Minnesota Session Laws - 1994, Regular Session

                            CHAPTER 524-H.F.No. 1921 
                  An act relating to retirement; increasing employee 
                  contribution rates and benefit computation formulas 
                  for the teachers retirement fund; amending Minnesota 
                  Statutes 1992, sections 354.42, subdivision 2; and 
                  354.44, subdivision 6.  
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1992, section 354.42, 
        subdivision 2, is amended to read: 
           Subd. 2.  The employee contribution to the fund shall be an 
        amount equal to 4-1/2 6.5 percent of the salary of every 
        coordinated member and 8-1/2 10.5 percent of the salary of every 
        basic member.  This contribution shall be made by deduction from 
        salary.  Where any portion of a member's salary is paid from 
        other than public funds, such member's employee contribution 
        shall be based on the entire salary received.  
           Sec. 2.  Minnesota Statutes 1992, section 354.44, 
        subdivision 6, is amended to read: 
           Subd. 6.  [COMPUTATION OF FORMULA PROGRAM RETIREMENT 
        ANNUITY.] (1) The formula retirement annuity hereunder shall be 
        computed in accordance with the applicable provisions of the 
        formulas stated in clause (2) or (4) on the basis of each 
        member's average salary for the period of the member's formula 
        service credit.  
           For all years of formula service credit, "average salary," 
        for the purpose of determining the member's retirement annuity, 
        means the average salary upon which contributions were made and 
        upon which payments were made to increase the salary limitation 
        provided in Minnesota Statutes 1971, section 354.511, for the 
        highest five successive years of formula service credit 
        provided, however, that such "average salary" shall not include 
        any more than the equivalent of 60 monthly salary payments.  
        Average salary must be based upon all years of formula service 
        credit if this service credit is less than five years. 
           (2) This clause, in conjunction with clause (3), applies to 
        a person who first became a member of the fund or a member of a 
        pension fund listed in section 356.30, subdivision 3, before 
        July 1, 1989, unless clause (4), in conjunction with clause (5), 
        produces a higher annuity amount, in which case clause (4) 
        applies.  The average salary as defined in clause (1), 
        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: 
                               Coordinated Member   Basic Member
        Each year of service     1.0 1.13 percent   2.0 2.13 percent
         during first ten        per year           per year
        Each year of service     1.5 1.63 percent   2.5 2.63 percent
         thereafter              per year           per year
           (3)(i) This clause applies only to a person who first 
        became a member of the fund 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 clause (2), in 
        conjunction with this clause than when calculated under clause 
        (4), in conjunction with clause (5). 
           (ii) 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 clause (2) 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. 
           (iii) 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 clause (2), without any reduction by reason of early 
        retirement. 
           (4) This clause applies to a member who has become at least 
        55 years old and first became a member of the fund 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 
        clause and in conjunction with clause (5), is higher than it is 
        when calculated under clause (2), in conjunction with clause (3).
        The average salary, as defined in clause (1) multiplied by 2.5 
        2.63 percent for each year of service for a basic member and 
        by 1.5 1.63 percent for each year of service for a coordinated 
        member shall determine the amount of the retirement annuity to 
        which the member is entitled. 
           (5) This clause applies to a person who has become at least 
        55 years old and first becomes a member of the fund 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 
        clause (4) in conjunction with this clause than when calculated 
        under clause (2), in conjunction with clause (3).  An employee 
        who retires under the formula annuity before the normal 
        retirement age shall be paid the normal annuity provided in 
        clause (4) reduced so that 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 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. 
           Sec. 3.  [EFFECTIVE DATE.] 
           Section 1 is effective the first payroll period beginning 
        after July 1, 1994.  Section 2 is effective on May 15, 1994. 
           Presented to the governor April 25, 1994 
           Signed by the governor April 28, 1994, 10:10 a.m.