1.1                          A bill for an act
  1.2             relating to retirement; authorizing articles of 
  1.3             incorporation and bylaws amendments to provide 
  1.4             postretirement adjustments for the St. Paul teachers 
  1.5             retirement fund association. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION 
  1.8   POSTRETIREMENT ADJUSTMENT.] 
  1.9      Subdivision 1.  [AUTHORITY FOR AMENDMENTS.] Pursuant to 
  1.10  Minnesota Statutes, section 354A.12, authority is granted for 
  1.11  the St. Paul teachers retirement fund association to amend its 
  1.12  articles of incorporation or bylaws as required to provide 
  1.13  annual lump sum postretirement adjustments after June 1, 1995, 
  1.14  in accordance with this section. 
  1.15     Subd. 2.  [ANNUITY RESERVE FUND.] The St. Paul teachers 
  1.16  retirement fund association shall establish an annuity reserve 
  1.17  fund for providing an investment vehicle for the reserves for 
  1.18  various retirement annuities and benefits payable by the fund. 
  1.19     Subd. 3.  [ASSETS.] The assets of the annuity reserve fund 
  1.20  must consist of the money representing the funded ratio of the 
  1.21  actuarially determined required reserves for various retirement 
  1.22  annuities and benefits payable to retired members by the St. 
  1.23  Paul teachers retirement fund association. 
  1.24     Subd. 4.  [MANAGEMENT.] The St. Paul teachers retirement 
  1.25  fund association annuity reserve fund must be managed by the 
  2.1   board of trustees of the St. Paul teachers retirement fund 
  2.2   association. 
  2.3      Subd. 5.  [INVESTMENT.] The assets of the annuity reserve 
  2.4   fund must be invested, reinvested, and retained in the 
  2.5   discretion of the board of trustees of the St. Paul teachers 
  2.6   retirement fund association in authorized investments under 
  2.7   section 11A.24. 
  2.8      Subd. 6.  [ALLOCATION OF ASSETS.] No later than the last 
  2.9   business day of the month in which the benefit payment to an 
  2.10  individual begins, the board of trustees of the St. Paul 
  2.11  teachers retirement fund association shall determine the 
  2.12  reserves to be allocated to the annuity reserve fund on behalf 
  2.13  of that individual.  The annuity reserve fund shall be the 
  2.14  actuarially determined funded ratio of the present value of the 
  2.15  benefits payable to the annuitants or benefit recipients and 
  2.16  shall be determined using the postretirement earnings 
  2.17  assumptions specified for the fund in section 356.215, and the 
  2.18  mortality table applicable to the fund. 
  2.19     Subd. 7.  [INDIVIDUAL ELECTION OF POSTRETIREMENT ADJUSTMENT 
  2.20  METHOD.] Before August 1, 1995, the board of trustees of the St. 
  2.21  Paul teachers retirement fund association shall conduct an 
  2.22  election by those members who retired prior to July 1, 1995.  
  2.23  This individual member election shall be for the purpose of 
  2.24  selecting which postretirement adjustment mechanism as described 
  2.25  in subdivision 8 is to be applied to the pension or benefit of 
  2.26  each individual retiree or benefit recipient. 
  2.27     Subd. 8.  [CALCULATION OF POSTRETIREMENT ADJUSTMENTS.] (a) 
  2.28  Retired members and survivors of retired members who before July 
  2.29  1, 1995, were receiving a benefit from St. Paul teachers 
  2.30  retirement fund association shall continue to receive annually a 
  2.31  lump sum postretirement increase unless the member or 
  2.32  beneficiary elects to receive the alternate postretirement 
  2.33  adjustment described in paragraph (b).  The lump sum 
  2.34  postretirement increase shall be paid to all eligible 
  2.35  beneficiaries who have been retired for at least one year on 
  2.36  June 30.  The lump sum amount shall be determined as follows: 
  3.1      (1) The years of service and years of receiving a benefit 
  3.2   of each eligible benefit recipient shall be determined by the 
  3.3   association's board of trustees as of each June 30 based on the 
  3.4   records of the association and shall be called units. 
