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HF 3777

as introduced - 92nd Legislature (2021 - 2022) Posted on 02/24/2022 02:06pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to retirement; Public Employees Retirement Association; statewide
volunteer firefighter plan; adding vesting alternatives; removing the alternative
pension for members with less than five years of service credit under the retirement
plan; clarifying procedures for joining the retirement plan; amending Minnesota
Statutes 2020, sections 353G.01, subdivisions 7, 9a; 353G.05, subdivisions 1, 2,
3, by adding a subdivision; 353G.09, subdivisions 1, 2; repealing Minnesota Statutes
2020, section 353G.09, subdivision 3.

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

Section 1.

Minnesota Statutes 2020, section 353G.01, subdivision 7, is amended to read:


Subd. 7.

deleted text beginGood timedeleted text end Service credit.

"deleted text beginGood timedeleted text end Service credit" means the length of
service credit for an active firefighter that is reported by the applicable fire chief based on
the minimum firefighter activity standards of the fire department. The credit may be reported
on an annual or monthly basis.

Sec. 2.

Minnesota Statutes 2020, section 353G.01, subdivision 9a, is amended to read:


Subd. 9a.

Relief association.

"Relief association" means a volunteer firefighter relief
association established under chapter 424Anew text begin, including a volunteer firefighter relief associationnew text end
to which records, assets, and liabilities related to lump-sum or monthly benefits for active
and former firefighters will be transferred from the retirement fund upon satisfaction of the
requirements of section 353G.17.

Sec. 3.

Minnesota Statutes 2020, section 353G.05, subdivision 1, is amended to read:


Subdivision 1.

new text beginEntities eligible to request new text endcoverage.

(a) A relief association or a
municipality or independent nonprofit firefighting corporation affiliated with a relief
association may elect to have its volunteer firefighters covered by the lump-sum retirement
divisionnew text begin, if the volunteer firefighters for whom coverage is being requested are covered by
a relief association that is a lump-sum defined benefit relief association or a defined
contribution relief association governed by chapter 424A.
new text end

new text begin (b) A relief association or a municipality or independent nonprofit firefighting corporation
affiliated with a relief association may elect to have its volunteer firefighters covered by
the lump-sum retirement division
new text end or the monthly benefit retirement division of the retirement
plannew text begin, if the volunteer firefighters for whom coverage is being requested are covered by a
relief association that is a monthly benefit defined benefit relief association governed by
chapter 424A
new text end.

deleted text begin (b)deleted text end new text begin(c) new text endA municipality or independent nonprofit firefighting corporation that is not
affiliated with a relief association may elect to have its volunteer firefighters covered by
the lump-sum retirement division of the retirement plan.

Sec. 4.

Minnesota Statutes 2020, section 353G.05, is amended by adding a subdivision to
read:


new text begin Subd. 1a. new text end

new text begin Requesting coverage. new text end

new text begin (a) An entity that is eligible under subdivision 1 to
make a request for coverage may initiate the process of obtaining coverage by filing a request
with the executive director, as described in this subdivision.
new text end

new text begin (b) The request for coverage must be in writing and on a form prescribed by the executive
director.
new text end

new text begin (c) In the request for coverage, the entity must identify the desired service pension
amount and select a vesting schedule from the following options:
new text end

new text begin (1) incremental vesting beginning with 40 percent vested after completing five years of
active service and increasing by four percent upon completion of each additional year of
active service, until 100 percent vested upon completion of 20 years of active service;
new text end

new text begin (2) incremental vesting beginning with 40 percent vested after completing five years of
active service and increasing by 12 percent upon completion of each additional year of
active service, until 100 percent vested upon completion of 10 years of active service; or
new text end

new text begin (3) incremental vesting beginning with 40 percent vested after completing 10 years of
active service and increasing by six percent upon completion of each additional year of
active service, until 100 percent vested upon completion of 20 years of active service.
new text end

new text begin (d) If the request for coverage is for volunteer firefighters covered by a monthly benefit
defined benefit relief association, the entity making the request must elect coverage either
by the monthly benefit retirement division or by the lump-sum retirement division.
new text end

new text begin (e) If the request for coverage is for volunteer firefighters covered by a relief association
with a retirement plan governed by chapter 424A, the secretary of the relief association,
following approval of the request by the board of the relief association, and the chief
administrative officer of the entity affiliated with the relief association, following approval
of the request by the governing body of the entity, must jointly make the request. If the
relief association is affiliated with more than one entity, the chief administrative officer of
each affiliated entity must execute the request.
new text end

new text begin (f) If the request for coverage is for volunteer firefighters who are not covered by a relief
association, the chief administrative officer of the entity operating the fire department must
make the request.
new text end

Sec. 5.

