HF 3956

as introduced - 93rd Legislature (2023 - 2024) Posted on 02/19/2024 02:11pm

A bill for an act
relating to retirement; making administrative changes to the statutes governing the
pension plans administered by the Minnesota State Retirement System; modifying
the definition of salary; replacing an obsolete cross-reference related to setting the
executive director's salary; making conforming changes to vesting requirements;
clarifying dependent child survivor benefits; modifying a requirement for
correctional employees applying for disability benefits; amending Minnesota
Statutes 2022, sections 352.01, subdivision 13; 352.03, subdivision 5; 352.113,
subdivision 1; 352.12, subdivisions 1, 2, 2b, 7, 8; 352.95, subdivision 4.

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

Section 1.

Minnesota Statutes 2022, section 352.01, subdivision 13, is amended to read:

Subd. 13.

Salary.

(a) Subject to the limitations of section 356.611, "salary" means wages,
or other periodic compensation, paid to an employee before deductions for deferred
compensation, supplemental retirement plans, or other voluntary salary reduction programs.

(b) "Salary" does not include:

(1) lump-sum sick leave payments;

(2) severance payments;

(3) lump-sum annual leave payments and overtime payments made at the time of
separation from state service;

(4) payments in lieu of any employer-paid group insurance coverage, including the
difference between single and family rates that may be paid to an employee with single
coverage;

(5) payments made as an employer-paid fringe benefit;

(6) workers' compensation payments;

(7) employer contributions to a deferred compensation or tax-sheltered annuity program;
and

(8) amounts contributed under a benevolent vacation and sick leave donation program.

(c) Amounts deleted text begin provided deleted text end new text begin paid new text end to an employee by the employer through a grievance
proceeding or a legal settlement are salary only if the new text begin grievance or new text end settlement deleted text begin is reviewed
by the executive director and deleted text end new text begin agreement is received by the executive director no fewer than
14 days before payment is made and the executive director determines that:
new text end

new text begin (1) the grievance or settlement agreement describes with sufficient specificity the period
or periods of time worked or not worked by the employee for which the amounts are
compensation; and
new text end

new text begin (2) new text end the amounts are deleted text begin determined by the executive director to be consistent with deleted text end new text begin salary as
defined in new text end paragraph (a) and new text begin the determination is consistent with new text end prior determinations.

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2022, section 352.03, subdivision 5, is amended to read:

Subd. 5.

Executive director, deputy director, and assistant director.

(a) The board
shall appoint an executive director, in this chapter called the director, on the basis of
education, experience in the retirement field, ability to manage and lead system staff, and
ability to assist the board in setting a vision for the system. The director must have had at
least five years' experience in either an executive level management position or in a position
with responsibility for the governance, management, or administration of a retirement plan.

(b) The executive director, deputy director, and assistant director must be in the
unclassified service but appointees may be selected from civil service lists if desired.
Notwithstanding any law to the contrary, the board must set the salary of the executive
director. deleted text begin The salary of the executive director must not exceed the limit for a position listed
in section 15A.0815, subdivision 2. deleted text end new text begin The board must set the salary of the executive director
with reference to a salary range in the managerial plan in effect under section 43A.18,
subdivision 3. The board must designate the salary range and the salary of the executive
director, which must not exceed the maximum for the salary range. new text end The salary of the deputy
director and assistant director must be set in accordance with section 43A.18, subdivision
3.

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2022, section 352.113, subdivision 1, is amended to read:

Subdivision 1.

Age and service requirements.

(a) An employee covered by the system,
deleted text begin who is less than deleted text end new text begin who has satisfied the applicable allowable service credit requirement under
section 352.115, subdivision 1, has not reached new text end normal retirement age new text begin , new text end and deleted text begin who deleted text end becomes
totally and permanently disabled deleted text begin after three or more years of allowable service if employed
before July 1, 2010, or after five or more years of allowable service if employed after June
30, 2010, deleted text end is entitled to a disability benefit in an amount provided in subdivision 3.

(b) If the disabled employee's state service has terminated at any time, the employee
must have at least two years of allowable service after last becoming a state employee
covered by the system.

(c) Refunds may be repaid under section 352.23 before the effective accrual date of the
disability benefit under subdivision 2.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from July 1, 2023.
new text end

Sec. 4.

Minnesota Statutes 2022, section 352.12, subdivision 1, is amended to read:

Subdivision 1.

Death before termination of service.

