one year, shall receive
7.4 	disability benefits during the period of such disability.  The
7.5 	benefits must be in an amount equal to 60 percent of the
7.6 	"average salary" as defined in section 353.651 353.01,
7.7 	subdivision 2 17a, plus an additional percent specified in
7.8 	section 356.315, subdivision 6, of that average salary for each
7.9 	year of service in excess of 20 years.  If the disability under
7.10 	this subdivision occurs before the member has at least five
7.11 	years of allowable service credit in the police and fire plan,
7.12 	the disability benefit must be computed on the "average salary"
7.13 	from which deductions were made for contribution to the police
7.14 	and fire fund.

7.15 	Sec. 12. Minnesota Statutes 2004, section 354.05, is
7.16 	amended by adding a subdivision to read:
7.17 		Subd. 13a.Average salary. (a) "Average salary," for the
7.18 	purpose of determining the member's retirement annuity, means
7.19 	the average salary upon which contributions were made for the
7.20 	highest five successive years of formula service credit.
7.21 	(b) "Average salary" may not include any more than the
7.22 	equivalent of 60 monthly salary payments.
7.23 	(c) "Average salary" must be based upon all years of
7.24 	formula service credit if this service credit is less than five
7.25 	years.

7.26 	Sec. 13. Minnesota Statutes 2004, section 354.44,
7.27 	subdivision 6, is amended to read:
7.28 		Subd. 6.Computation of formula program retirement
7.29 	annuity.  (a) The formula retirement annuity must be computed in
7.30 	accordance with the applicable provisions of the formulas stated
7.31 	in paragraph (b) or (d) on the basis of each member's average
7.32 	salary under section 354.05, subdivision 13a,for the period of
7.33 	the member's formula service credit.
7.34 	For all years of formula service credit, "average salary,"
7.35 	for the purpose of determining the member's retirement annuity,
7.36 	means the average salary upon which contributions were made and
8.1 	upon which payments were made to increase the salary limitation
8.2 	provided in Minnesota Statutes 1971, section 354.511, for the
8.3 	highest five successive years of formula service credit
8.4 	provided, however, that such "average salary" shall not include
8.5 	any more than the equivalent of 60 monthly salary payments.
8.6 	Average salary must be based upon all years of formula service
8.7 	credit if this service credit is less than five years.
8.8 	(b) This paragraph, in conjunction with paragraph (c),
8.9 	applies to a person who first became a member of the association
8.10 	or a member of a pension fund listed in section 356.30,
8.11 	subdivision 3, before July 1, 1989, unless paragraph (d), in
8.12 	conjunction with paragraph (e), produces a higher annuity
8.13 	amount, in which case paragraph (d) applies.  The average salary
8.14 	as defined in paragraph (a) section 354.05, subdivision 13a,
8.15 	multiplied by the following percentages per year of formula
8.16 	service credit shall determine the amount of the annuity to
8.17 	which the member qualifying therefor is entitled:
8.18 	Coordinated Member   Basic Member
8.19 	Each year of service     the percent        the percent
8.20 	during first ten         specified in       specified in
8.21 	section 356.315,   section 356.315,
8.22 	subdivision 1,     subdivision 3,
8.23 	per year           per year
8.24 	Each year of service     the percent        the percent
8.25 	thereafter               specified in       specified in
8.26 	section 356.315,   section 356.315,
8.27 	subdivision 2,     subdivision 4,
8.28 	per year           per year
8.29 	(c)(i) This paragraph applies only to a person who first
8.30 	became a member of the association or a member of a pension fund
8.31 	listed in section 356.30, subdivision 3, before July 1, 1989,
8.32 	and whose annuity is higher when calculated under paragraph (b),
8.33 	in conjunction with this paragraph than when calculated under
8.34 	paragraph (d), in conjunction with paragraph (e).
8.35 	(ii) Where any member retires prior to normal retirement
8.36 	age under a formula annuity, the member shall be paid a
9.1 	retirement annuity in an amount equal to the normal annuity
9.2 	provided in paragraph (b) reduced by one-quarter of one percent
9.3 	for each month that the member is under normal retirement age at
9.4 	the time of retirement except that for any member who has 30 or
9.5 	more years of allowable service credit, the reduction shall be
9.6 	applied only for each month that the member is under age 62.
9.7 	(iii) Any member whose attained age plus credited allowable
9.8 	service totals 90 years is entitled, upon application, to a
9.9 	retirement annuity in an amount equal to the normal annuity
9.10 	provided in paragraph (b), without any reduction by reason of
9.11 	early retirement.
9.12 	(d) This paragraph applies to a member who has become at
9.13 	least 55 years old and first became a member of the association
9.14 	after June 30, 1989, and to any other member who has become at
9.15 	least 55 years old and whose annuity amount when calculated
9.16 	under this paragraph and in conjunction with paragraph (e), is
9.17 	higher than it is when calculated under paragraph (b), in
9.18 	conjunction with paragraph (c).  The average salary, as defined
9.19 	in paragraph (a) section 354.05, subdivision 13a,multiplied by
9.20 	the percent specified by section 356.315, subdivision 4, for
9.21 	each year of service for a basic member and by the percent
9.22 	specified in section 356.315, subdivision 2, for each year of
9.23 	service for a coordinated member shall determine the amount of
9.24 	the retirement annuity to which the member is entitled.
9.25 	(e) This paragraph applies to a person who has become at
9.26 	least 55 years old and first becomes a member of the association
9.27 	after June 30, 1989, and to any other member who has become at
9.28 	least 55 years old and whose annuity is higher when calculated
9.29 	under paragraph (d) in conjunction with this paragraph than when
9.30 	calculated under paragraph (b), in conjunction with paragraph
9.31 	(c).  An employee who retires under the formula annuity before
9.32 	the normal retirement age shall be paid the normal annuity
9.33 	provided in paragraph (d) reduced so that the reduced annuity is
9.34 	the actuarial equivalent of the annuity that would be payable to
9.35 	the employee if the employee deferred receipt of the annuity and
9.36 	the annuity amount were augmented at an annual rate of three
10.1 	percent compounded annually from the day the annuity begins to
10.2 	accrue until the normal retirement age.
10.3 	(f) No retirement annuity is payable to a former employee
10.4 	with a salary that exceeds 95 percent of the governor's salary
10.5 	unless and until the salary figures used in computing the
10.6 	highest five successive years average salary under paragraph (a)
10.7 	have been audited by the Teachers Retirement Association and
10.8 	determined by the executive director to comply with the
10.9 	requirements and limitations of section 354.05, subdivisions 35
10.10 	and 35a.

