SF 4250

as introduced - 92nd Legislature (2021 - 2022) Posted on 03/24/2022 10:18am

A bill for an act
relating to retirement; Minnesota State Retirement System; Public Employees
Retirement Association; Teachers Retirement Association; St. Paul Teachers'
Retirement Fund Association; restoring augmentation of deferred annuities for
members who left public employment before January 1, 2019; amending Minnesota
Statutes 2020, sections 352.22, subdivision 3a; 352B.08, subdivision 2b; 353.34,
subdivision 3; 354.55, subdivision 11; 354A.37, subdivision 2.

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

Section 1.

Minnesota Statutes 2020, section 352.22, subdivision 3a, is amended to read:

Subd. 3a.

Computation of deferred annuity.

(a) The deferred annuity of any former
state employee must be augmented from the first day of the month following termination
of active service or July 1, 1971, whichever is later, to the effective date of retirement.

(b) For a person who became a state employee before July 1, 2006, the annuity must be
augmented at the following rate or rates, compounded annually:

(1) five percent until January 1, 1981;

(2) three percent thereafter until January 1 of the year following the year in which the
former employee attains age 55 or January 1, 2012, whichever is earlier;

(3) five percent from the January 1 next following the attainment of age 55 until
December 31, 2011; new text begin and
new text end

(4) two percent deleted text begin from January 1, 2012, until December 31, 2018; and
deleted text end

deleted text begin (5) deleted text end new text begin after December 31, 2011, except that for any person who terminates active service
new text end after December 31, 2018, the new text begin augmentation rate is zero percent, and the person's new text end deferred
annuity must not be augmented new text begin after December 31, 2018 new text end .

(c) For a person who became a state employee after June 30, 2006, the annuity must be
augmented at the following rate or rates, compounded annually:

(1) 2.5 percent until December 31, 2011; new text begin and
new text end

(2) two percent deleted text begin from January 1, 2012, until December 31, 2018; and
deleted text end

deleted text begin (3) deleted text end new text begin after December 31, 2011, except that for any person who terminates active service
new text end after December 31, 2018, the new text begin augmentation rate is zero percent, and the person's new text end deferred
annuity must not be augmented new text begin after December 31, 2018 new text end .

(d) The retirement annuity or disability benefit of, or the survivor benefit payable on
behalf of, a former state employee who terminated service before July 1, 1997, which is not
first payable until after June 30, 1997, must be increased on an actuarial equivalent basis
to reflect the change in the investment return actuarial assumption under section 356.215,
subdivision 8, from five percent to six percent under a calculation procedure and the tables
adopted by the board and approved by the actuary retained under section 356.214.

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.

Minnesota Statutes 2020, section 352B.08, subdivision 2b, is amended to read:

Subd. 2b.

Computation of deferred annuity.

(a) The deferred annuity of any former
member must be augmented from the first day of the month following the termination of
active service, or July 1, 1971, whichever is later, to the effective date of retirement.

(b) For a person who became an employee before July 1, 2006, the annuity must be
augmented at the following rate or rates, compounded annually:

(1) five percent until January 1, 1981;

(2) three percent from January 1, 1981, until December 31, 2011; new text begin and
new text end

(3) two percent deleted text begin from January 1, 2012, until December 31, 2018; and
deleted text end

deleted text begin (4) deleted text end new text begin after December 31, 2011, except that for any person who terminates active service
new text end after December 31, 2018, the new text begin augmentation rate is zero percent, and the person's new text end deferred
annuity must not be augmented new text begin after December 31, 2018 new text end .

(c) For a person who became an employee after June 30, 2006, the annuity must be
augmented at the following rate or rates, compounded annually:

(1) 2.5 percent until December 31, 2011; new text begin and
new text end

(2) two percent deleted text begin from January 1, 2012, until December 31, 2018; and
deleted text end

deleted text begin (3) deleted text end new text begin after December 31, 2011, except that for any person who terminates active service new text end
after December 31, 2018, the new text begin augmentation rate is zero percent, and the person's new text end deferred
annuity must not be augmented new text begin after December 1, 2018 new text end .

(d) The mortality table and investment return assumption used to compute the annuity
must be those in effect when the member files application for annuity.

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 353.34, subdivision 3, is amended to read:

Subd. 3.

Deferred annuity; eligibility; computation.

