HF 3920

as introduced - 89th Legislature (2015 - 2016) Posted on 04/14/2016 12:47pm

A bill for an act
relating to retirement; financial solvency measures for the Minnesota State
Retirement System, St. Paul Teachers Retirement Fund Association, and
Teachers Retirement Association; increasing certain contribution rates; reducing
certain postretirement adjustment increase rates; revising certain postretirement
adjustment provisions; extending the amortization target date for the Teachers
Retirement Association; amending Minnesota Statutes 2014, sections 352.04,
subdivisions 2, 3, by adding a subdivision; 354.42, subdivision 3; 354A.12,
subdivision 2a; Minnesota Statutes 2015 Supplement, sections 354A.29,
subdivision 7; 356.215, subdivisions 8, 11; 356.415, subdivisions 1a, 1d, 1e, 1f;
repealing Minnesota Statutes 2015 Supplement, sections 354A.29, subdivisions
8, 9; 356.415, subdivision 1.

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

Section 1.

Minnesota Statutes 2014, section 352.04, subdivision 2, is amended to read:

Subd. 2.

Employee contributions.

(a) The employee contribution to the fund must
be equal to the following percent of salary:

	deleted text begin from July 1, 2010, to June 30, 2014 deleted text end	deleted text begin 5 deleted text end
	from July 1, 2014, deleted text begin and thereafter deleted text end new text begin to June 30, 2017 new text end	5.5
	new text begin from July 1, 2017, and thereafter new text end	new text begin 6 new text end

(b) These contributions must be made by deduction from salary as provided in
subdivision 4.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective June 30, 2016.
new text end

Sec. 2.

Minnesota Statutes 2014, section 352.04, subdivision 3, is amended to read:

Subd. 3.

Employer contributions.

The employer contribution to the fund must be
equal to the following percent of salary:

	deleted text begin from July 1, 2010, to June 30, 2014 deleted text end	deleted text begin 5 deleted text end
	from July 1, 2014, deleted text begin and thereafter deleted text end new text begin to June 30, 2017 new text end	5.5
	new text begin from July 1, 2017, and thereafter new text end	new text begin 6 new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective June 30, 2016.
new text end

Sec. 3.

Minnesota Statutes 2014, section 352.04, is amended by adding a subdivision
to read:

new text begin Subd. 3a. new text end

new text begin Additional employer contribution; expiration. new text end

new text begin (a) Effective July 1,
2017, an additional employer contribution to the general state employees retirement fund
of the Minnesota State Retirement System must be made equal to one percent of salary.
new text end

new text begin (b) This subdivision expires effective the first day of the fiscal year immediately
following the fiscal year in which the market value of the assets of the general state
employees retirement plan of the Minnesota State Retirement System equals or exceeds
the actuarial accrued liability of the plan as determined by the actuarial valuation prepared
under section 356.215 by the approved actuary retained under section 356.214.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective June 30, 2016.
new text end

Sec. 4.

Minnesota Statutes 2014, section 354.42, subdivision 3, is amended to read:

Subd. 3.

Employer.

(a) The regular employer contribution to the fund by Special
School District No. 1, Minneapolis, is an amount equal to the applicable following
percentage of salary of each coordinated member and the applicable percentage of salary
of each basic member specified in paragraph (c).

The additional employer contribution to the fund by Special School District No. 1,
Minneapolis, is an amount equal to 3.64 percent of the salary of each teacher who is a
coordinated member or who is a basic member.

(b) The regular employer contribution to the fund by Independent School District
No. 709, Duluth, is an amount equal to the applicable percentage of salary of each old law
or new law coordinated member specified for the coordinated program in paragraph (c).

(c) The employer contribution to the fund for every other employer is an amount
equal to the applicable following percentage of the salary of each coordinated member and
the applicable following percentage of the salary of each basic member:

	Period	Coordinated Member			Basic Member
	deleted text begin from July 1, 2013, until June 30, 2014 deleted text end		deleted text begin 7 percent deleted text end		deleted text begin 11 percent deleted text end
	after June 30, 2014 new text begin , through June 30, 2017 new text end		7.5 percent		11.5 percent
	new text begin after June 30, 2017 new text end		new text begin 8.5 percent new text end		new text begin 11.5 percent new text end

(d) When an employer contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid for each employer unit with the
first payroll cycle reported.

(e) After June 30, 2015, if a contribution rate revision is made under subdivisions
4a, 4b, and 4c, the employer contributions under paragraphs (a), (b), and (c) must be
adjusted accordingly.

new text begin (f) Effective July 1, 2017, the employer shall make the regular employer contributions
specified in paragraph (c) on behalf of any retired member of the Teachers Retirement
Association who resumes teaching in any employer unit to which this chapter applies.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

Minnesota Statutes 2014, section 354A.12, subdivision 2a, is amended to read:

Subd. 2a.

Employer regular and additional contributions.

