1.1                          A bill for an act 
  1.2             relating to retirement; modifying the computation of 
  1.3             the retirement annuity formula for the teachers 
  1.4             retirement association, Minneapolis teachers 
  1.5             retirement fund association, St. Paul teachers 
  1.6             retirement fund association, and Duluth teachers 
  1.7             retirement fund association coordinated members; 
  1.8             amending Minnesota Statutes 1998, sections 354.05, 
  1.9             subdivision 38; 354.44, subdivision 6; 354A.011, 
  1.10            subdivision 15a; and 354A.31, subdivisions 4, 6, and 
  1.11            7; repealing Minnesota Statutes 1998, section 354A.31, 
  1.12            subdivision 4a. 
  1.13  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.14     Section 1.  Minnesota Statutes 1998, section 354.05, 
  1.15  subdivision 38, is amended to read: 
  1.16     Subd. 38.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
  1.17  means age 65 for a person who ~~first became~~ is a member of the 
  1.18  association or who has service credit as a member of the 
  1.19  association and who is a member of a pension fund listed in 
  1.20  section 356.30, subdivision 3~~, before July 1, 1989.  For a~~ 
  1.21  ~~person who first becomes a member of the association after June~~ 
  1.22  ~~30, 1989, normal retirement age means the higher of age 65 or~~ 
  1.23  ~~"retirement age," as defined in United States Code, title 42,~~ 
  1.24  ~~section 416(l), as amended, but not to exceed age 66~~. 
  1.25     Sec. 2.  Minnesota Statutes 1998, section 354.44, 
  1.26  subdivision 6, is amended to read: 
  1.27     Subd. 6.  [COMPUTATION OF FORMULA PROGRAM RETIREMENT 
  1.28  ANNUITY.] (1) The formula retirement annuity must be computed in 
  1.29  accordance with the applicable provisions of the formulas stated 
  2.1   in clause (2) or (4) on the basis of each member's average 
  2.2   salary for the period of the member's formula service credit.  
  2.3   For all years of formula service credit, "average salary," for 
  2.4   the purpose of determining the member's retirement annuity, 
  2.5   means the average salary upon which contributions were made and 
  2.6   upon which payments were made to increase the salary limitation 
  2.7   provided in Minnesota Statutes 1971, section 354.511, for the 
  2.8   highest five successive years of formula service credit 
  2.9   provided, however, that such "average salary" shall not include 
  2.10  any more than the equivalent of 60 monthly salary payments.  
  2.11  Average salary must be based upon all years of formula service 
  2.12  credit if this service credit is less than five years. 
  2.13     (2) This clause, in conjunction with clause (3), applies to 
  2.14  ~~a person who first became~~ a member of the association or a 
  2.15  member of a pension fund listed in section 356.30, subdivision 
  2.16  3, ~~before July 1, 1989,~~ unless clause (4), in conjunction with 
  2.17  clause (5), produces a higher annuity amount, in which case 
  2.18  clause (4) applies.  The average salary as defined in clause 
  2.19  (1), multiplied by the following percentages per year of formula 
  2.20  service credit shall determine the amount of the annuity to 
  2.21  which the member qualifying therefor is entitled: 
  2.22                         Coordinated Member   Basic Member
  2.23  Each year of service     the percent        the percent
  2.24   during first ten        specified in       specified in
  2.25                           section 356.19,    section 356.19,
  2.26                           subdivision 1,     subdivision 3,
  2.27                           per year           per year
  2.28  Each year of service     the percent        the percent
  2.29   thereafter              specified in       specified in
  2.30                           section 356.19,    section 356.19,
  2.31                           subdivision 2,     subdivision 4,
  2.32                           per year           per year
  2.33     (3)(i) This clause applies ~~only~~ to ~~a person who first~~ 
  2.34  ~~became~~ a member of the association or a member of a pension fund 
  2.35  listed in section 356.30, subdivision 3, ~~before July 1, 1989,~~ 
  2.36  ~~and~~ whose annuity is higher when calculated under clause (2), in 
  3.1   conjunction with this clause than when calculated under clause 
  3.2   (4), in conjunction with clause (5).  
  3.3      (ii) Where any member retires prior to normal retirement 
  3.4   age under a formula annuity, the member shall be paid a 
  3.5   retirement annuity in an amount equal to the normal annuity 
  3.6   provided in clause (2) reduced by one-quarter of one percent for 
  3.7   each month that the member is under normal retirement age at the 
  3.8   time of retirement except that for any member who has 30 or more 
  3.9   years of allowable service credit, the reduction shall be 
  3.10  applied only for each month that the member is under age 62. 
  3.11     (iii) Any member whose attained age plus credited allowable 
  3.12  service totals 90 years is entitled, upon application, to a 
  3.13  retirement annuity in an amount equal to the normal annuity 
  3.14  provided in clause (2), without any reduction by reason of early 
  3.15  retirement. 
