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SF 2641

as introduced - 88th Legislature (2013 - 2014) Posted on 03/14/2014 08:58am

KEY: stricken = removed, old language.
underscored = added, new language.
Version List Authors and Status
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Current Version - as introduced

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7.8 7.9
7.10 7.11
7.12 7.13

A bill for an act
 relating to retirement; modifying interest rate and postretirement adjustment
rate actuarial assumptions; replacing an implicit postretirement adjustment rate
actuarial assumption with an explicit actuarial assumption; amending Minnesota
Statutes 2013 Supplement, section 356.215, subdivision 8; repealing Minnesota
Statutes 2012, section 356.415, subdivision 3.

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

Section 1.

Minnesota Statutes 2013 Supplement, section 356.215, subdivision 8,
is amended to read:


Subd. 8.

Interest and salary assumptions.

(a) The actuarial valuation must use
the applicable following preretirement interest assumption and the applicable following
postretirement interest assumption:

(1) select and ultimate interest rate assumption

plan
 ultimate
preretirement
 interest rate
assumption
 ultimate
postretirement
interest rate
assumption
general state employees retirement plan
 8.5%
 6.0%
correctional state employees retirement plan
 8.5
 6.0
State Patrol retirement plan
 8.5
 6.0
legislators retirement plan, and for the
constitutional officers calculation of total plan
liabilities
 0.0
0.0
judges retirement plan
 8.5
 6.0
general public employees retirement plan
 8.5
 6.0
public employees police and fire retirement plan
 8.5
 6.0
local government correctional service
retirement plan
 8.5
 6.0
teachers retirement plan
 8.5
 6.0
Duluth teachers retirement plan
 8.5
 8.5
St. Paul teachers retirement plan
 8.5
 8.5

Except for the legislators retirement plan and the constitutional officers calculation
of total plan liabilities, the select preretirement interest rate assumption for the period
after June 30, 2012, through June 30, 2017, is 8.0 percent. Except for the legislators
retirement plan and the constitutional officers calculation of total plan liabilities, the select
postretirement interest rate assumption for the period after June 30, 2012, through June
30, 2017, is 5.5 percent, except for the Duluth teachers retirement plan and the St. Paul
teachers retirement plan, each with a select postretirement interest rate assumption for the
period after June 30, 2012, through June 30, 2017, of 8.0 percent.

(2) single rate preretirement and postretirement interest rate assumption

plan
 interest rate
assumption
Bloomington Fire Department Relief Association
 6.0
local monthly benefit volunteer firefighters relief
associations
 5.0

(b)(1) If the retirement plan has met the applicable minimum funded percentage for
the full percentage postretirement adjustment rate under section 354A.27, subdivision
6a; 354A.29, subdivision 8; or 356.415, subdivision 1a, 1b, 1c, 1d, 1e, or 1f, as of the
valuation date, and the applicable percentage postretirement adjustment rate specified in
section 354A.27, subdivision 7; 354A.29, subdivision 9; or 356.415, subdivision 1, is in
effect, the actuarial valuation must use the applicable full postretirement adjustment rate
as the postretirement adjustment rate actuarial assumption.

(2) If clause (1) does not apply, the actuarial valuation must use the applicable
postretirement adjustment rate actuarial assumption for the applicable period or periods:

plan
 		rate and duration
general state employees retirement plan
 		2.0% until December 31,
2040, 2.5% thereafter
correctional state employees retirement plan
 		2.0% until December 31,
2038, 2.5% thereafter
State Patrol retirement plan
 		1.0% until December 31,
2037, 2.5% thereafter
legislators retirement plan, including constitutional officers
2.0% until December 31,
2040, 2.5% thereafter
judges retirement plan
 		1.75% until December 31,
2039, 2.5% thereafter
general public employees retirement plan
 		1.0% until December 31,
2031, 2.5% thereafter
public employees police and fire retirement plan
 		1.0% until December 31,
2039, 2.5% thereafter
local government correctional service retirement plan
 		1.0% until December 31,
2015, 2.5% thereafter
MERF division of the Public Employees Retirement
Association
 		1.0% until December 31,
2031, 2.5% thereafter
teachers retirement plan
 		2.0% until December 31,
2037, 2.5% thereafter
Duluth teachers retirement plan
 		1.0% until December 31,
2039, 2.5% thereafter
St. Paul teachers retirement plan
 		1.0% until December 31,
2038, 2.5% thereafter

