Minnesota Legislature
SF 4347
as introduced - 92nd Legislature (2021 - 2022) Posted on 03/29/2022 08:42am
Current Version - as introduced
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A bill for an act
relating to retirement; Teachers Retirement Association and St. Paul Teachers
Retirement Fund Association; reinstating the rule of 90 and increasing employee
contributions to pay for rule of 90 benefit; appropriating money; amending
Minnesota Statutes 2020, sections 354.42, subdivisions 2, 3; 354.44, subdivision
6; 354A.12, subdivision 2a; Minnesota Statutes 2021 Supplement, sections 354A.12,
subdivision 1; 354A.31, subdivision 7.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2020, 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, 2014, through June 30, deleted text begin 2023deleted text end new text begin 2022 new text end |
11 percent |
7.5 percent |
|
|
new text begin
from July 1, 2022, through June 30, 2023 new text end |
new text begin
11.62 percent new text end |
new text begin
8.12 percent new text end |
|
| after June 30, 2023 |
deleted text begin 11.25deleted text end new text begin 11.87new text end percent |
deleted text begin 7.75deleted text end new text begin 8.37new text end percent |
(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) 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.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2022.
new text end
Sec. 2.
Minnesota Statutes 2020, 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 |
|||
|
deleted text begin
from July 1, 2014, through June 30, 2018 deleted text end |
deleted text begin
7.5 percent deleted text end |
deleted text begin
11.5 percent deleted text end |
|||
|
deleted text begin
from July 1, 2018, through June 30, 2019 deleted text end |
deleted text begin
7.71 percent deleted text end |
deleted text begin
11.71 percent deleted text end |
|||
|
deleted text begin
from July 1, 2019, through June 30, 2020 deleted text end |
deleted text begin
7.92 percent deleted text end |
deleted text begin
11.92 percent deleted text end |
|||
|
deleted text begin
from July 1, 2020, through June 30, 2021 deleted text end |
deleted text begin
8.13 percent deleted text end |
deleted text begin
12.13 percent deleted text end |
|||
| from July 1, 2021, through June 30, 2022 |
8.34 percent |
12.34 percent |
|||
| from July 1, 2022, through June 30, 2023 |
deleted text begin 8.55deleted text end new text begin 9.17new text end percent |
deleted text begin 12.55deleted text end new text begin 13.17new text end percent |
|||
| after June 30, 2023 |
deleted text begin 8.75deleted text end new text begin 9.37new text end percent |
deleted text begin 12.75deleted text end new text begin 13.37new text end percent |
|||
(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.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2022.
new text end
Sec. 3.
Minnesota Statutes 2020, 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 person who first
became a member of the association or a member of a pension fund listed in section 356.30,
subdivision 3, before July 1, 1989, 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)(1) This paragraph applies only to a person who first became a member of the
association or a member of a pension fund listed in section 356.30, subdivision 3, before
July 1, 1989, and 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).
(2) 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.
(3) 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 first
became a member of the association after June 30, 1989, and to any other member who has
become at least 55 years old and 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).
(1) 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.
(2) 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 person who has become at least 55 years old and first
becomes a member of the association after June 30, 1989, and to any other 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), reduced as described in clause (1) ornew text begin without reduction as described in clausenew text end
(2), as applicable.
deleted text begin
(1) For a member who is at least age 62 and has at least 30 years of service, the annuity
shall be reduced by an early reduction factor of six percent for each year that the member's
age of retirement precedes the normal retirement age. The resulting reduced annuity shall
be further adjusted to take into account the increase in the monthly amount that would have
occurred had the member retired early and deferred receipt of the annuity until normal
retirement age and the annuity was augmented during the deferral period at 2.5 percent, if
the member commenced employment after June 30, 2006, or at three percent, if the member
commenced employment before July 1, 2006, compounded annually.
deleted text end
deleted text begin (2)deleted text end new text begin (1) new text end For a member who deleted text begin has not attained age 62 or has fewer than 30 years of servicedeleted text end new text begin
is not entitled to a retirement annuity under clause (2)new text end , the annuity shall be reduced for each
year that the member's age of retirement precedes normal retirement age by the following
early reduction factors:
(i) for the period during which the member is age 55 through age 58, the factor is four
percent; and
(ii) for the period during which the member is at least age 59 but not yet normal retirement
age, the factor is seven percent.
The resulting annuity shall be further adjusted to take into account the increase in the
monthly amount that would have occurred had the member retired early and deferred receipt
of the annuity until normal retirement age and the annuity was augmented during the deferral
period at the applicable annual rate, compounded annually. The applicable annual rate is
the rate in effect for the month that includes the member's effective date of retirement and
shall be considered as fixed for the member for the period until the member reaches normal
retirement age. The applicable annual rate for June 2019 is 2.5 percent, if the member
commenced employment after June 30, 2006, or three percent, if the member commenced
employment before July 1, 2006, compounded annually, and decreases each month beginning
July 2019 in equal monthly increments over the five-year period that begins July 1, 2019,
and ends June 30, 2024, to zero percent effective for July 2024 and thereafter.
