HF 1016

as introduced - 79th Legislature (1995 - 1996) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to retirement; changing the postretirement 
  1.3             benefit increase mechanism from a lump-sum adjustment 
  1.4             to a cost-of-living adjustment for the Duluth teachers 
  1.5             retirement fund association; amending Minnesota 
  1.6             Statutes 1994, section 354A.27. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1994, section 354A.27, is 
  1.9   amended to read: 
  1.10     354A.27 [DULUTH TEACHERS RETIREMENT FUND ASSOCIATION; LUMP 
  1.11  SUM POSTRETIREMENT ADJUSTMENT MECHANISM.] 
  1.12     Subdivision 1.  [ELIGIBILITY POSTRETIREMENT ADJUSTMENT 
  1.13  MODIFICATION.] A person receiving a retirement annuity, 
  1.14  disability benefit, or surviving spouse benefit or annuity from 
  1.15  the Duluth teachers retirement fund association who has received 
  1.16  the annuity or benefit for at least one year may be entitled to 
  1.17  receive a lump sum postretirement adjustment under subdivision 
  1.18  2, in the discretion of the board of trustees under subdivision 
  1.19  3.  Any postretirement adjustment payable from the Duluth 
  1.20  teachers retirement fund association after November 1, 1995, 
  1.21  must be computed and paid according to this section. 
  1.22     Subd. 2.  [ADJUSTMENT AMOUNT ANNUITY RESERVE ACCOUNT.] The 
  1.23  amount an eligible annuitant or benefit recipient is entitled to 
  1.24  receive must be determined by the governing board as follows: 
  1.25     (1) the years of service credit of each annuitant or the 
  1.26  years of service credit of each decedent on behalf of whom a 
  2.1   survivor benefit is paid must be added to the number of years 
  2.2   the annuity or survivor benefit has been paid; 
  2.3      (2) the dollar amount equal to up to one percent of the 
  2.4   current assets of the fund, as defined under section 356.215, 
  2.5   subdivision 1, clause (6), at the end of the previous fiscal 
  2.6   year must be determined by the board of trustees; 
  2.7      (3) the dollar amount determined under clause (2) must be 
  2.8   divided by the total number of years for each annuitant or 
  2.9   benefit recipient under clause (1) to arrive at the adjustment 
  2.10  figure per unit; and 
  2.11     (4) the adjustment for each eligible annuitant or benefit 
  2.12  recipient is equal to the amount per unit determined under 
  2.13  clause (3) multiplied by the number of years determined under 
  2.14  clause (1).  The association shall establish an annuity reserve 
  2.15  account to provide an investment vehicle for the reserves for 
  2.16  various retirement annuities and benefits payable by the fund. 
  2.17     Subd. 3.  [DISCRETION TO MODIFY ADJUSTMENT 
  2.18  AMOUNT ASSETS.] The board of trustees may eliminate or reduce 
  2.19  the adjustment amount in any fiscal year.  The assets of the 
  2.20  annuity reserve account consist of the money representing the 
  2.21  actuarially determined required reserves for various retirement 
  2.22  annuities and benefits payable by the association. 
  2.23     Subd. 4.  [ANNUITIZATION OPTION MANAGEMENT.] The lump sum 
  2.24  postretirement adjustment payable under this section, at the 
  2.25  request of the annuitant or benefit recipient and with the 
  2.26  approval of the board of trustees, may be converted to a monthly 
  2.27  annuity of an equivalent actuarial value, based on: 
  2.28     (1) the age of the annuitant or benefit recipient on the 
  2.29  date of the lump sum postretirement adjustment; 
  2.30     (2) the mortality table established by the board of 
  2.31  trustees of the association and approved under section 356.215, 
  2.32  subdivision 7; and 
  2.33     (3) a postretirement interest rate assumption of 7.5 
  2.34  percent.  The association annuity reserve account must be 
  2.35  managed by the board of trustees of the association. 
  2.36     Subd. 5.  [INVESTMENT.] The assets of the annuity reserve 
  3.1   account must be invested, reinvested, and retained in the 
  3.2   discretion of the board in investments authorized by section 
  3.3   356A.06. 