(a) The employing
units shall make the following employer contributions to the teachers retirement fund
association:

(1) for any coordinated member of the St. Paul Teachers Retirement Fund
Association, the employing unit shall make a regular employer contribution to the
retirement fund association in an amount equal to the designated percentage of the salary
of the coordinated member as provided below:

	after June 30, 2014	5.5 percent
	after June 30, 2015	6 percent
	after June 30, 2016	6.25 percent
	after June 30, 2017	deleted text begin 6.5 deleted text end new text begin 7.5 new text end percent
	new text begin after June 30, 2018 new text end	new text begin 8.0 percent new text end

(2) for any basic member of the St. Paul Teachers Retirement Fund Association, the
employing unit shall make a regular employer contribution to the respective retirement
fund in an amount according to the schedule below:

	after June 30, 2014	9 percent of salary
	after June 30, 2015	9.5 percent of salary
	after June 30, 2016	9.75 percent of salary
	after June 30, 2017	deleted text begin 10 deleted text end new text begin 11 new text end percent of salary
	new text begin after June 30, 2018 new text end	new text begin 11.5 percent of salary new text end

(3) for a basic member of the St. Paul Teachers Retirement Fund Association, the
employing unit shall make an additional employer contribution to the respective fund in
an amount equal to 3.64 percent of the salary of the basic member;

(4) for a coordinated member of the St. Paul Teachers Retirement Fund Association,
the employing unit shall make an additional employer contribution to the respective fund
in an amount equal to 3.84 percent of the coordinated member's salary.

(b) The regular and additional employer contributions must be remitted directly to
the St. Paul Teachers Retirement Fund Association at least once each month. Delinquent
amounts are payable with interest under the procedure in subdivision 1a.

(c) Payments of regular and additional employer contributions for school district
or technical college employees who are paid from normal operating funds must be made
from the appropriate fund of the district or technical college.

(d) When an employer contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid by the employer with the first
payroll cycle reported.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2016.
new text end

Sec. 6.

Minnesota Statutes 2015 Supplement, section 354A.29, subdivision 7, is
amended to read:

Subd. 7.

Eligibility for deleted text begin payment deleted text end new text begin and calculation new text end of postretirement adjustments.

(a) Annually, after June 30, the board of trustees of the St. Paul Teachers Retirement
Fund Association must determine the amount of any postretirement adjustment using the
procedures in this subdivision deleted text begin and subdivision 8 or 9, whichever is applicable deleted text end .

(b) On January 1, each person who has been receiving an annuity or benefit under
the articles of incorporation, the bylaws, or this chapter, whose effective date of benefit
commencement occurred on or before July 1 of the new text begin immediately preceding new text end calendar year
deleted text begin immediately before the adjustment deleted text end , is eligible to receive a postretirement increase deleted text begin as
specified in subdivision 8 or 9 deleted text end new text begin as determined under paragraph (c), clause (1) or (2),
whichever applies new text end .

new text begin (c) The amount provided for under this subdivision is the full postretirement increase
to be applied as a permanent increase to the regular payment of each eligible member.
new text end

new text begin (1) A one percent postretirement increase shall apply for any eligible member
whose effective date of benefit commencement occurred on or before January 1 of the
immediately preceding calendar year.
new text end

new text begin (2) A one-half of one percent postretirement increase shall apply for any eligible
member whose effective date of benefit commencement occurred after January 1 of the
immediately preceding calendar year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2016.
new text end

Sec. 7.

Minnesota Statutes 2015 Supplement, section 356.215, subdivision 8, is
amended to read:

Subd. 8.

Interest and salary assumptions.

(a) The actuarial valuation must use the
applicable following interest assumption:

(1) select and ultimate interest rate assumption

plan	ultimate interest rate assumption
teachers retirement plan	8.5%

The select preretirement interest rate assumption for the period through June 30,
2017, is eight percent.

(2) single rate interest rate assumption

plan	interest rate assumption
general state employees retirement plan	8%
correctional state employees retirement plan	8
State Patrol retirement plan	8
legislators retirement plan, and for the constitutional officers calculation of total plan liabilities	0
judges retirement plan	8
general public employees retirement plan	8
public employees police and fire retirement plan	8
local government correctional service retirement plan	8
St. Paul teachers retirement plan	8
Bloomington Fire Department Relief Association	6
local monthly benefit volunteer firefighter relief associations	5
monthly benefit retirement plans in the statewide volunteer firefighter retirement plan	6

(b)(1) If funding stability has been attained, the valuation new text begin of each public pension
and retirement plan enumerated in section 356.20, subdivision 2, clauses (2), (4), (8),
(11), and (13), new text end must use a postretirement adjustment rate actuarial assumption equal to
the postretirement adjustment rate specified in section deleted text begin 354A.27, subdivision 7; 354A.29,
subdivision 9; or deleted text end 356.415, subdivision deleted text begin 1 deleted text end new text begin 1b, 1c, 1e, or 1f new text end , whichever applies.

