356.551 POST JULY 1, 2004, PRIOR SERVICE CREDIT PURCHASE PAYMENT
AMOUNT DETERMINATION PROCEDURE.
Subdivision 1. Application.
(a) Unless the prior service credit purchase authorization
special law or general statute provision explicitly specifies a different purchase payment amount
determination procedure, this section governs the determination of the prior service credit
purchase payment amount of any prior service credit purchase.
(b) The purchase payment amount determination procedure must recognize any service
credit accrued to the purchaser in a pension plan enumerated in section
356.30, subdivision 3
(c) Any service credit in a Minnesota defined benefit public employee pension plan available
to be reinstated by the purchaser through the repayment of a refund of member or employee
contributions previously received must be repaid in full before any purchase of prior service credit
payment is made under this section.
Subd. 2. Determination.
(a) Unless the minimum purchase amount set forth in paragraph
(c) applies, the prior service credit purchase amount is an amount equal to the actuarial present
value, on the date of payment, as calculated by the chief administrative officer of the pension
plan and reviewed by the actuary retained under section
, of the amount of the additional
retirement annuity obtained by the acquisition of the additional service credit in this section.
(b) Calculation of this amount must be made using the preretirement interest rate applicable
to the public pension plan specified in section
356.215, subdivision 8
, and the mortality table
adopted for the public pension plan. The calculation must assume continuous future service in the
public pension plan until, and retirement at, the age at which the minimum requirements of the
fund for normal retirement or retirement with an annuity unreduced for retirement at an early age,
, are met with the additional service credit purchased. The calculation
must also assume a full-time equivalent salary, or actual salary, whichever is greater, and a future
salary history that includes annual salary increases at the applicable salary increase rate for the
plan specified in section
356.215, subdivision 4d
(c) The prior service credit purchase amount may not be less than the amount determined
by applying the current employee or member contribution rate, the employer contribution rate,
and the additional employer contribution rate, if any, to the person's current annual salary and
multiplying that result by the number of whole and fraction years of service to be purchased.
(d) Payment must be made in one lump sum within one year of the prior service credit
authorization. Payment of the amount calculated under this section must be made by the
applicable eligible person.
(e) However, the current employer or the prior employer may, at its discretion, pay all or
any portion of the payment amount that exceeds an amount equal to the employee contribution
rates in effect during the period or periods of prior service applied to the actual salary rates in
effect during the period or periods of prior service, plus interest at the rate of 8.5 percent a year
compounded annually from the date on which the contributions would otherwise have been
made to the date on which the payment is made. If the employer agrees to payments under this
subdivision, the purchaser must make the employee payments required under this subdivision
within 90 days of the prior service credit authorization. If that employee payment is made, the
employer payment under this subdivision must be remitted to the chief administrative officer
of the public pension plan within 60 days of receipt by the chief administrative officer of the
employee payments specified under this subdivision.
Subd. 3. Documentation.
The prospective prior service credit purchaser must provide any
relevant documentation required by the chief administrative officer of the applicable public
pension plan to determine eligibility for the prior service credit under this section.
Subd. 4. Payment precondition for credit grant.
Service credit for the purchase period
must be granted by the public pension plan to the purchaser upon receipt of the full purchase
payment amount specified in subdivision 2.
History: 1998 c 390 art 4 s 2; 2002 c 392 art 11 s 41; 1Sp2005 c 8 art 10 s 65