Minnesota Legislature
SF 930
as introduced - 90th Legislature (2017 - 2018) Posted on 02/15/2017 10:45am
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A bill for an act
relating to retirement; Teachers Retirement Association financial solvency
measures; increasing employer contribution rates; modifying the investment return
actuarial assumption; reducing deferral amount and implementing forfeiture
procedure for reemployed annuitants; extending the amortization target date;
reducing postretirement adjustment increase rates; eliminating postretirement
adjustment trigger procedures; authorizing additional funding for school districts
to pay for higher teacher retirement employer contribution costs; modifying interest
rates charged on certain payments; amending Minnesota Statutes 2016, sections
126C.10, subdivision 37; 354.42, subdivision 3; 354.44, subdivision 5; 354.50,
subdivision 2; 354.51, subdivision 5; 354.52, subdivision 4; 354.53, subdivision
5; 356.215, subdivisions 8, 11; 356.415, subdivision 1d; proposing coding for new
law in Minnesota Statutes, chapter 356; repealing Minnesota Statutes 2016, section
356.415, subdivision 1.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2016, section 126C.10, subdivision 37, is amended to read:
Subd. 37.
Pension adjustment revenue.
A school district's pension adjustment revenue
equals the new text begin sum of:
new text end
new text begin
(1) the greater of zero or the product of:
new text end
new text begin
(i) the difference between the teacher retirement fund employer contribution rate
established in section 354.42 or 354A.12 for the current fiscal year and the employer
contribution rate for fiscal year 2017; and
new text end
new text begin
(ii) the salaries paid to employees who are members of the Teachers Retirement
Association or the St. Paul Teachers Retirement Association for the previous fiscal year;
and
new text end
new text begin (2) the new text end greater of zero or the product of:
deleted text begin (1)deleted text end new text begin (i)new text end the difference between the district's adjustment under Minnesota Statutes 2012,
section 127A.50, subdivision 1, for fiscal year 2014 per adjusted pupil unit and the state
average adjustment under Minnesota Statutes 2012, section 127A.50, subdivision 1, for
fiscal year 2014 per adjusted pupil unit; and
deleted text begin (2)deleted text end new text begin (ii)new text end the district's adjusted pupil units for the fiscal year.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective for fiscal year 2018 and later.
new text end
Sec. 2.
Minnesota Statutes 2016, 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, 2013, until June 30, 2014 deleted text end |
deleted text begin
7 percent deleted text end |
deleted text begin
11 percent deleted text end |
|||
|
deleted text begin
after June 30, 2014
deleted text end
new text begin
from July 1, 2014, through June 30, 2017 new text end |
7.5 percent |
11.5 percent |
|||
|
new text begin
from July 1, 2017, through June 30, 2018 new text end |
new text begin
8.0 percent new text end |
new text begin
11.5 percent new text end |
|||
|
new text begin
from July 1, 2018, through June 30, 2019 new text end |
new text begin
8.5 percent new text end |
new text begin
11.5 percent new text end |
|||
|
new text begin
from July 1, 2019, through June 30, 2020 new text end |
new text begin
9.0 percent new text end |
new text begin
11.5 percent new text end |
|||
|
new text begin
after June 30, 2020 new text end |
new text begin
9.5 percent new text end |
new text begin
11.5 percent new text end |
|||
(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.
(e) After June 30, 2015, if a contribution rate revision is made under subdivisions 4a,
4b, and 4c, the employer contributions under paragraphs (a), (b), and (c) must be adjusted
accordingly.
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 2016, section 354.44, subdivision 5, is amended to read:
Subd. 5.
Resumption of teaching service after retirement.
(a) deleted text begin Anydeleted text end new text begin If a new text end person who
deleted text begin retireddeleted text end new text begin is receiving a retirement annuity new text end under the provisions of this chapter deleted text begin and has thereafter
resumeddeleted text end new text begin resumes new text end teaching deleted text begin indeleted text end new text begin with new text end any employer deleted text begin unitdeleted text end to which this chapter appliesnew text begin :
new text end
new text begin (1) the personnew text end is eligible to continue to receive new text begin annuity new text end payments deleted text begin in accordance with the
annuitydeleted text end except that all or a portion of the annuity payments must be deferred during the
calendar year immediately following the fiscal year in which the person's salary from deleted text begin thedeleted text end
teaching service deleted text begin is in an amount greater thandeleted text end new text begin exceeds new text end $46,000. The amount of the deleted text begin annuitydeleted text end
deferral is one-half of the salary amount in excess of $46,000 and must be deducted from
the annuity payable for the calendar year immediately following the fiscal year in which
the excess amount was earneddeleted text begin .deleted text end new text begin ; and
new text end
new text begin
(2) if the person resumed teaching on or after July 1, 2017, the employer shall make the
regular employer contributions specified in section 354.42, subdivision 3, paragraph (c),
based on the person's salary as defined in paragraph (e), clauses (1) and (2).
