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Minnesota Legislature

Office of the Revisor of Statutes

SF 3599

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to retirement; Duluth Teachers Retirement Fund Association; extending
the rule of 90 benefit tier to post-1989 hires; amending Minnesota Statutes 2006,
sections 354A.011, subdivision 15a; 354A.12, subdivisions 1, 2a; 354A.31,
subdivisions 1, 4a, 6, 7; 354A.35, subdivision 2; Minnesota Statutes 2007
Supplement, section 356.351, subdivision 2.

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

Section 1.

Minnesota Statutes 2006, section 354A.011, subdivision 15a, is amended to
read:


Subd. 15a.

Normal retirement age.

new text begin(a) new text end"Normal retirement age" means age
65 for a person who first became a member of the coordinated program of the St. Paul
Teachers Retirement Fund Association new text beginbefore July 1, 1989, new text endor new text begina person who first became a
member of
new text endthe new law coordinated program of the Duluth Teachers Retirement Fund
Associationnew text begin, irrespective of the person's date of first membership, new text end or new text begina person who first
became a member of
new text enda member of deleted text beginadeleted text end new text beginone of the other new text endpension deleted text beginfunddeleted text end new text beginplans new text endlisted in section
356.30, subdivision 3, before July 1, 1989.

new text begin (b)new text end For a person who first became a member of the coordinated program of the St.
Paul Teachers Retirement Fund Association deleted text beginor the new law coordinated program of the
Duluth Teachers Retirement Fund Association
deleted text end after June 30, 1989, normal retirement age
means the higher of age 65 or retirement age, as defined in United States Code, title 42,
section 416(l), as amended, but not to exceed age 66.

new text begin (c)new text end For a person who is a member of the basic program of the St. Paul Teachers
Retirement Fund Association or the old law coordinated program of the Duluth Teachers
Retirement Fund Association, normal retirement age means the age at which a teacher
becomes eligible for a normal retirement annuity computed upon meeting the age and
service requirements specified in the applicable provisions of the articles of incorporation
or bylaws of the respective teachers retirement fund association.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 2.

Minnesota Statutes 2006, section 354A.12, subdivision 1, is amended to read:


Subdivision 1.

Employee contributions.

new text begin(a) new text endThe contribution required to be paid
by each member of a teachers retirement fund association shall not be less than the
percentage of total salary specified below for the applicable association and program:

Association and Program
Percentage of Total Salary
Duluth Teachers Retirement Association
old law and new law coordinated programs
new text begin before July 1, 2009
new text end
5.5 percent
new text begin after June 30, 2009
new text end
new text begin ... percent
new text end
St. Paul Teachers Retirement Association
basic program
8 percent
coordinated program
5.5 percent

new text begin (b) new text endContributions shall be made by deduction from salary and must be remitted
directly to the respective teachers retirement fund association at least once each month.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 3.

Minnesota Statutes 2006, section 354A.12, subdivision 2a, is amended to read:


Subd. 2a.

Employer regular and additional contribution rates.

(a) The
employing units shall make the following employer contributions to teachers retirement
fund associations:

(1) for any coordinated member of a teachers retirement fund association in a city
of the first class, the employing unit shall pay the employer Social Security taxes in
accordance with section 355.46, subdivision 3, clause (b);

(2) for any coordinated member of one of the following teachers retirement fund
associations in a city of the first class, the employing unit shall make a regular employer
contribution to the respective retirement fund association in an amount equal to the
designated percentage of the salary of the coordinated member as provided below:

Duluth Teachers Retirement Fund Association
4.50 percent
St. Paul Teachers Retirement Fund Association
4.50 percent

(3) for any 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 equal to 8.00 percent of the salary of the basic member;

(4) for a 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;

(5) for a coordinated member of a teachers retirement fund association in a city
of the first class, the employing unit shall make an additional employer contribution to
the respective fund in an amount equal to the applicable percentage of the coordinated
member's salary, as provided below:

Duluth Teachers Retirement Fund Association
new text begin before July 1, 2009
new text end
1.29 percent
new text begin after June 30, 2009
new text end
new text begin ... percent
new text end
St. Paul Teachers Retirement Fund Association
July 1, 1993 - June 30, 1994
0.50 percent
July 1, 1994 - June 30, 1995
1.50 percent
July 1, 1997, and thereafter
3.84 percent

(b) The regular and additional employer contributions must be remitted directly to
the respective 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.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 4.

Minnesota Statutes 2006, section 354A.31, subdivision 1, is amended to read:


Subdivision 1.

Age and service requirements.

new text begin(a) new text endAny coordinated member or
former coordinated member who has ceased to render teaching service for the school
district in which the teachers retirement fund association exists and who has either attained
the age of at least 55 years with not less than three years of allowable service credit or
received credit for not less than 30 years of allowable service regardless of age, shall be
entitled upon written application to a retirement annuity.

new text begin (b) Irrespective of the person's date of first membership before July 1, 1989, or
after June 30, 1989, a member or former member of the Duluth Teachers Retirement
Fund Association who ceases or has ceased to render teaching service with an employing
unit covered by the association who has credit for at least 30 years of allowable service,
irrespective of age, is entitled, upon filing a written application, to a retirement annuity
under this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 5.