(b) (c) The actuarial valuation must use the applicable following single rate future
salary increase assumption, the applicable following modified single rate future salary
increase assumption, or the applicable following graded rate future salary increase
assumption:

(1) single rate future salary increase assumption

plan
 future salary increase assumption
legislators retirement plan
 5.0%
judges retirement plan
 3.0
Bloomington Fire Department Relief
Association
 4.0

(2) age-related future salary increase age-related select and ultimate future salary
increase assumption or graded rate future salary increase assumption

plan
 future salary increase assumption
local government correctional service retirement plan
 assumption C
Duluth teachers retirement plan
 assumption A
St. Paul teachers retirement plan
 assumption B

For plans other than the Duluth teachers
retirement plan, the select calculation
is: during the designated select period, a
designated percentage rate is multiplied by
the result of the designated integer minus T,
where T is the number of completed years
of service, and is added to the applicable
future salary increase assumption. The
designated select period is ten years and
the designated integer is ten for the Duluth
Teachers Retirement Fund Association
and for the local government correctional
service retirement plan and 15 for the St.
Paul Teachers Retirement Fund Association.
The designated percentage rate is 0.2
percent for the St. Paul Teachers Retirement
Fund Association. The select calculation
for the Duluth Teachers Retirement Fund
Association is 8.00 percent per year for
service years one through seven, 7.25 percent
per year for service years seven and eight,
and 6.50 percent per year for service years
eight and nine.

The ultimate future salary increase assumption is:

age
 A
 B
 C
16
 6.00%
 5.90%
 9.00%
17
 6.00
 5.90
 9.00
18
 6.00
 5.90
 9.00
19
 6.00
 5.90
 9.00
20
 6.00
 5.90
 9.00
21
 6.00
 5.90
 8.75
22
 6.00
 5.90
 8.50
23
 6.00
 5.85
 8.25
24
 6.00
 5.80
 8.00
25
 6.00
 5.75
 7.75
26
 6.00
 5.70
 7.50
27
 6.00
 5.65
 7.25
28
 6.00
 5.60
 7.00
29
 6.00
 5.55
 6.75
30
 6.00
 5.50
 6.75
31
 6.00
 5.45
 6.50
32
 6.00
 5.40
 6.50
33
 6.00
 5.35
 6.50
34
 6.00
 5.30
 6.25
35
 6.00
 5.25
 6.25
36
 5.86
 5.20
 6.00
37
 5.73
 5.15
 6.00
38
 5.59
 5.10
 6.00
39
 5.45
 5.05
 5.75
40
 5.31
 5.00
 5.75
41
 5.18
 4.95
 5.75
42
 5.04
 4.90
 5.50
43
 4.90
 4.85
 5.25
44
 4.76
 4.80
 5.25
45
 4.63
 4.75
 5.00
46
 4.49
 4.70
 5.00
47
 4.35
 4.65
 5.00
48
 4.21
 4.60
 5.00
49
 4.08
 4.55
 5.00
50
 3.94
 4.50
 5.00
51
 3.80
 4.45
 5.00
52
 3.66
 4.40
 5.00
53
 3.53
 4.35
 5.00
54
 3.39
 4.30
 5.00
55
 3.25
 4.25
 4.75
56
 3.25
 4.20
 4.75
57
 3.25
 4.15
 4.50
58
 3.25
 4.10
 4.25
59
 3.25
 4.05
 4.25
60
 3.25
 4.00
 4.25
61
 3.25
 4.00
 4.25
62
 3.25
 4.00
 4.25
63
 3.25
 4.00
 4.25
64
 3.25
 4.00
 4.25
65
 3.25
 4.00
 4.00
66
 3.25
 4.00
 4.00
67
 3.25
 4.00
 4.00
68
 3.25
 4.00
 4.00
69
 3.25
 4.00
 4.00
70
 3.25
 4.00
 4.00