new text end
(b) If the person is retired for only a fractional part of the fiscal year during the initial
year of retirement, the deleted text begin maximum reemployment salary exempt from triggering adeleted text end deferral
deleted text begin asdeleted text end new text begin threshold dollar amount new text end specified in deleted text begin this subdivisiondeleted text end new text begin paragraph (a), clause (1), new text end must be
prorated for that fiscal year.
(c) After a person has reached the Social Security normal retirement age, no deferral
requirement is applicable regardless of the amount of salary.
(d) The amount of the retirement annuity deferral must be handled or disposed of as
provided in section 356.47.
(e) For the purpose of this subdivision, salary from teaching service deleted text begin includesdeleted text end new text begin means:
new text end
new text begin (1)new text end all salary or income earned as a teacher as defined in section 354.05, subdivision 2,
paragraph (a), clause (1)deleted text begin . Salary from teaching service also includes, but is not limited to:deleted text end new text begin ;
new text end
deleted text begin (1)deleted text end new text begin (2) new text end all income for services performed as a consultant, independent contractor, or
third-party supplierdeleted text begin ,deleted text end new text begin to an employer to which this chapter applies new text end or as an employee of a
consultant, independent contractor, or third-party supplierdeleted text begin ,deleted text end to an employer deleted text begin unit covered by
the provisions ofdeleted text end new text begin to which new text end this chapternew text begin appliesnew text end ; and
deleted text begin (2) thedeleted text end new text begin (3) if new text end greater deleted text begin of either the income receiveddeleted text end new text begin than clause (1) new text end or new text begin (2), new text end an amount based
on the rate paid deleted text begin with respectdeleted text end to new text begin a person in new text end an administrative position, new text begin or as a new text end consultant,
independent contractor, or third-party supplier, or as an employee of a consultant, independent
contractor, or third-party supplierdeleted text begin , indeleted text end new text begin to new text end an employer deleted text begin unitdeleted text end with approximately the same
number of pupils and at the same level as the position occupied by the person who resumes
teaching service.
(f) Notwithstanding other paragraphs of this subdivision, if the reemployed annuitant
has a former spouse receiving a portion of the annuity under section 518.58, subdivision 1,
the portion payable to the former spouse must not be deferred.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2017.
new text end
Sec. 4.
Minnesota Statutes 2016, section 354.50, subdivision 2, is amended to read:
Subd. 2.
Interest charge.
If a member desires to repay the refunds, payment shall include
interest at deleted text begin an annual rate of 8.5 percentdeleted text end new text begin the applicable annual rate or rates specified in section
356.59, subdivision 4, new text end compounded annuallynew text begin ,new text end from date of withdrawal to the date payment
is made and shall be credited to the fund.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2017.
new text end
Sec. 5.
Minnesota Statutes 2016, section 354.51, subdivision 5, is amended to read:
Subd. 5.
Payment of shortages.
(a) Except as provided in paragraph (b), in the event
that full required member contributions are not deducted from the salary of a teacher,
payment of shortages in member deductions on salary earned are the sole obligation of the
employing unit and are payable by the employing unit upon notification by the executive
director of the shortagenew text begin . The amount of the shortage shall be paid new text end with interest at deleted text begin an annual
rate of 8.5 percentdeleted text end new text begin the applicable annual rate or rates specified in section 356.59, subdivision
4, new text end compounded annuallynew text begin ,new text end from the end of the fiscal year in which the shortage occurred to
the end of the month in which payment is made and the interest must be credited to the
fund. The employing unit shall also pay the employer contributions as specified in section
354.42, subdivisions 3 and 5 for the shortages. If the shortage payment is not paid by the
employing unit within 60 days of notification, and if the executive director does not use the
recovery procedure in section 354.512, the executive director shall certify the amount of
the shortage to the applicable county auditor, who shall spread a levy in the amount of the
shortage payment over the taxable property of the taxing district of the employing unit if
the employing unit is supported by property taxes. Payment may not be made for shortages
in member deductions on salary paid or payable under paragraph (b) or for shortages in
member deductions for persons employed by the Minnesota State Colleges and Universities
system in a faculty position or in an eligible unclassified administrative position and whose
employment was less than 25 percent of a full academic year, exclusive of the summer
session, for the applicable institution that exceeds the most recent 36 months.
