SF 1077

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to retirement; modifying the computation of 
  1.3             the retirement annuity formula for certain hirees 
  1.4             covered by the Minnesota state retirement system, the 
  1.5             public employee retirement association, and the 
  1.6             teachers retirement association; amending Minnesota 
  1.7             Statutes 1998, sections 352.01, subdivision 25; 
  1.8             352.115, subdivision 3; 352.116, subdivisions 1 and 
  1.9             1a; 353.01, subdivision 37; 353.29, subdivision 3; 
  1.10            353.30, subdivisions 1, 1a, 1b, and 1c; 354.05, 
  1.11            subdivision 38; and 354.44, subdivision 6. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  Minnesota Statutes 1998, section 352.01, 
  1.14  subdivision 25, is amended to read: 
  1.15     Subd. 25.  [NORMAL RETIREMENT AGE.] Unless another age is 
  1.16  specified elsewhere in law, "normal retirement age" means age 65 
  1.17  for a person who first became is a covered employee or who has 
  1.18  service credit as a covered employee and who is a member of a 
  1.19  pension fund listed in section 356.30, subdivision 3, before 
  1.20  July 1, 1989.  For a person who first becomes a covered employee 
  1.21  after June 30, 1989, normal retirement age means the higher of 
  1.22  age 65 or "retirement age," as defined in United States Code, 
  1.23  title 42, section 416(l), as amended, but not to exceed age 66. 
  1.24     Sec. 2.  Minnesota Statutes 1998, section 352.115, 
  1.25  subdivision 3, is amended to read: 
  1.26     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
  1.27  in conjunction with section 352.116, subdivision 1, applies to a 
  1.28  person who became is a covered employee or who has service 
  2.1   credit as a covered employee and who is a member of a pension 
  2.2   fund listed in section 356.30, subdivision 3, before July 1, 
  2.3   1989, unless paragraph (b), in conjunction with section 352.116, 
  2.4   subdivision 1a, produces a higher annuity amount, in which case 
  2.5   paragraph (b) will apply.  The employee's average salary, as 
  2.6   defined in subdivision 2, multiplied by the percent specified in 
  2.7   section 356.19, subdivision 1, per year of allowable service for 
  2.8   the first ten years and the percent specified in section 356.19, 
  2.9   subdivision 2, for each later year of allowable service and pro 
  2.10  rata for completed months less than a full year shall determine 
  2.11  the amount of the retirement annuity to which the employee is 
  2.12  entitled. 
  2.13     (b) This paragraph applies to a person who has become at 
  2.14  least 55 years old and first became a covered employee after 
  2.15  June 30, 1989, and to any other covered employee who has become 
  2.16  at least 55 years old and whose annuity amount, when calculated 
  2.17  under this paragraph and in conjunction with section 352.116, 
  2.18  subdivision 1a, is higher than it is when calculated under 
  2.19  paragraph (a), in conjunction with section 352.116, subdivision 
  2.20  1.  The employee's average salary, as defined in subdivision 2, 
  2.21  multiplied by the percent specified in section 356.19, 
  2.22  subdivision 2, for each year of allowable service and pro rata 
  2.23  for months less than a full year shall determine the amount of 
  2.24  the retirement annuity to which the employee is entitled. 
  2.25     Sec. 3.  Minnesota Statutes 1998, section 352.116, 
  2.26  subdivision 1, is amended to read: 
  2.27     Subdivision 1.  [REDUCED ANNUITY BEFORE NORMAL RETIREMENT 
  2.28  AGE.] (a) This subdivision applies only to a person who first 
  2.29  became is a covered employee or who has service credit as a 
  2.30  covered employee and who is a member of a pension fund listed in 
  2.31  section 356.30, subdivision 3, before July 1, 1989, and whose 
  2.32  annuity is higher when calculated under section 352.115, 
  2.33  subdivision 3, paragraph (a), in conjunction with this 
  2.34  subdivision than when calculated under section 352.115, 
  2.35  subdivision 3, paragraph (b), in conjunction with subdivision 1a.