(3) service-related ultimate future salary increase assumption

general state employees retirement plan of the
Minnesota State Retirement System
 assumption A
general employees retirement plan of the Public
Employees Retirement Association
 assumption B
Teachers Retirement Association
 assumption C
public employees police and fire retirement plan
 assumption D
State Patrol retirement plan
 assumption E
correctional state employees retirement plan of the
Minnesota State Retirement System
 assumption F
service
length
 A
 B
 C
 D
 E
 F
1
 10.50%
 12.03%
 12.00%
 13.00%
 8.00%
 6.00%
2
 8.10
 8.90
 9.00
 11.00
 7.50
 5.85
3
 6.90
 7.46
 8.00
 9.00
 7.00
 5.70
4
 6.20
 6.58
 7.50
 8.00
 6.75
 5.55
5
 5.70
 5.97
 7.25
 6.50
 6.50
 5.40
6
 5.30
 5.52
 7.00
 6.10
 6.25
 5.25
7
 5.00
 5.16
 6.85
 5.80
 6.00
 5.10
8
 4.70
 4.87
 6.70
 5.60
 5.85
 4.95
9
 4.50
 4.63
 6.55
 5.40
 5.70
 4.80
10
 4.40
 4.42
 6.40
 5.30
 5.55
 4.65
11
 4.20
 4.24
 6.25
 5.20
 5.40
 4.55
12
 4.10
 4.08
 6.00
 5.10
 5.25
 4.45
13
 4.00
 3.94
 5.75
 5.00
 5.10
 4.35
14
 3.80
 3.82
 5.50
 4.90
 4.95
 4.25
15
 3.70
 3.70
 5.25
 4.80
 4.80
 4.15
16
 3.60
 3.60
 5.00
 4.80
 4.65
 4.05
17
 3.50
 3.51
 4.75
 4.80
 4.50
 3.95
18
 3.50
 3.50
 4.50
 4.80
 4.35
 3.85
19
 3.50
 3.50
 4.25
 4.80
 4.20
 3.75
20
 3.50
 3.50
 4.00
 4.80
 4.05
 3.75
21
 3.50
 3.50
 3.90
 4.70
 4.00
 3.75
22
 3.50
 3.50
 3.80
 4.60
 4.00
 3.75
23
 3.50
 3.50
 3.70
 4.50
 4.00
 3.75
24
 3.50
 3.50
 3.60
 4.50
 4.00
 3.75
25
 3.50
 3.50
 3.50
 4.50
 4.00
 3.75
26
 3.50
 3.50
 3.50
 4.50
 4.00
 3.75
27
 3.50
 3.50
 3.50
 4.50
 4.00
 3.75
28
 3.50
 3.50
 3.50
 4.50
 4.00
 3.75
29
 3.50
 3.50
 3.50
 4.50
 4.00
 3.75
30 or more
 3.50
 3.50
 3.50
 4.50
 4.00
 3.75

(c) (d) The actuarial valuation must use the applicable following payroll growth
assumption for calculating the amortization requirement for the unfunded actuarial
accrued liability where the amortization retirement is calculated as a level percentage
of an increasing payroll:

plan
 payroll growth assumption
general state employees retirement plan of the
Minnesota State Retirement System
 3.75%
correctional state employees retirement plan
 3.75
State Patrol retirement plan
 3.75
judges retirement plan
 3.00
general employees retirement plan of the Public
Employees Retirement Association
 3.75
public employees police and fire retirement plan
 3.75
local government correctional service retirement plan
 3.75
teachers retirement plan
 3.75
Duluth teachers retirement plan
 3.50
St. Paul teachers retirement plan
 4.00

(d) (e) The assumptions set forth in paragraphs (b) (c) and (c) (d) continue to apply,
unless a different salary assumption or a different payroll increase assumption:

(1) has been proposed by the governing board of the applicable retirement plan;

(2) is accompanied by the concurring recommendation of the actuary retained under
section 356.214, subdivision 1, if applicable, or by the approved actuary preparing the
most recent actuarial valuation report if section 356.214 does not apply; and

(3) has been approved or deemed approved under subdivision 18.

EFFECTIVE DATE.

This section is effective June 30, 2014, and applies to
actuarial valuation reports prepared on or after that date.

Sec. 2. REPEALER.

Minnesota Statutes 2012, section 356.415, subdivision 3, is repealed.

EFFECTIVE DATE.

This section is effective June 30, 2014, and applies to
actuarial valuation reports prepared on or after that date.