2000 Minnesota Statutes

CHAPTER 181B. Private pension benefits protection

     181B.01 Citation.  

    Sections 181B.01 to 181B.17 shall be known and may be cited 
 as the "Private Pension Benefits Protection Act."  

    HIST: 1974 c 437 s 1 

     181B.02 Definitions.  

    Subdivision 1.  As used in sections 181B.01 to 181B.17, the 
 following terms shall have the meanings given.  

    Subd. 2.  "Employer" means any person, firm or corporation 
 who employs 100 or more people at least one of whom is employed 
 in this state at any time within one year prior to the date that 
 it ceases to operate a place of employment or a pension plan or 
 such longer period as may be prescribed by the commissioner 
 pursuant to section 181B.14.  

    Subd. 3.  "Place of employment" means any location within 
 this state at which an employer employs any employees at any 
 time within one year prior to the date that the employer ceases 
 to operate at such location or such longer period as may be 
 prescribed by the commissioner pursuant to section 181B.14.  

    Subd. 4.  "Employee" means any person employed at the place 
 of employment at any time within one year prior to the date when 
 the employer ceases to operate the place of employment or a 
 pension plan or such longer period as may be prescribed by the 
 commissioner pursuant to section 181B.14.  "Employee" also means 
 any person who is not employed by the employer but who was 
 formerly employed in this state, and is eligible or will be 
 eligible without the earning of additional pension credits to 
 receive a pension benefit from the employer's pension plan.  

    Subd. 5.  "Commissioner" means the commissioner of labor 
 and industry.  

    Subd. 6.  "Ceases to operate a place of employment or a 
 pension plan" means: 

    (a) The complete termination of operations at a place of 
 employment, or 

    (b) A substantial reduction in the number of employees at a 
 place of employment, or 

    (c) The termination or substantial reduction of pension 
 plan operations or benefits for all or a portion of an 
 employer's employees.  

    The term shall not mean any temporary cessation of 
 operations or reduction of employees.  Neither shall the term 
 mean any cessation of operations by a single employer who 
 participates in a pension plan to which more than one employer 
 makes contributions if such cessation does not also entail the 
 termination of the master pension plan.  In determining whether 
 any reduction has been substantial the commissioner shall take 
 into consideration not only the absolute size of the reduction 
 but the relative size of the reduction as it relates to the 
 corporate and employment history of the group or subgroup 
 suffering the reduction.  In addition, the commissioner may find 
 that a number of unsubstantial reductions are, for the purposes 
 of sections 181B.01 to 181B.17, equivalent to a substantial 
 reduction.  When an employer ceases to operate a place of 
 employment or a pension plan but offers to retain without loss 
 of pension credit all of the employees in comparable jobs with 
 equal or increased compensation at another location within the 
 state or at some other location outside this state as specified 
 in any voluntary agreement authorized by section 181B.10, 
 sections 181B.01 to 181B.17 shall not apply except as it affects 
 persons not employed by the employer but who are eligible or 
 will be eligible without the earning of additional pension 
 credits to receive the pension benefits from the employer's 
 pension plan.  

    Subd. 7.  "Pension plan" means any plan, fund or program 
 which is established, maintained or entered into by an employer 
 for the purpose of providing retirement benefits for its 
 employees, or their beneficiaries and which is designated as a 
 qualified pension plan under section 401 of the United States 
 Internal Revenue Code of 1986, as amended through December 31, 
 1992, but does not mean any plan established by collective 
 bargaining agreement which is excluded from the coverage of 
 United States Code, title 29, section 186(c) (5) (B) by United 
 States Code, title 29, section 186(g) and for which the employer 
 has no administrative responsibility and no responsibility for 
 the establishment of the retirement benefit schedule.  Sections 
 181B.01 to 181B.17 shall not apply to any retirement fund or 
 program providing benefits only for public employees of the 
 federal government or the state government or a subdivision of 
 the state, nor shall it apply to any pension plan established on 
 behalf of a religious, charitable, or educational organization 
 as defined by section 501 (c) (3) of the United States Internal 
 Revenue Code of 1986, as amended through December 31, 1992.  
 Further, sections 181B.01 to 181B.17 shall not apply to any 
 money purchase, profit sharing, or stock bonus plan in which no 
 definitely determinable level of benefits is stipulated to be 
 given to qualified plan participants at normal retirement age or 
 some other age.  

