HF 1758

as introduced - 92nd Legislature (2021 - 2022) Posted on 03/01/2021 04:10pm

A bill for an act
relating to retirement; Public Employees Retirement Association; making
administrative changes to the retirement plans administered by the association;
amending Minnesota Statutes 2020, sections 353.01, subdivisions 16, 28; 353.014,
subdivision 4; 353.0162; 353.27, subdivision 12; 353.30, subdivisions 1a, 1b, 1c;
353.335; 353.34, subdivision 2; 353D.071, subdivision 1.

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

Section 1.

Minnesota Statutes 2020, section 353.01, subdivision 16, is amended to read:

Subd. 16.

Allowable service; limits and computation.

(a) "Allowable service" means:

(1) service during years of actual membership in the course of which employee deductions
were withheld from salary and contributions were made at the applicable rates under section
353.27, 353.65, or 353E.03;

(2) periods of service covered by payments in lieu of salary deductions under sections
353.27, subdivisions 12 and 12a, and 353.35;

(3) service in years during which the public employee was not a member but for which
the member later elected, while a member, to obtain credit by making payments to the fund
as permitted by any law then in effect;

(4) a period of authorized leave of absence during which the employee receives pay as
specified in subdivision 10, paragraph (a), clause (4) or (5), from which deductions for
employee contributions are made, deposited, and credited to the fund;

(5) a period of authorized leave of absence without pay, or with pay that is not included
in the definition of salary under subdivision 10, paragraph (a), clause (4) or (5), for which
salary deductions are not authorized, and for which a member obtained service credit for
up to 12 months of the authorized leave period by payment under section 353.0162, to the
fund made in place of salary deductions;

deleted text begin (6) a periodic, repetitive leave that is offered to all employees of a governmental
subdivision. The leave program may not exceed 208 hours per annual normal work cycle
as certified to the association by the employer. A participating member obtains service credit
by making employee contributions in an amount or amounts based on the member's average
salary, excluding overtime pay, that would have been paid if the leave had not been taken.
The employer shall pay the employer and additional employer contributions on behalf of
the participating member. The employee and the employer are responsible to pay interest
on their respective shares at the applicable rate or rates specified in section 356.59,
subdivision 3, compounded annually, from the end of the normal cycle until full payment
is made. An employer shall also make the employer and additional employer contributions,
plus interest at the applicable rate or rates specified in section 356.59, subdivision 3,
compounded annually, on behalf of an employee who makes employee contributions but
terminates public service. The employee contributions must be made within one year after
the end of the annual normal working cycle or within 30 days after termination of public
service, whichever is sooner. The executive director shall prescribe the manner and forms
to be used by a governmental subdivision in administering a periodic, repetitive leave. Upon
payment, the member must be granted allowable service credit for the purchased period;
deleted text end

deleted text begin (7) deleted text end new text begin (6) new text end an authorized temporary or seasonal layoff under subdivision 12, limited to three
months allowable service per authorized temporary or seasonal layoff in one calendar year.
An employee who has received the maximum service credit allowed for an authorized
temporary or seasonal layoff must return to public service and must obtain a minimum of
three months of allowable service subsequent to the layoff in order to receive allowable
service for a subsequent authorized temporary or seasonal layoff;

deleted text begin (8) deleted text end new text begin (7) new text end a period of uniformed services leave purchased under section 353.014;

deleted text begin (9) deleted text end new text begin (8) new text end a period of military service purchased under section 353.0141; or

deleted text begin (10) deleted text end new text begin (9) new text end a period deleted text begin specified deleted text end new text begin of reduced salary purchased new text end under section 353.0162.

(b) No member may receive more than 12 months of allowable service credit in a year
either for vesting purposes or for benefit calculation purposes.