Minnesota Statutes 2020, section 353G.05, subdivision 2, is amended to read:


Subd. 2.

deleted text beginElection of coverage;deleted text end new text beginCost analysis for coverage by the new text endlump sumnew text begin
division
new text end.

(a) deleted text beginThe process for electing coverage of volunteer firefighters by the lump-sum
retirement division is initiated by a request to the executive director for a cost analysis of
the prospective retirement coverage under the lump-sum retirement division.
deleted text endnew text begin Upon receipt
of a request for coverage by the lump-sum division, the executive director must prepare a
cost analysis as described in this subdivision.
new text end

deleted text begin (b) If the volunteer firefighters are currently covered by a lump-sum volunteer firefighter
relief association or a defined contribution volunteer firefighter relief association governed
by chapter 424A, the cost analysis of the prospective retirement coverage must be requested
jointly by the secretary of the volunteer firefighter relief association, following approval of
the request by the board of the volunteer firefighter relief association, and the chief
administrative officer of the entity associated with the relief association, following approval
of the request by the governing body of the entity associated with the relief association. If
the relief association is associated with more than one entity, the chief administrative officer
of each associated entity must execute the request. If the volunteer firefighters are not
currently covered by a volunteer firefighter relief association, the cost analysis of the
prospective retirement coverage must be requested by the chief administrative officer of
the entity operating the fire department. The request must be made in writing and must be
made on a form prescribed by the executive director.
deleted text end

deleted text begin (c)deleted text end new text begin(b) new text endThe cost analysis deleted text beginof the prospective retirement coverage by the lump-sum
retirement division of the statewide retirement plan
deleted text end new text beginunder this subdivision new text endmust be based
onnew text begin:
new text end

new text begin (1)new text end the service pension amount under section 353G.11 closest to the service pension
amount provided by the deleted text beginvolunteer firefighterdeleted text end relief association if the relief association is a
lump-sum defined benefit plan, deleted text beginor thedeleted text end new text beginan new text endamount new text beginthat is new text endequal to 95 percent of the most
current average account balance per relief association member if the relief association is a
defined contribution plan, or deleted text begintodeleted text end the lowest service pension amount under section 353G.11
if there is no deleted text beginvolunteer firefighterdeleted text end relief association, rounded updeleted text begin,deleted text endnew text begin;new text end and deleted text beginany other
deleted text end

new text begin (2) if different than the amount under clause (1), thenew text end service pension amount deleted text begindesignated
by the requester or requesters
deleted text endnew text begin identified in the request under subdivision 1anew text end.

new text begin (c) The cost analysis must take into account the vesting option selected in the request
under subdivision 1a.
new text end

new text begin (d) new text endThe cost analysis must be prepared using a mathematical procedure certified as
accurate by an approved actuary retained by the Public Employees Retirement Association.

deleted text begin (d)deleted text end new text begin(e) new text endIf new text beginthe request for coverage was made by new text enda deleted text begincost analysis is requested and a volunteer
firefighters
deleted text end relief association deleted text beginexistsdeleted text end that has filed the information required under section
424A.014 in a timely fashion, upon request by the executive director, the state auditor shall
provide the most recent data available on the financial condition of the deleted text beginvolunteer firefighterdeleted text end
relief association, the most recent firefighter demographic data available, and a copy of the
current relief association bylaws. If a cost analysis is requested, but no deleted text beginvolunteer firefighterdeleted text end
relief association exists, the chief administrative officer of the entity operating the fire
department shall provide the demographic information on the volunteer firefighters serving
as members of the fire department requested by the executive director.

Sec. 6.