If an employee dies before state
service has terminated and neither a survivor annuity nor a deleted text begin reversionary deleted text end new text begin bounce-back new text end annuity
is payable on behalf of the employee, or if a former employee who has sufficient service
credit to be entitled to an annuity dies before the annuity has become payable, a refund deleted text begin with deleted text end
new text begin in an amount equal to the employee's accumulated contributions plus new text end interest is payable
upon filing a written application on a form prescribed by the executive director. The refund
is payable to the last designated beneficiary or, if there is none, to the surviving spouse or,
if none, to the employee's surviving children in equal shares or, if none, to the employee's
surviving parents in equal shares or, if none, to the representative of the estate. Interest must
be computed as provided in section 352.22, subdivision 2. Upon the death of an employee
who has received a refund that was later repaid in full, interest must be paid on the repaid
refund only from the date of the repayment. If the repayment was made in installments,
interest must be paid only from the date on which the installment payments began. The
designated beneficiary, the surviving spouse, or the representative of the estate of an
employee who had received a disability benefit is not entitled to the payment of interest
upon any balance remaining to the decedent's credit in the fund at the time of death, unless
the death occurred before any payment could be negotiated.

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 2022, section 352.12, subdivision 2, is amended to read:

Subd. 2.

Surviving spouse benefit.

(a) If an employee or former employee has deleted text begin credit
for at least three years allowable service if the employee was employed before July 1, 2010,
or for at least five years of allowable service if the employee was employed after June 30,
2010, deleted text end new text begin satisfied the applicable allowable service credit requirement under section 352.115,
subdivision 1, new text end and dies before an annuity or disability benefit has become payable,
notwithstanding any designation of beneficiary to the contrary, the surviving spouse of the
employee may elect to receive, in lieu of the refund with interest under subdivision 1, an
annuity equal to the joint and 100 percent survivor annuity which the employee or former
employee could have qualified for on the date of death.

(b) If the employee was new text begin an active employee at the time of the employee's death, was
new text end under age 55 new text begin , new text end and has credit for at least 30 years of allowable service on the date of death,
the surviving spouse may elect to receive a 100 percent joint and survivor annuity based on
the age of the employee and surviving spouse on the date of death. The annuity is payable
using the full early retirement reduction under section 352.116, subdivision 1, paragraph
(b), to age 55 and one-half of the early retirement reduction from age 55 to the age payment
begins.

(c) If the employee was new text begin an active employee at the time of the employee's death, was
new text end under age 55 new text begin , new text end and has deleted text begin credit for at least three years of allowable service credit on the date
of death if the employee was employed before July 1, 2010, or for at least five years of
allowable service if the employee was employed after June 30, 2010, deleted text end new text begin satisfied the applicable
allowable service credit requirement under section 352.115, subdivision 1, new text end but did not yet
qualify for retirement, the surviving spouse may elect to receive a 100 percent joint and
survivor annuity based on the age of the employee and surviving spouse at the time of death.
The annuity is payable using the full early retirement reduction under section 352.116,
subdivision 1 or 1a, to age 55 and one-half of the early retirement reduction from age 55 to
the age payment begins.

(d) The surviving spouse eligible for benefits under paragraph (a) may apply for the
annuity at any time after the date on which the employee or former employee would have
attained the required age for retirement based on the allowable service earned. The surviving
spouse eligible for surviving spouse benefits under paragraph (b) or (c) may apply for the
annuity at any time after the employee's death. The annuity must be computed under sections
352.115, subdivisions 1, 2, and 3, and 352.116, subdivisions 1, 1a, and 3. deleted text begin Sections deleted text end new text begin Section
new text end 352.22, deleted text begin subdivision deleted text end new text begin subdivisions new text end 3 deleted text begin , deleted text end and deleted text begin 352.72, subdivision 2 deleted text end new text begin 3a new text end , apply to a deferred annuity
deleted text begin or deleted text end new text begin payable to a new text end surviving spouse deleted text begin benefit payable deleted text end under this subdivision. The annuity must
cease with the last payment received by the surviving spouse in the lifetime of the surviving
spouse, or upon expiration of a term certain benefit payment to a surviving spouse under
subdivision 2a. An amount equal to the excess, if any, of the accumulated contributions
credited to the account of the deceased employee in excess of the total of the benefits paid
and payable to the surviving spouse must be paid to the deceased employee's or former
employee's last designated beneficiary or, if none, as specified under subdivision 1.

(e) Any employee or former employee may request in writing, with the signed consent
of the spouse, that this subdivision not apply and that payment be made only to a designated
beneficiary as otherwise provided by this chapter.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from July 1, 2023.
new text end

Sec. 6.

Minnesota Statutes 2022, section 352.12, subdivision 2b, is amended to read:

Subd. 2b.

Dependent child survivor coverage.