  2.36     (a) (b) Any employee person specified in paragraph (a) who 
  3.1   is eligible for a retirement annuity under section 352.115, 
  3.2   subdivision 1, and who retires before normal retirement age with 
  3.3   credit for at least three but less than 30 years of allowable 
  3.4   service shall be paid the normal retirement annuity provided in 
  3.5   section 352.115, subdivisions 2 and 3, paragraph (a), reduced by 
  3.6   one-quarter of one percent for each month that the employee 
  3.7   person is under normal retirement age at the time of 
  3.8   retirement.  An employee A person specified in paragraph (a) who 
  3.9   is eligible for a retirement annuity under section 352.115, 
  3.10  subdivision 1, and who retires prior to age 62 with credit for 
  3.11  at least 30 years of allowable service shall be paid the normal 
  3.12  retirement annuity provided in section 352.115, subdivisions 2 
  3.13  and 3, paragraph (a), reduced by one-quarter of one percent for 
  3.14  each month that the employee person is under age 62 at the time 
  3.15  of retirement. 
  3.16     (b) (c) Any person specified in paragraph (a) whose 
  3.17  attained age plus credited allowable service totals 90 years is 
  3.18  entitled, upon application, to a retirement annuity in an amount 
  3.19  equal to the normal annuity provided in section 352.115, 
  3.20  subdivisions 2 and 3, paragraph (a), without any reduction by 
  3.21  reason of early retirement. 
  3.22     Sec. 4.  Minnesota Statutes 1998, section 352.116, 
  3.23  subdivision 1a, is amended to read: 
  3.24     Subd. 1a.  [ACTUARIAL REDUCTION FOR EARLY RETIREMENT.] This 
  3.25  subdivision applies to a person who is a covered employee, or 
  3.26  who has service credit as a covered employee and who is a member 
  3.27  of a pension fund listed in section 356.30, subdivision 3, who 
  3.28  has become at least 55 years old and first became a covered 
  3.29  employee after June 30, 1989, and to any other covered employee 
  3.30  who has become at least 55 years old and whose annuity is higher 
  3.31  when calculated under section 352.115, subdivision 3, paragraph 
  3.32  (b), in conjunction with this subdivision than when calculated 
  3.33  under section 352.115, subdivision 3, paragraph (a), in 
  3.34  conjunction with subdivision 1.  A covered employee person 
  3.35  specified in this subdivision who retires before the normal 
  3.36  retirement age shall be paid the normal retirement annuity 
  4.1   provided in section 352.115, subdivisions 2 and 3, paragraph 
  4.2   (b), reduced so that the reduced annuity is the actuarial 
  4.3   equivalent of the annuity that would be payable to the employee 
  4.4   if the employee deferred receipt of the annuity and the annuity 
  4.5   amount were augmented at an annual rate of three percent 
  4.6   compounded annually from the day the annuity begins to accrue 
  4.7   until the normal retirement age. 
  4.8      Sec. 5.  Minnesota Statutes 1998, section 353.01, 
  4.9   subdivision 37, is amended to read: 
  4.10     Subd. 37.  [NORMAL RETIREMENT AGE.] Unless another age is 
  4.11  specified elsewhere in law, "normal retirement age" means age 65 
  4.12  for a person who first became is a public employee as defined in 
  4.13  subdivisions 2 and 2a or who has service credit as a public 
  4.14  employee and who is a member of a pension fund listed in section 
  4.15  356.30, subdivision 3, before July 1, 1989.  For a person who 
  4.16  first becomes a public employee after June 30, 1989, "normal 
  4.17  retirement age" means the higher of age 65 or "retirement age," 
  4.18  as defined in United States Code, title 42, section 416(l), as 
  4.19  amended, but not to exceed age 66. 
