HF 1103

as introduced - 91st Legislature (2019 - 2020) Posted on 02/14/2019 03:20pm

A bill for an act
relating to retirement; requiring annual stress testing for certain public retirement
systems; appropriating money; proposing coding for new law in Minnesota Statutes,
chapter 356.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [356.231] STRESS TEST AND RISK ASSESSMENT.
new text end

new text begin Subdivision 1. new text end

new text begin Annual assessment required. new text end

new text begin The Legislative Commission on Pensions
and Retirement shall conduct an annual stress test and risk assessment of each pension plan
administered by the Minnesota State Retirement System and the Public Employees
Retirement Association that has assets with a market value in excess of $1,000,000,000 as
of the most recent actuarial valuation date, the Teachers Retirement Association, and the
St. Paul Teachers Retirement Fund Association.
new text end

new text begin Subd. 2. new text end

new text begin Standards for assessment. new text end

new text begin The assessment shall be performed by a consultant
in accordance with generally accepted and nationally recognized actuarial standards of
practice relating to measuring pension plan obligations or costs, selecting economic and
demographic assumptions, assessing and disclosing risks associated with measuring
obligations and contributions, and actuarial communications.
new text end

new text begin Subd. 3. new text end

new text begin Scope of assessment. new text end

new text begin The assessment shall include:
new text end

new text begin (1) projections that consider the effect of long-term conditions and patterns of behavior
of the investment market to assess the impact on each pension plan in periods when market
returns are significantly above or below baseline assumed returns;
new text end

new text begin (2) projections of assets, liabilities, pension debt, service costs, employee contributions,
employer contributions, net amortization, benefit payments, payroll, and funded ratio for
each pension plan for each of the next 30 years based upon the then-current actuarial
assumptions, including the assumed investment rate of return; and
new text end

new text begin (3) use of methods deemed appropriate by the consultant, in consultation with the
executive director of the Legislative Commission on Pensions and Retirement, which
methods may include scenario tests, sensitivity tests, stochastic modeling, stress tests, and
a comparison of actuarial present values using a discount derived from minimal-risk
investments and using the discount rate set forth in the plan's actuarial valuation.
new text end

new text begin Subd. 4. new text end

new text begin Consultant retention; timing of reports. new text end

new text begin The assessment shall be conducted
by a consultant engaged pursuant to section 3.225 by the executive director of the Legislative
Commission on Pensions and Retirement, who is an actuary, investment adviser, or other
individual with appropriate experience and expertise. The consultant shall produce a report
on the assessment and the consultant's conclusions and recommendations. The consultant
shall deliver the report to the executive director of the Legislative Commission on Pensions
and Retirement no later than March 1 of each year.
new text end

new text begin Subd. 5. new text end

new text begin Report; posting on website. new text end

new text begin The Legislative Commission on Pensions and
Retirement shall post the report required by subdivision 4 on its website.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2019.
new text end

Sec. 2. new text begin APPROPRIATIONS.
new text end

new text begin $....... in fiscal year 2020 and $....... in fiscal year 2021 are appropriated from the general
fund to the Legislative Coordinating Commission for the Legislative Commission on Pensions
and Retirement to conduct assessments under Minnesota Statutes, section 356.231.
new text end