1.1 .................... moves to amend H. F. No. 2847, the first engrossment, as follows:
1.2 Page 1, after line 18, insert:
1.3 "ARTICLE 1
1.4 MINNESOTA POST RETIREMENT INVESTMENT FUND CHANGES
1.5 Section 1. Minnesota Statutes 2004, section 11A.18, subdivision 9, is amended to read:
1.6 Subd. 9. Calculation of postretirement adjustment. (a) Annually, following June
1.7 30, the state board shall use the procedures in paragraphs (b), (c), and (d) to determine
1.8 whether a postretirement adjustment is payable and to determine the amount of any
1.9 postretirement adjustment.
1.10 (b) If the Consumer Price Index for urban wage earners and clerical workers all
1.11 items index published by the Bureau of Labor Statistics of the United States Department
1.12 of Labor increases from June 30 of the preceding year to June 30 of the current year,
1.13 the state board shall certify the percentage increase. The amount certified must not
1.14 exceed the lesser of the difference between the preretirement interest assumption and
1.15 postretirement interest assumption in section 356.215, subdivision 8, paragraph (a), or
1.16 2.5 percent. For the Minneapolis Employees Retirement Fund, the amount certified must
1.17 not exceed 3.5 percent.
1.18 (c) In addition to any percentage increase certified under paragraph (b), the board
1.19 shall use the following procedures to determine if a postretirement adjustment is payable
1.20 under this paragraph:
1.21 (1) The state board shall determine the market value of the fund on June 30 of
1.22 that year;
1.23 (2) The amount of reserves required as of the current June 30 for the annuity or
1.24 benefit payable to an annuitant and benefit recipient of the participating public pension
1.25 plans or funds must be determined by the commission-retained actuary as of the current
1.26 June 30 retained under section 356.214. An annuitant or benefit recipient who has been
1.27 receiving an annuity or benefit for at least 12 full months as of the current June 30 is
2.1 eligible to receive a full postretirement adjustment. An annuitant or benefit recipient who
2.2 has been receiving an annuity or benefit for at least one full month, but less than 12 full
2.3 months as of the current June 30, is eligible to receive a partial postretirement adjustment.
2.4 Each fund shall report separately the amount of the reserves for those annuitants and
2.5 benefit recipients who are eligible to receive a full postretirement benefit adjustment. This
2.6 amount is known as "eligible reserves." Each fund shall also report separately the amount
2.7 of the reserves for those annuitants and benefit recipients who are not eligible to receive
2.8 a postretirement adjustment. This amount is known as "noneligible reserves." For an
2.9 annuitant or benefit recipient who is eligible to receive a partial postretirement adjustment,
2.10 each fund shall report separately as additional "eligible reserves" an amount that bears the
2.11 same ratio to the total reserves required for the annuitant or benefit recipient as the number
2.12 of full months of annuity or benefit receipt as of the current June 30 bears to 12 full
2.13 months. The remainder of the annuitant's or benefit recipient's reserves must be separately
2.14 reported as additional "noneligible reserves." The amount of "eligible" and "noneligible"
2.15 required reserves must be certified to the board by the commission-retained actuary as
2.16 soon as is practical following the current June 30;
2.17 (3) The state board shall determine the percentage increase certified under paragraph
2.18 (b) multiplied by the eligible required reserves, as adjusted for mortality gains and losses
2.19 under subdivision 11, determined under clause (2);
2.20 (4) The state board shall add the amount of reserves required for the annuities or
2.21 benefits payable to annuitants and benefit recipients of the participating public pension
2.22 plans or funds as of the current June 30 to the amount determined under clause (3);
2.23 (5) The state board shall subtract the amount determined under clause (4) from the
2.24 market value of the fund determined under clause (1);
2.25 (6) The state board shall adjust the amount determined under clause (5) by the
2.26 cumulative current balance determined pursuant to under clause (8) and any negative
2.27 balance carried forward under clause (9);
2.28 (7) A positive amount resulting from the calculations in clauses (1) to (6) is the
2.29 excess market value. A negative amount is the negative balance;
2.30 (8) The state board shall allocate one-fifth of the excess market value or one-fifth
2.31 of the negative balance to each of five consecutive years, beginning with the fiscal year
2.32 ending the current June 30; and
2.33 (9) To calculate the postretirement adjustment under this paragraph based on
2.34 investment performance for a fiscal year, the state board shall add together all excess
2.35 market value allocated to that year and subtract from the sum all negative balances
2.36 allocated to that year. If this calculation results in a negative number, the entire negative
3.1 balance must be carried forward and allocated to the next year. If the resulting amount is
3.2 positive, a postretirement adjustment is payable under this paragraph. The board shall
3.3 express a positive amount as a percentage of the total eligible required reserves certified to
3.4 the board under clause (2).