(b) For a person who is employed by the Minnesota State Colleges and Universities
system in a faculty position or in an eligible unclassified administrative position and whose
employment was less than 25 percent of a full academic year, exclusive of the summer
session, for the applicable institution, upon the person's election under section 354B.21 of
retirement coverage under this chapter, the shortage in member deductions on the salary
for employment by the Minnesota State Colleges and Universities system institution of less
than 25 percent of a full academic year, exclusive of the summer session, for the applicable
institution for the most recent 36 months and the associated employer contributions must
be paid by the Minnesota State Colleges and Universities system institution, plus deleted text begin annual
compounddeleted text end interest at the deleted text begin rate of 8.5 percentdeleted text end new text begin applicable annual rate or rates specified in
section 356.59, subdivision 4, compounded annually, new text end from the end of the fiscal year in
which the shortage occurred to the end of the month in which the Teachers Retirement
Association coverage election is made. An individual electing coverage under this paragraph
shall repay the amount of the shortage in member deductions, plus interest, through deduction
from salary or compensation payments within the first year of employment after the election
under section 354B.21, subject to the limitations in section 16D.16. The Minnesota State
Colleges and Universities system may use any means available to recover amounts which
were not recovered through deductions from salary or compensation payments. No payment
of the shortage in member deductions under this paragraph may be made for a period longer
than the most recent 36 months.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2017.
new text end
Sec. 6.
Minnesota Statutes 2016, section 354.52, subdivision 4, is amended to read:
Subd. 4.
Reporting and remittance requirements.
An employer shall remit all amounts
due to the association and furnish a statement indicating the amount due and transmitted
with any other information required by the executive director. If an amount due is not
received by the association within 14 calendar days of the payroll warrant, the deleted text begin amount
accrues interest at an annual rate of 8.5 percentdeleted text end new text begin employer shall pay interest on the amount
due at the applicable annual rate or rates specified in section 356.59, subdivision 4,
new text end compounded annuallynew text begin ,new text end from the due date until the amount is received by the association.
All amounts due and other employer obligations not remitted within 60 days of notification
by the association must be certified to the commissioner of management and budget who
shall deduct the amount from any state aid or appropriation amount applicable to the
employing unit.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2017.
new text end
Sec. 7.
Minnesota Statutes 2016, section 354.53, subdivision 5, is amended to read:
Subd. 5.
Interest requirements.
The employer shall pay interest on all equivalent
employee and employer contribution amounts payable under this sectiondeleted text begin . Interest must be
computed at a rate of 8.5 percentdeleted text end new text begin at the applicable annual rate or rates specified in section
356.59, subdivision 4,new text end compounded annuallynew text begin ,new text end 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 July 1, 2017.
new text end
Sec. 8.
Minnesota Statutes 2016, section 356.215, subdivision 8, is amended to read:
Subd. 8.
deleted text begin Interest and salarydeleted text end new text begin Actuarial new text end assumptions.
(a) The actuarial valuation must
use the applicable following deleted text begin interestdeleted text end new text begin investment return new text end assumption:
(1) new text begin for the teachers retirement plan:
new text end
new text begin (i) the new text end select new text begin investment return assumption for the period July 1, 2017, to June 30, 2022,
is 7.5 percent; new text end and
new text begin (ii) thenew text end ultimate deleted text begin interest ratedeleted text end new text begin investment return new text end assumptionnew text begin is eight percent; and
new text end
|
deleted text begin
plan deleted text end |
deleted text begin
ultimate interest rate assumption deleted text end |
|
|
deleted text begin
teachers retirement plan deleted text end |
deleted text begin
8.5% deleted text end |
deleted text begin
The select preretirement interest rate assumption for the period through June 30, 2017,
is eight percent.