  3.16     (4) This clause applies to a member who has become at least 
  3.17  55 years old ~~and first became a member of the association after~~ 
  3.18  ~~June 30, 1989, and to any other member who has become at least~~ 
  3.19  ~~55 years old~~ and whose annuity amount when calculated under this 
  3.20  clause and in conjunction with clause (5), is higher than it is 
  3.21  when calculated under clause (2), in conjunction with clause (3).
  3.22  The average salary, as defined in clause (1) multiplied by the 
  3.23  percent specified by section 356.19, subdivision 4, for each 
  3.24  year of service for a basic member and by the percent specified 
  3.25  in section 356.19, subdivision 2, for each year of service for a 
  3.26  coordinated member shall determine the amount of the retirement 
  3.27  annuity to which the member is entitled. 
  3.28     (5) This clause applies to a ~~person~~ member who has become 
  3.29  at least 55 years old ~~and first becomes a member of the~~ 
  3.30  ~~association after June 30, 1989, and to any other member who has~~ 
  3.31  ~~become at least 55 years old~~ and whose annuity is higher when 
  3.32  calculated under clause (4) in conjunction with this clause than 
  3.33  when calculated under clause (2), in conjunction with clause 
  3.34  (3).  An employee who retires under the formula annuity before 
  3.35  the normal retirement age shall be paid the normal annuity 
  3.36  provided in clause (4) reduced so that the reduced annuity is 
  4.1   the actuarial equivalent of the annuity that would be payable to 
  4.2   the employee if the employee deferred receipt of the annuity and 
  4.3   the annuity amount were augmented at an annual rate of three 
  4.4   percent compounded annually from the day the annuity begins to 
  4.5   accrue until the normal retirement age. 
  4.6      Sec. 3.  Minnesota Statutes 1998, section 354A.011, 
  4.7   subdivision 15a, is amended to read: 
  4.8      Subd. 15a.  [NORMAL RETIREMENT AGE.] "Normal retirement 
  4.9   age" means age 65 for a person who ~~first became~~ is a member of 
  4.10  the coordinated program of the Minneapolis or St. Paul teachers 
  4.11  retirement fund association or the new law coordinated program 
  4.12  of the Duluth teachers retirement fund association or who has 
  4.13  service credit as a coordinated member of one of these 
  4.14  associations and who is a member of a pension fund listed in 
  4.15  section 356.30, subdivision 3~~, before July 1, 1989.  For a~~ 
  4.16  ~~person who first became a member of the coordinated program of~~ 
  4.17  ~~the Minneapolis or St. Paul teachers retirement fund association~~ 
  4.18  ~~or the new law coordinated program of the Duluth teachers~~ 
  4.19  ~~retirement fund association after June 30, 1989, normal~~ 
  4.20  ~~retirement age means the higher of age 65 or retirement age, as~~ 
  4.21  ~~defined in United States Code, title 42, section 416(l), as~~ 
  4.22  ~~amended, but not to exceed age 66~~.  For a person who is a member 
  4.23  of the basic program of the Minneapolis or St. Paul teachers 
  4.24  retirement fund association or the old law coordinated program 
  4.25  of the Duluth teachers retirement fund association, normal 
  4.26  retirement age means the age at which a teacher becomes eligible 
  4.27  for a normal retirement annuity computed upon meeting the age 
  4.28  and service requirements specified in the applicable provisions 
  4.29  of the articles of incorporation or bylaws of the respective 
  4.30  teachers retirement fund association. 
  4.31     Sec. 4.  Minnesota Statutes 1998, section 354A.31, 
  4.32  subdivision 4, is amended to read: 
  4.33     Subd. 4.  [COMPUTATION OF THE NORMAL COORDINATED RETIREMENT 
  4.34  ANNUITY~~; MINNEAPOLIS AND ST. PAUL FUNDS~~.] (a) This subdivision 
  4.35  applies to the coordinated programs of the Minneapolis teachers 
  4.36  retirement fund association and the St. Paul teachers retirement 
  5.1   fund association and to the new law coordinated program of the 
  5.2   Duluth teachers retirement fund association.  
  5.3      (b) The normal coordinated retirement annuity shall be an 
  5.4   amount equal to a retiring coordinated member's average salary 
  5.5   multiplied by the retirement annuity formula 
  5.6   percentage multiplied by the years of credited coordinated 
  5.7   service, unless further restricted or reduced in this section.  
  5.8   Average salary for purposes of this section shall mean an amount 
  5.9   equal to the average salary upon which contributions were made 
  5.10  for the highest five successive years of service credit, but 
  5.11  which shall not in any event include any more than the 
  5.12  equivalent of 60 monthly salary payments.  Average salary must 
  5.13  be based upon all years of service credit if this service credit 
  5.14  is less than five years. 
