2003 Minnesota Statutes

     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 have the meaning given. 

    (b) "Actuarial valuation" means a set of calculations 
 prepared by the actuary retained by the Legislative Commission 
 on Pensions and Retirement 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 Legislative Commission on Pensions and Retirement 
 shall have prepared by the actuary retained by the commission 
 annual actuarial valuations of the retirement plans enumerated 
 in section 3.85, subdivision 11, paragraph (b), and quadrennial 
 experience studies of the retirement plans enumerated in section 
 3.85, subdivision 11, 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 3.85, subdivision 11, 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 by the Legislative Commission on Pensions and 
 Retirement 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 commission-retained actuary 
 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 
      Minneapolis 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 
      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 

    (2) modified single rate future salary increase assumption 

                                             future salary 
                plan                       increase assumption
          Minneapolis employees        the prior calendar year 
            retirement plan            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             select calculation and
          retirement plan                      assumption A 
      correctional state employees 
          retirement plan                      assumption H 
      State Patrol retirement plan             assumption H 
      general public employees            select calculation and
          retirement plan                      assumption B 
      public employees police and fire 
          fund retirement plan                 assumption C 
      local government correctional service 
          retirement plan                      assumption H 
      teachers retirement plan                 assumption D 
      Duluth teachers retirement plan          assumption E 
      Minneapolis teachers retirement plan     assumption F 
      St. Paul teachers retirement plan        assumption G 
      
      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; 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; and 0.4 percent for the Minneapolis Teachers
      Retirement Fund Association.
      
           The ultimate future salary increase assumption is:
      
      age  A     B      C     D     E     F     G      H 
      16  6.95% 6.95% 11.50% 8.20% 8.00% 6.50% 6.90% 7.7500
      17  6.90  6.90  11.50  8.15  8.00  6.50  6.90  7.7500
      18  6.85  6.85  11.50  8.10  8.00  6.50  6.90  7.7500
      19  6.80  6.80  11.50  8.05  8.00  6.50  6.90  7.7500
      20  6.75  6.40  11.50  6.00  6.90  6.50  6.90  7.7500
      21  6.75  6.40  11.50  6.00  6.90  6.50  6.90  7.1454
      22  6.75  6.40  11.00  6.00  6.90  6.50  6.90  7.0725
      23  6.75  6.40  10.50  6.00  6.85  6.50  6.85  7.0544
      24  6.75  6.40  10.00  6.00  6.80  6.50  6.80  7.0363
      25  6.75  6.40   9.50  6.00  6.75  6.50  6.75  7.0000 
      26  6.75  6.36   9.20  6.00  6.70  6.50  6.70  7.0000
      27  6.75  6.32   8.90  6.00  6.65  6.50  6.65  7.0000 
      28  6.75  6.28   8.60  6.00  6.60  6.50  6.60  7.0000
      29  6.75  6.24   8.30  6.00  6.55  6.50  6.55  7.0000
      30  6.75  6.20   8.00  6.00  6.50  6.50  6.50  7.0000
      31  6.75  6.16   7.80  6.00  6.45  6.50  6.45  7.0000
      32  6.75  6.12   7.60  6.00  6.40  6.50  6.40  7.0000
      33  6.75  6.08   7.40  6.00  6.35  6.50  6.35  7.0000
      34  6.75  6.04   7.20  6.00  6.30  6.50  6.30  7.0000
      35  6.75  6.00   7.00  6.00  6.25  6.50  6.25  7.0000
      36  6.75  5.96   6.80  6.00  6.20  6.50  6.20  6.9019
      37  6.75  5.92   6.60  6.00  6.15  6.50  6.15  6.8074
      38  6.75  5.88   6.40  5.90  6.10  6.50  6.10  6.7125
      39  6.75  5.84   6.20  5.80  6.05  6.50  6.05  6.6054
      40  6.75  5.80   6.00  5.70  6.00  6.50  6.00  6.5000
      41  6.75  5.76   5.90  5.60  5.90  6.50  5.95  6.3540
      42  6.75  5.72   5.80  5.50  5.80  6.50  5.90  6.2087
      43  6.65  5.68   5.70  5.40  5.70  6.50  5.85  6.0622
      44  6.55  5.64   5.60  5.30  5.60  6.50  5.80  5.9048
      45  6.45  5.60   5.50  5.20  5.50  6.50  5.75  5.7500
      46  6.35  5.56   5.45  5.10  5.40  6.40  5.70  5.6940
      47  6.25  5.52   5.40  5.00  5.30  6.30  5.65  5.6375
      48  6.15  5.48   5.35  5.00  5.20  6.20  5.60  5.5822
      49  6.05  5.44   5.30  5.00  5.10  6.10  5.55  5.5404
      50  5.95  5.40   5.25  5.00  5.00  6.00  5.50  5.5000
      51  5.85  5.36   5.25  5.00  5.00  5.90  5.45  5.4384
      52  5.75  5.32   5.25  5.00  5.00  5.80  5.40  5.3776
      53  5.65  5.28   5.25  5.00  5.00  5.70  5.35  5.3167
      54  5.55  5.24   5.25  5.00  5.00  5.60  5.30  5.2826
      55  5.45  5.20   5.25  5.00  5.00  5.50  5.25  5.2500 
      56  5.35  5.16   5.25  5.00  5.00  5.40  5.20  5.2500
      57  5.25  5.12   5.25  5.00  5.00  5.30  5.15  5.2500
      58  5.25  5.08   5.25  5.10  5.00  5.20  5.10  5.2500
      59  5.25  5.04   5.25  5.20  5.00  5.10  5.05  5.2500
      60  5.25  5.00   5.25  5.30  5.00  5.00  5.00  5.2500
      61  5.25  5.00   5.25  5.40  5.00  5.00  5.00  5.2500
      62  5.25  5.00   5.25  5.50  5.00  5.00  5.00  5.2500
      63  5.25  5.00   5.25  5.60  5.00  5.00  5.00  5.2500
      64  5.25  5.00   5.25  5.70  5.00  5.00  5.00  5.2500
      65  5.25  5.00   5.25  5.70  5.00  5.00  5.00  5.2500
      66  5.25  5.00   5.25  5.70  5.00  5.00  5.00  5.2500
      67  5.25  5.00   5.25  5.70  5.00  5.00  5.00  5.2500
      68  5.25  5.00   5.25  5.70  5.00  5.00  5.00  5.2500
      69  5.25  5.00   5.25  5.70  5.00  5.00  5.00  5.2500
      70  5.25  5.00   5.25  5.70  5.00  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 
      Minneapolis 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 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 
 Legislative Commission on Pensions and Retirement, 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. 

    HIST: 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