deleted text end
(2) deleted text begin single rate interest ratedeleted text end new text begin for all plans other than the teachers retirement plan, the
investment return new text end assumptionnew text begin is:
new text end
| plan |
deleted text begin interest ratedeleted text end new text begin investment returnnew text end assumption |
|
| general state employees retirement plan |
8% |
|
| correctional state employees retirement plan |
8 |
|
| State Patrol retirement plan |
8 |
|
| legislators retirement plan, and for the constitutional officers calculation of total plan liabilities |
0 |
|
| judges retirement plan |
8 |
|
| general public employees retirement plan |
8 |
|
| public employees police and fire retirement plan |
8 |
|
| local government correctional service retirement plan |
8 |
|
| St. Paul teachers retirement plan |
8 |
|
| Bloomington Fire Department Relief Association |
6 |
|
| local monthly benefit volunteer firefighter relief associations |
5 |
|
| monthly benefit retirement plans in the statewide volunteer firefighter retirement plan |
6 |
(b)deleted text begin (1) If funding stability has been attained,deleted text end The new text begin actuarial new text end valuation new text begin for each of the
covered retirement plans listed in section 356.415, subdivision 2, new text end must deleted text begin use adeleted text end new text begin take into account
the new text end postretirement adjustment rate deleted text begin actuarial assumption equal to the postretirement adjustment
ratedeleted text end new text begin or rates applicable to the plan as new text end specified in section deleted text begin 354A.27, subdivision 7;deleted text end 354A.29,
subdivision deleted text begin 9;deleted text end new text begin 7, new text end or 356.415deleted text begin , subdivision 1deleted text end , whichever applies.
deleted text begin
(2) If funding stability has not been attained, the valuation must use a select postretirement
adjustment rate actuarial assumption equal to the postretirement adjustment rate specified
in section 354A.27, subdivision 6a; 354A.29, subdivision 8; or 356.415, subdivision 1a,
1b, 1c, 1d, 1e, or 1f, whichever applies, for a period ending when the approved actuary
estimates that the plan will attain the defined funding stability measure, and thereafter an
ultimate postretirement adjustment rate actuarial assumption equal to the postretirement
adjustment rate under section 354A.27, subdivision 7; 354A.29, subdivision 9; or 356.415,
subdivision 1, for the applicable period or periods beginning when funding stability is
projected to be attained.
deleted text end
(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% |
|
| judges retirement plan |
2.75 |
|
| Bloomington Fire Department Relief Association |
4 |
|
(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 B |
| St. Paul teachers retirement plan |
assumption A |
For plans other than the St. Paul teachers
retirement plan and the local government
correctional service 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 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 ultimate future salary increase assumption is:
| age |
A |
B |
|
| 16 |
5.9% |
8.75% |
|
| 17 |
5.9 |
8.75 |
|
| 18 |
5.9 |
8.75 |
|
| 19 |
5.9 |
8.75 |
