SF 4825

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/12/2024 09:06am

A bill for an act
relating to retirement; Public Employees Retirement Association; general employees
retirement plan; modifying the requirements for rule of 90 to permit a member to
retire under rule of 90 if the member purchases service credit for a period of military
service that began before July 1, 1989; modifying the calculation of the purchase
price for a period of military service that began before July 1, 1989; permitting
members who purchased service credit before the effective date for a period of
military service that began before July 1, 1989, to elect to use the service to qualify
for rule of 90 retirement; amending Minnesota Statutes 2022, sections 353.0141,
subdivision 3; 353.30, subdivision 1a; Minnesota Statutes 2023 Supplement, section
356.551, subdivision 2.

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

Section 1.

Minnesota Statutes 2022, section 353.0141, subdivision 3, is amended to read:

Subd. 3.

Purchase payment amount; service credit grant.

(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
allowable service credit for service in the uniformed services that occurred before becoming
a public employee or between periods of public employment, section 356.551, subdivision
2, paragraph (c), shall not apply.

(b) Allowable service credit must be granted by the applicable plan to the purchasing
member upon the executive director's receipt of the purchase payment amount. The allowable
service credit purchased under this section new text begin :
new text end

new text begin (1) new text end may not be used for the purpose of determining a disability benefit under section
353.031, 353.33, 353.656, or 353E.06 deleted text begin . deleted text end new text begin ; and
new text end

new text begin (2) may be used for the purpose of eligibility for rule of 90 under section 353.30,
subdivision 1a, if the period of service in the uniformed services for which allowable service
credit was purchased began before July 1, 1989, and the member elects, at the time the
member makes the purchase, to be considered as having first become a public employee or
a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989.
new text end

(c) Payment must be made before the effective date of the member's retirement.

Sec. 2.

Minnesota Statutes 2022, section 353.30, subdivision 1a, is amended to read:

Subd. 1a.

Pre-July 1, 1989, members: rule of 90.

new text begin (a) new text end Upon termination of public service
under section 353.01, subdivision 11a, a person who first became a public employee or a
member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, and
whose attained age plus credited allowable service totals 90 years is entitled upon application
to a retirement annuity in an amount equal to the applicable normal annuity provided in
section 353.29, subdivision 3, paragraph (a); section 353.651, subdivision 3; or section
353E.04, subdivision 3. Such annuity is not subject to a reduction for early retirement.

new text begin (b) If a person purchases allowable service credit under section 353.0141 for a period
of service in the uniformed services that began before July 1, 1989, and the person made
the election under section 353.0141, subdivision 3, paragraph (b), clause (2), at the time of
the purchase, the person must be considered as having first become a public employee or
a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989,
under paragraph (a).
new text end

Sec. 3.

Minnesota Statutes 2023 Supplement, 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 352.272;
352B.087; 353.0141, subdivision 3; 354.544; 354A.0961; or 490.1211, subdivision 2. The
calculation must new text begin :
new text end

new text begin (i) new text end 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 deleted text begin . The calculation must deleted text end new text begin ;
new text end

new text begin (ii) new text end be determined using the retirement age that provides the most valuable benefit to
the member deleted text begin . The calculation must also deleted text end new text begin ;
new text end

new text begin (iii) new text end 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 deleted text begin . deleted text end new text begin ; and
new text end

new text begin (iv) assume that the purchaser of the service credit, if the purchaser is a member of the
Public Employees Retirement Association general employees retirement plan, will retire
under section 353.30, subdivision 1a, if the service credit being purchased is for a period
of service in the uniformed services that began before July 1, 1989, and the person made
the election under section 353.0141, subdivision 3, paragraph (b), clause (2), at the time of
the purchase.
new text end

(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.

Sec. 4. new text begin ELECTION TO HAVE PURCHASE OF SERVICE CREDIT FOR PRE-JULY
1, 1989, MILITARY SERVICE QUALIFY A MEMBER FOR RETIREMENT UNDER
RULE OF 90.
new text end

new text begin (a) If, before the effective date of this act, a member of the Public Employees Retirement
Association general employees retirement plan purchased service credit for a period of
service in the uniformed services that began before July 1, 1989, the member may file an
election with the executive director of the Public Employees Retirement Association to be
considered under Minnesota Statutes, section 353.30, subdivision 1a, as having first become
a public employee or a member of a pension fund listed in Minnesota Statutes, section
356.30, subdivision 3, before July 1, 1989.
new text end

new text begin (b) The executive director must determine the cost to qualify for rule of 90 retirement
by determining the cost of the service credit purchase under Minnesota Statutes, section
356.551, subdivision 2, paragraph (b), taking into account clause (2), item (iv), minus the
amount paid by the member to purchase the service credit. The executive director must
notify the member of the cost to qualify for rule of 90.
new text end

new text begin (c) Following payment by the member of the cost to qualify for rule of 90 determined
under paragraph (b), the executive director must consider the member eligible for retirement
under Minnesota Statutes, section 353.30, subdivision 1a, if the member otherwise satisfies
the requirements of Minnesota Statutes, section 353.30, subdivision 1a.
new text end

Sec. 5. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 4 are effective the day following final enactment.
new text end