After June 30, 2024, the reduced annuity commencing before normal retirement age
under this clause shall not take into account any augmentation.
new text begin
(2) A 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 (d) without any reduction by reason of early retirement.
new text end
(f) 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, 2022.
new text end
Sec. 4.
Minnesota Statutes 2021 Supplement, section 354A.12, subdivision 1, is amended
to read:
Subdivision 1.
Employee contributions.
(a) The contribution required to be paid by
each member of the St. Paul Teachers Retirement Fund Association is the percentage of
total salary specified below for the applicable association and program:
| Program |
Percentage of Total Salary |
|
| St. Paul Teachers Retirement Fund Association |
||
| basic program after June 30, 2016 |
10 percent |
|
|
new text begin
basic program after June 30, 2022 new text end |
new text begin
10.62 percent new text end |
|
| basic program after June 30, 2023 |
deleted text begin 10.25deleted text end new text begin 10.87new text end percent |
|
| coordinated program after June 30, 2016 |
7.5 percent |
|
|
new text begin
coordinated program after June 20, 2022 new text end |
new text begin
8.12 percent new text end |
|
| coordinated program after June 30, 2023 |
deleted text begin 7.75deleted text end new text begin 8.37new text end percent |
|
(b) Contributions must be made by deduction from salary and must be remitted directly
to the St. Paul Teachers Retirement Fund Association at least once each month.
(c) When an employee contribution rate changes for a fiscal year, the new contribution
rate is effective for the entire salary paid by the employer with the first payroll cycle reported.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2022.
new text end
Sec. 5.
Minnesota Statutes 2020, section 354A.12, subdivision 2a, is amended to read:
Subd. 2a.
Employer regular and additional contributions.
(a) The employing units
shall make the following employer contributions to the teachers retirement fund association:
(1) for each coordinated member of the St. Paul Teachers Retirement Fund Association,
the employing unit shall make a regular employer contribution to the retirement fund
association in an amount equal to the designated percentage of the salary of the coordinated
member as provided below:
|
deleted text begin
after June 30, 2016 deleted text end |
deleted text begin
6.25 percent deleted text end |
|
|
deleted text begin
after June 30, 2017 deleted text end |
deleted text begin
6.5 percent deleted text end |
|
|
deleted text begin
after June 30, 2018 deleted text end |
deleted text begin
7.335 percent deleted text end |
|
|
deleted text begin
after June 30, 2019 deleted text end |
deleted text begin
8.17 percent deleted text end |
|
|
deleted text begin
after June 30, 2020 deleted text end |
deleted text begin
8.38 percent deleted text end |
|
| after June 30, 2021 |
8.59 percent |
|
| after June 30, 2022 |
deleted text begin 8.8deleted text end new text begin 9.42new text end percent |
|
| after June 30, 2023 |
deleted text begin 9deleted text end new text begin 9.62new text end percent |
(2) for each basic member of the St. Paul Teachers Retirement Fund Association, the
employing unit shall make a regular employer contribution to the respective retirement fund
in an amount according to the schedule below:
|
deleted text begin
after June 30, 2016 deleted text end |
deleted text begin
9.75 percent of salary deleted text end |
|
|
deleted text begin
after June 30, 2017 deleted text end |
deleted text begin
10 percent of salary deleted text end |
|
|
deleted text begin
after June 30, 2018 deleted text end |
deleted text begin
10.835 percent of salary deleted text end |
|
|
deleted text begin
after June 30, 2019 deleted text end |
deleted text begin
11.67 percent of salary deleted text end |
|
|
deleted text begin
after June 30, 2020 deleted text end |
deleted text begin
11.88 percent of salary deleted text end |
|
| after June 30, 2021 |
12.09 percent of salary |
|
| after June 30, 2022 |
12.3 percent of salary |
|
| after June 30, 2023 |
12.5 percent of salary |
(3) for each basic member of the St. Paul Teachers Retirement Fund Association, the
employing unit shall make an additional employer contribution to the respective fund in an
amount equal to 3.64 percent of the salary of the basic member;
(4) for each coordinated member of the St. Paul Teachers Retirement Fund Association,
the employing unit shall make an additional employer contribution to the respective fund
in an amount equal to 3.84 percent of the coordinated member's salary.
(b) The regular and additional employer contributions must be remitted directly to the
St. Paul Teachers Retirement Fund Association at least once each month. Delinquent amounts
are payable with interest under the procedure in subdivision 1a.
(c) Payments of regular and additional employer contributions for school district or
technical college employees who are paid from normal operating funds must be made from
the appropriate fund of the district or technical college.