(2) If funding stability has not been attained, the valuation new text begin of each public pension
and retirement plan enumerated in section 356.20, subdivision 2, clauses (2), (4), (8), (11),
and (13), new text end must use a select postretirement adjustment rate actuarial assumption equal to
the postretirement adjustment rate specified in section deleted text begin 354A.27, subdivision 6a; 354A.29,
subdivision 8; or deleted text end 356.415, subdivision deleted text begin 1a, deleted text end 1b, 1c, deleted text begin 1d, deleted text end 1e, or 1f, whichever applies, for a
period ending when the approved actuary estimates that the plan will attain the defined
funding stability measure, and thereafter an ultimate postretirement adjustment rate
actuarial assumption equal to the postretirement adjustment rate under section deleted text begin 354A.27,
subdivision 7; 354A.29, subdivision 9; or deleted text end 356.415, subdivision deleted text begin 1 deleted text end new text begin 1b, 1c, 1e, or 1f new text end , for the
applicable period or periods beginning when funding stability is projected to be attained.

new text begin (3) The valuation of each public pension and retirement plan enumerated in section
356.20, subdivision 2, clauses (1), (3), (5), and (12), must use a postretirement adjustment
rate actuarial assumption equal to the postretirement adjustment rate specified in section
354A.29 or 356.415, subdivision 1a or 1d, whichever applies.
new text end

(c) The actuarial valuation must use the applicable following single rate future salary
increase assumption, the applicable following modified single rate future salary increase
assumption, or the applicable following graded rate future salary increase assumption:

(1) single rate future salary increase assumption

plan	future salary increase assumption
legislators retirement plan		5%
judges retirement plan		2.75
Bloomington Fire Department Relief Association		4

(2) age-related future salary increase age-related select and ultimate future salary
increase assumption or graded rate future salary increase assumption

plan	future salary increase assumption
local government correctional service retirement plan	assumption B
St. Paul teachers retirement plan	assumption A

For plans other than the St. Paul teachers
retirement plan and the local government
correctional service retirement plan, the
select calculation is: during the designated
select period, a designated percentage rate
is multiplied by the result of the designated
integer minus T, where T is the number of
completed years of service, and is added
to the applicable future salary increase
assumption. The designated select period
is ten years and the designated integer is
ten for the local government correctional
service retirement plan and 15 for the St.
Paul Teachers Retirement Fund Association.
The designated percentage rate is 0.2 percent
for the St. Paul Teachers Retirement Fund
Association.

The ultimate future salary increase assumption is:

age	A	B
16	5.9%	8.75%
17	5.9	8.75
18	5.9	8.75
19	5.9	8.75
20	5.9	8.75
21	5.9	8.5
22	5.9	8.25
23	5.85	8
24	5.8	7.75
25	5.75	7.5
26	5.7	7.25
27	5.65	7
28	5.6	6.75
29	5.55	6.5
30	5.5	6.5
31	5.45	6.25
32	5.4	6.25
33	5.35	6.25
34	5.3	6
35	5.25	6
36	5.2	5.75
37	5.15	5.75
38	5.1	5.75
39	5.05	5.5
40	5	5.5
41	4.95	5.5
42	4.9	5.25
43	4.85	5
44	4.8	5
45	4.75	4.75
46	4.7	4.75
47	4.65	4.75
48	4.6	4.75
49	4.55	4.75
50	4.5	4.75
51	4.45	4.75
52	4.4	4.75
53	4.35	4.75
54	4.3	4.75
55	4.25	4.5
56	4.2	4.5
57	4.15	4.25
58	4.1	4
59	4.05	4
60	4	4
61	4	4
62	4	4
63	4	4
64	4	4
65	4	3.75
66	4	3.75
67	4	3.75
68	4	3.75
69	4	3.75
70	4	3.75

(3) service-related ultimate future salary increase assumption

general state employees retirement plan of the Minnesota State Retirement System	assumption A
general employees retirement plan of the Public Employees Retirement Association	assumption B
Teachers Retirement Association	assumption C
public employees police and fire retirement plan	assumption D
State Patrol retirement plan	assumption E
correctional state employees retirement plan of the Minnesota State Retirement System	assumption F

