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2007 Minnesota Statutes

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356.215 ACTUARIAL VALUATIONS AND EXPERIENCE STUDIES.
    Subdivision 1. Definitions. (a) For the purposes of sections 3.85 and 356.20 to 356.23, each
of the terms in the following paragraphs has the meaning given.
(b) "Actuarial valuation" means a set of calculations prepared by the actuary retained under
section 356.214 if so required under section 3.85, or otherwise, by an approved actuary, to
determine the normal cost and the accrued actuarial liabilities of a benefit plan, according to the
entry age actuarial cost method and based upon stated assumptions including, but not limited to
rates of interest, mortality, salary increase, disability, withdrawal, and retirement and to determine
the payment necessary to amortize over a stated period any unfunded accrued actuarial liability
disclosed as a result of the actuarial valuation of the benefit plan.
(c) "Approved actuary" means a person who is regularly engaged in the business of providing
actuarial services and who has at least 15 years of service to major public employee pension or
retirement funds or who is a fellow in the Society of Actuaries.
(d) "Entry age actuarial cost method" means an actuarial cost method under which the
actuarial present value of the projected benefits of each individual currently covered by the
benefit plan and included in the actuarial valuation is allocated on a level basis over the service
of the individual, if the benefit plan is governed by section 69.773, or over the earnings of the
individual, if the benefit plan is governed by any other law, between the entry age and the assumed
exit age, with the portion of the actuarial present value which is allocated to the valuation year
to be the normal cost and the portion of the actuarial present value not provided for at the
valuation date by the actuarial present value of future normal costs to be the actuarial accrued
liability, with aggregation in the calculation process to be the sum of the calculated result for
each covered individual and with recognition given to any different benefit formulas which may
apply to various periods of service.
(e) "Experience study" means a report providing experience data and an actuarial analysis of
the adequacy of the actuarial assumptions on which actuarial valuations are based.
(f) "Current assets" means:
(1) for the July 1, 2001, actuarial valuation, the market value of all assets as of June 30,
2001, reduced by:
(i) 30 percent of the difference between the market value of all assets as of June 30, 1999,
and the actuarial value of assets used in the July 1, 1999, actuarial valuation;
(ii) 60 percent of the difference between the actual net change in the market value of assets
between June 30, 1999, and June 30, 2000, and the computed increase in the market value of
assets between June 30, 1999, and June 30, 2000, if the assets had increased at the percentage
preretirement interest rate assumption used in the July 1, 1999, actuarial valuation; and
(iii) 80 percent of the difference between the actual net change in the market value of assets
between June 30, 2000, and June 30, 2001, and the computed increase in the market value of
assets between June 30, 2000, and June 30, 2001, if the assets had increased at the percentage
preretirement interest rate assumption used in the July 1, 2000, actuarial valuation;
(2) for the July 1, 2002, actuarial valuation, the market value of all assets as of June 30,
2002, reduced by:
(i) ten percent of the difference between the market value of all assets as of June 30, 1999,
and the actuarial value of assets used in the July 1, 1999, actuarial valuation;
(ii) 40 percent of the difference between the actual net change in the market value of assets
between June 30, 1999, and June 30, 2000, and the computed increase in the market value of
assets between June 30, 1999, and June 30, 2000, if the assets had increased at the percentage
preretirement interest rate assumption used in the July 1, 1999, actuarial valuation;
(iii) 60 percent of the difference between the actual net change in the market value of assets
between June 30, 2000, and June 30, 2001, and the computed increase in the market value of
assets between June 30, 2000, and June 30, 2001, if the assets had increased at the percentage
preretirement interest rate assumption used in the July 1, 2000, actuarial valuation; and
(iv) 80 percent of the difference between the actual net change in the market value of assets
between June 30, 2001, and June 30, 2002, and the computed increase in the market value of
assets between June 30, 2001, and June 30, 2002, if the assets had increased at the percentage
preretirement interest rate assumption used in the July 1, 2001, actuarial valuation; or
(3) for any actuarial valuation after July 1, 2002, the market value of all assets as of the
preceding June 30, reduced by:
(i) 20 percent of the difference between the actual net change in the market value of assets
between the June 30 that occurred three years earlier and the June 30 that occurred four years
earlier and the computed increase in the market value of assets over that fiscal year period if the
assets had increased at the percentage preretirement interest rate assumption used in the actuarial
valuation for the July 1 that occurred four years earlier;
(ii) 40 percent of the difference between the actual net change in the market value of assets
between the June 30 that occurred two years earlier and the June 30 that occurred three years
earlier and the computed increase in the market value of assets over that fiscal year period if the
assets had increased at the percentage preretirement interest rate assumption used in the actuarial
valuation for the July 1 that occurred three years earlier;
(iii) 60 percent of the difference between the actual net change in the market value of assets
between the June 30 that occurred one year earlier and the June 30 that occurred two years
earlier and the computed increase in the market value of assets over that fiscal year period if the
assets had increased at the percentage preretirement interest rate assumption used in the actuarial
valuation for the July 1 that occurred two years earlier; and
(iv) 80 percent of the difference between the actual net change in the market value of assets
between the immediately prior June 30 and the June 30 that occurred one year earlier and the
computed increase in the market value of assets over that fiscal year period if the assets had
increased at the percentage preretirement interest rate assumption used in the actuarial valuation
for the July 1 that occurred one year earlier.