(c) For an active member who was an active member of the former Minneapolis
Firefighters Relief Association on December 29, 2011, "allowable service" is the period of
service credited by the Minneapolis Firefighters Relief Association as reflected in the
transferred records of the association up to December 30, 2011, and the period of service
credited under paragraph (a), clause (1), after December 30, 2011. For an active member
who was an active member of the former Minneapolis Police Relief Association on December
29, 2011, "allowable service" is the period of service credited by the Minneapolis Police
Relief Association as reflected in the transferred records of the association up to December
30, 2011, and the period of service credited under paragraph (a), clause (1), after December
30, 2011.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021.
new text end

Sec. 2.

Minnesota Statutes 2020, section 353.01, subdivision 28, is amended to read:

Subd. 28.

Retirement.

(a) "Retirement" means the payment of an annuity by the
association. A right to retirement is subject to termination of public service under subdivision
11a. A right to retirement requires a complete and continuous separation for 30 days from
employment as a public employee.

(b) Notwithstanding the 30-day separation requirement under paragraph (a), a member
of a defined benefit plan under this chapter, who also participates in the public employees
defined contribution plan under chapter 353D for other public service, may be paid, if
eligible, a retirement annuity from the defined benefit plan while participating in the defined
contribution plan. A retirement annuity is also payable from a defined benefit plan under
this chapter to an eligible member who terminates public service and who, within 30 days
of separation, takes office as an elected official of a governmental subdivision.

(c) Elected officials included in association membership under subdivisions 2a and 2d
meet the 30-day separation requirement under this section by resigning from office before
filing for a subsequent term in the same office and by remaining completely and continuously
separated from that office for 30 days prior to the date of the election.

new text begin (d) The 30-day separation requirement under paragraph (a) does not apply to a retirement
annuity payable from a defined benefit plan under this chapter to a public employee if the
public employee:
new text end

new text begin (1) is covered by a covered retirement plan under section 356.30, subdivision 3;
new text end

new text begin (2) is eligible for a combined service annuity under section 356.30, subdivision 1; and
new text end

new text begin (3) has entered into a phased retirement agreement or its equivalent permitted by the
laws applicable to the covered retirement plan with coverage of the last period of public
service.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021.
new text end

Sec. 3.

Minnesota Statutes 2020, section 353.014, subdivision 4, is amended to read:

Subd. 4.

Time period for making member's payment.

Payment of the employee
equivalent contributions must be made during a period that begins with the date on which
the member returns to public employment and that is three times the length of the military
leave period, or within five years of the date on which the member returns to public
employment, whichever is less. If the payment period is less than one year, payment of the
employee equivalent contributions may be made within one year of the date of the member's
discharge from service in the uniformed services. Payment may not be accepted after deleted text begin 30
days deleted text end new text begin six months new text end following termination of public service under section 353.01, subdivision
11a.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021.
new text end

Sec. 4.

Minnesota Statutes 2020, section 353.0162, is amended to read:

353.0162 SALARY CREDIT PURCHASE FOR PERIODS OF REDUCED
SALARY.

(a) A member may purchase differential salary credit as described in paragraph (c) for
a period deleted text begin specified deleted text end new text begin of reduced salary as described new text end in paragraph (b).

(b) The deleted text begin applicable deleted text end period deleted text begin is deleted text end new text begin of reduced salary must be new text end a period new text begin occurring entirely within
one school year, for school year employees, or one calendar year, for all other employees,
new text end during which the member deleted text begin is receiving deleted text end new text begin receives new text end no new text begin salary new text end or a reduced salary from the
employer while the member is:

(1) receiving workers' compensation payments related to the member's service to the
public employer;

(2) on an authorized leave of absence deleted text begin , except that if the authorized leave of absence
exceeds 12 months, the period of leave for which differential salary credit may be purchased
is limited to 12 months deleted text end ; deleted text begin or
deleted text end

(3) on an authorized leave of absence as a result of a budgetary or salary savings program
offered or mandated by a governmental subdivision, if certified to the executive director
by the governmental subdivision deleted text begin . deleted text end new text begin ; or
new text end

new text begin (4) on a periodic, repetitive leave that is offered to all employees of a governmental
subdivision where the leave program is certified by the employer to the association as one
that does not exceed 208 hours during the school year or calendar year, as applicable.
new text end

(c) Differential salary credit is the difference between the salary received by the member
during a period new text begin of reduced salary new text end specified in paragraph (b) and the salary of the member,
excluding overtime, on which contributions to the applicable plan would have been made
during the period based on the member's normal employment period, measured in hours or
otherwise, as applicable, and rate of pay.