  3.5      (2) The amount payable to each eligible benefit recipient 
  3.6   shall be the product of the number of units allocated to that 
  3.7   person multiplied by the unit value. 
  3.8      (3) The unit value to determine the lump sum adjustment 
  3.9   shall be the previous year unit amount increased by 7.5 percent. 
  3.10     (4) The increase in total annual benefits provided to each 
  3.11  eligible beneficiary under this method shall not exceed the cost 
  3.12  of living as determined by the consumer price index for urban 
  3.13  wage earners and clerical workers all items index published by 
  3.14  the Bureau of Labor Statistics of the United States from June 30 
  3.15  of the previous year to June 30 of the current year. 
  3.16  The lump sum postretirement determined under this method is 
  3.17  payable annually six months following fiscal year end or in 12 
  3.18  equal installments added to the monthly annuity payment.  Any 
  3.19  additional increase determined in paragraphs (c), (d), and (e), 
  3.20  will be payable to those eligible on January 1 following the 
  3.21  fiscal year end. 
  3.22     (b) Annually on June 30, the actuary preparing the annual 
  3.23  actuarial valuation shall determine the actuarial accrued 
  3.24  liability for those members who retired after July 30, 1995, and 
  3.25  for those pre-July 1, 1995, retirees who elected not to receive 
  3.26  the lump sum postretirement adjustment described in paragraph 
  3.27  (a).  The benefit of each eligible retiree or beneficiary 
  3.28  choosing this method who has been retired for at least one year 
  3.29  on June 30 shall be increased by two percent each January 1, 
  3.30  following the fiscal year end unless the increase in the 
  3.31  consumer price index for urban wage earners and clerical workers 
  3.32  all items index published by the Bureau of Labor Statistics of 
  3.33  the United States Department of Labor from June 30 of the 
  3.34  preceding year to June 30 of the current year is less than two 
  3.35  percent.  In this event, the increase shall be limited to the 
  3.36  rate of consumer price index increase plus any increase 
  4.1   determined in paragraphs (c), (d), and (e). 
  4.2      (c) Annually, following June 30, the board of trustees of 
  4.3   the St. Paul teachers retirement fund association shall use the 
  4.4   procedures in paragraph (d) to determine whether an additional 
  4.5   postretirement adjustment is payable and the amount of any 
  4.6   additional postretirement adjustment. 
  4.7      (d) The amount of excess investment earnings, the funding 
  4.8   ratio, and the actuarial accrued liability shall be determined 
  4.9   by the actuary preparing the annual actuarial valuation as 
  4.10  specified in section 356.215 and must be used to determine the 
  4.11  amount of an excess earnings postretirement adjustment, as 
  4.12  follows: 
  4.13     (1) the amount of excess investment return shall be 
  4.14  determined by the actuary as of each June 30 fiscal year end; 
  4.15     (2) the retiree percentage of the total fund actuarial 
  4.16  accrued liability shall be determined and multiplied by the 
  4.17  amount of excess investment return determined in clause (1); 
  4.18     (3) one-fifth of the amount determined in clause (2) shall 
  4.19  be allocated equally to the current year postretirement 
  4.20  adjustment and one-fifth to each of the subsequent four years; 
  4.21     (4) the amount determined in clause (3) shall be combined 
  4.22  with the excess earnings allocated to the same fiscal year in 
  4.23  prior years; 
  4.24     (5) in the event the amount determined in clause (4) is not 
  4.25  positive, then no adjustment shall be allowed; and 
  4.26     (6) the postretirement adjustment increase rate shall be 
  4.27  determined by dividing the amount determined in clause (5) by 
  4.28  the actuarial accrued liability for benefit recipients in the 
  4.29  preceding year actuarial report. 
  4.30     (e) The additional postretirement adjustment rate 
  4.31  determined in paragraph (d) shall apply to all annuitants 
  4.32  eligible for a regular postretirement increase in paragraph (b) 
  4.33  or (c) on January 1 following the fiscal year end. 
  4.34     Sec. 2.  [EFFECTIVE DATE.] 
  4.35     Section 1 is effective July 1, 1995.