|
| 20 |
5.9 |
8.75 |
|
| 21 |
5.9 |
8.5 |
|
| 22 |
5.9 |
8.25 |
|
| 23 |
5.85 |
8 |
|
| 24 |
5.8 |
7.75 |
|
| 25 |
5.75 |
7.5 |
|
| 26 |
5.7 |
7.25 |
|
| 27 |
5.65 |
7 |
|
| 28 |
5.6 |
6.75 |
|
| 29 |
5.55 |
6.5 |
|
| 30 |
5.5 |
6.5 |
|
| 31 |
5.45 |
6.25 |
|
| 32 |
5.4 |
6.25 |
|
| 33 |
5.35 |
6.25 |
|
| 34 |
5.3 |
6 |
|
| 35 |
5.25 |
6 |
|
| 36 |
5.2 |
5.75 |
|
| 37 |
5.15 |
5.75 |
|
| 38 |
5.1 |
5.75 |
|
| 39 |
5.05 |
5.5 |
|
| 40 |
5 |
5.5 |
|
| 41 |
4.95 |
5.5 |
|
| 42 |
4.9 |
5.25 |
|
| 43 |
4.85 |
5 |
|
| 44 |
4.8 |
5 |
|
| 45 |
4.75 |
4.75 |
|
| 46 |
4.7 |
4.75 |
|
| 47 |
4.65 |
4.75 |
|
| 48 |
4.6 |
4.75 |
|
| 49 |
4.55 |
4.75 |
|
| 50 |
4.5 |
4.75 |
|
| 51 |
4.45 |
4.75 |
|
| 52 |
4.4 |
4.75 |
|
| 53 |
4.35 |
4.75 |
|
| 54 |
4.3 |
4.75 |
|
| 55 |
4.25 |
4.5 |
|
| 56 |
4.2 |
4.5 |
|
| 57 |
4.15 |
4.25 |
|
| 58 |
4.1 |
4 |
|
| 59 |
4.05 |
4 |
|
| 60 |
4 |
4 |
|
| 61 |
4 |
4 |
|
| 62 |
4 |
4 |
|
| 63 |
4 |
4 |
|
| 64 |
4 |
4 |
|
| 65 |
4 |
3.75 |
|
| 66 |
4 |
3.75 |
|
| 67 |
4 |
3.75 |
|
| 68 |
4 |
3.75 |
|
| 69 |
4 |
3.75 |
|
| 70 |
4 |
3.75 |
(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 |
10.25% |
11.78% |
12% |
12.75% |
7.75% |
5.75% |
| 2 |
7.85 |
8.65 |
9 |
10.75 |
7.25 |
5.6 |
| 3 |
6.65 |
7.21 |
8 |
8.75 |
6.75 |
5.45 |
| 4 |
5.95 |
6.33 |
7.5 |
7.75 |
6.5 |
5.3 |
| 5 |
5.45 |
5.72 |
7.25 |
6.25 |
6.25 |
5.15 |
| 6 |
5.05 |
5.27 |
7 |
5.85 |
6 |
5 |
| 7 |
4.75 |
4.91 |
6.85 |
5.55 |
5.75 |
4.85 |
| 8 |
4.45 |
4.62 |
6.7 |
5.35 |
5.6 |
4.7 |
| 9 |
4.25 |
4.38 |
6.55 |
5.15 |
5.45 |
4.55 |
| 10 |
4.15 |
4.17 |
6.4 |
5.05 |
5.3 |
4.4 |
| 11 |
3.95 |
3.99 |
6.25 |
4.95 |
5.15 |
4.3 |
| 12 |
3.85 |
3.83 |
6 |
4.85 |
5 |
4.2 |
| 13 |
3.75 |
3.69 |
5.75 |
4.75 |
4.85 |
4.1 |
| 14 |
3.55 |
3.57 |
5.5 |
4.65 |
4.7 |
4 |
| 15 |
3.45 |
3.45 |
5.25 |
4.55 |
4.55 |
3.9 |
| 16 |
3.35 |
3.35 |
5 |
4.55 |
4.4 |
3.8 |
| 17 |
3.25 |
3.26 |
4.75 |
4.55 |
4.25 |
3.7 |
| 18 |
3.25 |
3.25 |
4.5 |
4.55 |
4.1 |
3.6 |
| 19 |
3.25 |
3.25 |
4.25 |
4.55 |
3.95 |
3.5 |
| 20 |
3.25 |
3.25 |
4 |
4.55 |
3.8 |
3.5 |
| 21 |
3.25 |
3.25 |
3.9 |
4.45 |
3.75 |
3.5 |
| 22 |
3.25 |
3.25 |
3.8 |
4.35 |
3.75 |
3.5 |
| 23 |
3.25 |
3.25 |
3.7 |
4.25 |
3.75 |
3.5 |
| 24 |
3.25 |
3.25 |
3.6 |
4.25 |
3.75 |
3.5 |
| 25 |
3.25 |
3.25 |
3.5 |
4.25 |
3.75 |
3.5 |
| 26 |
3.25 |
3.25 |
3.5 |
4.25 |
3.75 |
3.5 |
| 27 |
3.25 |
3.25 |
3.5 |
4.25 |
3.75 |
3.5 |
| 28 |
3.25 |
3.25 |
3.5 |
4.25 |
3.75 |
3.5 |
| 29 |
3.25 |
3.25 |
3.5 |
4.25 |
3.75 |
3.5 |
| 30 or more |
3.25 |
3.25 |
3.5 |
4.25 |
3.75 |
3.5 |
(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 |
3.5% |
| correctional state employees retirement plan |
3.5 |
| State Patrol retirement plan |
3.5 |
| judges retirement plan |
2.75 |
| general employees retirement plan of the Public Employees Retirement Association |
3.5 |
| public employees police and fire retirement plan |
3.5 |
| local government correctional service retirement plan |
3.5 |
| teachers retirement plan |
3.75 |
| St. Paul teachers retirement plan |
4 |
(e) The assumptions set forth in paragraphs (c) and (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.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 9.
Minnesota Statutes 2016, section 356.215, subdivision 11, is amended to read:
Subd. 11.
Amortization contributions.
