HF 4270

as introduced - 93rd Legislature (2023 - 2024) Posted on 02/28/2024 06:02pm

A bill for an act
relating to retirement; Minnesota Secure Choice Retirement Program; modifying
requirements applicable to the board of directors; authorizing the appointment of
an interim executive director; making technical corrections; amending Minnesota
Statutes 2023 Supplement, section 187.08, subdivisions 1, 7, 8; Laws 2023, chapter
46, section 11.

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

Section 1.

Minnesota Statutes 2023 Supplement, section 187.08, subdivision 1, is amended
to read:

Subdivision 1.

Membership.

The policy-making function of the program is vested in a
board of directors consisting of seven members as follows:

(1) the executive director of the Minnesota State Retirement System or the executive
director's designee;

(2) the executive director of the State Board of Investment or the executive director's
designee;

(3) three members chosen by the Legislative Commission on Pensions and Retirement,
one from each of the following experience categories:

(i) executive or operations manager with substantial experience in record keeping 401(k)
plans;

(ii) executive or operations manager with substantial experience in individual retirement
accounts; and

(iii) executive or other professional with substantial experience in retirement plan
investments;

(4) a human resources or retirement benefits executive from a private company with
substantial experience in administering the company's 401(k) plan, appointed by the governor;
and

(5) a small business owner new text begin , a small business executive, new text end or new text begin a nonprofit new text end executive appointed
by the governor.

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 2023 Supplement, section 187.08, subdivision 7, is amended
to read:

Subd. 7.

Executive director; staff.

new text begin (a) new text end The board must appoint an executive director,
determine the duties of the executive director, and set the compensation of the executive
director. new text begin The board may appoint an interim executive director to serve as executive director
during any period that the executive director position is vacant.
new text end

new text begin (b) new text end The board may deleted text begin also deleted text end hire staff as necessary to support the board new text begin and the executive
director or interim executive director new text end in performing deleted text begin its deleted text end new text begin their new text end duties new text begin or the board may authorize
the executive director or interim executive director to hire staff new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from January 1, 2024.
new text end

Sec. 3.

Minnesota Statutes 2023 Supplement, section 187.08, subdivision 8, is amended
to read:

Subd. 8.

Duties.

In addition to the duties set forth elsewhere in this chapter, the board
has the following duties:

(1) to establish secure processes for enrolling covered employees in the program and
for transmitting employee deleted text begin and employer deleted text end contributions to accounts in the trust;

(2) to prepare a budget and establish procedures for the payment of costs of administering
and operating the program;

(3) to lease or otherwise procure equipment necessary to administer the program;

(4) to procure insurance in connection with the property of the program and the activities
of the board, executive director, and other staff;

(5) to determine the following:

(i) any criteria for a covered employee other than employment with a covered employer
under section 187.03, subdivision 5;

(ii) contribution rates and an escalation schedule under section 187.05, subdivision 4;

(iii) withdrawal and distribution options under section 187.05, subdivision 6; and

(iv) the default investment fund under section 187.06, subdivision 5;

(6) to keep annual administrative fees, costs, and expenses as low as possible:

(i) except that any administrative fee assessed against the accounts of covered employees
may not exceed a reasonable amount relative to the fees charged by auto-IRA or defined
contribution programs of similar size in the state of Minnesota or another state; and

(ii) the fee may be asset-based, flat fee, or a hybrid combination of asset-based and flat
fee;

(7) to determine the eligibility of an employer, employee, or other individual to participate
in the program and review and decide claims for benefits and make factual determinations;

(8) to prepare information regarding the program that is clear and concise for
dissemination to all covered employees and includes the following:

(i) the benefits and risks associated with participating in the program;

(ii) procedures for enrolling in the program and opting out of the program, electing a
different or zero percent employee contribution rate, making investment elections, applying
for a distribution of employee accounts, and making a claim for benefits;

(iii) the federal and state income tax consequences of participating in the program, which
may consist of or include the disclosure statement required to be distributed by retirement
plan trustees or custodians under the Internal Revenue Code and the Treasury Regulations
thereunder;

