1.1                          A bill for an act 
  1.2             relating to retirement; modifying the computation of 
  1.3             the retirement annuity formula for the teachers 
  1.4             retirement association; amending Minnesota Statutes 
  1.5             2000, sections 354.05, subdivision 38; and 354.44, 
  1.6             subdivision 6. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 2000, section 354.05, 
  1.9   subdivision 38, is amended to read: 
  1.10     Subd. 38.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
  1.11  means age 65 for a person who first became a member of the 
  1.12  association or a member of a pension fund listed in section 
  1.13  356.30, subdivision 3, before July 1, 1989.  For a person who 
  1.14  first becomes a member of the association after June 30, 1989, 
  1.15  normal retirement age means the higher of age 65 or "retirement 
  1.16  age," as defined in United States Code, title 42, section 
  1.17  416(l), as amended, but not to exceed age 66 who has service 
  1.18  credit as a member of the association. 
  1.19     Sec. 2.  Minnesota Statutes 2000, section 354.44, 
  1.20  subdivision 6, is amended to read: 
  1.21     Subd. 6.  [COMPUTATION OF FORMULA PROGRAM RETIREMENT 
  1.22  ANNUITY.] (1) The formula retirement annuity must be computed in 
  1.23  accordance with the applicable provisions of the formulas stated 
  1.24  in clause (2) or (4) on the basis of each member's average 
  1.25  salary for the period of the member's formula service credit.  
  1.26     For all years of formula service credit, "average salary," 
  2.1   for the purpose of determining the member's retirement annuity, 
  2.2   means the average salary upon which contributions were made and 
  2.3   upon which payments were made to increase the salary limitation 
  2.4   provided in Minnesota Statutes 1971, section 354.511, for the 
  2.5   highest five successive years of formula service credit 
  2.6   provided, however, that such "average salary" shall not include 
  2.7   any more than the equivalent of 60 monthly salary payments.  
  2.8   Average salary must be based upon all years of formula service 
  2.9   credit if this service credit is less than five years. 
  2.10     (2) This clause, in conjunction with clause (3), applies to 
  2.11  a person who first became a member of the association or a 
  2.12  member of a pension fund listed in section 356.30, subdivision 
  2.13  3, before July 1, 1989, who has service credit as a member of 
  2.14  the association, unless clause (4), in conjunction with clause 
  2.15  (5), produces a higher annuity amount, in which case clause (4) 
  2.16  applies.  The average salary as defined in clause (1), 
  2.17  multiplied by the following percentages per year of formula 
  2.18  service credit plus the percentage determined in clause (6) 
  2.19  shall determine the amount of the annuity to which the member 
  2.20  qualifying therefor is entitled: 
  2.21                         Coordinated Member   Basic Member
  2.22  Each year of service     the percent        the percent
  2.23   during first ten        specified in       specified in
  2.24                           section 356.19,    section 356.19,
  2.25                           subdivision 1,     subdivision 3,
  2.26                           per year           per year
  2.27                           for service
  2.28                           before July 1,
  2.29                           2001, and 1.5
  2.30                           percent per year
  2.31                           for service on or
  2.32                           after July 1, 2001
  2.33  Each year of service     the percent        the percent
  2.34   thereafter              specified in       specified in
  2.35                           section 356.19,    section 356.19,
  2.36                           subdivision 2,     subdivision 4,
  3.1                            per year           per year
  3.2                            for service
  3.3                            before July 1,
  3.4                            2001, and the
  3.5                            percent specified
  3.6                            in section 356.19,
  3.7                            subdivision 2a,
  3.8                            per year for
  3.9                            service on or
  3.10                           after July 1, 2001
  3.11     (3)(i) This clause applies only to a person who first 
  3.12  became a member of the association or a member of a pension fund 
  3.13  listed in section 356.30, subdivision 3, before July 1, 1989, 
  3.14  and who has service credit as a member of the association, whose 
  3.15  annuity is higher when calculated under clause (2), in 
  3.16  conjunction with this clause than when calculated under clause 
  3.17  (4), in conjunction with clause (5). 
  3.18     (ii) Where any member retires prior to normal retirement 
  3.19  age under a formula annuity, the member shall be paid a 
  3.20  retirement annuity in an amount equal to the normal annuity 
  3.21  provided in clause (2) reduced by one-quarter of one percent for 
  3.22  each month that the member is under normal retirement age at the 
  3.23  time of retirement except that for any member who has 30 or more 
  3.24  years of allowable service credit, the reduction shall be 
  3.25  applied only for each month that the member is under age 62. 
  3.26     (iii) Any member whose attained age plus credited allowable 
  3.27  service totals 90 years is entitled, upon application, to a 
  3.28  retirement annuity in an amount equal to the normal annuity 
  3.29  provided in clause (2), without any reduction by reason of early 
  3.30  retirement. 
  3.31     (4) This clause applies to a member who has become at least 
  3.32  55 years old and first became a member of the association after 
  3.33  June 30, 1989, and to any other member who has become at least 
  3.34  55 years old and whose annuity amount when calculated under this 
  3.35  clause and in conjunction with clause (5), is higher than it is 
  3.36  when calculated under clause (2), in conjunction with clause (3).
  4.1   The average salary, as defined in clause (1) multiplied by the 
  4.2   percent specified by section 356.19, subdivision 4, for each 
  4.3   year of service for a basic member and by the percent specified 
  4.4   in section 356.19, subdivision 2, for each year of 
  4.5   service before July 1, 2001, and by the percent specified in 
  4.6   section 356.19, subdivision 2a, for each year of service after 
  4.7   July 1, 2001, plus the percentage determined by clause (6) for a 
  4.8   coordinated member shall determine the amount of the retirement 
  4.9   annuity to which the member is entitled. 
  4.10     (5) This clause applies to a person member who has become 
  4.11  at least 55 years old and first becomes a member of the 
  4.12  association after June 30, 1989, and to any other member who has 
  4.13  become at least 55 years old and whose annuity is higher when 
  4.14  calculated under clause (4) in conjunction with this clause than 
  4.15  when calculated under clause (2), in conjunction with clause 
  4.16  (3).  An employee who retires under the formula annuity before 
  4.17  the normal retirement age shall be paid the normal annuity 
  4.18  provided in clause (4) reduced so that the reduced annuity is 
  4.19  the actuarial equivalent of the annuity that would be payable to 
  4.20  the employee if the employee deferred receipt of the annuity and 
  4.21  the annuity amount were augmented at an annual rate of three 
  4.22  percent compounded annually from the day the annuity begins to 
  4.23  accrue until the normal retirement age. 
  4.24     (6) For the period July 1, 2001, to June 30, 2010, an 
  4.25  additional 1.0 percent will be added for each year of service 
  4.26  credit earned after the fiscal year in which a member attained 
  4.27  age 60 or in which the member's attained age plus credited 
  4.28  allowable service totals 90 years. 
  4.29     Sec. 3.  [EFFECTIVE DATE.] 
  4.30     Sections 1 and 2 are effective May 1, 2001.