Minnesota Statutes 2020, section 353G.05, subdivision 3, is amended to read:


Subd. 3.

deleted text beginElection of coverage;deleted text end new text beginCost analysis for coverage by the new text endmonthly benefitnew text begin
retirement division
new text end.

deleted text begin (a) The process for electing coverage of volunteer firefighters by the
monthly retirement division is initiated by a request to the executive director for an actuarial
cost analysis of the prospective retirement coverage under the monthly benefit retirement
division. This request must be made by the secretary of the volunteer firefighter relief
association and the chief administrative officer of the entity associated with the relief
association, both of which must first obtain approval of the request from their respective
municipal governing body or independent nonprofit firefighting corporation. The request
must be made in writing and must be made on a form prescribed by the executive director.
deleted text end

deleted text begin (b) Coverage by the monthly benefit retirement division may only be elected if the
volunteer firefighters are covered by a monthly benefit volunteer firefighter relief association
governed by chapter 424A.
deleted text end

deleted text begin (c)deleted text end new text begin (a) Upon receipt of a request for coverage by the monthly benefit retirement division,
the executive director must prepare a cost analysis as described in this subdivision.
new text end

new text begin (b) new text endThe cost analysis under deleted text beginparagraph (a)deleted text end new text beginthis subdivision new text endmust be prepared by the
approved actuary retained by the Public Employees Retirement Association. The cost
analysis must be based on:

(1) the new text beginmonthly new text endservice pension new text beginamount new text endand other retirement benefit types and amounts
in effect for the deleted text beginvolunteer firefighterdeleted text end relief association as of the date of the request deleted text beginand any
other
deleted text endnew text begin;
new text end

new text begin (2) if different than thenew text end amount deleted text beginor amounts designated by the requesters, as discloseddeleted text end
new text begin under clause (1), the monthly pension amount identified in the request under subdivision
1a and evaluated
new text endin a special actuarial valuation prepared under sections 356.215 and
356.216; and

deleted text begin (2)deleted text endnew text begin (3)new text end the standards for actuarial workdeleted text begin,deleted text end and the actuarial assumptions utilized in the
most recent deleted text beginpriordeleted text end actuarial valuation, except that the applicable investment return actuarial
assumption is six percent.

new text begin (c) The cost analysis must take into account the vesting option selected in the request
under subdivision 1a.
new text end

(d) The secretary of the deleted text beginvolunteer firefighterdeleted text end relief association making the request must
supply the demographic and financial data necessary for the cost analysis to be prepared.

Sec. 7.

Minnesota Statutes 2020, section 353G.09, subdivision 1, is amended to read:


Subdivision 1.

Entitlement.

deleted text beginExcept as provided in subdivision 3, An activedeleted text end new text begin(a) A new text endmember
of the retirement plan is entitled to a service pension from the retirement plan if the deleted text beginpersondeleted text endnew text begin
member
new text end:

(1) has separated from active service with the fire department for at least 30 days;

(2) has attained the age of at least 50 years;

deleted text begin (3) has completed at least five years of good time service credit as a member of the
retirement plan if the person is a member of the lump-sum retirement division
deleted text end

new text begin (3) has satisfied the minimum service requirement in paragraph (b) and new text endhas completed
at least the minimum number of years of deleted text begingood timedeleted text end service deleted text begincreditdeleted text end as a member of the
retirement plan specified in the retirement benefit plan document attributable to the applicable
fire department if the person is a member of the monthly benefit retirement division; and

(4) applies in a manner prescribed by the executive director for the service pension.

new text begin (b) A member satisfies the minimum service requirement if the member meets at least
one of the following requirements:
new text end

new text begin (1) the member is at least 40 percent vested based on years of service as a member of
the retirement plan;
new text end

new text begin (2) the member is at least 40 percent vested based on years of service with the fire
department and the total number of years of service as a member of the former affiliated
relief association plus years of service as a member of the retirement plan is at least five;
or
new text end

new text begin (3) the member has completed at least the minimum number of years of service as a
member of the retirement plan specified in the retirement benefit plan document attributable
to the applicable fire department if the person is a member of the monthly benefit retirement
division.
new text end

Sec. 8.

Minnesota Statutes 2020, section 353G.09, subdivision 2, is amended to read:


Subd. 2.