3.5 (d) The state board shall determine the amount of any postretirement adjustment
3.6 which is payable using the following procedure:
3.7 (1) The total "eligible" required reserves as of the first of January next following
3.8 the end of the fiscal year for the annuitants and benefit recipients eligible to receive a full
3.9 or partial postretirement adjustment as determined by clause (2) must be certified to the
3.10 state board by the commission-retained actuary retained under section 356.214. The total
3.11 "eligible" required reserves must be determined by the commission-retained actuary
3.12 retained under section 356.214 on the assumption that all annuitants and benefit recipients
3.13 eligible to receive a full or partial postretirement adjustment will be alive on the January
3.14 1 in question; and
3.15 (2) The state board shall add the percentage certified under paragraph (b) to any
3.16 positive percentage calculated under paragraph (c). The board shall not subtract from the
3.17 percentage certified under paragraph (b) any negative amount calculated under paragraph
3.18 (c). The sum of these percentages must be carried to five decimal places and must be
3.19 certified to each participating public pension fund or plan as the full postretirement
3.20 adjustment percentage. The full postretirement adjustment percentage certified to each
3.21 participating public pension plan or fund must not exceed five percent. For the Minneapolis
3.22 Employees Retirement Fund, no maximum percentage adjustment is applicable.
3.23 (e) A retirement annuity payable in the event of retirement before becoming eligible
3.24 for Social Security benefits as provided in section 352.116, subdivision 3; 353.29,
3.25 subdivision 6; or 354.35 must be treated as the sum of a period certain retirement annuity
3.26 and a life retirement annuity for the purposes of any postretirement adjustment. The
3.27 period certain retirement annuity plus the life retirement annuity must be the annuity
3.28 amount payable until age 62 or 65, whichever applies. A postretirement adjustment
3.29 granted on the period certain retirement annuity must terminate when the period certain
3.30 retirement annuity terminates.
3.31 Sec. 2. EFFECTIVE DATE.
3.32 Section 1 is effective July 1, 2010.
3.33 ARTICLE 2
3.34 DEFERRED ANNUITY AUGMENTATION RATE CHANGE
3.35 Section 1. Minnesota Statutes 2004, section 352.116, subdivision 1a, is amended to
3.36 read:
4.1 Subd. 1a. Actuarial reduction for early retirement. This subdivision applies to a
4.2 person who has become at least 55 years old and first became a covered employee after
4.3 June 30, 1989, and to any other covered employee who has become at least 55 years
4.4 old and whose annuity is higher when calculated under section 352.115, subdivision 3,
4.5 paragraph (b), in conjunction with this subdivision than when calculated under section
4.6 352.115, subdivision 3, paragraph (a), in conjunction with subdivision 1. A covered
4.7 employee who retires before the normal retirement age shall be paid the normal retirement
4.8 annuity provided in section 352.115, subdivisions 2 and 3, paragraph (b), reduced so
4.9 that the reduced annuity is the actuarial equivalent of the annuity that would be payable
4.10 to the employee if the employee deferred receipt of the annuity and the annuity amount
4.11 were augmented at an annual rate of three percent compounded annually from the day
4.12 the annuity begins to accrue until the normal retirement age if the employee became an
4.13 employee before July 1, 2006, and at an annual rate of 2.5 percent compounded annually
4.14 from the day the annuity begins to accrue until the normal retirement age if the employee
4.15 initially becomes an employee after June 30, 2006.