  4.20     Sec. 6.  Minnesota Statutes 1998, section 353.29, 
  4.21  subdivision 3, is amended to read: 
  4.22     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
  4.23  in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 
  4.24  1c, applies to any member who first became is a public 
  4.25  employee as defined in section 353.01, subdivisions 2 and 2a, or 
  4.26  who has service credit as a public employee and who is a member 
  4.27  of a pension fund listed in section 356.30, subdivision 
  4.28  3, before July 1, 1989, unless paragraph (b), in conjunction 
  4.29  with section 353.30, subdivision 5, produces a higher annuity 
  4.30  amount, in which case paragraph (b) will apply.  The average 
  4.31  salary as defined in subdivision 2, multiplied by the percent 
  4.32  specified in section 356.19, subdivision 3, for each year of 
  4.33  allowable service for the first ten years and thereafter by the 
  4.34  percent specified in section 356.19, subdivision 4, per year of 
  4.35  allowable service and completed months less than a full year for 
  4.36  the "basic member," and the percent specified in section 356.19, 
  5.1   subdivision 1, for each year of allowable service for the first 
  5.2   ten years and thereafter by the percent specified in section 
  5.3   356.19, subdivision 2, per year of allowable service and 
  5.4   completed months less than a full year for the "coordinated 
  5.5   member," shall determine the amount of the "normal" retirement 
  5.6   annuity. 
  5.7      (b) This paragraph applies to a member who if the eligible 
  5.8   individual has become at least 55 years old and first became a 
  5.9   public employee after June 30, 1989, and to any other member 
  5.10  whose if the annuity amount, when calculated under this 
  5.11  paragraph and in conjunction with section 353.30, subdivision 5, 
  5.12  is higher than it is when calculated under paragraph (a), in 
  5.13  conjunction with section 353.30, subdivisions 1, 1a, 1b, and 
  5.14  1c.  The average salary, as defined in subdivision 2, multiplied 
  5.15  by the percent specified in section 356.19, subdivision 4, for 
  5.16  each year of allowable service and completed months less than a 
  5.17  full year for a basic member and the percent specified in 
  5.18  section 356.19, subdivision 2, per year of allowable service and 
  5.19  completed months less than a full year for a coordinated member, 
  5.20  shall determine the amount of the normal retirement annuity. 
  5.21     Sec. 7.  Minnesota Statutes 1998, section 353.30, 
  5.22  subdivision 1, is amended to read: 
  5.23     Subdivision 1.  Upon separation from public service, any 
  5.24  person who first became is a public employee or who has service 
  5.25  credit as a public employee and who is a member of a pension 
  5.26  fund listed in section 356.30, subdivision 3, before July 1, 
  5.27  1989, and who has become at least 58 years old but not more than 
  5.28  normal retirement age and who received credit for not less than 
  5.29  20 years of allowable service is entitled upon application to a 
  5.30  retirement annuity in an amount equal to the normal annuity 
  5.31  provided in section 353.29, subdivisions 2 and 3, paragraph (a), 
  5.32  reduced by one-quarter of one percent for each month that the 
  5.33  member is under normal retirement age at the time of retirement. 
  5.34     Sec. 8.  Minnesota Statutes 1998, section 353.30, 
  5.35  subdivision 1a, is amended to read: 
  5.36     Subd. 1a.  Any person who first became a public employee or 
  6.1   who has service credit as a public employee and who is a member 
  6.2   of a pension fund listed in section 356.30, subdivision 
  6.3   3, before July 1, 1989, and whose attained age plus credited 
  6.4   allowable service totals 90 years is entitled upon application 
  6.5   to a retirement annuity in an amount equal to the normal annuity 
  6.6   provided in section 353.29, subdivisions 2 and 3, paragraph (a), 
  6.7   without any reduction in annuity by reason of such due to early 
  6.8   retirement. 