(d) To receive differential salary credit, the member shall pay the plan, by delivering
payment to the executive director, an amount equal to:

(1) the applicable employee contribution rate under section 353.27, subdivision 2; 353.65,
subdivision 2; or 353E.03, subdivision 1, as applicable, multiplied by the differential salary
amount;

(2) plus an employer equivalent payment equal to the applicable employer contribution
rate in section 353.27, subdivision 3; 353.65, subdivision 3; or 353E.03, subdivision 2, as
applicable, multiplied by the differential salary amount;

(3) plus, if applicable, an equivalent employer additional amount equal to the additional
employer contribution rate in section 353.27, subdivision 3a, multiplied by the differential
salary amount.

(e) The employer, by appropriate action of its governing body and documented in its
official records, may pay deleted text begin the employer equivalent contributions and deleted text end new text begin on behalf of the member
the amounts determined under paragraph (d), clauses (2) and (3) new text end , as applicable, deleted text begin the equivalent
employer additional contributions on behalf of the member deleted text end new text begin plus interest under paragraph
(f). However, if the period of reduced salary is a periodic, repetitive leave under paragraph
(b), clause (4), then the employer must pay on behalf of the member the amount determined
under paragraph (d), clauses (2) and (3), as applicable, plus interest under paragraph (f) new text end .

(f) Payment under this section must include interest on the contribution amount or
amounts, whichever applies, at the applicable rate or rates specified in section 356.59,
subdivision 3, compounded annually, prorated for the number of months, if less than 12
months, from the deleted text begin date on which the period of reduced salary specified in paragraph (b)
terminates to the date on which the payment or payments are deleted text end new text begin end of the school year or
calendar year, as applicable, until full payment is new text end received by the executive director. Payment
under this section must be completed by the earliest of:

(1) deleted text begin 30 days deleted text end new text begin six months new text end after termination of public service by the employee under section
353.01, subdivision 11a;

(2) one year after the termination of the period new text begin of reduced salary new text end specified in paragraph
(b); or

(3) deleted text begin 30 days deleted text end new text begin six months new text end after the commencement of a disability benefit.

deleted text begin (g) If the member has purchased 12 months of differential salary credit, the member
must return to public service and render a minimum of three months of allowable service
to purchase differential salary credit for a subsequent leave of absence.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021.
new text end

Sec. 5.

Minnesota Statutes 2020, section 353.27, subdivision 12, is amended to read:

Subd. 12.

Omitted salary deductions; obligations.

(a) In the case of omission of
required deductions for the general employees retirement plan, the public employees police
and fire retirement plan, or the local government correctional employees retirement plan
from the salary of an employee, the department head or designee shall immediately, upon
discovery, report the employee for membership and deduct the employee deductions under
subdivision 4 during the current pay period or during the pay period immediately following
the discovery of the omission. Payment for the omitted obligations may only be made in
accordance with reporting procedures and methods established by the executive director.

(b) When the entire omission period of an employee does not exceed 60 days, the
governmental subdivision may report and submit payment of the omitted employee
deductions and the omitted employer contributions through the reporting processes under
subdivision 4.