service length	A	B	C	D	E	F
1	10.25%	11.78%	12%	12.75%	7.75%	5.75%
2	7.85	8.65	9	10.75	7.25	5.6
3	6.65	7.21	8	8.75	6.75	5.45
4	5.95	6.33	7.5	7.75	6.5	5.3
5	5.45	5.72	7.25	6.25	6.25	5.15
6	5.05	5.27	7	5.85	6	5
7	4.75	4.91	6.85	5.55	5.75	4.85
8	4.45	4.62	6.7	5.35	5.6	4.7
9	4.25	4.38	6.55	5.15	5.45	4.55
10	4.15	4.17	6.4	5.05	5.3	4.4
11	3.95	3.99	6.25	4.95	5.15	4.3
12	3.85	3.83	6	4.85	5	4.2
13	3.75	3.69	5.75	4.75	4.85	4.1
14	3.55	3.57	5.5	4.65	4.7	4
15	3.45	3.45	5.25	4.55	4.55	3.9
16	3.35	3.35	5	4.55	4.4	3.8
17	3.25	3.26	4.75	4.55	4.25	3.7
18	3.25	3.25	4.5	4.55	4.1	3.6
19	3.25	3.25	4.25	4.55	3.95	3.5
20	3.25	3.25	4	4.55	3.8	3.5
21	3.25	3.25	3.9	4.45	3.75	3.5
22	3.25	3.25	3.8	4.35	3.75	3.5
23	3.25	3.25	3.7	4.25	3.75	3.5
24	3.25	3.25	3.6	4.25	3.75	3.5
25	3.25	3.25	3.5	4.25	3.75	3.5
26	3.25	3.25	3.5	4.25	3.75	3.5
27	3.25	3.25	3.5	4.25	3.75	3.5
28	3.25	3.25	3.5	4.25	3.75	3.5
29	3.25	3.25	3.5	4.25	3.75	3.5
30 or more	3.25	3.25	3.5	4.25	3.75	3.5

(d) The actuarial valuation must use the applicable following payroll growth
assumption for calculating the amortization requirement for the unfunded actuarial
accrued liability where the amortization retirement is calculated as a level percentage
of an increasing payroll:

plan	payroll growth assumption
general state employees retirement plan of the Minnesota State Retirement System	3.5%
correctional state employees retirement plan	3.5
State Patrol retirement plan	3.5
judges retirement plan	2.75
general employees retirement plan of the Public Employees Retirement Association	3.5
public employees police and fire retirement plan	3.5
local government correctional service retirement plan	3.5
teachers retirement plan	3.75
St. Paul teachers retirement plan	4

(e) The assumptions set forth in paragraphs (c) and (d) continue to apply, unless a
different salary assumption or a different payroll increase assumption:

(1) has been proposed by the governing board of the applicable retirement plan;

(2) is accompanied by the concurring recommendation of the actuary retained under
section 356.214, subdivision 1, if applicable, or by the approved actuary preparing the
most recent actuarial valuation report if section 356.214 does not apply; and

(3) has been approved or deemed approved under subdivision 18.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective June 30, 2016.
new text end

Sec. 8.

Minnesota Statutes 2015 Supplement, section 356.215, subdivision 11, is
amended to read:

Subd. 11.

Amortization contributions.

(a) In addition to the exhibit indicating
the level normal cost, the actuarial valuation of the retirement plan must contain an
exhibit for financial reporting purposes indicating the additional annual contribution
sufficient to amortize the unfunded actuarial accrued liability and must contain an exhibit
for contribution determination purposes indicating the additional contribution sufficient
to amortize the unfunded actuarial accrued liability. For the retirement plans listed in
subdivision 8, paragraph (c), but excluding the legislators retirement plan, the additional
contribution must be calculated on a level percentage of covered payroll basis by the
established date for full funding in effect when the valuation is prepared, assuming annual
payroll growth at the applicable percentage rate set forth in subdivision 8, paragraph (d).
For all other retirement plans and for the legislators retirement plan, the additional annual
contribution must be calculated on a level annual dollar amount basis.

(b) For any retirement plan other than a retirement plan governed by paragraph (d),
(e), (f), (g), (h), (i), or (j), if there has not been a change in the actuarial assumptions
used for calculating the actuarial accrued liability of the fund, a change in the benefit
plan governing annuities and benefits payable from the fund, a change in the actuarial
cost method used in calculating the actuarial accrued liability of all or a portion of the
fund, or a combination of the three, which change or changes by itself or by themselves
without inclusion of any other items of increase or decrease produce a net increase in the
unfunded actuarial accrued liability of the fund, the established date for full funding is the
first actuarial valuation date occurring after June 1, 2020.

(c) For any retirement plan, if there has been a change in any or all of the actuarial
assumptions used for calculating the actuarial accrued liability of the fund, a change in
the benefit plan governing annuities and benefits payable from the fund, a change in the
actuarial cost method used in calculating the actuarial accrued liability of all or a portion
of the fund, or a combination of the three, and the change or changes, by itself or by
themselves and without inclusion of any other items of increase or decrease, produce a net
increase in the unfunded actuarial accrued liability in the fund, the established date for full
funding must be determined using the following procedure:

(i) the unfunded actuarial accrued liability of the fund must be determined in
accordance with the plan provisions governing annuities and retirement benefits and the
actuarial assumptions in effect before an applicable change;

(ii) the level annual dollar contribution or level percentage, whichever is applicable,
needed to amortize the unfunded actuarial accrued liability amount determined under item
(i) by the established date for full funding in effect before the change must be calculated
using the interest assumption specified in subdivision 8 in effect before the change;

(iii) the unfunded actuarial accrued liability of the fund must be determined in
accordance with any new plan provisions governing annuities and benefits payable from
the fund and any new actuarial assumptions and the remaining plan provisions governing
annuities and benefits payable from the fund and actuarial assumptions in effect before
the change;