  6.9      Sec. 9.  Minnesota Statutes 1998, section 353.30, 
  6.10  subdivision 1b, is amended to read: 
  6.11     Subd. 1b.  Any person who first became a public employee or 
  6.12  who has service credit as a public employee and who is a member 
  6.13  of a pension fund listed in section 356.30, subdivision 
  6.14  3, before July 1, 1989, with 30 years or more of allowable 
  6.15  service credit, who elects early retirement under subdivision 1, 
  6.16  shall receive an annuity in an amount equal to the normal 
  6.17  annuity provided under section 353.29, subdivisions 2 and 3, 
  6.18  paragraph (a), reduced by one-quarter of one percent for each 
  6.19  month that the member is under age 62 at the time of retirement. 
  6.20     Sec. 10.  Minnesota Statutes 1998, section 353.30, 
  6.21  subdivision 1c, is amended to read: 
  6.22     Subd. 1c.  Any person who first became a public employee or 
  6.23  who has service credit as a public employee and who is a member 
  6.24  of a pension fund listed in section 356.30, subdivision 
  6.25  3, before July 1, 1989, and who has received credit for at least 
  6.26  30 years of allowable service or who has become at least 55 
  6.27  years old but not normal retirement age, and has received credit 
  6.28  for at least three years of allowable service is entitled upon 
  6.29  application to a retirement annuity in an amount equal to the 
  6.30  normal annuity provided in section 353.29, subdivisions 2 and 3, 
  6.31  paragraph (a), reduced by one-quarter of one percent for each 
  6.32  month that the member is under normal retirement age at the time 
  6.33  of retirement, except that for any member who has 30 or more 
  6.34  years of allowable service the reduction shall be applied only 
  6.35  for each month that the member is under age 62 at the time of 
  6.36  retirement. 
  7.1      Sec. 11.  Minnesota Statutes 1998, section 354.05, 
  7.2   subdivision 38, is amended to read: 
  7.3      Subd. 38.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
  7.4   means age 65 for a person who first became is a member of the 
  7.5   association or who has service credit as a member of the 
  7.6   association and who is a member of a pension fund listed in 
  7.7   section 356.30, subdivision 3, before July 1, 1989.  For a 
  7.8   person who first becomes a member of the association after June 
  7.9   30, 1989, normal retirement age means the higher of age 65 or 
  7.10  "retirement age," as defined in United States Code, title 42, 
  7.11  section 416(l), as amended, but not to exceed age 66. 
  7.12     Sec. 12.  Minnesota Statutes 1998, section 354.44, 
  7.13  subdivision 6, is amended to read: 
  7.14     Subd. 6.  [COMPUTATION OF FORMULA PROGRAM RETIREMENT 
  7.15  ANNUITY.] (1) (a) The formula retirement annuity must be 
  7.16  computed in accordance with the applicable provisions of the 
  7.17  formulas stated in clause (2) or (4) as specified in this 
  7.18  subdivision on the basis of each member's average salary for the 
  7.19  period of the member's formula service credit.  
  7.20     For all years of formula service credit, "average salary," 
  7.21  for the purpose of determining the member's retirement annuity, 
  7.22  means the average salary upon which contributions were made and 
  7.23  upon which payments were made to increase the salary limitation 
  7.24  provided in Minnesota Statutes 1971, section 354.511, for the 
  7.25  highest five successive years of formula service credit 
  7.26  provided, however, that such "average salary" shall not include 
  7.27  any more than the equivalent of 60 monthly salary payments.  
  7.28  Average salary must be based upon all years of formula service 
  7.29  credit if this service credit is less than five years. 