(g) "Unfunded actuarial accrued liability" means the total current and expected future benefit
obligations, reduced by the sum of current assets and the present value of future normal costs.
(h) "Pension benefit obligation" means the actuarial present value of credited projected
benefits, determined as the actuarial present value of benefits estimated to be payable in the
future as a result of employee service attributing an equal benefit amount, including the effect
of projected salary increases and any step rate benefit accrual rate differences, to each year of
credited and expected future employee service.
    Subd. 2. Requirements. (a) It is the policy of the legislature that it is necessary and
appropriate to determine annually the financial status of tax supported retirement and pension
plans for public employees. To achieve this goal:
(1) the actuary retained under section 356.214 shall prepare annual actuarial valuations of the
retirement plans enumerated in section 356.214, subdivision 1, paragraph (b), and quadrennial
experience studies of the retirement plans enumerated in section 356.214, subdivision 1,
paragraph (b), clauses (1), (2), and (7); and
(2) the commissioner of finance may have prepared by the actuary retained by the
commission, two years after each set of quadrennial experience studies, quadrennial projection
valuations of at least one of the retirement plans enumerated in section 6, subdivision 1, paragraph
(b), for which the commissioner determines that the analysis may be beneficial.
(b) The governing or managing board or administrative officials of each public pension and
retirement fund or plan enumerated in section 356.20, subdivision 2, clauses (9), (10), and (12),
shall have prepared by an approved actuary annual actuarial valuations of their respective funds
as provided in this section. This requirement also applies to any fund or plan that is the successor
to any organization enumerated in section 356.20, subdivision 2, or to the governing or managing
board or administrative officials of any newly formed retirement fund, plan, or association
operating under the control or supervision of any public employee group, governmental unit, or
institution receiving a portion of its support through legislative appropriations, and any local
police or fire fund to which section 356.216 applies.
    Subd. 2a. Projection valuation requirements. (a) A quadrennial projection valuation
authorized under subdivision 2 is intended to serve as an additional analytical tool with which
policy makers may assess the future funding status of public plans through forecasting and
testing various potential outcomes over time if certain plan assumptions or valuation methods
were to be modified.
(b) In consultation with the retirement fund directors, the state economist, the state
demographer, the commissioner of finance, and the commissioner of employee relations, the
actuary retained under section 356.214 shall perform the quadrennial projection valuations on
behalf of the commissioner of finance, testing future implications for plan funding by modifying
assumptions and methods currently in place. The actuary retained under section 356.214 shall
provide advice to the commissioner as to the periods over which such projections should be made,
the nature and scope of the scenarios to be analyzed, and the measures of funding status to be
employed, and shall report the results of these analyses in the same manner as for quadrennial
experience studies.
    Subd. 3. Reports. (a) The actuarial valuations required annually must be made as of the
beginning of each fiscal year.
(b) Two copies of the valuation must be delivered to the executive director of the Legislative
Commission on Pensions and Retirement, to the commissioner of finance and to the Legislative
Reference Library, not later than the first day of the sixth month occurring after the end of the
previous fiscal year.
(c) Two copies of a quadrennial experience study must be filed with the executive director of
the Legislative Commission on Pensions and Retirement, with the commissioner of finance, and
with the Legislative Reference Library, not later than the first day of the 11th month occurring
after the end of the last fiscal year of the four-year period which the experience study covers.