(iv) the level annual dollar contribution or level percentage, whichever is applicable,
needed to amortize the difference between the unfunded actuarial accrued liability amount
calculated under item (i) and the unfunded actuarial accrued liability amount calculated
under item (iii) over a period of 30 years from the end of the plan year in which the
applicable change is effective must be calculated using the applicable interest assumption
specified in subdivision 8 in effect after any applicable change;

(v) the level annual dollar or level percentage amortization contribution under item
(iv) must be added to the level annual dollar amortization contribution or level percentage
calculated under item (ii);

(vi) the period in which the unfunded actuarial accrued liability amount determined
in item (iii) is amortized by the total level annual dollar or level percentage amortization
contribution computed under item (v) must be calculated using the interest assumption
specified in subdivision 8 in effect after any applicable change, rounded to the nearest
integral number of years, but not to exceed 30 years from the end of the plan year in which
the determination of the established date for full funding using the procedure set forth in this
clause is made and not to be less than the period of years beginning in the plan year in which
the determination of the established date for full funding using the procedure set forth in
this clause is made and ending by the date for full funding in effect before the change; and

(vii) the period determined under item (vi) must be added to the date as of which
the actuarial valuation was prepared and the date obtained is the new established date
for full funding.

(d) For the general employees retirement plan of the Public Employees Retirement
Association, the established date for full funding is June 30, 2031.

(e) For the Teachers Retirement Association, the established date for full funding is
June 30, deleted text begin 2037 deleted text end new text begin 2046 new text end .

(f) For the correctional state employees retirement plan of the Minnesota State
Retirement System, the established date for full funding is June 30, 2038.

(g) For the judges retirement plan, the established date for full funding is June
30, 2038.

(h) For the public employees police and fire retirement plan, the established date
for full funding is June 30, 2038.

(i) For the St. Paul Teachers Retirement Fund Association, the established date for
full funding is June 30, 2042. In addition to other requirements of this chapter, the annual
actuarial valuation must contain an exhibit indicating the funded ratio and the deficiency
or sufficiency in annual contributions when comparing liabilities to the market value of
the assets of the fund as of the close of the most recent fiscal year.

(j) For the general state employees retirement plan of the Minnesota State Retirement
System, the established date for full funding is June 30, 2040.

(k) For the retirement plans for which the annual actuarial valuation indicates an
excess of valuation assets over the actuarial accrued liability, the valuation assets in
excess of the actuarial accrued liability must be recognized as a reduction in the current
contribution requirements by an amount equal to the amortization of the excess expressed
as a level percentage of pay over a 30-year period beginning anew with each annual
actuarial valuation of the plan.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 9.

Minnesota Statutes 2015 Supplement, section 356.415, subdivision 1a, is
amended to read:

Subd. 1a.

Annual postretirement adjustments; Minnesota State Retirement
System plans other than new text begin the new text end State Patrol new text begin and judges new text end retirement deleted text begin plan deleted text end new text begin plans new text end .

(a)
Retirement annuity, disability benefit, or survivor benefit recipients of the legislators
retirement plan, including constitutional officers as specified in chapter 3A, the general
state employees retirement plan, the correctional state employees retirement plan, and
the unclassified state employees retirement program are entitled to a postretirement
adjustment annually on January 1, as follows:

(1) deleted text begin for each successive January 1, if the definition of funding stability under
paragraph (b) has not been met as of the prior July 1 for or with respect to the applicable
retirement plan, deleted text end a postretirement increase of deleted text begin two deleted text end new text begin 1.75 new text end percent must be applied each year,
effective on January 1, to the monthly annuity or benefit of each annuitant or benefit
recipient who has been receiving an annuity or a benefit for at least 12 full months as of
the June 30 of the calendar year immediately before the adjustment; and

(2) deleted text begin for each successive January 1, if the definition of funding stability under
paragraph (b) has not been met as of the prior July 1 for or with respect to the applicable
retirement plan, deleted text end for each annuitant or benefit recipient who has been receiving an annuity
or a benefit for at least one full month, but less than 12 full months as of the June 30 of the
calendar year immediately before the adjustment, an annual postretirement increase of
1/12 of deleted text begin two deleted text end new text begin 1.75 new text end percent for each month that the person has been receiving an annuity or
benefit must be applied.

