Minnesota Legislature
SF 2614
as introduced - 92nd Legislature (2021 - 2022) Posted on 06/01/2022 01:54pm
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A bill for an act
relating to retirement; Minnesota State Retirement System; adding a right to
purchase service credit for periods of military service beyond the federally protected
right; amending Minnesota Statutes 2020, sections 352.27; 352B.086; 356.551,
subdivision 2; proposing coding for new law in Minnesota Statutes, chapters 352;
352B.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2020, section 352.27, is amended to read:
352.27 new text begin FEDERALLY PROTECTED PURCHASE OF SERVICE new text end CREDIT FOR
deleted text begin BREAK IN SERVICE TO PROVIDE UNIFORMEDdeleted text end new text begin PERIODS OF MILITARY
new text end SERVICE.
(a) An employee who is absent from employment by reason of service in the uniformed
services, as defined in United States Code, title 38, section 4303(13), and who returns to
state service upon discharge from service in the uniformed service within the time frames
required in United States Code, title 38, section 4312(e), may obtain service credit for the
period of the uniformed service as further specified in this section, provided that the employee
did not separate from uniformed service with a dishonorable or bad conduct discharge or
under other than honorable conditions.
(b) The employee may obtain credit by paying into the fund an equivalent employee
contribution based upon the contribution rate or rates in effect at the time that the uniformed
service was performed multiplied by the full and fractional years being purchased and
applied to the annual salary rate. The annual salary rate is the average annual salary during
the purchase period that the employee would have received if the employee had continued
to be employed in covered employment rather than deleted text begin to providedeleted text end new text begin having performed new text end uniformed
service, or, if the determination of that rate is not reasonably certain, the annual salary rate
is the employee's average salary rate during the 12-month period of covered employment
rendered immediately preceding the period of the uniformed service.
(c) The equivalent employer contribution and, if applicable, the equivalent additional
employer contribution provided in this chapter must be paid by the department employing
the employee from funds available to the department at the time and in the manner provided
in this chapter, using the employer and additional employer contribution rate or rates in
effect at the time that the uniformed service was performed, applied to the same annual
salary rate or rates used to compute the equivalent employee contribution.
(d) If the employee equivalent contributions provided in this section are not paid in full,
the employee's allowable service credit must be prorated by multiplying the full and fractional
number of years of uniformed service eligible for purchase by the ratio obtained by dividing
the total employee contribution received by the total employee contribution otherwise
required under this section.
(e) To receive service credit under this section, the new text begin equivalent employee new text end contributions
specified in deleted text begin this sectiondeleted text end new text begin paragraph (b) new text end must be transmitted to the Minnesota State Retirement
System during the period which begins with the date on which the individual returns to state
service and which has a duration of three times the length of the uniformed service period,
but not to exceed five years. If the determined payment period is less than deleted text begin one yeardeleted text end new text begin three
yearsnew text end , the contributions required under deleted text begin this sectiondeleted text end new text begin paragraph (b) new text end to receive service credit
deleted text begin maydeleted text end new text begin must new text end be made within deleted text begin one yeardeleted text end new text begin three years new text end of the discharge date.
(f) The amount of service credit obtainable under this section may not exceed five years
unless a longer purchase period is required under United States Code, title 38, section 4312.
(g) The employing unit shall pay interest on all equivalent employee and employer
contribution amounts payable under this section. Interest must be at the applicable annual
rate or rates specified in section 356.59, subdivision 2, compounded annually, from the end
of each fiscal year of the leave or the break in service to the end of the month in which the
payment is received.