    Subd. 8.  "Normal retirement benefit" means that benefit 
 payable under a pension plan in the event of retirement at the 
 normal retirement age.  

    Subd. 9.  "Normal retirement age" means the lesser of 
 either the normal retirement age as prescribed by the pension 
 plan or age 65.  

    Subd. 10.  "Accrued portion of the normal retirement 
 benefit" with respect to employees with ten or more years of 
 covered service means the larger of either the present value of 
 the pension benefit which the employee has earned prior to 
 cessation under the terms of the pension plan itself or the 
 present value of the normal retirement benefit to which the 
 employee would be entitled under the plan as in effect on the 
 date of the cessation if the employee continued to earn pension 
 credits based on the covered service which would have 
 accumulated had the employee continued as a plan participant 
 until normal retirement age or if the employee continued to earn 
 annually until normal retirement age the same rate of 
 compensation as that which had been earned prior to cessation, 
 upon which a pension credit would have been computed under the 
 plan at the rate specified by the plan for the years subsequent 
 to the cessation, multiplied by a fraction not to exceed one, 
 the numerator of which is the total number of years of covered 
 service as of the date of cessation, and the denominator of 
 which is the total number of years the employee would have had 
 in covered service in such plan as of normal retirement age if 
 the employee had continued to be an active participant in the 
 plan until attaining such age.  

    With respect to employees with less than ten years of 
 covered service, the defining term means the present value of 
 the total amount of pension benefits which have been vested on 
 or prior to the date of cessation.  Where the above formulas are 
 inapplicable or inequitable the defined term means that portion 
 of the normal retirement benefit to which the commissioner 
 determines actuarially the employee should be entitled based on 
 the covered service of the employee, as of the date of the 
 cessation.  

    Subd. 11.  "Covered service" means the longer of either: 

    (a) The period of employment with an employer including 
 predecessor employers as allowed in section 181B.07, clause (1) 
 which is recognized under the terms of the employer's pension 
 plan for the purposes of determining either an employee's 
 eligibility to receive benefits under the plan or the amount of 
 such benefits, or 

    (b) The amount of time after institution of the present 
 pension plan or any substantially similar predecessor plan that 
 an employee has been continuously employed in a full time 
 capacity by an employer including predecessor employers as 
 allowed in section 181B.07, clause (1) prior to the cessation of 
 operations.  Temporary and seasonal layoffs and unpaid vacations 
 and leaves of absence need not be credited as covered service 
 but neither shall they serve to interrupt an employee's 
 continuity of service.  Part time employment may be credited as 
 covered service if the commissioner determines that a previous 
 full time employee has been reduced to part time status as part 
 of a plan to evade provisions of sections 181B.01 to 181B.17.  

    Subd. 12.  "Vested right" means a legal right obtained by 
 an employee participating in a pension plan to that part of an 
 immediate or deferred pension benefit which arises from the 
 employee's covered service under the plan and is no longer 
 contingent on the employee remaining covered under the plan.  

    Subd. 13.  "Vested pension benefit" means that accrued 
 portion of the normal retirement benefit of an employee 
 participating, or who has participated, in a pension plan to 
 which the employee has a vested right.  

    Subd. 14.  "Nonvested pension benefit" means the accrued 
 portion of the normal retirement benefit of an employee 
 participating in a pension plan to which the employee does not 
 have a vested right.  

    Subd. 15.  "Present value of the total amount of nonvested 
 pension benefits" means that sum of money which if earning 
 interest in a secure investment from the date of the cessation 
 of operations onward would equal the value of the nonvested 
 pension benefit on the date on which the plan participant 
 reached normal retirement age.  

    Subd. 16.  "Present value of the total amount of vested 
 pension benefits" means that sum of money which if earning 
 interest in a secure investment from the date of cessation of 
 operations onward would equal the value of the vested pension 
 benefit on the date on which the plan participant reached normal 
 retirement age minus that sum of money which is set aside in 
 trust or exclusively reserved to finance pension benefits for 
 plan participants.  

    Subd. 17.  "Present value of the normal retirement benefit" 
 means that sum of money which if earning interest in a secure 
 investment from the date of the cessation of operations onward 
 would equal the value of the normal retirement benefit on the 
 date on which the plan participant reached normal retirement age.

    HIST: 1974 c 437 s 2; 1986 c 444; 1993 c 375 art 8 s 14 

     181B.03 Pension refunding charge, vested benefits prior 
  to Pension Benefits Protection Act.  