(a) A member who is partially
or 100 percent vested under section 353.01, subdivision 47, when termination of public
service or termination of membership occurs has the option of leaving the member's
accumulated deductions in the fund and being entitled to a deferred retirement annuity
commencing at normal retirement age or to a deferred early retirement annuity under section
353.30, subdivision 1a, 1b, 1c, or 5.

(b) The deferred annuity must be computed under section 353.29, subdivision 3, on the
basis of the law in effect on the date of termination of public service or termination of
membership, whichever is later, and, if the later of termination of public service or
termination of membership is on or before December 31, 2011, the deferred annuity must
be augmented as provided in paragraphs (c) to (e).

(c) The deferred annuity of any former member must be augmented from the first day
of the month following the termination of active service, or July 1, 1971, whichever is later,
to the effective date of retirement or, if earlier, December 31, 2018.

(d) For a person who became a public employee before July 1, 2006, and who has a
termination of public service before January 1, 2012, the deferred annuity must be augmented
at the following rate or rates, compounded annually:

(1) five percent until January 1, 1981;

(2) three percent from January 1, 1981, until January 1 of the year following the year in
which the former member attains age 55 or December 31, 2011, whichever is earlier;

(3) five percent from January 1 of the year following the year in which the former member
attains age 55, or December 31, 2011, whichever is earlier; new text begin and
new text end

(4) one percent deleted text begin from January 1, 2012, until December 31, 2018; and
deleted text end

deleted text begin (5) deleted text end new text begin after December 31, 2011, except that for any person who terminates active service
new text end after December 31, 2018, the new text begin augmentation rate is zero percent, and the person's new text end deferred
annuity must not be augmented new text begin after December 1, 2018 new text end .

(e) For a person who became a public employee after June 30, 2006, and who has a
termination of public service before January 1, 2012, the deferred annuity must be augmented
at the following rate or rates, compounded annually:

(1) 2.5 percent until December 31, 2011; new text begin and
new text end

(2) one percent deleted text begin from January 1, 2012, until December 31, 2018; and
deleted text end

deleted text begin (3) deleted text end after new text begin December 31, 2011, except that for any person who terminates active service
after new text end December 31, 2018, the new text begin augmentation rate is zero percent, and the person's new text end deferred
annuity must not be augmented new text begin after December 31, 2018 new text end .

(f) For a person who has a termination of public service after December 31, 2011, the
deferred annuity must not be augmented.

(g) The retirement annuity or disability benefit of, or the survivor benefit payable on
behalf of, a former member who terminated service before July 1, 1997, or the survivor
benefit payable on behalf of a basic or police and fire member who was receiving disability
benefits before July 1, 1997, which is first payable after June 30, 1997, must be increased
on an actuarial equivalent basis to reflect the change in the investment return actuarial
assumption under section 356.215, subdivision 8, from five percent to six percent under a
calculation procedure and tables adopted by the board and approved by the actuary retained
under section 356.214.

(h) A former member qualified to apply for a deferred retirement annuity may revoke
this option at any time before the commencement of deferred annuity payments by making
application for a refund. The person is entitled to a refund of accumulated member
contributions within 30 days following date of receipt of the application by the executive
director.

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.

Minnesota Statutes 2020, section 354.55, subdivision 11, is amended to read:

Subd. 11.

Deferred annuity; augmentation.

(a) Any person covered under section
354.44, subdivision 6, who ceases to render teaching service, may leave the person's
accumulated deductions in the fund for the purpose of receiving a deferred annuity at
retirement.

(b) The deferred retirement annuity of any former member must be augmented from the
first day of the month following the termination of active service to the effective date of
retirement.

(c) No augmentation is creditable if the deferral period is less than three months or if
deferral commenced before July 1, 1971.

(d) For persons who became covered employees before July 1, 2006, the annuity must
be augmented at the following rate or rates, compounded annually:

(1) five percent until January 1, 1981;

(2) three percent from January 1, 1981, until January 1 of the year following the year in
which the deferred annuitant attains age 55 or June 30, 2012, whichever is earlier;

(3) five percent from the date established in clause (2) until June 30, 2012; new text begin and
new text end

(4) two percent deleted text begin from July 1, 2012, until June 30, 2019; and
deleted text end

deleted text begin (5) deleted text end new text begin after June 30, 2012, except that for any person who terminates active service new text end after
June 30, 2019, the new text begin augmentation rate is zero percent, and the person's new text end deferred annuity must
not be augmented new text begin after June 30, 2019 new text end .