4.16 Sec. 2. Minnesota Statutes 2004, section 352.72, subdivision 2, is amended to read:
4.17 Subd. 2. Computation of deferred annuity. (a) The deferred annuity, if any,
4.18 accruing under subdivision 1, or section 352.22, subdivision 3, must be computed as
4.19 provided in section 352.22, subdivision 3, on the basis of allowable service before
4.20 termination of state service and augmented as provided herein. The required reserves
4.21 applicable to a deferred annuity or to an annuity for which a former employee was eligible
4.22 but had not applied or to any deferred segment of an annuity must be determined as of the
4.23 date the benefit begins to accrue and augmented by interest compounded annually from
4.24 the first day of the month following the month in which the employee ceased to be a state
4.25 employee, or July 1, 1971, whichever is later, to the first day of the month in which the
4.26 annuity begins to accrue. The rates of interest used for this purpose must be five percent
4.27 compounded annually until January 1, 1981, and three percent compounded annually
4.28 thereafter until January 1 of the year following the year in which the former employee
4.29 attains age 55., and from that date to the effective date of retirement, the rate is five percent
4.30 compounded annually if the employee became an employee before July 1, 2006, and at
4.31 2.5 percent compounded annually if the employee becomes an employee after June 30,
4.32 2006. If a person has more than one period of uninterrupted service, the required reserves
4.33 related to each period must be augmented by interest under this subdivision. The sum
4.34 of the augmented required reserves so determined is the present value of the annuity.
4.35 "Uninterrupted service" for the purpose of this subdivision means periods of covered
4.36 employment during which the employee has not been separated from state service for more
5.1 than two years. If a person repays a refund, the service restored by the repayment must be
5.2 considered continuous with the next period of service for which the employee has credit
5.3 with this system. The formula percentages used for each period of uninterrupted service
5.4 must be those applicable to a new employee. The mortality table and interest assumption
5.5 used to compute the annuity must be those in effect when the employee files application
5.6 for annuity. This section does not reduce the annuity otherwise payable under this chapter.
5.7 (b) The retirement annuity or disability benefit of, or the survivor benefit payable on
5.8 behalf of, a former state employee who terminated service before July 1, 1997, which is
5.9 not first payable until after June 30, 1997, must be increased on an actuarial equivalent
5.10 basis to reflect the change in the postretirement interest rate actuarial assumption under
5.11 section 356.215, subdivision 8, from five percent to six percent under a calculation
5.12 procedure and the tables adopted by the board and approved by the actuary retained by
5.13 the Legislative Commission on Pensions and Retirement.
5.14 Sec. 3. Minnesota Statutes 2004, section 352B.30, subdivision 2, is amended to read:
5.15 Subd. 2. Computation of deferred annuity. Deferred annuities must be computed
5.16 according to this chapter on the basis of allowable service before termination of service
5.17 and augmented as provided in this chapter. The required reserves applicable to a deferred
5.18 annuity must be augmented by interest compounded annually from the first day of the
5.19 month following the month in which the member terminated service, or July 1, 1971,
5.20 whichever is later, to the first day of the month in which the annuity begins to accrue. The
5.21 rates of interest used for this purpose shall be five percent per year compounded annually
5.22 until January 1, 1981, and after that date three percent per year compounded annually if
5.23 the employee became an employee before July 1, 2006, and at 2.5 percent compounded
5.24 annually if the employee becomes an employee after June 30, 2006. The mortality table
5.25 and interest assumption used to compute the annuity shall be those in effect when the
5.26 member files application for annuity.
5.27 Sec. 4. Minnesota Statutes 2004, section 353.30, subdivision 5, is amended to read:
5.28 Subd. 5. Actuarial reduction for early retirement. This subdivision applies to a
5.29 member who has become at least 55 years old and first became a public employee after
5.30 June 30, 1989, and to any other member who has become at least 55 years old and whose
5.31 annuity is higher when calculated under section 353.29, subdivision 3, paragraph (b), in
5.32 conjunction with this subdivision than when calculated under section 353.29, subdivision
5.33 3, paragraph (a), in conjunction with subdivision 1, 1a, 1b, or 1c. An employee who
5.34 retires before normal retirement age shall be paid the retirement annuity provided in
5.35 section 353.29, subdivision 3, paragraph (b), reduced so that the reduced annuity is the
5.36 actuarial equivalent of the annuity that would be payable to the employee if the employee
6.1 deferred receipt of the annuity and the annuity amount were augmented at an annual rate
6.2 of three percent compounded annually from the day the annuity begins to accrue until the
6.3 normal retirement age if the employee became an employee before July 1, 2006, and at 2.5
6.4 percent compounded annually from the day the annuity begins to accrue until the normal
6.5 retirement age if the employee initially becomes an employee after June 30, 2006.