(d) For actuarial valuations and experience studies prepared at the direction of the Legislative
Commission on Pensions and Retirement, two copies of the document must be delivered to
the governing or managing board or administrative officials of the applicable public pension
and retirement fund or plan.
    Subd. 4. Actuarial valuation; contents. (a) The actuarial valuation must be made in
conformity with the requirements of the definition contained in subdivision 1 and the most recent
standards for actuarial work adopted by the Legislative Commission on Pensions and Retirement.
(b) The actuarial valuation must measure all aspects of the benefit plan of the fund in
accordance with changes in benefit plans, if any, and salaries reasonably anticipated to be in force
during the ensuing fiscal year. The actuarial valuation must be prepared in accordance with the
entry age actuarial cost method. The actuarial valuation required under this section must include
the information required in subdivisions 5 to 15.
    Subd. 4a.[Renumbered subd 5]
    Subd. 4b.[Renumbered subd 6]
    Subd. 4c.[Renumbered subd 7]
    Subd. 4d.[Renumbered subd 8]
    Subd. 4e.[Renumbered subd 9]
    Subd. 4f.[Renumbered subd 10]
    Subd. 4g.[Renumbered subd 11]
    Subd. 4h.[Renumbered subd 12]
    Subd. 4i.[Renumbered subd 13]
    Subd. 4j.[Renumbered subd 14]
    Subd. 4k.[Renumbered subd 15]
    Subd. 5.MS 2000 [Renumbered subd 16]
    Subd. 5. Normal cost. For a fund providing benefits in whole or in part under a defined
benefit plan, the actuarial valuation must indicate the level normal cost of the benefits provided
under the laws governing the fund as of the date of the valuation, calculated in accordance with the
entry age actuarial cost method. The normal cost must be expressed as a level percentage of the
present value of future payrolls of the active participants of the fund as of the date of the valuation.
    Subd. 6.MS 2000 [Renumbered subd 17]
    Subd. 6. Accrued liability. For a fund providing benefits under a defined benefit plan, the
actuarial valuation must contain an exhibit indicating the actuarial accrued liabilities of the fund.
This figure is the present value of future benefits reduced by the present value of future normal
costs, calculated in accordance with the entry age actuarial cost method.
    Subd. 7.MS 2000 [Renumbered subd 18]
    Subd. 7. Defined contribution plan accumulations. For each fund providing benefits under
a money purchase or defined contribution plan, the actuarial valuation must contain an exhibit
indicating the member contributions accumulated at interest, as apportioned to members accounts,
to the date of the valuation. These accumulations must be separately tabulated in a manner which
properly reflects any differences in money purchase or defined contribution annuity rates which
may apply.
    Subd. 8. Interest and salary assumptions. (a) The actuarial valuation must use
the applicable following preretirement interest assumption and the applicable following
postretirement interest assumption:
preretirement
postretirement
interest rate
interest rate
plan
assumption
assumption
general state employees retirement plan
8.5%
6.0%
correctional state employees retirement
plan
8.5
6.0
State Patrol retirement plan
8.5
6.0
legislators retirement plan
8.5
6.0
elective state officers retirement plan
8.5
6.0
judges retirement plan
8.5
6.0
general public employees retirement plan
8.5
6.0
public employees police and fire retirement
plan
8.5
6.0
local government correctional service
retirement plan
8.5
6.0
teachers retirement plan
8.5
6.0
Minneapolis employees retirement plan
6.0
5.0
Duluth teachers retirement plan
8.5
8.5
St. Paul teachers retirement plan
8.5
8.5
Minneapolis Police Relief Association
6.0
6.0
Fairmont Police Relief Association
5.0
5.0
Minneapolis Fire Department Relief
Association
6.0
6.0
Virginia Fire Department Relief
Association
5.0
5.0
Bloomington Fire Department Relief
Association
6.0
6.0
local monthly benefit volunteer firefighters
relief associations
5.0
5.0
(b) The actuarial valuation must use the applicable following single rate future salary
