HF 3764

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to retirement; modifying the investment-related postretirement
adjustment of the Minneapolis firefighters relief association by correcting;
providing an additional cost-of-living unit to members of the Minneapolis
firefighters relief association upon achieving 110 percent funding; amending
Minnesota Statutes 2006, sections 423C.05, by adding subdivisions; 423C.06,
subdivision 2; repealing Laws 2007, chapter 134, article 9, section 2.

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

Section 1.

Minnesota Statutes 2006, section 423C.05, is amended by adding a
subdivision to read:

new text begin Subd. 10. new text end

new text begin Pension unit increase. new text end

new text begin When the actuarial value of assets of the special
fund is greater than 110 percent of the actuarial accrued liabilities, according to the most
recent annual actuarial valuation performed in accordance with sections 356.215 and
356.216, each service pensioner, joint survivor annuitant, and surviving spouse member is
entitled to a onetime permanent benefit increase of one additional unit. The association
shall add the additional unit to the pension to which the member is otherwise entitled
beginning January 1 of the year following the year for which the valuation was prepared.
Active members retiring after the effective date of this subdivision will be entitled to this
additional unit upon retirement from the fire department, once the requirements of this
legislation have been satisfied and the benefit has been provided to the retired membership.
The benefit increase authorized by this subdivision will occur only when the funding ratio
equals or exceeds 110 percent of liabilities. This subdivision authorizes a benefit increase
of up to one unit to a total maximum of 43 units for a service pensioner, 23 units for a
surviving spouse benefit, and 43.2 units for unmarried service pensioners. If adding an
additional unit results in raising total units past the maximum, a partial unit may be added
to reach the maximum. For joint survivor annuities, this subdivision authorizes a benefit
increase actuarially equivalent to one unit.
new text end

Sec. 2.

Minnesota Statutes 2006, section 423C.05, is amended by adding a subdivision
to read:

new text begin Subd. 11. new text end

new text begin Unit precedence. new text end

new text begin The additional unit provided for in subdivision 10
shall take precedence over the benefit provided in section 423C.06, subdivision 4. In
preparing the actuarial valuation under sections 356.215 and 356.216, the actuary for the
fund shall first account for the benefit provided in subdivision 10 in determining the plan's
funded ratio. No benefit payments may be made by the association under section 423C.06,
subdivision 4, until the actuarial impact of the benefit provided for in subdivision 10 has
been determined and factored into the funding ratio.
new text end

Sec. 3.

Minnesota Statutes 2006, section 423C.06, subdivision 2, is amended to read:

Subd. 2.

Actuarial assets of special fund less than 102 percent.

(a) When
the actuarial assets of the special fund in any year are less than 102 percent of its
accrued liabilities according to the most recent annual actuarial valuation of the special
fund prepared in accordance with sections 356.215 and 356.216, investment-related
postretirement adjustments shall be determined and paid pursuant to this subdivision.
Payment of the annual postretirement adjustment may be made only if there is excess
investment income.

(b) The board shall determine by May 1 of each year whether or not the special
fund has excess investment income. The amount of excess investment income, if any,
must be stated as a dollar amount and reported by the executive secretary to the mayor
and governing body of the city, the state auditor, the commissioner of finance, and the
executive director of the Legislative Commission on Pensions and Retirement. The dollar
amount of excess investment income up to one percent of the assets of the special fund
must be applied for the purpose specified in paragraph (c). Excess investment income
must not be considered as income to or assets of the special fund for actuarial valuations
of the special fund for that year under this section and sections 69.77, 356.215, and
356.216, except to offset the annual postretirement adjustment. Additional investment
income is any realized or unrealized investment income other than the excess investment
income and must be included in the actuarial valuations performed under this section
and sections 69.77, 356.215, and 356.216.

(c) The amount determined under paragraph (b) must be applied as follows:
the association shall apply deleted text begin the first one-half of deleted text end one percent of assets that constitute
excess investment income to the payment of an annual postretirement adjustment to
eligible members deleted text begin and the second one-half of one percent of assets which constitute
excess investment income shall be applied to reduce the state amortization state aid or
supplementary amortization state aid payments otherwise due the association under
section 423A.02 for the current calendar year deleted text end . The amounts of all payments to eligible
members shall not exceed deleted text begin one-half of deleted text end one percent of the assets of the fund. The amount
of each eligible member's postretirement adjustment shall be calculated by dividing the
total number of units to which eligible members are entitled into the excess investment
income available for distribution to eligible members, and then multiplying that result by
the number of units to which each eligible member is entitled. If this amount exceeds the
total monthly benefit that the eligible member was entitled to in the prior year under the
terms of this chapter, the association shall pay the eligible member the lesser amount.
new text begin Any amount of the excess investment income not used to pay a postretirement benefit to
eligible members shall be applied to reduce the city of Minneapolis' property tax levy to
the association for the following calendar year. new text end Payment of the annual postretirement
adjustment must be in a lump-sum amount on June 1 following the determination date
in any year. In the event an eligible member dies prior to the payment of the annual
postretirement adjustment, the executive secretary shall pay the eligible member's estate
the amount to which the member was entitled.

new text begin EFFECTIVE DATE; LOCAL APPROVAL. new text end

new text begin This section is effective the day after
the city council of the city of Minneapolis and its chief clerical officer timely complete
their compliance with section 645.021, subdivisions 2 and 3.
new text end

Sec. 4. new text begin REPEALER.
new text end

new text begin Laws 2007, chapter 134, article 9, section 2, new text end new text begin is repealed.
new text end

Sec. 5. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 and 2 are effective the day following final enactment.
new text end