SF 2078

1st Engrossment - 88th Legislature (2013 - 2014) Posted on 08/28/2014 03:12pm

A bill for an act
relating to retirement; requiring the commissioner of management and budget
to report on the establishment of a state-administered retirement savings plan;
requiring a report; establishing a trust account; appropriating money.

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

Section 1. new text begin REPORT; RETIREMENT SAVINGS PLAN.
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new text begin (a) The commissioner of management and budget must report to the legislature by
January 15, 2015, on potential establishment of a state-administered retirement savings
plan to serve employees without access to either an automatic enrollment payroll deduction
IRA maintained or offered by their employer, or a multiemployer retirement plan or
qualifying retirement plan or arrangement described in sections 414(f) and 219(g)(5),
respectively, of the Internal Revenue Code of 1986, as amended through April 14, 2011.
The potential state-administered plan would provide for individuals to make contributions
to their own accounts, with the benefit consisting of the balance in each individual's
account, and with the state having no liability for investment earnings and losses.
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new text begin (b) The report must include:
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new text begin (1) estimates of the average amount of savings and other financial resources residents
of Minnesota have upon retirement and those that are recommended for a financially
secure retirement in Minnesota;
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new text begin (2) estimates of the relative progress toward achieving the savings recommended for
a financially secure retirement by gender, race, and ethnicity;
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new text begin (3) barriers to savings and reasons individuals and employers may not be
participating in existing private sector retirement plans;
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new text begin (4) estimated impact on publicly funded social safety net programs attributable to
insufficient retirement savings, and the aggregate effect of potential state-administered
plan options on publicly funded social safety net programs and the state economy;
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new text begin (5) estimates of the number of Minnesota workers who could be served by the
potential state-administered plan, and the participation rate that would make the plan
self-sustaining;
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new text begin (6) effect of federal tax laws and the federal Employee Retirement Income Security
Act on a potential state-administered plan and on participating employers and employees,
including the effect of these laws if the plan included potential for employer contributions,
either comingled with or segregated from employee contributions;
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new text begin (7) advantages and disadvantages of a potential state-administered plan compared to
private sector and federal government retirement savings options;
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new text begin (8) existing state and federal consumer protections that would apply to a potential
state-administered plan and options for strengthening consumer protections for plan
participants;
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new text begin (9) alternative ways and costs for the state to encourage similar outcomes to a
state-administered plan;
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new text begin (10) options for state administration of the plan, including investment strategies for
funds contributed to the plan in consultation with the State Board of Investment, the
potential use and availability of investment strategies, private insurance, underwriting,
or reinsurance against loss to limit or eliminate potential state liability and manage risk
to the principal, and group annuities to ensure a stable stream of retirement income
throughout beneficiaries' retirement years;
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new text begin (11) options for meeting the investment needs of participants based on income,
desired liquidity, age, risk tolerance, and other factors determined by the commissioner;
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new text begin (12) options for the process by which individuals or employers would contribute to
the plan, and their effect on participation rates, savings rates, and fees;
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new text begin (13) options discouraging employers from dropping existing employer-sponsored
retirement savings plans in favor of a potential state-administered plan;
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new text begin (14) projected costs of administration, record keeping, and investment management,
including staffing, legal, compliance, licensing, procurement, communications with
employers and employees, oversight, marketing, technology and infrastructure, and the fee
needed to cover these costs as a percentage of the average daily net assets of the potential
state-administered plan, relative to asset size and plan structure, and projected by year of
plan operation, with estimates of investment-related fees determined in consultation with
the State Board of Investment;
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new text begin (15) how the projected fees compare with those of comparable retirement savings
options in the private sector with similar risk-adjusted return expectations; and
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new text begin (16) other topics that the commissioner determines are relevant to legislative
consideration of possible establishment of a state-administered plan.
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Sec. 2. new text begin APPROPRIATION.
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new text begin $....... is appropriated from the general fund for the fiscal year ending June 30, 2014,
for purposes of section 1. This appropriation is available until spent.
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Sec. 3. new text begin EFFECTIVE DATE.
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new text begin Sections 1 and 2 are effective the day following final enactment.
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