(c) When the omission period of an employee exceeds 60 days, the governmental
subdivision shall furnish to the association sufficient data and documentation upon which
the obligation for omitted employee and employer contributions can be calculated. The
omitted employee deductions must be deducted from the employee's subsequent salary
payment or payments and remitted to the association for deposit in the applicable retirement
fund. The employee shall pay omitted employee deductions due for the 60 days prior to the
end of the last pay period in the omission period during which salary was earned. The
employer shall pay any remaining omitted employee deductions and any omitted employer
contributions, plus deleted text begin cumulative deleted text end interest at the deleted text begin annual rate of 8.5 percent until June 30, 2015,
and eight percent thereafter deleted text end new text begin applicable rate or rates specified in section 356.59, subdivision
3, new text end compounded annually, from the date or dates each omitted employee contribution was
first payable.

(d) An employer shall not hold an employee liable for omitted employee deductions
beyond the pay period dates under paragraph (c), nor attempt to recover from the employee
those employee deductions paid by the employer on behalf of the employee. Omitted
deductions due under paragraph (c) which are not paid by the employee constitute a liability
of the employer that failed to deduct the omitted deductions from the employee's salary.
The employer shall make payment with interest at the applicable rate or rates specified in
section 356.59, subdivision 3, compounded annually. Omitted employee deductions are no
longer due if an employee terminates public service before making payment of omitted
employee deductions to the association, but the employer remains liable to pay omitted
employer contributions plus interest at the applicable rate or rates specified in section 356.59,
subdivision 3, compounded annually, from the date the contributions were first payable.

(e) The association may not commence action for the recovery of omitted employee
deductions and employer contributions after the expiration of three calendar years after the
calendar year in which the contributions and deductions were omitted. Except as provided
under paragraph (b), no payment may be made or accepted unless the association has already
commenced action for recovery of omitted deductions. An action for recovery commences
on the date of the mailing of any written correspondence from the association requesting
information from the governmental subdivision upon which to determine whether or not
omitted deductions occurred.

Sec. 6.

Minnesota Statutes 2020, section 353.30, subdivision 1a, is amended to read:

Subd. 1a.

Pre-July 1, 1989, members: rule of 90.

Upon termination of public service
under section 353.01, subdivision 11a, a person who first became a public employee or a
member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, and
whose attained age plus credited allowable service totals 90 years is entitled upon application
to a retirement annuity in an amount equal to the new text begin applicable new text end normal annuity provided in
section 353.29, subdivision 3, paragraph (a) deleted text begin , without any deleted text end new text begin ; section 353.651, subdivision 3;
or section 353E.04, subdivision 3. Such annuity is not subject to a new text end reduction deleted text begin in annuity due
to deleted text end new text begin for new text end early retirement.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021.
new text end

Sec. 7.

Minnesota Statutes 2020, section 353.30, subdivision 1b, is amended to read:

Subd. 1b.

Pre-July 1, 1989, members: 30 years of service.

Upon termination of public
service under section 353.01, subdivision 11a, a person who first became a public employee
or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989,
deleted text begin with deleted text end new text begin and has new text end 30 years or more of allowable service credit, new text begin and new text end who elects to retire prior to
normal retirement age, shall receive an annuity in an amount equal to the new text begin applicable new text end normal
annuity provided under section 353.29, subdivision 3, paragraph (a) deleted text begin , deleted text end new text begin ; section 353.651,
subdivision 3; or section 353E.04, subdivision 3. Such annuity must be new text end reduced by
one-quarter of one percent for each month that the member is under age 62 at the time of
retirement.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021.
new text end

Sec. 8.

Minnesota Statutes 2020, section 353.30, subdivision 1c, is amended to read:

Subd. 1c.

Pre-July 1, 1989, members: early retirement.