Minnesota Statutes 2006, section 354A.31, subdivision 4a, is amended to read:


Subd. 4a.

Computation of the normal coordinated retirement annuity; Duluth
fund.

(a) This subdivision applies to the new law coordinated program of the Duluth
Teachers Retirement Fund Association.

(b) The normal coordinated retirement annuity is an amount equal to a retiring
coordinated member's average salary under section 354A.011, subdivision 7a, multiplied
by the retirement annuity formula percentage.

(c) This paragraph, in conjunction with subdivision 6, applies to a deleted text beginperson who first
became a
deleted text end member or deleted text begina member in a pension fund listed in section 356.30, subdivision 3,
before July 1, 1989
deleted text endnew text begin, irrespective of the person's date of first membershipnew text end, unless paragraph
(d), in conjunction with subdivision 7, produces a higher annuity amount, in which case
paragraph (d) applies. The retirement annuity formula percentage for purposes of this
paragraph is the percent specified in section 356.315, subdivision 1, per year for each year
of coordinated service for the first ten years and the percent specified in section 356.315,
subdivision 2
, for each subsequent year of coordinated service.

(d) This paragraph applies to a deleted text beginperson who is at least 55 years old and who first
becomes a
deleted text end member deleted text beginafter June 30, 1989, and to any other member who is at least 55 years
old and
deleted text end whose annuity amount, when calculated under this paragraph and in conjunction
with subdivision 7, is higher than it is when calculated under paragraph (c) in conjunction
with subdivision 6. The retirement annuity formula percentage for purposes of this
paragraph is the percent specified in section 356.315, subdivision 2, for each year of
coordinated service.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 6.

Minnesota Statutes 2006, section 354A.31, subdivision 6, is amended to read:


Subd. 6.

Reduced retirement annuity.

new text begin(a) new text endThis subdivision applies only to a
person who first became a coordinated member new text beginof the St. Paul Teachers Retirement Fund
Association
new text endor a member of a pension fund listed in section 356.30, subdivision 3, before
July 1, 1989, and whose annuity is higher when calculated using the retirement annuity
formula percentage in subdivision 4, paragraph (c), deleted text beginor subdivision 4a, paragraph (c),deleted text end in
conjunction with this subdivision than when calculated under subdivision 4, paragraph (d),
deleted text begin or subdivision 4a, paragraph (d),deleted text end in conjunction with subdivision 7. new text beginThis subdivision also
applies to a member of the Duluth Teachers Retirement Fund Association, irrespective of
the person's date of first membership, whose annuity is higher when calculated using the
retirement annuity formula percentage in subdivision 4a, paragraph (c), in conjunction
with this subdivision than when calculated under subdivision 4a, paragraph (d), in
conjunction with subdivision 7.
new text end

deleted text begin (a)deleted text endnew text begin (b)new text end Upon retirement at an age before normal retirement age with three years of
service credit or prior to age 62 with at least 30 years of service credit, a coordinated
member shall be entitled to a retirement annuity in an amount equal to the normal
retirement annuity calculated using the retirement annuity formula percentage in
subdivision 4, paragraph (c), or subdivision 4a, paragraph (c), reduced by one-quarter of
one percent for each month that the coordinated member is under normal retirement age if
the coordinated member has less than 30 years of service credit or is under the age of 62 if
the coordinated member has at least 30 years of service credit.

deleted text begin (b)deleted text endnew text begin (c)new text end 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 retirement annuity calculated using the retirement annuity formula percentage
in subdivision 4, paragraph (c), or subdivision 4a, paragraph (c), without any reduction by
reason of early retirement.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 7.

Minnesota Statutes 2006, section 354A.31, subdivision 7, is amended to read:


Subd. 7.

Actuarial reduction for early retirement.

This subdivision applies to a
person new text beginwho is a member of the St. Paul Teachers Retirement Fund Association, new text endwho has
become at least 55 years oldnew text begin,new text end and first becomes a coordinated member after June 30, 1989,
and to any other new text beginSt. Paul Teachers Retirement Fund Association new text endcoordinated 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), deleted text beginand subdivision 4a,
paragraph (d),
deleted text end in conjunction with this subdivision than when calculated under subdivision
4, paragraph (c), deleted text beginor subdivision 4a, paragraph (c),deleted text end in conjunction with subdivision 6. new text beginThis
subdivision also applies to a person who is a member of the Duluth Teachers Retirement
Fund Association whose annuity is higher when calculated using the retirement annuity
formula percentage in subdivision 4a, paragraph (d), in conjunction with this subdivision
than when calculated under subdivision 4a, paragraph (c), in conjunction with subdivision
6.
new text endA coordinated member who retires before the full benefit age shall be paid the retirement
annuity calculated using the retirement annuity formula percentage in subdivision 4,
paragraph (d), or subdivision 4a, paragraph (d), reduced so that the reduced annuity is the
actuarial equivalent of the annuity that would be payable to the member if the member
deferred receipt of the annuity and the annuity amount were augmented at an annual rate
of three percent compounded annually from the day the annuity begins to accrue until the
normal retirement age if the employee became an employee before July 1, 2006, and at 2.5
percent compounded annually from the day the annuity begins to accrue until the normal
retirement age if the person initially becomes a teacher after June 30, 2006.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 8.