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.
new text begin
[352.272] STATE-AUTHORIZED PURCHASE OF SERVICE CREDIT FOR
PERIODS OF MILITARY SERVICE.
new text end
new text begin Subdivision 1. new text end
new text begin Service credit purchase authorized. new text end
new text begin
(a) Unless prohibited under
paragraph (b), an employee is eligible to purchase service credit, not to exceed five
cumulative years of service credit, for one or more periods of service in the uniformed
services, as defined in United States Code, title 38, section 4303(13), if:
new text end
new text begin
(1) the employee has at least three years of service credit with the general state employees
retirement plan or the correctional state employees retirement plan under this chapter;
new text end
new text begin
(2) the duration of the employee's current period of employment is at least six months;
and
new text end
new text begin
(3) one of the following applies:
new text end
new text begin
(i) the employee's service in the uniformed services occurred before becoming a state
employee as defined in section 352.01, subdivision 2; or
new text end
new text begin
(ii) the employee did not obtain service credit for a period of military service under
section 352.27.
new text end
new text begin
(b) A service credit purchase is prohibited if:
new text end
new text begin
(1) the employee separated from uniformed service with a dishonorable or bad conduct
discharge or under other than honorable conditions; or
new text end
new text begin
(2) the employee has purchased or otherwise received service credit from any Minnesota
public employee pension plan for the same period of service in the uniformed services.
new text end
new text begin
(c) When purchasing a period of service, if the period of service in the uniformed services
is one year or less, then the employee must purchase the full period of service. If the period
of service in the uniformed services is longer than one year, the employee may purchase
the full period, not to exceed five cumulative years, or may purchase a portion of the period
of service. If the employee purchases a portion of the period of service in the uniformed
services, the portion must:
new text end
new text begin
(1) not be less than one year; and
new text end
new text begin
(2) be in increments of six months of service.
new text end
new text begin Subd. 2. new text end
new text begin Application and documentation. new text end
new text begin
To purchase service credit under subdivision
1, an employee must apply to the executive director to make the purchase. The application
must include all necessary documentation of the employee's qualifications to make the
purchase, signed written permission to allow the executive director to request and receive
necessary verification of applicable facts and eligibility requirements, and any other relevant
information that the executive director may require. The employee must submit with the
application payment of the administrative fee in the amount of $250 to cover the costs of
calculating the purchase payment amount under section 356.551. If the employee proceeds
with the purchase, the administrative fee will be credited toward the purchase payment
amount.
new text end
new text begin Subd. 3. new text end
new text begin Purchase payment amount; service credit grant. new text end
new text begin
(a) The purchase payment
amount is the amount determined under section 356.551 for the period or periods of service
requested, except that, for purposes of calculating the purchase payment amount to purchase
service credit for service in the uniformed services that occurred before becoming a state
employee or between periods of employment as a state employee, section 356.551,
subdivision 2, paragraph (c), does not apply.
new text end
new text begin
(b) Service credit must be granted by the applicable plan to the purchasing employee
upon the executive director's receipt of the purchase payment amount. The service credit
purchased under this section may not be used for the purpose of determining a disability
benefit under section 352.113 or 352.95.
new text end
new text begin
(c) Payment must be made before the effective date of the employee's retirement.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 3.
Minnesota Statutes 2020, section 352B.086, is amended to read:
352B.086 new text begin FEDERALLY PROTECTED PURCHASE OF new text end SERVICE CREDIT FOR
deleted text begin UNIFORMEDdeleted text end new text begin PERIODS OF MILITARY new text end SERVICE.
(a) A member who is absent from employment by reason of service in the uniformed
services, as defined in United States Code, title 38, section 4303(13), and who returns to
state employment in a position covered by the plan upon discharge from service in the
uniformed services within the time frame required in United States Code, title 38, section
4312(e), may obtain service credit for the period of the uniformed service, provided that
the member did not separate from uniformed service with a dishonorable or bad conduct
discharge or under other than honorable conditions.
(b) The member may obtain credit by paying into the fund an equivalent member
contribution based on the member contribution rate or rates in effect at the time that the
uniformed service was performed multiplied by the full and fractional years being purchased
and applied to the annual salary rate. The annual salary rate is the average annual salary
during the purchase period that the member would have received if the member had continued
to provide employment services to the state rather than to provide uniformed service, or if
the determination of that rate is not reasonably certain, the annual salary rate is the member's
average salary rate during the 12-month period of covered employment rendered immediately
preceding the purchase period.