deleted text begin (b) Increases under this subdivision for the general state employees retirement
plan or the correctional state employees retirement plan terminate on December 31 of
the calendar year in which two prior consecutive actuarial valuations prepared by the
approved actuary under sections 356.214 and 356.215 and the standards for actuarial work
promulgated by the Legislative Commission on Pensions and Retirement indicate that the
market value of assets of the retirement plan equals or exceeds 90 percent of the actuarial
accrued liability of the retirement plan and increases under subdivision 1 recommence
after that date. Increases under this subdivision for the legislators retirement plan
established under chapter 3A, including the constitutional officers specified in that chapter,
and for the unclassified state employees retirement program, terminate on December 31
of the calendar year in which two prior consecutive actuarial valuations prepared by the
approved actuary under sections 356.214 and 356.215 and the standards for actuarial work
promulgated by the Legislative Commission on Pensions and Retirement indicate that the
market value of assets of the general state employees retirement plan equals or exceeds
90 percent of the actuarial accrued liability of the retirement plan and increases under
subdivision 1 recommence after that date.
deleted text end

deleted text begin (c) After having met the definition of funding stability under paragraph (b), the
increase provided in paragraph (a), clauses (1) and (2), rather than an increase under
subdivision 1, for the general state employees retirement plan or the correctional state
employees retirement plan, is again to be applied in a subsequent year or years if the
market value of assets of the applicable plan equals or is less than:
deleted text end

deleted text begin (1) 85 percent of the actuarial accrued liabilities of the applicable plan for two
consecutive actuarial valuations; or
deleted text end

deleted text begin (2) 80 percent of the actuarial accrued liabilities of the applicable plan for the most
recent actuarial valuation.
deleted text end

deleted text begin (d) After having met the definition of funding stability under paragraph (b), the
increase provided in paragraph (a), clauses (1) and (2), rather than an increase under
subdivision 1, for the legislators retirement plan, including the constitutional officers,
and for the unclassified state employees retirement program, is again to be applied in a
subsequent year or years if the market value of assets of the general state employees
retirement plan equals or is less than:
deleted text end

deleted text begin (1) 85 percent of the actuarial accrued liabilities of the applicable plan for two
consecutive actuarial valuations; or
deleted text end

deleted text begin (2) 80 percent of the actuarial accrued liabilities of the applicable plan for the most
recent actuarial valuation.
deleted text end

deleted text begin (e) deleted text end new text begin (b) new text end An increase in annuity or benefit payments under this subdivision must be
made automatically unless written notice is filed by the annuitant or benefit recipient
with the executive director of the applicable covered retirement plan requesting that the
increase not be made.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective June 30, 2016.
new text end

Sec. 10.

Minnesota Statutes 2015 Supplement, section 356.415, subdivision 1d,
is amended to read:

Subd. 1d.

Teachers Retirement Association annual postretirement adjustments.

(a) Retirement annuity, disability benefit, or survivor benefit recipients of the Teachers
Retirement Association are entitled to a postretirement adjustment annually on January
1, as follows:

(1) deleted text begin for each January 1 until funding stability is restored, deleted text end new text begin effective January 1, 2017,
through December 31, 2021, new text end a postretirement increase of deleted text begin two deleted text end new text begin one new text end percent must be applied
each year deleted text begin , effective on January 1, deleted text end to the monthly annuity or benefit amount of each
annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12
full months as of the June 30 of the calendar year immediately before the adjustment;

(2) deleted text begin for each January 1 until funding stability is restored deleted text end new text begin effective January 1, 2017,
through December 31, 2021 new text end , for each annuitant or benefit recipient who has been receiving
an annuity or a benefit for at least one full month, but less than 12 full months as of the
June 30 of the calendar year immediately before the adjustment, an annual postretirement
increase of 1/12 of deleted text begin two deleted text end new text begin one new text end percent for each month the person has been receiving an
annuity or benefit must be applied;

(3) deleted text begin for each January 1 following the restoration of funding stability deleted text end new text begin effective January
1, 2022, and thereafter new text end , a postretirement increase of deleted text begin 2.5 deleted text end new text begin 1.75 new text end percent must be applied each
year deleted text begin , effective January 1, deleted text end to the monthly annuity or benefit amount of each annuitant
or benefit recipient who has been receiving an annuity or a benefit for at least 12 full
months as of the June 30 of the calendar year immediately before the adjustment new text begin . For each
annuitant or benefit recipient who has been receiving an annuity or a benefit for at least
one full month, but less than 12 full months as of June 30 of the calendar year immediately
before the adjustment, an annual postretirement increase of 1/12 of 1.75 percent for each
month the person has been receiving an annuity or benefit must be applied new text end ; and

(4) deleted text begin for each January 1 following the restoration of funding stability deleted text end new text begin effective January
1, 2022, and thereafter new text end , for each annuitant or benefit recipient who has been receiving an
annuity or a benefit for at least one new text begin full new text end month, but less than 12 full months as of the June
30 of the calendar year immediately before the adjustment, an annual postretirement
increase of 1/12 of deleted text begin 2.5 deleted text end new text begin 1.75 new text end percent for each month the person has been receiving an
annuity or benefit must be applied.