6.6 Sec. 5. Minnesota Statutes 2004, section 353.71, subdivision 2, is amended to read:
6.7 Subd. 2. Deferred annuity computation; augmentation. (a) The deferred
6.8 annuity accruing under subdivision 1, or under sections 353.34, subdivision 3, and
6.9 353.68, subdivision 4, must be computed on the basis of allowable service prior to the
6.10 termination of public service and augmented as provided in this paragraph. The required
6.11 reserves applicable to a deferred annuity, or to any deferred segment of an annuity must
6.12 be determined as of the first day of the month following the month in which the former
6.13 member ceased to be a public employee, or July 1, 1971, whichever is later. These
6.14 required reserves must be augmented at the rate of five percent annually compounded
6.15 annually until January 1, 1981, and at the rate of three percent thereafter until January 1
6.16 of the year following the year in which the former member attains age 55. and from that
6.17 date to the effective date of retirement, the rate is five percent compounded annually if
6.18 the employee became an employee before July 1, 2006, and at 2.5 percent compounded
6.19 annually if the employee becomes an employee after June 30, 2006. If a person has more
6.20 than one period of uninterrupted service, the required reserves related to each period
6.21 must be augmented as specified in this paragraph. The sum of the augmented required
6.22 reserves is the present value of the annuity. Uninterrupted service for the purpose of this
6.23 subdivision means periods of covered employment during which the employee has not
6.24 been separated from public service for more than two years. If a person repays a refund,
6.25 the restored service must be considered as continuous with the next period of service
6.26 for which the employee has credit with this association. This section must not reduce
6.27 the annuity otherwise payable under this chapter. This paragraph applies to individuals
6.28 who become deferred annuitants on or after July 1, 1971. For a member who became a
6.29 deferred annuitant before July 1, 1971, the paragraph applies from July 1, 1971, if the
6.30 former active member applies for an annuity after July 1, 1973.
6.31 (b) The retirement annuity or disability benefit of, or the survivor benefit payable on
6.32 behalf of, a former member who terminated service before July 1, 1997, or the survivor
6.33 benefit payable on behalf of a basic or police and fire member who was receiving disability
6.34 benefits before July 1, 1997, which is first payable after June 30, 1997, must be increased
6.35 on an actuarial equivalent basis to reflect the change in the postretirement interest rate
6.36 actuarial assumption under section 356.215, subdivision 8, from five percent to six percent
7.1 under a calculation procedure and tables adopted by the board and approved by the actuary
7.2 retained by the Legislative Commission on Pensions and Retirement.
7.3 Sec. 6. Minnesota Statutes 2005 Supplement, section 354.44, subdivision 6, is
7.4 amended to read:
7.5 Subd. 6. Computation of formula program retirement annuity. (a) The formula
7.6 retirement annuity must be computed in accordance with the applicable provisions of the
7.7 formulas stated in paragraph (b) or (d) on the basis of each member's average salary under
7.8 section 354.05, subdivision 13a, for the period of the member's formula service credit.
7.9 (b) This paragraph, in conjunction with paragraph (c), applies to a person who first
7.10 became a member of the association or a member of a pension fund listed in section
7.11 356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with
7.12 paragraph (e), produces a higher annuity amount, in which case paragraph (d) applies. The
7.13 average salary as defined in section 354.05, subdivision 13a, multiplied by the following
7.14 percentages per year of formula service credit shall determine the amount of the annuity to
7.15 which the member qualifying therefor is entitled:
7.16 Coordinated Member Basic Member
7.17 the percent
7.18 specified in
7.19 the percent specified section 356.315,
7.20 Each year of service in section 356.315, subdivision 3, per
7.21 during first ten subdivision 1, per year year
7.22 the percent
7.23 specified in
7.24 the percent specified section 356.315,
7.25 Each year of service in section 356.315, subdivision 4, per
7.26 thereafter subdivision 2, per year year
7.27 (c) (i) This paragraph applies only to a person who first became a member of
7.28 the association or a member of a pension fund listed in section 356.30, subdivision 3,
7.29 before July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in
7.30 conjunction with this paragraph than when calculated under paragraph (d), in conjunction
7.31 with paragraph (e).