(d) When an employer contribution rate changes for a fiscal year, the new contribution
rate is effective for the entire salary paid by the employer with the first payroll cycle reported.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2022.
new text end
Sec. 6.
Minnesota Statutes 2021 Supplement, section 354A.31, subdivision 7, is amended
to read:
Subd. 7.
Reduction for early retirement.
(a) This subdivision applies to a person who
has become at least 55 years old and first becomes a coordinated member after June 30,
1989, and to any other coordinated member who has become at least 55 years old and whose
annuity is higher when calculated using the retirement annuity formula percentage in
subdivision 4, paragraph (d), in conjunction with this subdivision than when calculated
under subdivision 4, paragraph (c), in conjunction with subdivision 6. An employee who
retires under the formula annuity before the normal retirement age shall be paid the normal
annuity reduced as described in paragraph (b) if the person retires on or after July 1, 2019,
or in paragraph (c) if the person retires before July 1, 2019, as applicable.
(b) A coordinated member who retires before the normal retirement age and on or after
July 1, 2019, is entitled to receive a retirement annuity calculated using the retirement
annuity formula percentage in subdivision 4, paragraph (d), reduced as described in clause
(1) or new text begin without reduction as described in clause new text end (2), as applicable.
(1) Ifnew text begin upon retirementnew text end the member deleted text begin retires when the member is younger than age 62 or
with fewer than 30 years of servicedeleted text end new text begin is not entitled to a retirement annuity under clause (2)new text end ,
the annuity must be reduced by an early reduction factor for each year that the member's
age of retirement precedes normal retirement age. The early reduction factors are four
percent per year for members whose age at retirement is at least 55 but not yet 59 and seven
percent per year for members whose age at retirement is at least 59 but not yet normal
retirement age. The resulting annuity must be further adjusted to take into account
augmentation as if the employee had deferred receipt of the annuity until normal retirement
age and the annuity were augmented at the applicable annual rate, compounded annually,
from the day the annuity begins to accrue until normal retirement age. The applicable annual
rate is the rate in effect on the employee's effective date of retirement and shall be considered
as fixed for the employee. The applicable annual rates are the following:
(i) until June 30, 2019, 2.5 percent;
(ii) a rate that changes each month, beginning July 1, 2019, through June 30, 2024, which
is determined by reducing the rate in item (i) to zero in equal monthly increments over the
five-year period; and
(iii) after June 30, 2024, zero percent.
After June 30, 2024, the reduced annuity commencing before normal retirement age
under this clause shall not take into account any augmentation.
(2) deleted text begin If the member retires when the member is at least age 62 or older and has at least 30
years of service, the member is entitled to receive a retirement annuity calculated using the
retirement annuity formula percentage in subdivision 4, paragraph (d), multiplied by the
applicable early retirement factor specified for members "Age 62 or older with 30 years of
service" in the table in paragraph (c)deleted text end new text begin Any coordinated 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 subdivision 4, paragraph (d), without
any reduction by reason of early retirementnew text end .
(c) A coordinated member who retires before the normal retirement age and before July
1, 2019, is entitled to receive a retirement annuity calculated using the retirement annuity
formula percentage in subdivision 4, paragraph (d), multiplied by the applicable early
retirement factor specified below:
| Under age 62 |
Age 62 or older |
|
| or less than 30 years of service |
with 30 years of service |
| Normal retirement age: |
65 |
66 |
65 |
66 |
| Age at retirement |
||||
| 55 |
0.5376 |
0.4592 |
||
| 56 |
0.5745 |
0.4992 |
||
| 57 |
0.6092 |
0.5370 |
||
| 58 |
0.6419 |
0.5726 |
||
| 59 |
0.6726 |
0.6062 |
||
| 60 |
0.7354 |
0.6726 |
||
| 61 |
0.7947 |
0.7354 |
||
| 62 |
0.8507 |
0.7947 |
0.8831 |
0.8389 |
| 63 |
0.9035 |
0.8507 |
0.9246 |
0.8831 |
| 64 |
0.9533 |
0.9035 |
0.9635 |
0.9246 |
| 65 |
1.0000 |
0.9533 |
1.0000 |
0.9635 |
| 66 |
1.0000 |
1.0000 |
For normal retirement ages between ages 65 and 66, the early retirement factors must
be determined by linear interpolation between the early retirement factors applicable for
normal retirement ages 65 and 66.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2022.
new text end
Sec. 7. new text begin APPROPRIATION.
new text end
new text begin
(a) $2,000,000,000 in fiscal year 2023 is appropriated from the general fund to the
commissioner of management and budget for transfer to the Teachers Retirement Fund.
new text end
new text begin
(b) $82,000,000 in fiscal year 2023 is appropriated from the general fund to the
commissioner of management and budget for transfer to the St. Paul Teachers Retirement
Fund.
new text end
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2022.
new text end