    Every employer who hereafter ceases to operate a place of 
 employment or a pension plan within this state shall owe to 
 employees covered by sections 181B.01 to 181B.17 a pension 
 funding charge which shall be equal to the present value of the 
 total amount of vested pension benefits based upon covered 
 service occurring before April 10, 1974, of such employees of 
 the employer who have completed ten or more years of any covered 
 service under the pension plan of the employer and whose vested 
 pension benefits have been or will be forfeited because of the 
 employer's ceasing to operate a place of employment or a pension 
 plan, less the amount of such vested pension benefits which are 
 compromised or settled to the satisfaction of the commissioner 
 as provided in sections 181B.01 to 181B.17.  

    HIST: 1974 c 437 s 3; 1986 c 444 

     181B.04 Nonvested benefits prior to act.  

    Every employer who hereafter ceases to operate a place of 
 employment or a pension plan within this state shall owe to 
 employees covered by sections 181B.01 to 181B.17 a pension 
 funding charge which shall be equal to the present value of the 
 total amount of nonvested pension benefits based upon service 
 occurring before April 10, 1974, of such employees of the 
 employer who have completed ten or more years of any covered 
 service under the pension plan of the employer and whose 
 nonvested pension benefits have been or will be forfeited 
 because of the employer's ceasing to operate a place of 
 employment or a pension plan, less the amount of such nonvested 
 pension benefits which are compromised or settled to the 
 satisfaction of the commissioner as provided in sections 181B.01 
 to 181B.17.  

    HIST: 1974 c 437 s 4; 1986 c 444 

     181B.05 Vested benefits under act.  

    Every employer who hereafter ceases to operate a place of 
 employment or a pension plan within this state shall owe to 
 employees covered by sections 181B.01 to 181B.17 a pension 
 funding charge which shall be equal to the present value of the 
 total amount of vested pension benefits based upon covered 
 service occurring after April 10, 1974 of such employees of the 
 employer who have completed ten or more years of any covered 
 service under the pension plan of the employer and whose vested 
 pension benefits have been or will be forfeited because of the 
 employer's ceasing to operate a place of employment or a pension 
 plan, less the amount of such vested pension benefits which are 
 compromised or settled to the satisfaction of the commissioner 
 as provided in sections 181B.01 to 181B.17.  

    HIST: 1974 c 437 s 5; 1986 c 444 

     181B.06 Nonvested benefits under act.  

    Every employer who hereafter ceases to operate a place of 
 employment or a pension plan within this state shall owe to 
 employees covered by sections 181B.01 to 181B.17 a pension 
 funding charge which shall be equal to the present value of the 
 total amount of nonvested pension benefits based upon covered 
 service occurring after April 10, 1974 of such employees of the 
 employer who have completed ten or more years of any covered 
 service under the pension plan of the employer and whose 
 nonvested pension benefits have been or will be forfeited 
 because of the employer's ceasing to operate a place of 
 employment or a pension plan, less the amount of such nonvested 
 pension benefits which are compromised or settled to the 
 satisfaction of the commissioner as provided in sections 181B.01 
 to 181B.17.  

    HIST: 1974 c 437 s 6; 1986 c 444 

     181B.07 Exceptions to pension funding requirements.  

    An employer shall not be liable for any pension funding 
 charge under sections 181B.03 to 181B.06 when (1) the employer 
 ceases to operate a place of employment or a pension plan as a 
 result of merger, consolidation, or acquisition of assets, if 
 the successor to the employer continues the pension plan of the 
 employer or establishes a comparable pension plan which covers 
 all previously covered employees of the employer with no 
 reduction in credited covered service for purposes of sections 
 181B.01 to 181B.17 and no reduction in the value of the pension 
 credits already earned by the employees; or (2) the employer 
 ceasing to operate a place of employment or a pension plan has 
 (a) in each of the five years prior to cessation made a 
 contribution to the pension plan at least equal to the maximum 
 contribution which would have been exempt from income taxation 
 under section 404 of the United States Internal Revenue Code of 
 1986, as amended through December 31, 1992, or (b) in at least 
 eight of the ten years immediately prior to cessation made a 
 contribution to the pension plan at least equal to the maximum 
 contribution which would have been exempt from income taxation 
 under section 404 of the United States Internal Revenue Code of 
 1986, as amended through December 31, 1992, or (c) when the 
 pension plan has been instituted less than five years prior to 
 cessation, in every year since the institution of the plan, made 
 a contribution to the pension plan at least equal to the maximum 
 contribution which would have been exempt from income taxation 
 under section 404 of the United States Internal Revenue Code of 
 1986, as amended through December 31, 1992.  