10.11 	Sec. 14. Minnesota Statutes 2004, section 354A.011, is
10.12 	amended by adding a subdivision to read:
10.13 		Subd. 7a.Average salary. "Average salary," for purposes
10.14 	of computing a normal coordinated program retirement annuity
10.15 	under section 354A.31, subdivision 4 or 4a, means an amount
10.16 	equal to the average salary upon which contributions were made
10.17 	for the highest five successive years of service credit but may
10.18 	not in any event include any more than the equivalent of 60
10.19 	monthly salary payments.  Average salary must be based upon all
10.20 	years of service credit if this service credit is less than five
10.21 	years.

10.22 	Sec. 15. Minnesota Statutes 2004, section 354A.31,
10.23 	subdivision 4, is amended to read:
10.24 		Subd. 4.Computation of the normal coordinated retirement
10.25 	annuity; minneapolis and st. paul funds.  (a) This subdivision
10.26 	applies to the coordinated programs of the Minneapolis Teachers
10.27 	Retirement Fund Association and the St. Paul Teachers Retirement
10.28 	Fund Association.
10.29 	(b) The normal coordinated retirement annuity shall be is 
10.30 	an amount equal to a retiring coordinated member's average
10.31 	salary under section 354A.011, subdivision 7a,multiplied by the
10.32 	retirement annuity formula percentage. Average salary for
10.33 	purposes of this section shall mean an amount equal to the
10.34 	average salary upon which contributions were made for the
10.35 	highest five successive years of service credit, but which shall
10.36 	not in any event include any more than the equivalent of 60
11.1 	monthly salary payments.  Average salary must be based upon all
11.2 	years of service credit if this service credit is less than five
11.3 	years.
11.4 	(c) This paragraph, in conjunction with subdivision 6,
11.5 	applies to a person who first became a member or a member in a
11.6 	pension fund listed in section 356.30, subdivision 3, before
11.7 	July 1, 1989, unless paragraph (d), in conjunction with
11.8 	subdivision 7, produces a higher annuity amount, in which case
11.9 	paragraph (d) will apply.  The retirement annuity formula
11.10 	percentage for purposes of this paragraph is the percent
11.11 	specified in section 356.315, subdivision 1, per year for each
11.12 	year of coordinated service for the first ten years and the
11.13 	percent specified in section 356.315, subdivision 2, for each
11.14 	year of coordinated service thereafter.
11.15 	(d) This paragraph applies to a person who has become at
11.16 	least 55 years old and who first becomes a member after June 30,
11.17 	1989, and to any other member who has become at least 55 years
11.18 	old and whose annuity amount, when calculated under this
11.19 	paragraph and in conjunction with subdivision 7 is higher than
11.20 	it is when calculated under paragraph (c), in conjunction with
11.21 	the provisions of subdivision 6.  The retirement annuity formula
11.22 	percentage for purposes of this paragraph is the percent
11.23 	specified in section 356.315, subdivision 2, for each year of
11.24 	coordinated service.