Minnesota Statutes 2006, section 354A.35, subdivision 2, is amended to read:


Subd. 2.

Death while eligible to retire; surviving spouse optional annuity.

(a)
The surviving spouse of a coordinated member who has credit for at least three years of
service and dies prior to retirement may elect to receive, instead of a refund with interest
under subdivision 1, an annuity equal to the 100 percent joint and survivor annuity the
member could have qualified for had the member terminated service on the date of death.
The surviving spouse eligible for a surviving spouse benefit under this paragraph may
apply for the annuity at any time after the date on which the deceased employee would
have attained the required age for retirement based on the employee's allowable service. A
surviving spouse eligible for surviving spouse benefits under paragraph (b) or (c) may
apply for an annuity at any time after the member's death. The member's surviving
spouse shall be paid a joint and survivor annuity under section 354A.32 and computed
under section 354A.31.

(b) If the member was under age 55 and has credit for at least 30 years of allowable
service on the date of death, the surviving spouse may elect to receive a 100 percent joint
and survivor annuity based on the age of the member and surviving spouse on the date
of death. The annuity is payable using the full early retirement reduction under section
354A.31, subdivision 6, paragraph deleted text begin(a)deleted text endnew text begin (b)new text end, to age 55 and one-half of the early retirement
reduction from age 55 to the age payment begins.

(c) If the member was under age 55 and has credit for at least three years of
allowable service on the date of death but did not yet qualify for retirement, the surviving
spouse may elect to receive the 100 percent joint and survivor annuity based on the age
of the member and the survivor at the time of death. The annuity is payable using the
full early retirement reduction under section 354A.31, subdivision 6 or 7, to age 55 and
one-half of the early retirement reduction from age 55 to the date payment begins.

Sections 354A.37, subdivision 2, and 354A.39 apply to a deferred annuity or
surviving spouse benefit payable under this section. The benefits are payable for the life
of the surviving spouse, or upon expiration of the term certain benefit payment under
subdivision 2b.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end

Sec. 9.

Minnesota Statutes 2007 Supplement, section 356.351, subdivision 2, is
amended to read:


Subd. 2.

Incentive.

(a) For an employee eligible under subdivision 1, if approved
under paragraph (b), the employer may provide an amount up to $17,000, to an employee
who terminates service, to be used:

(1) unless the appointing authority has designated the use under clause (2) or the use
under clause (3) for the initial retirement incentive applicable to that employing entity
under Laws 2007, chapter 134, after May 26, 2007, for deposit in the employee's account
in the health care savings plan established by section 352.98;

(2) notwithstanding section 352.01, subdivision 11, or 354.05, subdivision 13,
whichever applies, if the appointing authority has designated the use under this clause
for the initial retirement incentive applicable to that employing entity under Laws 2007,
chapter 134, after May 26, 2007, for purchase of service credit for unperformed service
sufficient to enable the employee to retire under section 352.116, subdivision 1, paragraph
(b); 353.30; 354.44, subdivision 6, paragraph (b), or 354A.31, subdivision 6, paragraph
deleted text begin (b)deleted text endnew text begin (c)new text end, whichever applies; or

(3) if the appointing authority has designated the use under this clause for the initial
retirement incentive applicable to the employing entity under Laws 2007, chapter 134,
after May 26, 2007, for purchase of a lifetime annuity or an annuity for a specific number
of years from the applicable retirement plan to provide additional benefits, as provided in
paragraph (d).

(b) Approval to provide the incentive must be obtained from the commissioner
of finance if the eligible employee is a state employee and must be obtained from the
applicable governing board with respect to any other employing entity. An employee is
eligible for the payment under paragraph (a), clause (2), if the employee uses money from
a deferred compensation account that, combined with the payment under paragraph (a),
clause (2), would be sufficient to purchase enough service credit to qualify for retirement
under section 352.116, subdivision 1, paragraph (b); 353.30, subdivision 1a; 354.44,
subdivision 6
, paragraph (b), or 354A.31, subdivision 6, paragraph deleted text begin(b)deleted text endnew text begin (c)new text end, whichever
applies.

(c) The cost to purchase service credit under paragraph (a), clause (2), must be
made in accordance with section 356.551.

(d) The annuity purchase under paragraph (a), clause (3), must be made using
annuity factors derived from the applicable factors used by the applicable retirement plan
to transfer amounts to the Minnesota postretirement investment fund and to calculate
optional annuity forms. The purchased annuity must be the actuarial equivalent of the
incentive amount.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2008.
new text end