Vesting schedule; nonforfeitable portion of service pension.

deleted text begin(a) If an active
member of the lump-sum retirement division has completed less than 20 years of good time
service credit as
deleted text end A member of the deleted text beginlump-sumdeleted text end retirement deleted text begindivision of thedeleted text end plandeleted text begin, the person's
entitlement
deleted text endnew text begin is entitlednew text end to deleted text beginadeleted text end new text beginthe vested portion of the new text endservice pension deleted text beginis equal to the
nonforfeitable percentage of the applicable service pension amount,
deleted text end as deleted text beginfollows:deleted text endnew text begin determined
by applying the vesting schedule elected in the request for coverage under section 353G.05,
subdivision 1a.
new text end

deleted text begin Completed years of good time service
credit
deleted text end
deleted text begin Nonforfeitable percentage of the service
pension
deleted text end
deleted text begin 5
deleted text end
deleted text begin 40 percent
deleted text end
deleted text begin 6
deleted text end
deleted text begin 44 percent
deleted text end
deleted text begin 7
deleted text end
deleted text begin 48 percent
deleted text end
deleted text begin 8
deleted text end
deleted text begin 52 percent
deleted text end
deleted text begin 9
deleted text end
deleted text begin 56 percent
deleted text end
deleted text begin 10
deleted text end
deleted text begin 60 percent
deleted text end
deleted text begin 11
deleted text end
deleted text begin 64 percent
deleted text end
deleted text begin 12
deleted text end
deleted text begin 68 percent
deleted text end
deleted text begin 13
deleted text end
deleted text begin 72 percent
deleted text end
deleted text begin 14
deleted text end
deleted text begin 76 percent
deleted text end
deleted text begin 15
deleted text end
deleted text begin 80 percent
deleted text end
deleted text begin 16
deleted text end
deleted text begin 84 percent
deleted text end
deleted text begin 17
deleted text end
deleted text begin 88 percent
deleted text end
deleted text begin 18
deleted text end
deleted text begin 92 percent
deleted text end
deleted text begin 19
deleted text end
deleted text begin 96 percent
deleted text end

deleted text begin (b) If an active member of the monthly benefit retirement division has completed less
than 20 years of good time service credit as a member of the monthly benefit retirement
division of the plan, the person's entitlement to a service pension must be governed by the
retirement benefit plan document attributable to the applicable fire department.
deleted text end

Sec. 9. new text beginREVISOR INSTRUCTION.
new text end

new text begin In Minnesota Statutes, chapter 353G, the revisor of statutes shall change the term "good
time service" to the term "service."
new text end

Sec. 10. new text beginREPEALER.
new text end

new text begin Minnesota Statutes 2020, section 353G.09, subdivision 3, new text end new text begin is repealed.
new text end

Sec. 11. new text beginEFFECTIVE DATE.
new text end

new text begin Sections 1 to 10 are effective the day following final enactment.
new text end

APPENDIX

Repealed Minnesota Statutes: 22-06094

353G.09 RETIREMENT BENEFIT ELIGIBILITY.

Subd. 3.

Alternative lump-sum pension eligibility and computation.

(a) An active member of the lump-sum retirement division of the retirement plan is entitled to an alternative lump-sum service pension from the retirement plan if the person:

(1) has separated from active service with the fire department for at least 30 days;

(2) has attained the age of at least 50 years or the age for receipt of a service pension under the benefit plan of the applicable former volunteer firefighter relief association as of the date immediately before the election of the retirement coverage change, whichever is later;

(3) has completed at least five years of active service with the fire department and at least five years in total as a member of the applicable former volunteer firefighter relief association or of the lump-sum retirement division of the retirement plan, but has not rendered at least five years of good time service credit as a member of the lump-sum retirement division of the plan; and

(4) applies in a manner prescribed by the executive director for the service pension.

(b) If retirement coverage before statewide retirement plan coverage was provided to an active member by a defined benefit relief association, as defined in section 424A.001, subdivision 1b, the alternative lump-sum service pension is:

(1) the service pension level specified in the bylaws of the applicable former volunteer firefighter relief association as of the date immediately before the election of the retirement coverage change; multiplied by

(2) either full years of service or years and months of service, as specified in the bylaws, as a member of that volunteer firefighter relief association and as a member of the retirement plan; multiplied by

(3) the nonforfeitable percentage of the service pension to which the member is entitled under subdivision 2.

(c) If retirement coverage before statewide retirement plan coverage was provided to an active member by a defined contribution relief association, as defined in section 424A.001, subdivision 1c, the alternative lump-sum service pension is:

(1) the person's account balance as of the date immediately before the election of the retirement coverage change; multiplied by

(2) the nonforfeitable percentage of the account balance to which the person is entitled under subdivision 2; plus

(3) six percent annual compound interest from the date immediately before the election of the retirement coverage change until the date immediately before the date of retirement.