(c) The equivalent employer contribution and, if applicable, the equivalent employer
additional contribution, must be paid by the employing unit, using the employer and employer
additional contribution rate or rates in effect at the time that the uniformed service was
performed, applied to the same annual salary rate or rates used to compute the equivalent
member contribution.
(d) If the member equivalent contributions provided for in this section are not paid in
full, the member's allowable service credit must be prorated by multiplying the full and
fractional number of years of uniformed service eligible for purchase by the ratio obtained
by dividing the total member contributions received by the total member contributions
otherwise required under this section.
(e) To receive allowable service credit under this section, the new text begin equivalent member
new text end contributions specified in deleted text begin this sectiondeleted text end new text begin paragraph (b) new text end must be transmitted to the fund during
the period which begins with the date on which the individual returns to state employment
covered by the plan and which has a duration of three times the length of the uniformed
service period, but not to exceed five years. If the determined payment period is calculated
to be less than deleted text begin one yeardeleted text end new text begin three yearsnew text end , the contributions required under deleted text begin this sectiondeleted text end new text begin paragraph
(b) new text end to receive service credit must be transmitted to the fund within deleted text begin one yeardeleted text end new text begin three years new text end from
the discharge date.
(f) The amount of allowable service credit obtainable under this section may not exceed
five years, unless a longer purchase period is required under United States Code, title 38,
section 4312.
(g) The employing unit shall pay interest on all equivalent member and employer
contribution amounts payable under this section. Interest must be computed at the applicable
annual rate or rates specified in section 356.59, subdivision 2, compounded annually, from
the end of each fiscal year of the leave or break in service to the end of the month in which
payment is received.
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.
new text begin
[352B.087] STATE-AUTHORIZED PURCHASE OF SERVICE CREDIT
FOR PERIODS OF MILITARY SERVICE.
new text end
new text begin Subdivision 1. new text end
new text begin Service credit purchase authorized. new text end
new text begin
(a) Unless prohibited under
paragraph (b), a member is eligible to purchase service credit, not to exceed five cumulative
years of service credit, for one or more periods of service in the uniformed services, as
defined in United States Code, title 38, section 4303(13), if:
new text end
new text begin
(1) the member has at least three years of service credit with the plan;
new text end
new text begin
(2) the duration of the member's current period of employment is at least six months;
and
new text end
new text begin
(3) one of the following applies:
new text end
new text begin
(i) the member's service in the uniformed services occurred before employment in a
position covered by the plan; or
new text end
new text begin
(ii) the member did not obtain service credit for a period of military service under section
352B.086.
new text end
new text begin
(b) A service credit purchase is prohibited if:
new text end
new text begin
(1) the member separated from uniformed service with a dishonorable or bad conduct
discharge or under other than honorable conditions; or
new text end
new text begin
(2) the member has purchased or otherwise received service credit from any Minnesota
public employee pension plan for the same period of service in the uniformed services.
new text end
new text begin
(c) When purchasing a period of service, if the period of service in the uniformed services
is one year or less, then the member must purchase the full period of service. If the period
of service in the uniformed services is longer than one year, the member may purchase the
full period, not to exceed five cumulative years, or may purchase a portion of the period of
service. If the member purchases a portion of the period of service in the uniformed services,
the portion must:
new text end
new text begin
(1) not be less than one year; and
new text end
new text begin
(2) be in increments of six months of service.
new text end
new text begin Subd. 2. new text end
new text begin Application and documentation. new text end
new text begin
To purchase service credit under subdivision
1, a member must apply to the executive director to make the purchase. The application
must include all necessary documentation of the member's qualifications to make the
purchase, signed written permission to allow the executive director to request and receive
necessary verification of applicable facts and eligibility requirements, and any other relevant
information that the executive director may require. The member must submit with the
application payment of the administrative fee in the amount of $250 to cover the costs of
calculating the purchase payment amount under section 356.551. If the member proceeds
with the purchase, the administrative fee will be credited toward the purchase payment
amount.
