HF 650

as introduced - 88th Legislature (2013 - 2014) Posted on 02/18/2013 01:35pm

A bill for an act
relating to retirement; Teachers Retirement Association; modifying certain early
retirement adjustment factors; phasing in actuarial equivalent early retirement
adjustment factors over a five-year period beginning in 2015; amending
Minnesota Statutes 2012, section 354.44, subdivision 6.

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

Section 1.

Minnesota Statutes 2012, section 354.44, subdivision 6, is amended to read:

Subd. 6.

Computation of formula program retirement annuity.

(a) The formula
retirement annuity must be computed in accordance with the applicable provisions of the
formulas stated in paragraph (b) or (d) on the basis of each member's average salary under
section 354.05, subdivision 13a, for the period of the member's formula service credit.

(b) This paragraph, in conjunction with paragraph (c), applies to a person who first
became a member of the association or a member of a pension fund listed in section
356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with
paragraph (e), produces a higher annuity amount, in which case paragraph (d) applies. The
average salary as defined in section 354.05, subdivision 13a, multiplied by the following
percentages per year of formula service credit shall determine the amount of the annuity to
which the member qualifying therefor is entitled for service rendered before July 1, 2006:

			Coordinated Member		Basic Member
	Each year of service during first ten		the percent specified in section 356.315, subdivision 1, per year		the percent specified in section 356.315, subdivision 3, per year
	Each year of service thereafter		the percent specified in section 356.315, subdivision 2, per year		the percent specified in section 356.315, subdivision 4, per year

For service rendered on or after July 1, 2006, the average salary as defined in section
354.05, subdivision 13a, multiplied by the following percentages per year of service credit,
determines the amount the annuity to which the member qualifying therefor is entitled:

			Coordinated Member		Basic Member
	Each year of service during first ten		the percent specified in section 356.315, subdivision 1a, per year		the percent specified in section 356.315, subdivision 3, per year
	Each year of service after ten years of service		the percent specified in section 356.315, subdivision 2b, per year		the percent specified in section 356.315, subdivision 4, per year

(c)(i) This paragraph applies only to a person who first became a member of the
association or a member of a pension fund listed in section 356.30, subdivision 3, before
July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in
conjunction with this paragraph than when calculated under paragraph (d), in conjunction
with paragraph (e).

(ii) Where any member retires prior to normal retirement age under a formula
annuity, the member shall be paid a retirement annuity in an amount equal to the normal
annuity provided in paragraph (b) reduced by one-quarter of one percent for each month
that the member is under normal retirement age at the time of retirement except that for
any member who has 30 or more years of allowable service credit, the reduction shall be
applied only for each month that the member is under age 62.

(iii) Any member whose attained age plus credited allowable service totals 90 years
is entitled, upon application, to a retirement annuity in an amount equal to the normal
annuity provided in paragraph (b), without any reduction by reason of early retirement.

(d) This paragraph applies to a member who has become at least 55 years old and
first became a member of the association after June 30, 1989, and to any other member
who has become at least 55 years old and whose annuity amount when calculated under
this paragraph and in conjunction with paragraph (e), is higher than it is when calculated
under paragraph (b), in conjunction with paragraph (c). For a basic member, the average
salary, as defined in section 354.05, subdivision 13a, multiplied by the percent specified
by section 356.315, subdivision 4, for each year of service for a basic member shall
determine the amount of the retirement annuity to which the basic member is entitled.
The annuity of a basic member who was a member of the former Minneapolis Teachers
Retirement Fund Association as of June 30, 2006, must be determined according to the
annuity formula under the articles of incorporation of the former Minneapolis Teachers
Retirement Fund Association in effect as of that date. For a coordinated member, the
average salary, as defined in section 354.05, subdivision 13a, multiplied by the percent
specified in section 356.315, subdivision 2, for each year of service rendered before July
1, 2006, and by the percent specified in section 356.315, subdivision 2b, for each year of
service rendered on or after July 1, 2006, determines the amount of the retirement annuity
to which the coordinated member is entitled.

(e) This paragraph applies to a person who has become at least 55 years old and first
becomes a member of the association after June 30, 1989, and to any other member who
has become at least 55 years old and whose annuity is higher when calculated under
paragraph (d) in conjunction with this paragraph than when calculated under paragraph
(b), in conjunction with paragraph (c). An employee who retires under the formula annuity
before the normal retirement age shall be paid the normal annuity provided in paragraph
(d) reduced so that the reduced annuity is the actuarial equivalent of the annuity that
would be payable to the employee if the employee deferred receipt of the annuity and the
annuity amount were augmented at an annual rate of three percent compounded annually
from the day the annuity begins to accrue until the normal retirement age if the employee
became an employee before July 1, 2006, and at 2.5 percent compounded annually if the
employee becomes an employee after June 30, 2006. new text begin Except in regards to section 354.46,
this paragraph remains in effect until June 30, 2015.
new text end

new text begin (f) After June 30, 2020, this paragraph applies to a person who has become at least
55 years old and first becomes a member of the association after June 30, 1989, and to any
other member who has become at least 55 years old and whose annuity is higher when
calculated under paragraph (d) in conjunction with this paragraph than when calculated
under paragraph (b), in conjunction with paragraph (c). An employee who retires under
the formula annuity before the normal retirement age is entitled to receive the normal
annuity provided in paragraph (d). For a person who is at least age 62 or older and has at
least 30 years of service, the annuity must be reduced by an early reduction factor of six
percent per year of the annuity that would be payable to the employee if the employee
deferred receipt of the annuity and the annuity amount were augmented at an annual rate
of three percent compounded annually from the day the annuity begins to accrue until the
normal retirement age if the employee became an employee before July 1, 2006, and at 2.5
percent compounded annually if the employee became an employee after June 30, 2006.
For a person who is not at least age 62 or older and does not have at least 30 years of
service, the annuity would be reduced by an early reduction factor of four percent per year
for ages 55 through 59 and seven percent per year of the annuity that would be payable
to the employee if the employee deferred receipt of the annuity and the annuity amount
were augmented at an annual rate of three percent compounded annually from the day
the annuity begins to accrue until the normal retirement age if the employee became an
employee before July 1, 2006, and at 2.5 percent compounded annually if the employee
became an employee after June 30, 2006.
new text end

new text begin (g) After June 30, 2015, and before July 1, 2020, for a person who would have
a reduced retirement annuity under either paragraph (e) or (f) if they were applicable,
the employee is entitled to receive a reduced annuity which must be calculated using
a blended reduction factor augmented monthly by 1/60 of the difference between the
reduction required under paragraph (e) and the reduction required under paragraph (f).
new text end

deleted text begin (f) deleted text end new text begin (h) new text end No retirement annuity is payable to a former employee with a salary that
exceeds 95 percent of the governor's salary unless and until the salary figures used in
computing the highest five successive years average salary under paragraph (a) have been
audited by the Teachers Retirement Association and determined by the executive director
to comply with the requirements and limitations of section 354.05, subdivisions 35 and 35a.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2013.
new text end