deleted text begin (b) Funding stability is restored when the market value of assets of the Teachers
Retirement Association equals or exceeds 90 percent of the actuarial accrued liabilities
of the Teachers Retirement Association in the two most recent prior actuarial valuations
prepared under section 356.215 and the standards for actuarial work by the approved
actuary retained by the Teachers Retirement Association under section 356.214.
deleted text end

deleted text begin (c) After having met the definition of funding stability under paragraph (b), the
increase provided in paragraph (a), clauses (1) and (2), rather than an increase under
subdivision 1, or the increase under paragraph (a), clauses (3) and (4), is again to be applied
in a subsequent year or years if the market value of assets of the plan equals or is less than:
deleted text end

deleted text begin (1) 85 percent of the actuarial accrued liabilities of the plan for two consecutive
actuarial valuations; or
deleted text end

deleted text begin (2) 80 percent of the actuarial accrued liabilities of the plan for the most recent
actuarial valuation.
deleted text end

deleted text begin (d) deleted text end new text begin (b) new text end An increase in annuity or benefit payments under this section must be made
automatically unless written notice is filed by the annuitant or benefit recipient with the
executive director of the Teachers Retirement Association requesting that the increase
not be made.

deleted text begin (e) deleted text end new text begin (c) new text end The retirement annuity payable to a person who retires before becoming
eligible for Social Security benefits and who has elected the optional payment as provided
in section 354.35 must be treated as the sum of a period-certain retirement annuity
and a life retirement annuity for the purposes of any postretirement adjustment. The
period-certain retirement annuity plus the life retirement annuity must be the annuity
amount payable until age 62, 65, or normal retirement age, as selected by the member
at retirement, for an annuity amount payable under section 354.35. A postretirement
adjustment granted on the period-certain retirement annuity must terminate when the
period-certain retirement annuity terminates.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 11.

Minnesota Statutes 2015 Supplement, section 356.415, subdivision 1e,
is amended to read:

Subd. 1e.

Annual postretirement adjustments; State Patrol retirement plan.

(a) Retirement annuity, disability benefit, or survivor benefit recipients of the State Patrol
retirement plan are entitled to a postretirement adjustment annually on January 1 if the
definition of funding stability under paragraph (b) has not been met, as follows:

(1) a postretirement increase of one percent must be applied each year, effective on
January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who
has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of
the calendar year immediately before the adjustment; and

(2) for each annuitant or benefit recipient who has been receiving an annuity or
a benefit for at least one full month, but less than 12 full months as of the June 30 of
the calendar year immediately before the adjustment, an annual postretirement increase
of 1/12 of one percent for each month that the person has been receiving an annuity or
benefit must be applied.

(b) Increases under paragraph (a) for the State Patrol retirement plan terminate on
December 31 of the calendar year in which two prior consecutive actuarial valuations for
the plan prepared by the approved actuary under sections 356.214 and 356.215 and the
standards for actuarial work promulgated by the Legislative Commission on Pensions
and Retirement indicates that the market value of assets of the retirement plan equals or
exceeds 85 percent of the actuarial accrued liability of the retirement plan. Thereafter,
increases under paragraph (a) become effective again on the December 31 of the calendar
year in which the actuarial valuation, or prior consecutive actuarial valuations for the
plan prepared by the approved actuary under sections 356.214 and 356.215 and the
standards for actuarial work promulgated by the Legislative Commission on Pensions and
Retirement indicates that the market value of the assets of the retirement plan equals or is
less than 80 percent of the actuarial accrued liability of the retirement plan for two years,
or equals or is less than 75 percent of the actuarial accrued liability of the retirement plan
for one year and increases under paragraph (c) commence after that date.

(c) Retirement annuity, disability benefit, or survivor benefit recipients of the State
Patrol retirement plan are entitled to a postretirement adjustment annually on January 1 new text begin if
the definition of funding stability under paragraph (b) has been met new text end , as follows:

(1) a postretirement increase of 1.5 percent must be applied each year, effective on
January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who
has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of
the calendar year immediately before the adjustment; and

(2) for each annuitant or benefit recipient who has been receiving an annuity or
a benefit for at least one full month, but less than 12 full months as of the June 30 of
the calendar year immediately before the adjustment, an annual postretirement increase
of 1/12 of 1.5 percent for each month that the person has been receiving an annuity or
benefit must be applied.

(d) Increases under paragraph (c) for the State Patrol retirement plan terminate on
December 31 of the calendar year in which two prior consecutive actuarial valuations
prepared by the approved actuary under sections 356.214 and 356.215 and the standards
for actuarial work adopted by the Legislative Commission on Pensions and Retirement
indicates that the market value of assets of the retirement plan equals or exceeds 90 percent
of the actuarial accrued liability of the retirement plan and increases under deleted text begin subdivision
1 recommence deleted text end new text begin paragraph (e) commence new text end after that date.

new text begin (e) Retirement annuity, disability benefit, or survivor benefit recipients of the State
Patrol retirement plan are entitled to a postretirement adjustment annually on January 1 if
the definition of funding stability under paragraph (d) has been met, as follows:
new text end

new text begin (1) a postretirement increase of 2.5 percent must be applied each year, effective on
January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who
has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of
the calendar year immediately before the adjustment; and
new text end

new text begin (2) for each annuitant or benefit recipient who has been receiving an annuity or
a benefit for at least one full month, but less than 12 full months as of the June 30 of
the calendar year immediately before the adjustment, an annual postretirement increase
of 1/12 of 2.5 percent for each month that the person has been receiving an annuity or
benefit must be applied.
new text end

deleted text begin (e) deleted text end new text begin (f) new text end An increase in annuity or benefit payments under this subdivision must be
made automatically unless written notice is filed by the annuitant or benefit recipient
with the executive director of the applicable covered retirement plan requesting that the
increase not be made.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective June 30, 2016.
new text end

Sec. 12.