11.25 	Sec. 16. Minnesota Statutes 2004, section 354A.31,
11.26 	subdivision 4a, is amended to read:
11.27 		Subd. 4a.Computation of the normal coordinated
11.28 	retirement annuity; duluth fund.  (a) This subdivision applies
11.29 	to the new law coordinated program of the Duluth Teachers
11.30 	Retirement Fund Association.
11.31 	(b) The normal coordinated retirement annuity is an amount
11.32 	equal to a retiring coordinated member's average salary under
11.33 	section 354A.011, subdivision 7a,multiplied by the retirement
11.34 	annuity formula percentage. Average salary for purposes of this
11.35 	section means an amount equal to the average salary upon which
11.36 	contributions were made for the highest five successive years of
12.1 	service credit, but may not in any event include any more than
12.2 	the equivalent of 60 monthly salary payments.  Average salary
12.3 	must be based upon all years of service credit if this service
12.4 	credit is less than five years.
12.5 	(c) This paragraph, in conjunction with subdivision 6,
12.6 	applies to a person who first became a member or a member in a
12.7 	pension fund listed in section 356.30, subdivision 3, before
12.8 	July 1, 1989, unless paragraph (d), in conjunction with
12.9 	subdivision 7, produces a higher annuity amount, in which case
12.10 	paragraph (d) applies.  The retirement annuity formula
12.11 	percentage for purposes of this paragraph is the percent
12.12 	specified in section 356.315, subdivision 1, per year for each
12.13 	year of coordinated service for the first ten years and the
12.14 	percent specified in section 356.315, subdivision 2, for each
12.15 	subsequent year of coordinated service.
12.16 	(d) This paragraph applies to a person who is at least 55
12.17 	years old and who first becomes a member after June 30, 1989,
12.18 	and to any other member who is at least 55 years old and whose
12.19 	annuity amount, when calculated under this paragraph and in
12.20 	conjunction with subdivision 7, is higher than it is when
12.21 	calculated under paragraph (c) in conjunction with subdivision
12.22 	6.  The retirement annuity formula percentage for purposes of
12.23 	this paragraph is the percent specified in section 356.315,
12.24 	subdivision 2, for each year of coordinated service.

12.25 	Sec. 17. Minnesota Statutes 2004, section 422A.01, is
12.26 	amended by adding a subdivision to read:
12.27 		Subd. 4a.Average salary. (a) "Average salary" means the
12.28 	arithmetic average annual salary, wages or compensation of the
12.29 	member from the city for any five calendar years out of the last
12.30 	ten calendar years of service, except as provided for in section
12.31 	422A.16, which may include the year in which the employee
12.32 	retires, as selected by the employee.
12.33 	(b) A member with more than five calendar years of service
12.34 	but less than ten calendar years may select any five calendar
12.35 	years of service to determine the average salary.  A member with
12.36 	less than five years of service with the city shall use all
13.1 	earnings to determine the average salary.