(e) For persons who become covered employees after June 30, 2006, the annuity must
be augmented at the following rate or rates, compounded annually:

(1) 2.5 percent until June 30, 2012; new text begin and
new text end

(2) two percent deleted text begin from July 1, 2012, until June 30, 2019; and
deleted text end

deleted text begin (3) deleted text end new text begin after June 30, 2012, except that for any person who terminates active service new text end after
June 30, 2019, the new text begin augmentation rate is zero percent, and the person's new text end deferred annuity must
not be augmented new text begin after June 30, 2019 new text end .

(f) In no case may the annuity payable under this subdivision be less than the amount
of annuity payable under section 354.44, subdivision 6.

(g) The requirements and provisions for retirement before normal retirement age contained
in section 354.44, subdivision 6, also apply to an employee fulfilling the requirements with
a combination of service as provided in section 356.311.

(h) The augmentation provided by this subdivision applies to the benefit provided in
section 354.46, subdivision 2.

(i) The augmentation provided by this subdivision does not apply to any period in which
a person is on an approved leave of absence from an employer unit covered by the provisions
of this chapter.

(j) The retirement annuity or disability benefit of, or the survivor benefit payable on
behalf of, a former teacher who terminated service before July 1, 1997, which is not first
payable until after June 30, 1997, must be increased on an actuarial equivalent basis to
reflect the change in the investment return actuarial assumption under section 356.215,
subdivision 8, from five percent to six percent under a calculation procedure and tables
adopted by the board as recommended by an approved actuary and approved by the actuary
retained under section 356.214.

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 354A.37, subdivision 2, is amended to read:

Subd. 2.

Eligibility for deferred retirement annuity.

(a) Any coordinated member
who ceases to render teaching services for the school district in which the teachers retirement
fund association is located, with sufficient allowable service credit to meet the minimum
service requirements specified in section 354A.31, subdivision 1, shall be entitled to a
deferred annuity in lieu of a refund under subdivision 1.

(b) The deferred annuity must be augmented from the first day of the month following
the termination of active service to the effective date of retirement. There is no augmentation
if this period is less than three months.

(c) The deferred annuity commences upon application after the person on deferred status
attains at least the minimum age specified in section 354A.31, subdivision 1.

(d) For a person who became a covered employee before July 1, 2006, the annuity must
be augmented at the following rate or rates, compounded annually:

(1) three percent until January 1 of the year following the year in which the former
member attains age 55 or June 30, 2012, whichever is earlier;

(2) five percent from the January 1 next following the attainment of age 55 or until June
30, 2012; new text begin and
new text end

(3) two percent deleted text begin from July 1, 2012, until June 30, 2019; and
deleted text end

deleted text begin (4) deleted text end new text begin after June 30, 2012, except that for any person who terminates active service new text end after
June 30, 2019, the new text begin augmentation rate is zero percent, and the person's new text end deferred annuity must
not be augmented new text begin after June 30, 2019 new text end .

(e) For a person who became a covered employee after June 30, 2006, the annuity must
be augmented at the following rate or rates, compounded annually:

(1) 2.5 percent until June 30, 2012; new text begin and
new text end

(2) two percent deleted text begin from July 1, 2012, until June 30, 2019; and
deleted text end

deleted text begin (3) deleted text end new text begin after June 30, 2012, except that for any person who terminates active service new text end after
June 30, 2019, the new text begin augmentation rate is zero percent, and the person's new text end deferred annuity must
not be augmented new text begin after June 30, 2019 new text end .

(f) The augmentation provided by this subdivision applies to the benefit provided in
section 354A.35, subdivision 2. The augmentation provided by this subdivision does not
apply to any period in which a person is on an approved leave of absence from an employer
unit.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 6. new text begin RETROACTIVE IMPLEMENTATION.
new text end

new text begin Subdivision 1. new text end

new text begin Minnesota State Retirement System. new text end

new text begin (a) The executive director of the
Minnesota State Retirement System must recalculate the annuity of any former state employee
who started to receive a pension from the general state employees retirement plan, the
correctional state employees retirement plan, or the State Patrol retirement plan on or after
January 1, 2019, and whose monthly pension amount would have been larger had sections
1 and 2 been in effect on January 1, 2019.
new text end

new text begin (b) For each former state employee, the executive director must adjust the ongoing
annuity amount so that it is the amount calculated under section 1 or 2, as applicable, taking
into account any election of any optional annuity forms of payment and any postretirement
increases.
new text end

