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HF 2507

as introduced - 92nd Legislature (2021 - 2022) Posted on 04/09/2021 11:31am

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

Bill Text Versions

Engrossments
Introduction Posted on 04/09/2021

Current Version - as introduced

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A bill for an act
relating to retirement; Minnesota State Retirement System; extending eligibility
for a Rule of 90 unreduced early retirement benefit by one month to members
hired after June 30, 1989, and before August 1, 1989; amending Minnesota Statutes
2020, sections 352.01, subdivision 25; 352.115, subdivision 3; 352.116,
subdivisions 1, 1a.

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

Section 1.

Minnesota Statutes 2020, section 352.01, subdivision 25, is amended to read:


Subd. 25.

Normal retirement age.

"Normal retirement age" means age 65 for a person
who first became a covered employee or a member of a pension fund listed in section 356.30,
subdivision 3
, before deleted text beginJulydeleted text end new text beginAugust new text end1, 1989. For a person who first becomes a covered
employee after deleted text beginJune 30deleted text endnew text begin July 31new text end, 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.

Sec. 2.

Minnesota Statutes 2020, section 352.115, subdivision 3, is amended to read:


Subd. 3.

Retirement annuity formula.

(a) This paragraph, in conjunction with section
352.116, subdivision 1, applies to a person who became a covered employee or a member
of a pension fund listed in section 356.30, subdivision 3, before deleted text beginJulydeleted text end new text beginAugust new text end1, 1989, unless
paragraph (b), in conjunction with section 352.116, subdivision 1a, produces a higher annuity
amount, in which case paragraph (b) applies. The employee's average salary, as defined in
section 352.01, subdivision 14a, multiplied by 1.2 percent per year of allowable service for
the first ten years and 1.7 percent for each later year of allowable service and pro rata for
completed months less than a full year determines the amount of the retirement annuity to
which the employee is entitled.

(b) This paragraph applies to a person who has become at least 55 years old and first
became a covered employee after deleted text beginJune 30deleted text endnew text begin July 31new text end, 1989, and to any other covered employee
who has become at least 55 years old and whose annuity amount, when calculated under
this paragraph and in conjunction with section 352.116, subdivision 1a, is higher than it is
when calculated under paragraph (a), in conjunction with section 352.116, subdivision 1.
The employee's average salary, as defined in section 352.01, subdivision 14a, multiplied
by 1.7 percent for each year of allowable service and pro rata for months less than a full
year determines the amount of the retirement annuity to which the employee is entitled.

Sec. 3.

Minnesota Statutes 2020, section 352.116, subdivision 1, is amended to read:


Subdivision 1.

Reduced annuity before normal retirement age.

(a) This subdivision
applies only to a person who first became a covered employee or a member of a pension
fund listed in section 356.30, subdivision 3, before deleted text beginJulydeleted text end new text beginAugust new text end1, 1989, and whose annuity
is higher when calculated under section 352.115, subdivision 3, paragraph (a), in conjunction
with this subdivision than when calculated under section 352.115, subdivision 3, paragraph
(b), in conjunction with subdivision 1a.

(b) Any employee who is eligible for a retirement annuity under section 352.115,
subdivision 1
, and who retires before normal retirement age with credit for at least three
but less than 30 years of allowable service shall be paid the normal retirement annuity
provided in section 352.115, subdivisions 2 and 3, paragraph (a), reduced by one-quarter
of one percent for each month that the employee is under normal retirement age at the time
of retirement. An employee who is eligible for a retirement annuity under section 352.115,
subdivision 1
, and who retires prior to age 62 with credit for at least 30 years of allowable
service shall be paid the normal retirement annuity provided in section 352.115, subdivisions
2 and 3, paragraph (a), reduced by one-quarter of one percent for each month that the
employee is under age 62 at the time of retirement.

(c) Any person 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 section 352.115, subdivisions 2 and 3, paragraph (a), without any reduction by
reason of early retirement.

Sec. 4.

Minnesota Statutes 2020, section 352.116, subdivision 1a, is amended to read:


Subd. 1a.

Actuarial reduction for early retirement.

(a) This subdivision applies to a
person who has become at least 55 years old and first became a covered employee after
deleted text begin June 30deleted text endnew text begin July 31new text end, 1989, and to any other covered employee who has become at least 55 years
old and whose annuity is higher when calculated under section 352.115, subdivision 3,
paragraph (b), in conjunction with this subdivision than when calculated under section
352.115, subdivision 3, paragraph (a), in conjunction with subdivision 1. A covered employee
who retires before the normal retirement age shall be paid the normal retirement annuity
provided in section 352.115, subdivisions 2 and 3, paragraph (b), reduced as described in
paragraph (b) or (c), as applicable.

(b) For covered employees who retire on or after July 1, 2019, the reduced annuity is
the actuarial equivalent of the annuity that would be payable to the employee if the employee
deferred receipt of the annuity until normal retirement age and the annuity amount were
augmented at the applicable annual rate, compounded annually, from the day the annuity
begins to accrue until the 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 for the period until the employee reaches normal retirement age. The applicable
annual rates are the following:

(1) until June 30, 2019, three percent if the employee became an employee before July
1, 2006, and 2.5 percent if the employee became an employee after June 30, 2006;

(2) beginning July 1, 2019, through June 30, 2024, a rate that changes each month, on
the first day of the month, starting with the rate in clause (1), as applicable to the employee,
and reducing the rate to zero in equal monthly increments over the five-year period; and

(3) after June 30, 2024, zero percent.

After June 30, 2024, actuarial equivalent, for the purpose of determining the reduced
annuity commencing before normal retirement age under this clause, shall not take into
account any augmentation.

(c) For covered employees who retire before July 1, 2019, the reduced annuity is the
actuarial equivalent of the annuity that would be payable to the employee if the employee
deferred receipt of the annuity until normal retirement age and the annuity amount were
augmented at an annual rate of three percent, compounded annually, from the day the annuity
begins to accrue until normal retirement age if the employee became an employee before
July 1, 2006, and at an annual rate of 2.5 percent, compounded annually, from the day the
annuity begins to accrue until normal retirement age if the employee became an employee
after June 30, 2006.

Sec. 5. new text beginEFFECTIVE DATE.
new text end

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