(a) In addition to the exhibit indicating the level
normal cost, the actuarial valuation of the retirement plan must contain an exhibit for financial
reporting purposes indicating the additional annual contribution sufficient to amortize the
unfunded actuarial accrued liability and must contain an exhibit for contribution
determination purposes indicating the additional contribution sufficient to amortize the
unfunded actuarial accrued liability. For the retirement plans listed in subdivision 8, paragraph
(c), but excluding the legislators retirement plan, the additional contribution must be
calculated on a level percentage of covered payroll basis by the established date for full
funding in effect when the valuation is prepared, assuming annual payroll growth at the
applicable percentage rate set forth in subdivision 8, paragraph (d). For all other retirement
plans and for the legislators retirement plan, the additional annual contribution must be
calculated on a level annual dollar amount basis.
(b) For any retirement plan other than a retirement plan governed by paragraph (d), (e),
(f), (g), (h), (i), or (j), if there has not been a change in the actuarial assumptions used for
calculating the actuarial accrued liability of the fund, a change in the benefit plan governing
annuities and benefits payable from the fund, a change in the actuarial cost method used in
calculating the actuarial accrued liability of all or a portion of the fund, or a combination
of the three, which change or changes by itself or by themselves without inclusion of any
other items of increase or decrease produce a net increase in the unfunded actuarial accrued
liability of the fund, the established date for full funding is the first actuarial valuation date
occurring after June 1, 2020.
(c) For any retirement plan, if there has been a change in any or all of the actuarial
assumptions used for calculating the actuarial accrued liability of the fund, a change in the
benefit plan governing annuities and benefits payable from the fund, a change in the actuarial
cost method used in calculating the actuarial accrued liability of all or a portion of the fund,
or a combination of the three, and the change or changes, by itself or by themselves and
without inclusion of any other items of increase or decrease, produce a net increase in the
unfunded actuarial accrued liability in the fund, the established date for full funding must
be determined using the following procedure:
(i) the unfunded actuarial accrued liability of the fund must be determined in accordance
with the plan provisions governing annuities and retirement benefits and the actuarial
assumptions in effect before an applicable change;
(ii) the level annual dollar contribution or level percentage, whichever is applicable,
needed to amortize the unfunded actuarial accrued liability amount determined under item
(i) by the established date for full funding in effect before the change must be calculated
using the interest assumption specified in subdivision 8 in effect before the change;
(iii) the unfunded actuarial accrued liability of the fund must be determined in accordance
with any new plan provisions governing annuities and benefits payable from the fund and
any new actuarial assumptions and the remaining plan provisions governing annuities and
benefits payable from the fund and actuarial assumptions in effect before the change;
(iv) the level annual dollar contribution or level percentage, whichever is applicable,
needed to amortize the difference between the unfunded actuarial accrued liability amount
calculated under item (i) and the unfunded actuarial accrued liability amount calculated
under item (iii) over a period of 30 years from the end of the plan year in which the applicable
change is effective must be calculated using the applicable interest assumption specified in
subdivision 8 in effect after any applicable change;
(v) the level annual dollar or level percentage amortization contribution under item (iv)
must be added to the level annual dollar amortization contribution or level percentage
calculated under item (ii);
(vi) the period in which the unfunded actuarial accrued liability amount determined in
item (iii) is amortized by the total level annual dollar or level percentage amortization
contribution computed under item (v) must be calculated using the interest assumption
specified in subdivision 8 in effect after any applicable change, rounded to the nearest
integral number of years, but not to exceed 30 years from the end of the plan year in which
the determination of the established date for full funding using the procedure set forth in
this clause is made and not to be less than the period of years beginning in the plan year in
which the determination of the established date for full funding using the procedure set forth
in this clause is made and ending by the date for full funding in effect before the change;
and
(vii) the period determined under item (vi) must be added to the date as of which the
actuarial valuation was prepared and the date obtained is the new established date for full
funding.
(d) For the general employees retirement plan of the Public Employees Retirement
Association, the established date for full funding is June 30, 2031.
(e) For the Teachers Retirement Association, the established date for full funding is June
30, deleted text begin 2037deleted text end new text begin 2047new text end .
(f) For the correctional state employees retirement plan of the Minnesota State Retirement
System, the established date for full funding is June 30, 2038.
(g) For the judges retirement plan, the established date for full funding is June 30, 2038.
(h) For the public employees police and fire retirement plan, the established date for full
funding is June 30, 2038.
(i) For the St. Paul Teachers Retirement Fund Association, the established date for full
funding is June 30, 2042. In addition to other requirements of this chapter, the annual
actuarial valuation must contain an exhibit indicating the funded ratio and the deficiency
or sufficiency in annual contributions when comparing liabilities to the market value of the
assets of the fund as of the close of the most recent fiscal year.