13.2 	Sec. 18. Minnesota Statutes 2004, section 422A.15,
13.3 	subdivision 1, is amended to read:
13.4 		Subdivision 1.Formula pension and annuity.  Except as
13.5 	otherwise provided in subdivision 3, each contributing member
13.6 	who, at the time of retirement, fulfills the conditions
13.7 	necessary to enable the member to retire, shall is entitled to 
13.8 	receive what shall be known as a "formula pension and annuity"
13.9 	equal to two percent for each year of allowable service for the
13.10 	first ten years and thereafter 2.5 percent per year of allowable
13.11 	service of the arithmetic average annual salary, wages or
13.12 	compensation of the member from the city for any five calendar
13.13 	years out of the last ten calendar years of service except as
13.14 	provided for in section 422A.16, which may include the year in
13.15 	which the employee retires, as selected by the employee,
13.16 	multiplied by the years of service credited by the retirement
13.17 	fund.  The formula pension and annuity shall must be computed on
13.18 	the single life plan but subject to the option selections
13.19 	provided for in section 422A.17.
13.20 	In order to be entitled to the formula pension and annuity
13.21 	herein provided for, the retiring employee at the time of
13.22 	cessation of employment and of actual retirement shall must have
13.23 	attained the age of 60 years or have been employed by the city
13.24 	not less than 30 years, or meet the qualifications provided for
13.25 	in section 422A.16, and in addition thereto have contributed to
13.26 	the retirement fund at the percentage rate prescribed by the
13.27 	retirement law applicable when the salary, wages or compensation
13.28 	was paid on all salaries, wages, or compensation received from
13.29 	the city or from an applicable employing unit.  The years of
13.30 	service to be applied in the formula pension and annuity shall 
13.31 	must be found and determined by the retirement board, except
13.32 	that no credit shall may be allowed for any year in which a back
13.33 	charge is owing at time of retirement and the earnings from any
13.34 	year in which a back charge is owing shall may not be used in
13.35 	determining the average annual salary.

13.36 	Sec. 19. Minnesota Statutes 2004, section 422A.16,
14.1 	subdivision 9, is amended to read:
14.2 		Subd. 9.Incompetency or death of member.  Any member of
14.3 	the contributing class who becomes permanently separated from
14.4 	the service of the city under subdivision 8, may, by an
14.5 	instrument in writing, filed with the municipal employees
14.6 	retirement board within 30 days after such the separation
14.7 	becomes permanent, elect to allow the member contributions
14.8 	to such the fund to the date of separation to remain on deposit
14.9 	in such the fund, and in such the event the member shall be 
14.10 	is entitled to receive a retirement allowance at age 65,
14.11 	provided the member, or someone acting in the member's behalf if
14.12 	the member be incompetent, shall must make a written application
14.13 	for such the retirement allowance in the same manner provided
14.14 	for in section 422A.17 and in accordance with the provisions of
14.15 	section 422A.15, subdivision 1,except for determining
14.16 	average annual salary. A member with more than five calendar
14.17 	years of service but less than ten calendar years may select any
14.18 	five calendar years of service to determine the average annual
14.19 	salary.  A member with less than five years of service with the
14.20 	city shall use all earnings to determine the average annual
14.21 	salary.
14.22 	If the contributing member dies before reaching the age of
14.23 	65 years, or having attained the age of 65 years without having
14.24 	made the election provided for herein, the net accumulated
14.25 	amount of deductions from the member's salary, pay or
14.26 	compensation, plus interest, to the member's credit on date of
14.27 	death shall be paid is payable to such the person or persons as
14.28 	have been nominated by written designation filed with the
14.29 	retirement board, in such the form as that the retirement board
14.30 	shall require requires.
14.31 	If the employee fails to make a designation, or if the
14.32 	person or persons designated by such the employee predeceases
14.33 	such the employee, the net accumulated credit to such the 
14.34 	employee's account on date of death shall be paid is payable to
14.35 	such the employee's estate.
14.36 	The provisions of subdivisions 4, 5,and 6 shall also apply
15.1 	to any member qualifying for benefits under this subdivision,
15.2 	except for purposes of this subdivision the age referred to in
15.3 	subdivision 4 shall be is 65 years.

15.4 	Sec. 20. Minnesota Statutes 2004, section 490.121,
15.5 	subdivision 21, is amended to read:
15.6 		Subd. 21.Final average compensation.  "Final average
15.7 	compensation" means the total amount of salary payable paid to a
15.8 	judge in the highest five years of the last ten years prior to 
15.9 	before the event of maturity of benefits, divided by five;
15.10 	provided, however, that .If the number of years of service is
15.11 	less than ten, the highest five shall years of salary must be
15.12 	counted, and .If the number of years of service is less than
15.13 	five, the aggregate salary in such during the period shall must 
15.14 	be divided by the number of months in such the period and
15.15 	multiplied by 12.

15.16 	Sec. 21. REPEALER.
 15.17 	Minnesota Statutes 2004, sections 352C.031, subdivision 3;
15.18 	353.29, subdivision 2; and 353.651, subdivision 2, are repealed.

15.19 	Sec. 22. EFFECTIVE DATE.
 15.20 	Sections 1 to 21 are effective July 1, 2005.