increase assumption, the applicable following modified single rate future salary increase
assumption, or the applicable following graded rate future salary increase assumption:
(1) single rate future salary increase assumption
future salary
plan
increase assumption
legislators retirement plan
5.0%
elective state officers retirement plan
5.0
judges retirement plan
5.0
Minneapolis Police Relief Association
4.0
Fairmont Police Relief Association
3.5
Minneapolis Fire Department Relief Association
4.0
Virginia Fire Department Relief Association
3.5
Bloomington Fire Department Relief Association
4.0
(2) modified single rate future salary increase assumption
future salary
plan
increase assumption
Minneapolis employees retirement
plan
the prior calendar year amount increased
first by 1.0198 percent to prior fiscal year
date and then increased by 4.0 percent
annually for each future year
(3) select and ultimate future salary increase assumption or graded rate future salary increase
assumption
future salary
plan
increase assumption
general state employees retirement
plan
select calculation and assumption A
correctional state employees
retirement plan
assumption G
State Patrol retirement plan
assumption G
general public employees
retirement plan
select calculation and assumption B
public employees police and fire
fund retirement plan
assumption C
local government correctional
service retirement plan
assumption G
teachers retirement plan
assumption D
Duluth teachers retirement plan
assumption E
St. Paul teachers retirement plan
assumption F
The select calculation is: during the ten-year
select period, a designated percent is multiplied
by the result of ten minus T, where T is the
number of completed years of service, and is
added to the applicable future salary increase
assumption. The designated percent is 0.2
percent for the correctional state employees
retirement plan, the State Patrol retirement plan,
the public employees police and fire plan, and
the local government correctional service plan;
and 0.3 percent for the general state employees
retirement plan, the general public employees
retirement plan, the teachers retirement plan, the
Duluth Teachers Retirement Fund Association,
and the St. Paul Teachers Retirement Fund
Association.
    The ultimate future salary increase assumption is:
age
A
B
C
D
E
F
G
16
6.95%
6.95%
11.50%
8.20%
8.00%
6.90%
7.7500%
17
6.90
6.90
11.50
8.15
8.00
6.90
7.7500
18
6.85
6.85
11.50
8.10
8.00
6.90
7.7500
19
6.80
6.80
11.50
8.05
8.00
6.90
7.7500
20
6.75
6.40
11.50
6.00
6.90
6.90
7.7500
21
6.75
6.40
11.50
6.00
6.90
6.90
7.1454
22
6.75
6.40
11.00
6.00
6.90
6.90
7.0725
23
6.75
6.40
10.50
6.00
6.85
6.85
7.0544
24
6.75
6.40
10.00
6.00
6.80
6.80
7.0363
25
6.75
6.40
9.50
6.00
6.75
6.75
7.0000
26
6.75
6.36
9.20
6.00
6.70
6.70
7.0000
27
6.75
6.32
8.90
6.00
6.65
6.65
7.0000
28
6.75
6.28
8.60
6.00
6.60
6.60
7.0000
29
6.75
6.24
8.30
6.00
6.55
6.55
7.0000
30
6.75
6.20
8.00
6.00
6.50
6.50
7.0000
31
6.75
6.16
7.80
6.00
6.45
6.45
7.0000
32
6.75
6.12
7.60
6.00
6.40
6.40
7.0000
33
6.75
6.08
7.40
6.00
6.35
6.35
7.0000
34
6.75
6.04
7.20
6.00
6.30
6.30
7.0000
35
6.75
6.00
7.00
6.00
6.25
6.25
7.0000
36
6.75
5.96
6.80
6.00
6.20
6.20
6.9019
37
6.75
5.92
6.60
6.00
6.15
6.15
6.8074
38
6.75
5.88
6.40
5.90
6.10
6.10
6.7125
39
6.75
5.84
6.20
5.80
6.05
6.05
6.6054
40
6.75
5.80
6.00
5.70
6.00
6.00
6.5000
41
6.75
5.76
5.90
5.60
5.90
5.95
6.3540
42
6.75
5.72
5.80
5.50
5.80
5.90
6.2087
43
6.65
5.68
5.70
5.40
5.70
5.85
6.0622
44
6.55
5.64
5.60
5.30
5.60
5.80
5.9048
45
6.45
5.60
5.50
5.20
5.50
5.75
5.7500
46
6.35
5.56
5.45
5.10
5.40
5.70
5.6940
47
6.25
5.52
5.40
5.00
5.30
5.65
5.6375
48
6.15
5.48
5.35
5.00
5.20
5.60
5.5822
49
6.05
5.44
5.30
5.00
5.10
5.55
5.5404
50
5.95
5.40
5.25
5.00
5.00
5.50
5.5000
51
5.85
5.36
5.25
5.00
5.00
5.45
5.4384
52
5.75
5.32
5.25
5.00
5.00
5.40
5.3776
53
5.65
5.28
5.25
5.00
5.00
5.35
5.3167
54
5.55
5.24
5.25
5.00
5.00
5.30
5.2826
55
5.45
5.20
5.25
5.00
5.00
5.25
5.2500
56
5.35
5.16
5.25
5.00
5.00
5.20
5.2500
57
5.25
5.12
5.25
5.00
5.00
5.15
5.2500
58
5.25
5.08
5.25
5.10
5.00
5.10
5.2500
59
5.25
5.04
5.25
5.20
5.00
5.05
5.2500
60
5.25
5.00
5.25
5.30
5.00
5.00
5.2500
61
5.25
5.00
5.25
5.40
5.00
5.00
5.2500
62
5.25
5.00
5.25