(j) For the general state employees retirement plan of the Minnesota State Retirement
System, the established date for full funding is June 30, 2040.
(k) For the retirement plans for which the annual actuarial valuation indicates an excess
of valuation assets over the actuarial accrued liability, the valuation assets in excess of the
actuarial accrued liability must be recognized as a reduction in the current contribution
requirements by an amount equal to the amortization of the excess expressed as a level
percentage of pay over a 30-year period beginning anew with each annual actuarial valuation
of the plan.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 10.
Minnesota Statutes 2016, section 356.415, subdivision 1d, is amended to read:
Subd. 1d.
Teachers Retirement Association annual postretirement adjustments.
(a)
Retirement annuity, disability benefit, or survivor benefit recipients of the Teachers
Retirement Association are entitled to a postretirement adjustment annually deleted text begin ondeleted text end new text begin , effective
as of eachnew text end January 1, as follows:
(1) deleted text begin for each January 1 until funding stability is restored,deleted text end new text begin effective January 1, 2018,
through December 31, 2022, new text end a postretirement increase of deleted text begin twodeleted text end new text begin one new text end percent must be applied
each yeardeleted text begin , effective on January 1,deleted text end to the monthly annuity or benefit amount of each annuitant
or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months
as of the June 30 of the calendar year immediately before the adjustment;
(2) deleted text begin for each January 1 until funding stability is restored,deleted text end new text begin effective January 1, 2018,
through December 31, 2022, new text end for each annuitant or benefit recipient who has been receiving
an annuity or a benefit for at least one full month, but less than 12 full months as of the June
30 of the calendar year immediately before the adjustment, an annual postretirement increase
of 1/12 of deleted text begin twodeleted text end new text begin one new text end percent for each month the person has been receiving an annuity or
benefit must be appliednew text begin to the monthly annuity or benefit amount of the annuitant or benefit
recipientnew text end ;
(3) deleted text begin for each January 1 following the restoration of funding stability,deleted text end new text begin effective January
1, 2023, and thereafter, new text end a postretirement increase of deleted text begin 2.5deleted text end new text begin 1.5new text end percent must be applied each
yeardeleted text begin , effective January 1,deleted text end to the monthly annuity or benefit amount of each annuitant or
benefit recipient who has been receiving an annuity or a benefit for at least 12 full months
as of the June 30 of the calendar year immediately before the adjustment; and
(4) deleted text begin for each January 1 following the restoration of funding stability,deleted text end new text begin effective January
1, 2023, and thereafter, new text end for each annuitant or benefit recipient who has been receiving an
annuity or a benefit for at least one new text begin full new text end month, but less than 12 full months as of the June
30 of the calendar year immediately before the adjustment, an annual postretirement increase
of 1/12 of deleted text begin 2.5deleted text end new text begin 1.5 new text end percent for each month the person has been receiving an annuity or benefit
must be appliednew text begin to the monthly annuity or benefit amount of the annuitant or benefit recipientnew text end .
deleted text begin
(b) Funding stability is restored when the market value of assets of the Teachers
Retirement Association equals or exceeds 90 percent of the actuarial accrued liabilities of
the Teachers Retirement Association in the two most recent prior actuarial valuations
prepared under section 356.215 and the standards for actuarial work by the approved actuary
retained by the Teachers Retirement Association under section 356.214.
deleted text end
deleted text begin
(c) After having met the definition of funding stability under paragraph (b), the increase
provided in paragraph (a), clauses (1) and (2), rather than an increase under subdivision 1,
or the increase under paragraph (a), clauses (3) and (4), is again to be applied in a subsequent
year or years if the market value of assets of the plan equals or is less than:
deleted text end
deleted text begin
(1) 85 percent of the actuarial accrued liabilities of the plan for two consecutive actuarial
valuations; or
deleted text end
deleted text begin
(2) 80 percent of the actuarial accrued liabilities of the plan for the most recent actuarial
valuation.
deleted text end
deleted text begin (d)deleted text end new text begin (b) new text end An increase in annuity or benefit payments under this section must be made
automatically unless written notice is filed by the annuitant or benefit recipient with the
executive director of the Teachers Retirement Association requesting that the increase not
be made.
deleted text begin (e)deleted text end new text begin (c) new text end The retirement annuity payable to a person who retires before becoming eligible
for Social Security benefits and who has elected the optional payment as provided in section
354.35 must be treated as the sum of a period-certain retirement annuity and a life retirement
annuity for the purposes of any postretirement adjustment. The period-certain retirement
annuity plus the life retirement annuity must be the annuity amount payable until age 62,
65, or normal retirement age, as selected by the member at retirement, for an annuity amount
payable under section 354.35. A postretirement adjustment granted on the period-certain
retirement annuity must terminate when the period-certain retirement annuity terminates.