new text end
new text begin Subd. 3. new text end
new text begin Purchase payment amount; service credit grant. new text end
new text begin
(a) The purchase payment
amount is the amount determined under section 356.551 for the period or periods of service
requested, except that, for purposes of calculating the purchase payment amount to purchase
service credit for service in the uniformed services that occurred before employment in a
position covered by the plan or between periods of employment in a position covered by
the plan, section 356.551, subdivision 2, paragraph (c), does not apply.
new text end
new text begin
(b) Service credit must be granted by the plan to the purchasing member upon the
executive director's receipt of the purchase payment amount. The service credit purchased
under this section may not be used for the purpose of determining a disability benefit under
section 352B.10.
new text end
new text begin
(c) Payment must be made before the effective date of the member's retirement.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 5.
Minnesota Statutes 2020, section 356.551, subdivision 2, is amended to read:
Subd. 2.
Determination.
(a) Unless the minimum purchase amount set forth in paragraph
(c) applies, the prior service credit purchase amount is an amount equal to the actuarial
present value, on the date of payment, as calculated by the chief administrative officer of
the pension plan and reviewed by the actuary retained under section 356.214, of the amount
of the additional retirement annuity obtained by the acquisition of the additional service
credit in this section.
(b) Calculation of this amount must be made using the investment return assumption
applicable to the public pension plan specified in section 356.215, subdivision 8, and the
mortality table adopted for the public pension plan.
(1) Unless clause (2) applies, the calculation must assume continuous future service in
the public pension plan until, and retirement at, the age at which the minimum requirements
of the fund for normal retirement or retirement with an annuity unreduced for retirement at
an early age, including section 356.30, are met with the additional service credit purchased.
The calculation must also assume a full-time equivalent salary, or actual salary, whichever
is greater, and a future salary history that includes annual salary increases at the applicable
salary increase rate for the plan specified in section 356.215, subdivision 8.
(2) This clause applies when the calculation is being done for purposes of section new text begin
352.272, 352B.087, or new text end 353.0141, subdivision 3. The calculation must include continuous
future service in the public pension plan until, and retirement at, any age at or after which
the minimum requirements of the fund for early retirement or retirement with an annuity
unreduced for retirement at an early age, including section 356.30, are met with the additional
service credit purchased. The calculation must be determined using the retirement age that
provides the most valuable benefit to the member. The calculation must also assume a
full-time equivalent salary, or actual salary, whichever is greater, and a future salary history
that includes annual salary increases at the applicable salary increase rate for the plan
specified in section 356.215, subdivision 8.
(c) The prior service credit purchase amount may not be less than the amount determined
by applying, for each year or fraction of a year being purchased, the sum of the employee
contribution rate, the employer contribution rate, and the additional employer contribution
rate, if any, applicable during that period, to the person's annual salary during that period,
or fractional portion of a year's salary, if applicable, plus interest at the applicable annual
rate or rates specified in section 356.59, subdivision 2, 3, 4, or 5, whichever applies,
compounded annually, from the end of the year in which contributions would otherwise
have been made to the date on which the payment is received.
(d) Unless otherwise provided by statutes governing a specific plan, payment must be
made in one lump sum within one year of the prior service credit authorization or prior to
the member's effective date of retirement, whichever is earlier. Payment of the amount
calculated under this section must be made by the applicable eligible person.
(e) However, the current employer or the prior employer may, at its discretion, pay all
or any portion of the payment amount that exceeds an amount equal to the employee
contribution rates in effect during the period or periods of prior service applied to the actual
salary rates in effect during the period or periods of prior service, plus interest at the
applicable annual rate or rates specified in section 356.59, subdivision 2, 3, 4, or 5, whichever
applies, compounded annually, from the date on which the contributions would otherwise
have been made to the date on which the payment is made. If the employer agrees to
payments under this subdivision, the purchaser must make the employee payments required
under this subdivision within 90 days of the prior service credit authorization. If that
employee payment is made, the employer payment under this subdivision must be remitted
to the chief administrative officer of the public pension plan within 60 days of receipt by
the chief administrative officer of the employee payments specified under this subdivision.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end