  5.15     (c) This paragraph, in conjunction with subdivision 6, 
  5.16  applies to a person who ~~first became~~ is a member ~~or a member~~ in 
  5.17  a pension fund listed in section 356.30, subdivision 3, ~~before~~ 
  5.18  ~~July 1, 1989,~~ unless paragraph (d), in conjunction with 
  5.19  subdivision 7, produces a higher annuity amount, in which case 
  5.20  paragraph (d) will apply.  The retirement annuity formula 
  5.21  percentage for purposes of this paragraph is the percent 
  5.22  specified in section 356.19, subdivision 1, per year for each 
  5.23  year of coordinated service for the first ten years and the 
  5.24  percent specified in section 356.19, subdivision 2, for each 
  5.25  year of coordinated service thereafter.  
  5.26     (d) This paragraph applies to ~~a person who has become at~~ 
  5.27  ~~least 55 years old and who first becomes a member after June 30,~~ 
  5.28  ~~1989, and to~~ any ~~other~~ member who has become at least 55 years 
  5.29  old and whose annuity amount, when calculated under this 
  5.30  paragraph and in conjunction with subdivision 7 is higher than 
  5.31  it is when calculated under paragraph (c), in conjunction with 
  5.32  the provisions of subdivision 6.  The retirement annuity formula 
  5.33  percentage for purposes of this paragraph is the percent 
  5.34  specified in section 356.19, subdivision 2, for each year of 
  5.35  coordinated service. 
  5.36     Sec. 5.  Minnesota Statutes 1998, section 354A.31, 
  6.1   subdivision 6, is amended to read: 
  6.2      Subd. 6.  [REDUCED RETIREMENT ANNUITY.] This subdivision 
  6.3   applies ~~only~~ to a person who ~~first became~~ is a coordinated 
  6.4   member or a member of a pension fund listed in section 356.30, 
  6.5   subdivision 3, ~~before July 1, 1989,~~ and whose annuity is higher 
  6.6   when calculated using the retirement annuity formula percentage 
  6.7   in subdivision 4, paragraph (b), in conjunction with this 
  6.8   subdivision than when calculated under subdivision 4, paragraph 
  6.9   (c), in conjunction with subdivision 7. 
  6.10     (a) Upon retirement at an age before normal retirement age 
  6.11  with three or more years of service credit or prior to age 62 
  6.12  with at least 30 years of service credit, a coordinated member 
  6.13  shall be entitled to a retirement annuity in an amount equal to 
  6.14  the normal retirement annuity calculated using the retirement 
  6.15  annuity formula percentage in subdivision 4, paragraph (b), 
  6.16  reduced by one-quarter of one percent for each month that the 
  6.17  coordinated member is under normal retirement age if the 
  6.18  coordinated member has less than 30 years of service credit or 
  6.19  is under the age of 62 if the coordinated member has at least 30 
  6.20  years of service credit.  
  6.21     (b) Any coordinated member whose attained age plus credited 
  6.22  allowable service totals 90 years is entitled, upon application, 
  6.23  to a retirement annuity in an amount equal to the normal 
  6.24  retirement annuity calculated using the retirement annuity 
  6.25  formula percentage in subdivision 4, paragraph (b), without any 
  6.26  reduction ~~by reason of~~ due to early retirement. 
  6.27     Sec. 6.  Minnesota Statutes 1998, section 354A.31, 
  6.28  subdivision 7, is amended to read: 
  6.29     Subd. 7.  [ACTUARIAL REDUCTION FOR EARLY RETIREMENT.] This 
  6.30  subdivision applies to ~~a person who has become at least 55 years~~ 
  6.31  ~~old and first becomes a coordinated member after June 30, 1989,~~ 
  6.32  ~~and to~~ any ~~other~~ coordinated member who ~~has become~~ is at least 
  6.33  55 years old and whose annuity is higher when calculated using 
  6.34  the retirement annuity formula percentage in subdivision 4, 
  6.35  paragraph (c), in conjunction with this subdivision than when 
  6.36  calculated under subdivision 4, paragraph (b), in conjunction 
  7.1   with subdivision 6.  A coordinated member who retires before the 
  7.2   full benefit age shall be paid the retirement annuity calculated 
  7.3   using the retirement annuity formula percentage in subdivision 
  7.4   4, paragraph (c), reduced so that the reduced annuity is the 
  7.5   actuarial equivalent of the annuity that would be payable to the 
  7.6   member if the member deferred receipt of the annuity and the 
  7.7   annuity amount were augmented at an annual rate of three percent 
  7.8   compounded annually from the day the annuity begins to accrue 
  7.9   until the normal retirement age. 
  7.10     Sec. 7.  [REPEALER.] 
  7.11     Minnesota Statutes 1998, section 354A.31, subdivision 4a, 
  7.12  is repealed. 
  7.13     Sec. 8.  [EFFECTIVE DATE.] 
  7.14     Sections 1 to 7 are effective May 16, 2000.