Upon termination of public
service new text begin under section 353.01, subdivision 11a new text end , a person who first became a public employee
or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989,
deleted text begin who has become deleted text end new text begin and is new text end at least 55 years old but deleted text begin not deleted text end new text begin is younger than new text end normal retirement age,
and new text begin who new text end is vested under section 353.01, subdivision 47, is entitled, upon application, to a
retirement annuity in an amount equal to the new text begin applicable new text end normal annuity provided in section
353.29, subdivision 3, paragraph (a) deleted text begin , deleted text end new text begin ; section 353.651, subdivision 3; or section 353E.04,
subdivision 3. Such annuity must be new text end reduced by one-quarter of one percent for each month
that the member is under normal retirement age at the time of retirement.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021.
new text end

Sec. 9.

Minnesota Statutes 2020, section 353.335, is amended to read:

353.335 DISABILITANT EARNINGS REPORTS.

new text begin Unless waived by the executive director, a new text end disability benefit deleted text begin recipients deleted text end new text begin recipient new text end must
report all earnings from reemployment and from income from workers' compensation to
the association annually by May 15 in a format prescribed by the executive director. If the
form is not submitted by May 15, benefits must be suspended effective June 1. Upon receipt
of the form by the association, if the disability benefit recipient is deemed by the executive
director to be eligible for continued payment, benefits must be reinstated retroactive to June
1. new text begin The executive director may waive the requirements in this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021.
new text end

Sec. 10.

Minnesota Statutes 2020, section 353.34, subdivision 2, is amended to read:

Subd. 2.

Refund with interest.

(a) Except as provided in subdivision 1, any person who
ceases to be a member is entitled to receive a refund in an amount equal to accumulated
deductions, less the sum of any disability benefits that have been paid by the fund, plus
annual compound interest new text begin at the applicable rate or rates under paragraph (b) new text end to the first day
of the month in which the refund is processed.

(b) Annual compound interest rates deleted text begin on a refund under paragraph (a) deleted text end shall be as follows:

(1) six percent to June 30, 2011;

(2) four percent after June 30, 2011, to June 30, 2018; and

(3) three percent after June 30, 2018.

(c) If a person repays a refund and subsequently applies for another refund, the repayment
amount, including interest, is added to the fiscal year balance in which the repayment was
made.

(d) If the refund payable to a member is based on employee deductions that are
determined to be invalid under section 353.27, subdivision 7, the interest payable on the
invalid employee deductions is deleted text begin three percent deleted text end new text begin annual compound interest at the applicable
rate or rates under paragraph (b) new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021.
new text end

Sec. 11.

Minnesota Statutes 2020, section 353D.071, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have
the meanings given them.

(b) "Designated beneficiary" means the person designated as the beneficiary under
section 353D.07, subdivision 5, and who is the designated beneficiary under section 401(a)(9)
of the Internal Revenue Code and section 1.401 (a)(9)-1, Q&A-4 of the Treasury regulations.

(c) "Distribution calendar year" means a calendar year for which a minimum distribution
is required. For distributions beginning before the member's death, the first distribution
calendar year is the calendar year immediately preceding the calendar year which contains
the member's required beginning date. For distributions beginning after the member's death,
the first distribution calendar year is the calendar year in which distributions are required
to begin under subdivision 2, paragraph (c). The required minimum distribution for the
member's first distribution calendar year shall be made on or before the member's required
beginning date.

(d) "Member's account balance" means the account balance as of the last valuation date
in the valuation calendar year increased by the amount of any contributions made and
allocated to the account balance as of dates in the valuation calendar year after the valuation
date and decreased by distributions made in the valuation calendar year after the valuation
date. The account balance for the valuation calendar year includes any amounts rolled over
or transferred to the plan either in the valuation calendar year or in the distribution calendar
year if distributed or transferred in the valuation calendar year.

(e) "Required beginning date" means the deleted text begin later of April 1 of the calendar year following
the calendar year that the member attains age 70 years, six months, or April 1 of the calendar
year following the calendar year in which the member terminates employment deleted text end new text begin date a
terminated member's retirement benefit must begin under section 356.635, subdivision 1,
paragraph (a) new text end .

(f) "Valuation calendar year" means the calendar year immediately preceding the
distribution calendar year.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021.
new text end