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective the day following final enactment.
new text end
Sec. 11.
new text begin
[356.59] INTEREST RATES.
new text end
new text begin Subdivision 1. new text end
new text begin Applicable interest rates. new text end
new text begin
Whenever the payment of interest is required
with respect to any payment, including refunds, remittances, shortages, contributions, or
repayments, the rate of interest is the rate or rates specified in subdivisions 2 to 5 for each
public retirement plan.
new text end
new text begin Subd. 2. new text end
new text begin Minnesota State Retirement System. new text end
new text begin
The interest rates for all retirement plans
administered by the Minnesota State Retirement System are as follows:
new text end
|
new text begin
Annual new text end |
new text begin
Monthly new text end |
||||
|
new text begin
before July 1, 2015 new text end |
new text begin
8.5 percent new text end |
new text begin
0.71 percent new text end |
|||
|
new text begin
from July 1, 2015, to June 30, 2017 new text end |
new text begin
8.0 percent new text end |
new text begin
0.667 percent new text end |
|||
|
new text begin
after June 30, 2017 new text end |
new text begin
7.5 percent new text end |
new text begin
0.625 percent new text end |
|||
new text begin Subd. 3. new text end
new text begin Public Employees Retirement Association. new text end
new text begin
The interest rates for all retirement
plans administered by the Public Employees Retirement Association are as follows:
new text end
|
new text begin
Annual new text end |
new text begin
Monthly new text end |
||||
|
new text begin
before July 1, 2015 new text end |
new text begin
8.5 percent new text end |
new text begin
0.71 percent new text end |
|||
|
new text begin
from July 1, 2015, to June 30, 2017 new text end |
new text begin
8.0 percent new text end |
new text begin
0.667 percent new text end |
|||
|
new text begin
after June 30, 2017 new text end |
new text begin
7.5 percent new text end |
new text begin
0.625 percent new text end |
|||
new text begin Subd. 4. new text end
new text begin Teachers Retirement Association. new text end
new text begin
The interest rates for the retirement plan
administered by the Teachers Retirement Association are as follows:
new text end
|
new text begin
Annual new text end |
new text begin
Monthly new text end |
||||
|
new text begin
8.5 percent new text end |
new text begin
0.71 percent new text end |
||||
new text begin Subd. 5. new text end
new text begin St. Paul Teachers Retirement Fund Association. new text end
new text begin
The interest rates for the
retirement plan administered by the St. Paul Teachers Retirement Fund Association are as
follows:
new text end
|
new text begin
Annual new text end |
new text begin
Monthly new text end |
||||
|
new text begin
before July 1, 2015 new text end |
new text begin
8.5 percent new text end |
new text begin
0.71 percent new text end |
|||
|
new text begin
from July 1, 2015, to June 30, 2017 new text end |
new text begin
8.0 percent new text end |
new text begin
0.667 percent new text end |
|||
|
new text begin
after June 30, 2017 new text end |
new text begin
7.5 percent new text end |
new text begin
0.625 percent new text end |
|||
new text begin EFFECTIVE DATE. new text end
new text begin
This section is effective July 1, 2017.
new text end
Sec. 12. new text begin REPEALER.
new text end
new text begin
Minnesota Statutes 2016, section 356.415, subdivision 1,
new text end
new text begin
is repealed.
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
APPENDIX
Repealed Minnesota Statutes: 17-2402
356.415 POSTRETIREMENT ADJUSTMENTS; STATEWIDE RETIREMENT PLANS.
Subdivision 1.
Annual postretirement adjustments; generally.
(a) Except as otherwise provided in subdivision 1a, 1b, 1c, 1d, 1e, or 1f, retirement annuity, disability benefit, or survivor benefit recipients of a covered retirement plan are entitled to a postretirement adjustment annually on January 1, as follows:
(1) a postretirement increase of 2.5 percent must be applied each year, effective January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and
(2) for each annuitant or benefit recipient who has been receiving an annuity or a benefit amount for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of 2.5 percent for each month that the person has been receiving an annuity or benefit must be applied.
(b) An increase in annuity or benefit payments under this section must be made automatically unless written notice is filed by the annuitant or benefit recipient with the executive director of the covered retirement plan requesting that the increase not be made.