5.50
5.00
5.00
5.2500
63
5.25
5.00
5.25
5.60
5.00
5.00
5.2500
64
5.25
5.00
5.25
5.70
5.00
5.00
5.2500
65
5.25
5.00
5.25
5.70
5.00
5.00
5.2500
66
5.25
5.00
5.25
5.70
5.00
5.00
5.2500
67
5.25
5.00
5.25
5.70
5.00
5.00
5.2500
68
5.25
5.00
5.25
5.70
5.00
5.00
5.2500
69
5.25
5.00
5.25
5.70
5.00
5.00
5.2500
70
5.25
5.00
5.25
5.70
5.00
5.00
5.2500
71
5.25
5.00
5.70
(c) The actuarial valuation must use the applicable following payroll growth assumption for
calculating the amortization requirement for the unfunded actuarial accrued liability where the
amortization retirement is calculated as a level percentage of an increasing payroll:
payroll growth
plan
assumption
general state employees retirement plan
5.00%
correctional state employees retirement plan
5.00
State Patrol retirement plan
5.00
legislators retirement plan
5.00
elective state officers retirement plan
5.00
judges retirement plan
5.00
general public employees retirement plan
6.00
public employees police and fire retirement plan
6.00
local government correctional service retirement
plan
6.00
teachers retirement plan
5.00
Duluth teachers retirement plan
5.00
St. Paul teachers retirement plan
5.00
    Subd. 9. Other assumptions. The actuarial valuation must use assumptions concerning
mortality, disability, retirement, withdrawal, retirement age, and any other relevant demographic
or economic factor. These assumptions must be set at levels consistent with those determined
in the most recent quadrennial experience study completed under subdivision 16, if required, or
representative of the best estimate of future experience, if a quadrennial experience study is not
required. The actuarial valuation must contain an exhibit indicating any actuarial assumptions
used in preparing the valuation report.
    Subd. 10. Public sector accounting disclosure information. The actuarial valuation must
contain those actuarial calculations that are necessary to allow the retirement plan administration
or participating employing units to prepare the pension-related portions of annual financial
reporting that meet generally accepted accounting principles for the public sector.
    Subd. 11. Amortization contributions. (a) In addition to the exhibit indicating the level
normal cost, the actuarial valuation must contain an exhibit indicating the additional annual
contribution sufficient to amortize the unfunded actuarial accrued liability. For funds governed
by chapters 3A, 352, 352B, 352C, 353, 354, 354A, and 490, the additional contribution must be
calculated on a level percentage of covered payroll basis by the established date for full funding in
effect when the valuation is prepared. For funds governed by chapter 3A, sections 352.90 through
352.951, chapters 352B, 352C, sections 353.63 through 353.68, and chapters 353C, 354A, and
490, the level percent additional contribution must be calculated assuming annual payroll growth
of 6.5 percent. For funds governed by sections 352.01 through 352.86 and chapter 354, the level
percent additional contribution must be calculated assuming an annual payroll growth of five
percent. For the fund governed by sections 353.01 through 353.46, the level percent additional
contribution must be calculated assuming an annual payroll growth of six percent. For all other
funds, the additional annual contribution must be calculated on a level annual dollar amount basis.
(b) For any fund other than the Minneapolis Employees Retirement Fund and the Public
Employees Retirement Association general plan, if there has not been a change in the actuarial
assumptions used for calculating the actuarial accrued liability of the fund, a change in the
benefit plan governing annuities and benefits payable from the fund, a change in the actuarial
cost method used in calculating the actuarial accrued liability of all or a portion of the fund, or a
combination of the three, which change or changes by itself or by themselves without inclusion
of any other items of increase or decrease produce a net increase in the unfunded actuarial
accrued liability of the fund, the established date for full funding is the first actuarial valuation
date occurring after June 1, 2020.