Minnesota Statutes 2015 Supplement, section 356.415, subdivision 1f, is
amended to read:

Subd. 1f.

Annual postretirement adjustments; Minnesota State Retirement
System judges retirement plan.

deleted text begin (a) The increases provided under this subdivision are in
lieu of increases under subdivision 1 or 1a for retirement annuity, disability benefit, or
survivor benefit recipients of the judges retirement plan.
deleted text end

deleted text begin (b) deleted text end new text begin (a) new text end Retirement annuity, disability benefit, or survivor benefit recipients of the
judges retirement plan are entitled to a postretirement adjustment annually on January 1 new text begin if
the definition of funding stability under paragraph (b) has not been met new text end , as follows:

(1) a postretirement increase of 1.75 percent must be applied each year, effective on
January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who
has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of
the calendar year immediately before the adjustment; and

(2) for each annuitant or benefit recipient who has been receiving an annuity or a
benefit for at least one full month, but less than 12 full months as of the June 30 of the
calendar year immediately before the adjustment, an annual postretirement increase of
1/12 of 1.75 percent for each month that the person has been receiving an annuity or
benefit must be applied.

deleted text begin (c) deleted text end new text begin (b) new text end Increases under deleted text begin this subdivision deleted text end new text begin paragraph (a) new text end terminate on December 31
of the calendar year in which two prior consecutive actuarial valuations prepared by the
approved actuary under sections 356.214 and 356.215 and the standards for actuarial work
promulgated by the Legislative Commission on Pensions and Retirement indicates that
the market value of assets of the judges retirement plan equals or exceeds 70 percent of
the actuarial accrued liability of the retirement plan deleted text begin . deleted text end new text begin and new text end increases under deleted text begin subdivision
1 or 1a, whichever is applicable, begin on the January 1 next following deleted text end new text begin paragraph (c)
commence after new text end that date.

new text begin (c) Retirement annuity, disability benefit, or survivor benefit recipients of the judges
retirement plan are entitled to a postretirement adjustment annually on January 1 if the
definition of funding stability under paragraph (d) has not been met, as follows:
new text end

new text begin (1) a postretirement increase of two percent must be applied each year, effective on
January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who
has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of
the calendar year immediately before the adjustment; and
new text end

new text begin (2) for each annuitant or benefit recipient who has been receiving an annuity or a
benefit for at least one full month, but less than 12 full months as of the June 30 of the
calendar year immediately before the adjustment, an annual postretirement increase of
1/12 of two percent for each month that the person has been receiving an annuity or
benefit must be applied.
new text end

new text begin (d) Increases under paragraph (c) terminate on December 31 of the calendar year
in which two prior consecutive actuarial valuations prepared by the approved actuary
under sections 356.214 and 356.215 and the standards for actuarial work adopted by the
Legislative Commission on Pensions and Retirement indicates that the market value of
assets of the judges retirement plan equals or exceeds 90 percent of the actuarial accrued
liability of the retirement plan and increases under paragraph (e) commence after that date.
new text end

new text begin (e) Retirement annuity, disability benefit, or survivor benefit recipients of the judges
retirement plan are entitled to a postretirement adjustment annually on January 1 if the
definition of funding stability under paragraph (d) has been met, as follows:
new text end

new text begin (1) a postretirement increase of 2.5 percent must be applied each year, effective on
January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who
has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of
the calendar year immediately before the adjustment; and
new text end

new text begin (2) for each annuitant or benefit recipient who has been receiving an annuity or
a benefit for at least one full month, but less than 12 full months as of the June 30 of
the calendar year immediately before the adjustment, an annual postretirement increase
of 1/12 of 2.5 percent for each month that the person has been receiving an annuity or
benefit must be applied.
new text end

deleted text begin (d) deleted text end new text begin (f) new text end An increase in annuity or benefit payments under this subdivision must be
made automatically unless written notice is filed by the annuitant or benefit recipient
with the executive director of the applicable covered retirement plan requesting that the
increase not be made.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective June 30, 2016.
new text end

Sec. 13. new text begin REPEALER.
new text end

new text begin (a) new text end new text begin Minnesota Statutes 2015 Supplement, section 356.415, subdivision 1, new text end new text begin is repealed.
new text end

new text begin (b) new text end new text begin Minnesota Statutes 2015 Supplement, section 354A.29, subdivisions 8 and
9, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Paragraph (a) is effective June 30, 2016. Paragraph (b) is
effective July 1, 2016.
new text end