If there is no surviving spouse eligible
for benefits under subdivision 2, a dependent child or children as defined in section 352.01,
subdivision 26, is eligible for monthly payments new text begin under this subdivision, but only if the
dependent child or children did not elect to receive a refund under subdivision 1 new text end . Payments
to a dependent child must be paid from the date of the employee's death to the date the
dependent child attains age 20 if the child is under age 15. If the child is 15 years or older
on the date of death, payment must be made for five years. The payment to a dependent
child is an amount actuarially equivalent to the value of a 100 percent optional annuity
under subdivision 2 using the age of the employee and age of the dependent child at the
date of death in lieu of the age of the surviving spouse. If there is more than one dependent
child, each dependent child shall receive a proportionate share of the actuarial value of the
employee's account.

new text begin EFFECTIVE DATE. new text end

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

Sec. 7.

Minnesota Statutes 2022, section 352.12, subdivision 7, is amended to read:

Subd. 7.

Absence of optional or deleted text begin reversionary deleted text end new text begin bounce-back new text end annuity.

Upon the death
of a retired employee who selected neither an optional annuity or a deleted text begin reversionary deleted text end new text begin bounce-back new text end
annuity, a refund must be paid in an amount equal to the excess, if any, of the accumulated
contributions to the credit of the retired employee immediately before retirement in excess
of the sum of (1) all annuities, retirement allowances, and disability benefits that had been
received and had accrued in the lifetime of the decedent, and (2) the annuity, retirement
allowance, or disability benefit if not negotiated, payable to the surviving spouse under
section 352.115, subdivision 8, or 352.113, subdivision 4, for the calendar month in which
the retired employee died. The refund must be paid to the named beneficiary or, if there be
none, to the surviving spouse or, if none, to the employee's surviving children in equal
shares or, if none, to the employee's surviving parents in equal shares or, if none, to the
representative of the estate.

new text begin EFFECTIVE DATE. new text end

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

Sec. 8.

Minnesota Statutes 2022, section 352.12, subdivision 8, is amended to read:

Subd. 8.

Optional or deleted text begin reversionary deleted text end new text begin bounce-back new text end annuity.

If the last eligible recipient
of an optional annuity dies and the total amounts paid under it are less than the accumulated
contributions to the credit of the retired employee immediately before retirement, the balance
of accumulated contributions must be paid to the person designated by the retired employee
in writing to receive payment. If no designation has been made by the retired employee, the
remaining balance of accumulated contributions must be paid to the surviving children of
the deceased recipient of the optional annuity in equal shares. If there are no surviving
children, payment must be made to the deceased recipient's parents or, if none, to the
representative of the deceased recipient's estate.

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 2022, section 352.95, subdivision 4, is amended to read:

Subd. 4.

Medical or psychological evidence.

(a) An applicant shall provide medical,
chiropractic, or psychological evidence to support an application for disability benefits. The
director deleted text begin shall deleted text end new text begin may new text end have the employee examined by at least one additional licensed physician,
APRN, chiropractor, or psychologist who is designated by the medical adviser. The
physicians, APRNs, chiropractors, or psychologists with respect to a mental impairment,
shall make written reports to the director concerning the question of the employee's disability,
including their expert opinions as to whether the employee has an occupational disability
within the meaning of section 352.01, subdivision 17a, and whether the employee has a
duty disability, physical or psychological, under section 352.01, subdivision 17b, or has a
regular disability, physical or psychological, under section 352.01, subdivision 17c. The
director shall also obtain written certification from the employer stating whether or not the
employee is on sick leave of absence because of a disability that will prevent further service
to the employer performing normal duties as defined in section 352.01, subdivision 17d, or
performing less frequent duties as defined in section 352.01, subdivision 17e, and as a
consequence, the employee is not entitled to compensation from the employer.

(b) If, on considering the reports by the physicians, APRNs, chiropractors, or
psychologists and any other evidence supplied by the employee or others, the medical
adviser finds that the employee has an occupational disability within the meaning of section
352.01, subdivision 17a, the adviser shall make the appropriate recommendation to the
director, in writing, together with the date from which the employee has been disabled. The
director shall then determine the propriety of authorizing payment of a duty disability benefit
or a regular disability benefit as provided in this section.

(c) Unless the payment of a disability benefit has terminated because the employee no
longer has an occupational disability, or because the employee has reached either age 55
or the five-year anniversary of the effective date of the disability benefit, whichever is later,
the disability benefit must cease with the last payment which was received by the disabled
employee or which had accrued during the employee's lifetime. While disability benefits
are paid, the director has the right, at reasonable times, to require the disabled employee to
submit proof of the continuance of an occupational disability. If any examination indicates
to the medical adviser that the employee no longer has an occupational disability, the
disability payment must be discontinued upon the person's reinstatement to state service or
within 60 days of the finding, whichever is sooner.

new text begin EFFECTIVE DATE. new text end

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