    HIST: 1974 c 437 s 7; 1993 c 375 art 8 s 14 

     181B.08 Notice of intention to cease operations.  

    Any employer who intends to cease to operate a place of 
 employment or a pension plan within this state shall notify the 
 commissioner of such intention not later than six months prior 
 to the date the employer intends to cease such operation.  In 
 the case of an employer who intends to cease to operate a place 
 of employment or a pension plan within this state within six 
 months of April 10, 1974, the notice required by this section 
 shall be given by the employer as soon as practicable, but not 
 later than ten days after April 10, 1974.  

    HIST: 1974 c 437 s 8 

     181B.09 Investigation by commissioner.  

    Upon receipt of such notification, or upon the 
 commissioner's initiative when such notification is not given as 
 required, the commissioner shall cause an investigation to be 
 made of the employer to determine the number of employees who 
 have completed ten or more years of covered service under the 
 pension plan of the employer and whose nonvested or vested 
 pension benefits have been or will be forfeited by such 
 cessation, the number of employees whose vested pension benefits 
 have been or will be forfeited by such cessation, the amounts of 
 such nonvested or vested pension benefits, if any, of such 
 employees, and any other facts or circumstances concerning the 
 employer, employees and the pension plan for such employees as 
 may be necessary or useful to the commissioner to carry out 
 duties and responsibilities under sections 181B.01 to 181B.17.  
 The investigation, insofar as practicable, shall be conducted at 
 the employer's place of business during normal business hours.  
 The employer shall cooperate fully with the commissioner in such 
 investigation, and shall make available to the commissioner any 
 books, records or other information necessary or useful to such 
 investigation.  To aid in such investigations, the commissioner 
 is authorized to administer oaths and affirmations and to issue 
 subpoenas to compel the attendance of witnesses or the 
 production of books, records or other documents.  The 
 commissioner may seek, through the attorney general, orders from 
 any court of competent jurisdiction to compel an employer to 
 comply with the provisions of sections 181B.01 to 181B.17 and to 
 punish disobedience of any subpoena issued pursuant to sections 
 181B.01 to 181B.17.  

    HIST: 1974 c 437 s 9; 1986 c 444 

     181B.10 Determination of amount of benefits; agreements 
  as to benefits.  

    As part of the investigation of an employer, the 
 commissioner shall determine the amount of nonvested and vested 
 pension benefits which have been compromised or settled to the 
 commissioner's satisfaction.  Nonvested and vested pension 
 benefits may be compromised or settled by voluntary agreement 
 between the employer and individual employees which is mutually 
 understood by both parties to be a complete and final 
 satisfaction of the employer's obligations regarding such 
 benefits, provided that both parties are made fully aware of 
 their rights and obligations under sections 181B.01 to 181B.17 
 prior to the making of such voluntary agreement.  Before any 
 such settlement can be made it must be approved by the 
 commissioner.  The commissioner shall not approve any settlement 
 that is not fair and equitable.  Further, for all settlements 
 entered into by the employer the relationship between the 
 present value of the compromised pension credits and the value 
 of the settlement must be as constant as is practicable.  

    HIST: 1974 c 437 s 10; 1986 c 444 

     181B.101 Loss of rights clause void.  

    A clause in a pension or profit sharing plan which provides 
 that the employee will lose a vested right or vested pension or 
 profit sharing benefit if the employee joins a competing 
 employer is void.  This section is effective for rights and 
 benefits which become vested before or after August 1, 1975.  

    HIST: 1975 c 307 s 1 

     181B.11 Certification of amounts available.  