(iv) how to obtain additional information on the program; and

(v) disclaimers of covered employer and state responsibility, including the following
statements:

(A) covered employees seeking financial, investment, or tax advice should contact their
own advisors;

(B) neither a covered employer nor the state of Minnesota are liable for decisions covered
employees make regarding their account in the program;

(C) neither a covered employer nor the state of Minnesota guarantees the accounts in
the program or any particular investment rate of return; and

(D) neither a covered employer nor the state of Minnesota monitors or has an obligation
to monitor any covered employee's eligibility under the Internal Revenue Code to make
contributions to an account in the program, or whether the covered employee's contributions
to an account in the program exceed the maximum permissible contribution under the
Internal Revenue Code;

(9) to publish an annual financial report, prepared according to generally accepted
accounting principles, on the operations of the program, which must include but not be
limited to costs attributable to the use of outside consultants, independent contractors, and
other persons who are not state employees and deliver the report to the chairs and ranking
minority members of the legislative committees with jurisdiction over jobs and economic
development and state government finance, the executive directors of the State Board of
Investment and the Legislative Commission on Pensions and Retirement, and the Legislative
Reference Library;

(10) to publish an annual report regarding plan outcomes, progress toward savings goals
established by the board, statistics on the number of participants, participating employers,
and covered employees who have opted out of participation, plan expenses, estimated impact
of the program on social safety net programs, and penalties and violations, and disciplinary
actions for enforcement, and deliver the report to the chairs and ranking minority members
of the legislative committees with jurisdiction over jobs and economic development and
state government finance, the executive directors of the State Board of Investment and the
Legislative Commission on Pensions and Retirement, and the Legislative Reference Library;

(11) to file all reports required under the Internal Revenue Code or chapter 290;

(12) to, at the board's discretion, seek and accept gifts, grants, and donations to be used
for the program, unless such gifts, grants, or donations would result in a conflict of interest
relating to the solicitation of service provider for program administration, and deposit such
gifts, grants, or donations in the Secure Choice administrative fund;

(13) to, at the board's discretion, seek and accept appropriations from the state or loans
from the state or any agency of the state;

(14) to assess the feasibility of partnering with another state or a governmental subdivision
of another state to administer the program through shared administrative resources and, if
determined beneficial, enter into contracts, agreements, memoranda of understanding, or
other arrangements with any other state or an agency or a subdivision of any other state to
administer, operate, or manage any part of the program, which may include combining
resources, investments, or administrative functions;

(15) to hire, retain, and terminate third-party service providers as the board deems
necessary or desirable for the program, including but not limited to the trustees, consultants,
investment managers or advisors, custodians, insurance companies, recordkeepers,
administrators, consultants, actuaries, legal counsel, auditors, and other professionals,
provided that each service provider is authorized to do business in the state;

(16) to interpret the program's governing documents and this chapter and make all other
decisions necessary to administer the program;

(17) to conduct comprehensive employer and worker education and outreach regarding
the program that reflect the cultures and languages of the state's diverse workforce population,
which may, in the board's discretion, include collaboration with state and local government
agencies, community-based and nonprofit organizations, foundations, vendors, and other
entities deemed appropriate to develop and secure ongoing resources; and

(18) to prepare notices for delivery to covered employees regarding the escalation
schedule and to each covered employee before the covered employee is subject to an
automatic contribution increase.

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Laws 2023, chapter 46, section 11, is amended to read:

Sec. 11. BOARD SUPPORT UNTIL APPOINTMENT OF EXECUTIVE DIRECTOR.

With the assistance of the Legislative Coordinating Commission, the executive director
of the Legislative Commission on Pensions and Retirement must deleted text begin :
deleted text end

deleted text begin (1) deleted text end provide notice to members of the board regarding the first meeting of the board and
work with the member designated under section 10, subdivision 2, to determine the agenda
and provide meeting support deleted text begin ; deleted text end and

deleted text begin (2) serve as the interim executive director to deleted text end assist the board until the board new text begin appoints an
interim executive director or new text end completes the search, recruitment, and interview process and
appoints the executive director under Minnesota Statutes, section 187.08, subdivision 8.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective retroactively from January 1, 2024.
new text end