  7.30     (2) This clause, in conjunction with clause (3), applies to 
  7.31  a person who first became a member of the association or a 
  7.32  member of a pension fund listed in section 356.30, subdivision 
  7.33  3, before July 1, 1989, unless clause (4), in conjunction with 
  7.34  clause (5), produces a higher annuity amount, in which case 
  7.35  clause (4) applies. (b) The average salary, as defined in clause 
  7.36  (1) paragraph (a), multiplied by the following percentages per 
  8.1   year of formula service credit shall determine determines the 
  8.2   amount of the annuity to which the qualifying member qualifying 
  8.3   therefor is entitled, unless otherwise specified in this 
  8.4   subdivision: 
  8.5                          Coordinated Member   Basic Member
  8.6   Each year of service     the percent        the percent
  8.7    during first ten        specified in       specified in
  8.8                            section 356.19,    section 356.19,
  8.9                            subdivision 1,     subdivision 3,
  8.10                           per year           per year
  8.11  Each year of service     the percent        the percent
  8.12   thereafter              specified in       specified in
  8.13                           section 356.19,    section 356.19,
  8.14                           subdivision 2,     subdivision 4,
  8.15                           per year           per year
  8.16     (3)(i) (c) This clause paragraph applies only to a person 
  8.17  who first became is a member of the association or a member who 
  8.18  has service credit as a member of the association and who is a 
  8.19  member of a pension fund listed in section 356.30, subdivision 
  8.20  3, before July 1, 1989, and whose annuity is higher when 
  8.21  calculated under clause (2) paragraph (b), in conjunction with 
  8.22  this clause paragraph than when calculated under clause 
  8.23  (4) paragraph (d), in conjunction with clause (5) paragraph 
  8.24  (e).  (ii) Where any member retires prior to normal retirement 
  8.25  age under a formula annuity, the member shall be paid a 
  8.26  retirement annuity in an amount equal to the normal annuity 
  8.27  provided in clause (2) paragraph (b) reduced by one-quarter of 
  8.28  one percent for each month that the member is under normal 
  8.29  retirement age at the time of retirement except that for any 
  8.30  member who has 30 or more years of allowable service credit, the 
  8.31  reduction shall be applied only for each month that the member 
  8.32  is under age 62.  (iii) Any member whose attained age plus 
  8.33  credited allowable service totals 90 years is entitled, upon 
  8.34  application, to a retirement annuity in an amount equal to 
  8.35  the normal annuity provided in clause (2) paragraph (b), without 
  8.36  any reduction by reason of due to early retirement. 
  9.1      (4) (d) This clause paragraph applies to a person who is 
  9.2   a member of the association, or who has service credit as a 
  9.3   member of the association and who is a member of a pension fund 
  9.4   listed in section 356.30, subdivision 3, who has become at least 
  9.5   55 years old and first became a member of the association after 
  9.6   June 30, 1989, and to any other member who has become at least 
  9.7   55 years old and whose annuity amount when calculated under this 
  9.8   clause paragraph and in conjunction with clause (5) paragraph 
  9.9   (e), is higher than it is when calculated under clause 
  9.10  (2) paragraph (b), in conjunction with clause (3) paragraph (c). 
  9.11  The average salary, as defined in clause (1) paragraph (a), 
  9.12  multiplied by the percent specified by section 356.19, 
  9.13  subdivision 4, for each year of service for a basic member and 
  9.14  by the percent specified in section 356.19, subdivision 2, for 
  9.15  each year of service for a coordinated member shall determine 
  9.16  the amount of the retirement annuity to which the member is 
  9.17  entitled. 
  9.18     (5) (e) This clause paragraph applies to a person 
  9.19  member who has become at least 55 years old and first becomes a 
  9.20  member of the association after June 30, 1989, and to any other 
  9.21  member who has become at least 55 years old and whose annuity is 
  9.22  higher when calculated under clause (4) paragraph (d) in 
  9.23  conjunction with this clause paragraph than when calculated 
  9.24  under clause (2) paragraph (b), in conjunction with clause 
  9.25  (3) paragraph (c).  An employee who retires under the formula 
  9.26  annuity before the normal retirement age shall be paid the 
  9.27  normal annuity provided in clause (4) paragraph (d) reduced so 
  9.28  that the reduced annuity is the actuarial equivalent of the 
  9.29  annuity that would be payable to the employee if the employee 
  9.30  deferred receipt of the annuity and the annuity amount were 
  9.31  augmented at an annual rate of three percent compounded annually 
  9.32  from the day the annuity begins to accrue until the normal 
  9.33  retirement age. 
  9.34     Sec. 13.  [EFFECTIVE DATE.] 
  9.35     Sections 1 to 12 are effective May 16, 1999.