    After the investigation of the employer the commissioner 
 shall certify to the employer the present value of the total 
 amount of nonvested and vested pension benefits which are 
 includable in determining an employer's pension funding charge 
 liability under sections 181B.01 to 181B.17 and the amount of 
 such benefits which have been compromised or settled to the 
 satisfaction of the commissioner.  When the assets of an 
 employer available for distribution under sections 181B.01 to 
 181B.17 are less than the sum total of the pension funding 
 charges owed to employees as calculated by the commissioner, the 
 commissioner shall calculate the proportion of available assets 
 owed to each employee so that the actual amount to be received 
 by any covered employee at normal retirement age divided by the 
 amount that employee would have received at normal retirement 
 age had there been no shortage of assets available for 
 distribution under sections 181B.01 to 181B.17 is a ratio as 
 constant as is possible from employee to employee.  In seeking 
 to keep such ratio constant the commissioner shall consider the 
 amounts to be received by an employee from trust fund assets set 
 aside for employee pension benefits but unavailable for 
 distribution under sections 181B.01 to 181B.17.  The amount 
 certified by the commissioner shall be due and payable to the 
 employees in the manner specified in section 181B.12 on the date 
 that the employer ceases to operate its place of employment or a 
 pension plan and shall be a lien upon the employer's assets.  If 
 the pension funding charge is not paid when due, the employer 
 shall be liable for interest on the amount due at the rate of 
 eight percent per annum until the charge and interest are paid, 
 and the attorney general of this state shall bring action in an 
 appropriate district court of this state or in the courts of 
 another state or in an appropriate federal court as provided for 
 in section 181B.13.  

    HIST: 1974 c 437 s 11 

     181B.12 Purchase of prepaid deferred annuity.  

    The amount certified by the commissioner as due and payable 
 to the employees shall be paid to the employees by the employer 
 through the purchase of a prepaid deferred annuity payable to 
 the employee when normal retirement age is reached or to a 
 beneficiary upon the employee's death.  Such purchase shall be 
 made through a trust authorized by the United States Internal 
 Revenue Service to make such purchases in a manner which exempts 
 from federal income taxation the money used to purchase the 
 annuity and all income earned by such annuity up to the date of 
 the distribution of the annuity amount.  In no event shall the 
 amount of annuity to be distributed at normal retirement age 
 exceed the amount of the accrued normal retirement benefit.  

    HIST: 1974 c 437 s 12; 1986 c 444 

     181B.13 Recovery of amounts due.  

    The commissioner shall maintain a separate record of each 
 employee owed a pension funding charge under sections 181B.01 to 
 181B.17.  Ten days after any pension funding charge is due the 
 commissioner shall tabulate all unpaid amounts and certify that 
 figure to the attorney general who shall immediately take 
 appropriate legal action as authorized in section 181B.11 on 
 behalf of all aggrieved employees in a class action suit.  

    HIST: 1974 c 437 s 13 

     181B.14 Acts constituting termination.  

    For the purposes of sections 181B.01 to 181B.17, the 
 employment of any employee involuntarily terminated within one 
 year of the date an employer ceases to operate a place of 
 employment or a pension plan within this state, or within such 
 longer period as prescribed by the commissioner when the 
 commissioner determines that an employer is attempting to evade 
 the provisions of sections 181B.01 to 181B.17, shall be deemed 
 to have been terminated because of the employer's ceasing to 
 operate its place of employment or a pension plan, unless the 
 employer can conclusively show that the termination was 
 attributable to some other cause.  

    HIST: 1974 c 437 s 14; 1986 c 444 

     181B.15 Rules.  

    The commissioner may promulgate rules to provide for the 
 efficient administration of the provisions of sections 181B.01 
 to 181B.17, or to clarify such provisions as may be necessary to 
 effectuate the purposes of sections 181B.01 to 181B.17, and may 
 from time to time specify any appropriate actuarial assumptions 
 necessary to effectuate the purposes of sections 181B.01 to 
 181B.17.  

    HIST: 1974 c 437 s 15; 1985 c 248 s 70 

     181B.16 Protection of funds from execution or process.  

    The funds of any employer which are set aside or reserved 
 for benefits under a pension plan of the employer to which 
 employees have a vested right shall not be liable to levy or 
 attachment by virtue of any execution or civil process whatever, 
 issued out of any court of this state, for the collection of the 
 pension funding charge imposed by sections 181B.01 to 181B.17.  

    HIST: 1974 c 437 s 16 

     181B.17 Effective date; effect of federal act in area.  

    Sections 181B.01 to 181B.17 shall take effect April 10, 
 1974.  Provided that sections 181B.01 to 181B.17 shall become 
 null and void upon the institution of a mandatory plan of 
 termination insurance guaranteeing the payment of a substantial 
 portion of an employee's vested pension benefits pursuant to any 
 law of the United States.  

    HIST: 1974 c 437 s 17