new text begin (c) The executive director must offer a lump sum distribution to the former state employee
of the difference between the monthly amount determined under section 1 or 2, as applicable,
and the monthly amount being paid to the former state employee, multiplied by the number
of monthly payments made to the former state employee before the annuity calculated under
section 1 or 2, as applicable, begins. The lump sum must be adjusted to take into account
any election of any optional annuity forms of payment and any postretirement increases.
The former state employee may elect a distribution of the lump sum or a direct rollover
under Minnesota Statutes, section 356.635, subdivisions 3 to 7, if the lump sum is an eligible
rollover distribution as defined in section 356.635, subdivisions 4 and 5.
new text end

new text begin Subd. 2. new text end

new text begin Public Employees Retirement Association. new text end

new text begin (a) The executive director of the
Public Employees Retirement Association must recalculate the annuity of any former public
employee who started to receive a pension from the general employees retirement plan, the
local government correctional service retirement plan, or the public employees police and
fire plan on or after January 1, 2019, and whose monthly pension amount would have been
larger had section 3 been in effect on January 1, 2019.
new text end

new text begin (b) For each former public employee, the executive director must adjust the ongoing
annuity amount so that it is the amount calculated under section 3, taking into account any
election of any optional annuity forms of payment and any postretirement increases.
new text end

new text begin (c) The executive director must offer a lump sum distribution to the former public
employee of the difference between the monthly amount determined under section 3 and
the monthly amount being paid to the former public employee, multiplied by the number
of monthly payments made to the former public employee before the annuity calculated
under section 3 begins. The lump sum must be adjusted to take into account any election
of any optional annuity forms of payment and any postretirement increases. The former
public employee may elect a distribution of the lump sum or a direct rollover under Minnesota
Statutes, section 356.635, subdivisions 3 to 7, if the lump sum is an eligible rollover
distribution as defined in section 356.635, subdivisions 4 and 5.
new text end

new text begin Subd. 3. new text end

new text begin Teachers Retirement Association. new text end

new text begin (a) The executive director of the Teachers
Retirement Association must recalculate the annuity of any former teacher who started to
receive a pension from the Teachers Retirement Association on or after July 1, 2019, and
whose monthly pension amount would have been larger had section 4 been in effect on July
1, 2019.
new text end

new text begin (b) For each former teacher, the executive director must adjust the ongoing annuity
amount so that it is the amount calculated under section 4, taking into account any election
of any optional annuity forms of payment and any postretirement increases.
new text end

new text begin (c) The executive director must offer a lump sum distribution to the former teacher of
the difference between the monthly amount determined under section 4 and the monthly
amount being paid to the former teacher, multiplied by the number of monthly payments
made to the former teacher before the annuity calculated under section 4 begins. The lump
sum must be adjusted to take into account any election of any optional annuity forms of
payment and any postretirement increases. The former teacher may elect a distribution of
the lump sum or a direct rollover under Minnesota Statutes, section 356.635, subdivisions
3 to 7, if the lump sum is an eligible rollover distribution as defined in section 356.635,
subdivisions 4 and 5.
new text end

new text begin Subd. 4. new text end

new text begin St. Paul Teachers' Retirement Fund Association. new text end

new text begin (a) The executive director
of the St. Paul Teachers' Retirement Fund Association must recalculate the annuity of any
former teacher who started to receive a pension from the St. Paul Teachers' Retirement Fund
Association on or after July 1, 2019, and whose monthly pension amount would have been
larger had section 5 been in effect on July 1, 2019.
new text end

new text begin (b) For each former teacher, the executive director must adjust the ongoing annuity
amount so that it is the amount calculated under section 5, taking into account any election
of any optional annuity forms of payment and any postretirement increases.
new text end

new text begin (c) The executive director must offer a lump sum distribution to the former teacher of
the difference between the monthly amount determined under section 5 and the monthly
amount being paid to the former teacher, multiplied by the number of monthly payments
made to the former teacher before the annuity calculated under section 5 begins. The lump
sum must be adjusted to take into account any election of any optional annuity forms of
payment and any postretirement increases. The former teacher may elect a distribution of
the lump sum or a direct rollover under Minnesota Statutes, section 356.635, subdivisions
3 to 7, if the lump sum is an eligible rollover distribution as defined in section 356.635,
subdivisions 4 and 5.
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