  3.4      Subd. 6.  [ALLOCATION OF ASSETS.] At least once each fiscal 
  3.5   year and before the payment of the annual postretirement 
  3.6   adjustment, the board shall determine the reserves to be 
  3.7   allocated to the respective annuity reserve account in the 
  3.8   following manner: 
  3.9      (1) the present value of the benefits payable to the 
  3.10  annuitants or benefit recipients must be determined using the 
  3.11  postretirement earnings assumptions specified for the first 
  3.12  class city teachers retirement funds in section 356.215 and the 
  3.13  mortality table applicable to the fund; and 
  3.14     (2) the amount determined in clause (1) must be multiplied 
  3.15  by the funding ratio of the association determined for the 
  3.16  previous fiscal year end, and the product must be identified as 
  3.17  the amount allocated to the annuity reserve account. 
  3.18     Subd. 7.  [WITHDRAWAL OF MONEY.] If the executive secretary 
  3.19  of the association concludes that money is required for the 
  3.20  payment of retirement annuities or benefits, the executive 
  3.21  secretary shall sell sufficient securities in the reserve 
  3.22  account or transfer available cash to pay benefits. 
  3.23     Subd. 8.  [CALCULATION OF POSTRETIREMENT ADJUSTMENTS.] (a) 
  3.24  Annually, after June 30, the board of trustees determines the 
  3.25  amount of any postretirement adjustment using the procedures in 
  3.26  this subdivision and subdivision 9. 
  3.27     (b) Each person who has been receiving an annuity or 
  3.28  benefit under the articles of incorporation, bylaws, or under 
  3.29  this section for at least 12 months as of the date of the 
  3.30  postretirement adjustment, shall be eligible for a 
  3.31  postretirement adjustment.  The postretirement adjustment shall 
  3.32  be payable each January 1.  The postretirement adjustment shall 
  3.33  be equal to two percent of the annuity or benefit to which the 
  3.34  person is entitled one month prior to the payment of the 
  3.35  postretirement adjustment, except for the initial payment of the 
  3.36  postretirement adjustment, which shall be calculated as 
  4.1   specified in subdivision 10. 
  4.2      Subd. 9.  [ADDITIONAL INCREASE.] (a) In addition to the 
  4.3   postretirement increases granted under subdivision 8, an 
  4.4   additional percentage increase must be computed and paid under 
  4.5   this subdivision. 
  4.6      (b) The board of trustees shall determine the number of 
  4.7   annuitants or benefit recipients who have been receiving an 
  4.8   annuity or benefit for at least 12 months as of the current June 
  4.9   30.  These recipients are entitled to receive the surplus 
  4.10  investment earnings additional postretirement increase. 
  4.11     (c) Annually, as of each June 30, the board shall determine 
  4.12  the amount of reserves in the annuity reserve account as 
  4.13  specified in subdivision 6. 
  4.14     (d) Annually, as of each June 30, the board shall determine 
  4.15  the five-year annualized rate of return attributable to the 
  4.16  assets in the annuity reserve account under the formula or 
  4.17  formulas specified in section 11A.04, clause (11). 
  4.18     (e) The board shall determine the amount of excess 
  4.19  five-year annualized rate of return over the preretirement 
  4.20  interest assumption as specified in section 356.215. 
  4.21     (f) The additional increase must be determined by 
  4.22  multiplying the quantity one minus the rate of contribution 
  4.23  deficiency, as specified in the most recent actuarial report of 
  4.24  the actuary retained by the legislative commission on pensions 
  4.25  and retirement, times the rate of return excess as determined in 
  4.26  paragraph (e). 
  4.27     (g) The additional increase is payable to all eligible 
  4.28  annuitants or benefit recipients on January 1 following the June 
  4.29  30 determination date under paragraphs (c) and (d). 
  4.30     Subd. 10.  [FIRST ADJUSTMENT.] For all annuitants and 
  4.31  beneficiaries of the association, before calculation of the 
  4.32  first postretirement adjustment under this section following 
  4.33  enactment, and for the purposes of calculating the adjustment 
  4.34  amounts under subdivisions 8 and 9, their annual retirement 
  4.35  annuity or benefit shall be permanently increased by the amount 
  4.36  of their previous lump-sum postretirement adjustment. 
  5.1      Sec. 2.  [DULUTH OLD PLAN BYLAWS.] 
  5.2      In accordance with Minnesota Statutes, section 354A.12, 
  5.3   subdivision 4, approval is granted for the Duluth teachers 
  5.4   retirement fund association to amend their articles of 
  5.5   incorporation or bylaws to conform to section 1.  The amendments 
  5.6   in this section apply to the old law coordinated program members 
  5.7   in the Duluth teachers retirement fund association. 
  5.8      Sec. 3.  [EFFECTIVE DATE.] 
  5.9      Sections 1 and 2 are effective November 1, 1995.