Minnesota Legislature
SF 2232
as introduced - 89th Legislature (2015 - 2016) Posted on 03/16/2016 03:30pm
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A bill for an act
relating to retirement; Teachers Retirement Association; extending Rule of
90 benefits to post-June 30, 1989, hires; revising employee and employer
contribution rates; amending Minnesota Statutes 2014, sections 354.05,
subdivision 38; 354.42, subdivisions 2, 3; 354.44, subdivision 6.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2014, section 354.05, subdivision 38, is amended to read:
Subd. 38.
Normal retirement age.
"Normal retirement age" means age 65 for
a person who deleted text begin first becamedeleted text end new text begin is new text end a member of the association deleted text begin or a member of a pension
fund listed in section 356.30, subdivision 3, before July 1, 1989. For a person who first
becomes a member of the association after June 30, 1989, normal retirement age means
the higher of age 65 or "retirement age," as defined in United States Code, title 42, section
416(l), as amended, but not to exceed age 66deleted text end .
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2016.
new text end
Sec. 2.
Minnesota Statutes 2014, section 354.42, subdivision 2, is amended to read:
Subd. 2.
Employee contribution.
(a) The employee contribution to the fund is the
following percentage of the member's salary:
| Period |
Basic Program |
Coordinated Program |
|
| from July 1, 2013, until June 30, 2014 |
10.5 percent |
7 percent |
|
| deleted text begin after June 30,deleted text end new text begin from July 1, new text end 2014new text begin , until June 30, 2017 new text end |
11 percent |
7.5 percent |
|
|
new text begin
from July 1, 2017, and thereafter new text end |
new text begin
11 percent new text end |
new text begin
... percent new text end |
(b) When an employee contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid for each employer unit with the
first payroll cycle reported.
(c) After June 30, 2015, if a contribution rate revision is required under subdivisions
4a, 4b, and 4c, the employee contributions under paragraphs (a) and (b) must be adjusted
accordingly.
(d) This contribution must be made by deduction from salary. Where any portion
of a member's salary is paid from other than public funds, the member's employee
contribution must be based on the entire salary received.
Sec. 3.
Minnesota Statutes 2014, section 354.42, subdivision 3, is amended to read:
Subd. 3.
Employer.
(a) The regular employer contribution to the fund by Special
School District No. 1, Minneapolis, is an amount equal to the applicable following
percentage of salary of each coordinated member and the applicable percentage of salary
of each basic member specified in paragraph (c).
The additional employer contribution to the fund by Special School District No. 1,
Minneapolis, is an amount equal to 3.64 percent of the salary of each teacher who is a
coordinated member or who is a basic member.
(b) The regular employer contribution to the fund by Independent School District
No. 709, Duluth, is an amount equal to the applicable percentage of salary of each old law
or new law coordinated member specified for the coordinated program in paragraph (c).
(c) The employer contribution to the fund for every other employer is an amount
equal to the applicable following percentage of the salary of each coordinated member and
the applicable following percentage of the salary of each basic member:
| Period |
Coordinated Member |
Basic Member |
|||
| from July 1, 2013, until June 30, 2014 |
7 percent |
11 percent |
|||
| deleted text begin after June 30,deleted text end new text begin from July 1, new text end 2014new text begin , until June 30, 2017 new text end |
7.5 percent |
11.5 percent |
|||
|
new text begin
from July 1, 2017, and thereafter new text end |
new text begin
... percent new text end |
new text begin
11.5 percent new text end |
|||
(d) When an employer contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid for each employer unit with the
first payroll cycle reported.
(e) After June 30, 2015, if a contribution rate revision is made under subdivisions
4a, 4b, and 4c, the employer contributions under paragraphs (a), (b), and (c) must be
adjusted accordingly.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2016.
new text end
Sec. 4.
Minnesota Statutes 2014, 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 deleted text begin person who first
became adeleted text end member of the association deleted text begin or a member of a pension fund listed in section
356.30, subdivision 3, before July 1, 1989deleted text end , 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:
| Period |
Coordinated Member |
Basic Member |
|||
| Each year of service during first ten |
1.2 percent per year |
2.2 percent per year |
|||
| Each year of service thereafter |
1.7 percent per year |
2.7 percent per year |
For service rendered on or after July 1, 2006, by a member other than a member
who was a member of the former Duluth Teachers Retirement Fund Association between
January 1, 2006, and June 30, 2015, and for service rendered on or after July 1, 2013, by a
member who was a member of the former Duluth Teachers Retirement Fund Association
between January 1, 2013, and June 30, 2015, 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:
| Period |
Coordinated Member |
Basic Member |
|||
| Each year of service during first ten |
1.4 percent per year |
2.2 percent per year |
|||
| Each year of service after ten years of service |
1.9 percent per year |
2.7 percent per year |
(c)(i) This paragraph applies deleted text begin onlydeleted text end to a deleted text begin person who first became adeleted text end member of the
association deleted text begin or a member of a pension fund listed in section 356.30, subdivision 3, before
July 1, 1989, anddeleted text end 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
deleted text begin first became a member of the association after June 30, 1989, and to any other member
who has become at least 55 years old anddeleted text end 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 2.7 percent for each
year of service for a basic member determines 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 1.7 percent for each year of service rendered before July 1, 2006, and by 1.9
percent for each year of service rendered on or after July 1, 2006, for a member other than
a member who was a member of the former Duluth Teachers Retirement Fund Association
between January 1, 2006, and June 30, 2015, and by 1.9 percent for each year of service
rendered on or after July 1, 2013, for a member of the former Duluth Teachers Retirement
Fund Association between January 1, 2013, and June 30, 2015, determines the amount of
the retirement annuity to which the coordinated member is entitled.
(e) This paragraph applies to a deleted text begin person who has become at least 55 years old and first
becomes a member of the association after June 30, 1989, and to any otherdeleted text end 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. Except in regards to section 354.46,
this paragraph remains in effect until June 30, 2015.
(f) After June 30, 2020, this paragraph applies to a deleted text begin person who has become at least
55 years old and first becomes a member of the association after June 30, 1989, and to any
otherdeleted text end 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.
(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).
(h) 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, 2016.
new text end