(c) For any fund or plan other than the Minneapolis Employees Retirement Fund and the
Public Employees Retirement Association general plan, if there has been a change in any or all
of the actuarial assumptions used for calculating the actuarial accrued liability of the fund, a
change in the benefit plan governing annuities and benefits payable from the fund, a change in
the actuarial cost method used in calculating the actuarial accrued liability of all or a portion of
the fund, or a combination of the three, and the change or changes, by itself or by themselves
and without inclusion of any other items of increase or decrease, produce a net increase in the
unfunded actuarial accrued liability in the fund, the established date for full funding must be
determined using the following procedure:
(i) the unfunded actuarial accrued liability of the fund must be determined in accordance
with the plan provisions governing annuities and retirement benefits and the actuarial assumptions
in effect before an applicable change;
(ii) the level annual dollar contribution or level percentage, whichever is applicable, needed
to amortize the unfunded actuarial accrued liability amount determined under item (i) by the
established date for full funding in effect before the change must be calculated using the interest
assumption specified in subdivision 8 in effect before the change;
(iii) the unfunded actuarial accrued liability of the fund must be determined in accordance
with any new plan provisions governing annuities and benefits payable from the fund and any
new actuarial assumptions and the remaining plan provisions governing annuities and benefits
payable from the fund and actuarial assumptions in effect before the change;
(iv) the level annual dollar contribution or level percentage, whichever is applicable, needed
to amortize the difference between the unfunded actuarial accrued liability amount calculated
under item (i) and the unfunded actuarial accrued liability amount calculated under item (iii) over
a period of 30 years from the end of the plan year in which the applicable change is effective
must be calculated using the applicable interest assumption specified in subdivision 8 in effect
after any applicable change;
(v) the level annual dollar or level percentage amortization contribution under item (iv) must
be added to the level annual dollar amortization contribution or level percentage calculated
under item (ii);
(vi) the period in which the unfunded actuarial accrued liability amount determined in item
(iii) is amortized by the total level annual dollar or level percentage amortization contribution
computed under item (v) must be calculated using the interest assumption specified in subdivision
8 in effect after any applicable change, rounded to the nearest integral number of years, but not
to exceed 30 years from the end of the plan year in which the determination of the established
date for full funding using the procedure set forth in this clause is made and not to be less than
the period of years beginning in the plan year in which the determination of the established date
for full funding using the procedure set forth in this clause is made and ending by the date for
full funding in effect before the change; and
(vii) the period determined under item (vi) must be added to the date as of which the actuarial
valuation was prepared and the date obtained is the new established date for full funding.
(d) For the Minneapolis Employees Retirement Fund, the established date for full funding is
June 30, 2020.
(e) For the general employees retirement plan of the Public Employees Retirement
Association, the established date for full funding is June 30, 2031.
(f) For the Teachers Retirement Association, the established date for full funding is June
30, 2037.
(g) For the retirement plans for which the annual actuarial valuation indicates an excess of
valuation assets over the actuarial accrued liability, the valuation assets in excess of the actuarial
accrued liability must be recognized as a reduction in the current contribution requirements by
an amount equal to the amortization of the excess expressed as a level percentage of pay over a
30-year period beginning anew with each annual actuarial valuation of the plan.
    Subd. 12. Actuarial gains and losses. The actuarial valuation must contain an exhibit
consisting of an analysis by the actuary explaining the net increase or decrease in the unfunded
actuarial accrued liability since the last valuation. The explanation must subdivide the net increase
or decrease in the unfunded actuarial accrued liability into at least the following parts:
(1) increases or decreases in the unfunded actuarial accrued liability because of changes
in benefits;
(2) increases and decreases in the unfunded actuarial accrued liability because of changes in
actuarial assumptions;
(3) increases or decreases in the unfunded actuarial accrued liability attributable to actuarial
gains or losses resulting from any experience deviations from the assumptions on which the
valuation is based, as follows:
(i) actual investment earnings;
(ii) actual postretirement mortality rates;
(iii) actual salary increase rates; and
(iv) the remainder of the increase or decrease not attributable to any separate source;
(4) increases or decreases in unfunded actuarial accrued liability because of other reasons,
including the effect of any amortization contribution paid or additional amortization contribution
previously calculated but unpaid; and
(5) increases or decreases in unfunded actuarial accrued liability because of changes in
eligibility requirements or groups included in the membership of the fund.
    Subd. 13. Membership tabulation. (a) The actuarial valuation must contain a tabulation of
active membership and annuitants in the fund. If the membership of a fund is under more than one
general benefit program, a separate tabulation must be made for each general benefit program.
(b) The tabulations must be prepared by the administration of the pension fund and must
contain the following information:
(1) Active members
Number
As of last valuation date
New entrants
Total
Separations from active service
Refund of contributions
Separation with deferred annuity
Separation with neither refund nor deferred
annuity
Disability
Death
Retirement with service annuity
Total separations
As of current valuation date
(2) Annuitants
Number
As of last valuation date
New entrants
Total
Terminations
Deaths
Other
Total Terminations
As of current valuation date
(c) The tabulation required under paragraph (b), clause (2), must be made separately for each
of the following classes of benefit recipients:
(1) service retirement annuitants;
(2) disability benefit recipients;
(3) survivor benefit recipients; and
(4) deferred annuitants.
    Subd. 14. Administrative expenses. (a) The actuarial valuation must indicate the
administrative expenses of the fund, expressed both in dollars and as a percentage of covered
payroll.
(b) Administrative expenses are the costs incurred by the retirement plans in the course of
operating the plan, excluding investment expenses. Investment expenses include all expenses
incurred for the retention of professional external investment managers and professional
investment consultants, custodian bank fees, investment transaction costs, and the costs incurred
by the retirement plans to manage investment portfolios or assets internally. Investment expenses
must be deducted from the investment return used in the actuarial valuation, and must not be
included in administrative expenses when calculating the allowance for expenses.
    Subd. 15. Benefit plan summary. The actuarial valuation must contain a summary of the
principal provisions of the benefit plan upon which the valuation is based.
    Subd. 16. Quadrennial experience study; contents. A quadrennial experience study, if
required, must contain an analysis by the approved actuary of the experience of the fund and a
comparison of the experience with the actuarial assumptions on which the most recent actuarial
valuation of the retirement fund was based.
    Subd. 17. Actuarial services by approved actuaries. (a) The actuarial valuation or
quadrennial experience study must be made and any actuarial consulting services for a retirement
fund or plan must be provided by an approved actuary. The actuarial valuation or quadrennial
experience study must include a signed written declaration that it has been prepared according to
sections 356.20 to 356.23 and according to the most recent standards for actuarial work adopted
by the Legislative Commission on Pensions and Retirement.
(b) Actuarial valuations or experience studies prepared by an approved actuary retained by
a retirement fund or plan must be submitted to the Legislative Commission on Pensions and
Retirement within ten days of the submission of the document to the retirement fund or plan.
    Subd. 18. Establishment of actuarial assumptions. (a) The actuarial assumptions used for
the preparation of actuarial valuations under this section that are other than those set forth in this
section may be changed only with the approval of the Legislative Commission on Pensions
and Retirement.
(b) A change in the applicable actuarial assumptions may be proposed by the governing
board of the applicable pension fund or relief association, by the actuary retained by the joint
retirement systems under section 356.214, by the actuarial advisor to a pension fund governed by
chapter 352, 353, 354, or 354A, or by the actuary retained by a local police or firefighters relief
association governed by sections 69.77 or 69.771 to 69.776, if one is retained.
History: 1975 c 192 s 3; 1978 c 563 s 9,10; 1979 c 184 s 1; 1981 c 224 s 169; 1984 c 564 s
43; 1Sp1985 c 7 s 27; 1986 c 359 s 26; 1986 c 458 s 20; 1987 c 259 s 55; 1989 c 319 art 13 s
90,91; 1991 c 199 art 2 s 24; 1991 c 269 art 3 s 3-19; 1991 c 345 art 4 s 3,4; 1993 c 336 art 4
s 1; 1993 c 352 s 7; 1995 c 141 art 3 s 14,15; 1997 c 233 art 1 s 57-59; 1997 c 241 art 4 s 1;
1998 c 390 art 8 s 2; 1999 c 222 art 4 s 14; 2000 c 461 art 1 s 3-6; 1Sp2001 c 10 art 11 s 18;
2002 c 392 art 9 s 1; art 11 s 7,53; 2004 c 223 s 7,8; 1Sp2005 c 8 art 11 s 2; 2006 c 271 art
3 sec 47; 2006 c 277 art 3 s 33,34

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