7.32 (ii) Where any member retires prior to normal retirement age under a formula
7.33 annuity, the member shall be paid a retirement annuity in an amount equal to the normal
7.34 annuity provided in paragraph (b) reduced by one-quarter of one percent for each month
7.35 that the member is under normal retirement age at the time of retirement except that for
7.36 any member who has 30 or more years of allowable service credit, the reduction shall be
7.37 applied only for each month that the member is under age 62.
7.38 (iii) Any member whose attained age plus credited allowable service totals 90 years
7.39 is entitled, upon application, to a retirement annuity in an amount equal to the normal
7.40 annuity provided in paragraph (b), without any reduction by reason of early retirement.
8.1 (d) This paragraph applies to a member who has become at least 55 years old and
8.2 first became a member of the association after June 30, 1989, and to any other member
8.3 who has become at least 55 years old and whose annuity amount when calculated under
8.4 this paragraph and in conjunction with paragraph (e), is higher than it is when calculated
8.5 under paragraph (b), in conjunction with paragraph (c). The average salary, as defined in
8.6 section 354.05, subdivision 13a, multiplied by the percent specified by section 356.315,
8.7 subdivision 4, for each year of service for a basic member and by the percent specified in
8.8 section 356.315, subdivision 2, for each year of service for a coordinated member shall
8.9 determine the amount of the retirement annuity to which the member is entitled.
8.10 (e) This paragraph applies to a person who has become at least 55 years old and first
8.11 becomes a member of the association after June 30, 1989, and to any other member who
8.12 has become at least 55 years old and whose annuity is higher when calculated under
8.13 paragraph (d) in conjunction with this paragraph than when calculated under paragraph
8.14 (b), in conjunction with paragraph (c). An employee who retires under the formula annuity
8.15 before the normal retirement age shall be paid the normal annuity provided in paragraph
8.16 (d) reduced so that the reduced annuity is the actuarial equivalent of the annuity that would
8.17 be payable to the employee if the employee deferred receipt of the annuity and the annuity
8.18 amount were augmented at an annual rate of three percent compounded annually from the
8.19 day the annuity begins to accrue until the normal retirement age if the employee became
8.20 an employee before July 1, 2006, and at 2.5 percent compounded annually if the employee
8.21 becomes an employee after June 30, 2006.
8.22 (f) No retirement annuity is payable to a former employee with a salary that exceeds
8.23 95 percent of the governor's salary unless and until the salary figures used in computing
8.24 the highest five successive years average salary under paragraph (a) have been audited by
8.25 the Teachers Retirement Association and determined by the executive director to comply
8.26 with the requirements and limitations of section 354.05, subdivisions 35 and 35a.
8.27 Sec. 7. Minnesota Statutes 2004, section 354.55, subdivision 11, is amended to read:
8.28 Subd. 11. Deferred annuity; augmentation. (a) Any person covered under section
8.29 354.44, subdivision 6, who ceases to render teaching service, may leave the person's
8.30 accumulated deductions in the fund for the purpose of receiving a deferred annuity at
8.31 retirement. Eligibility for an annuity under this subdivision is governed pursuant to
8.32 section 354.44, subdivision 1, or 354.60.
8.33 (b) The amount of the deferred retirement annuity is determined by section 354.44,
8.34 subdivision 6, and augmented as provided in this subdivision. The required reserves
8.35 related to that portion of the annuity which had accrued when the member ceased to
8.36 render teaching service must be augmented by interest compounded annually from the
9.1 first day of the month following the month during which the member ceased to render
9.2 teaching service to the effective date of retirement. There shall be no augmentation if
9.3 this period is less than three months or if this period commences prior to July 1, 1971.
9.4 The rates of interest used for this purpose must be five percent compounded annually
9.5 commencing July 1, 1971, until January 1, 1981, and three percent compounded annually
9.6 thereafter until January 1 of the year following the year in which the former member
9.7 attains age 55. and from that date to the effective date of retirement, the rate is five percent
9.8 compounded annually if the employee became an employee before July 1, 2006, and at
9.9 2.5 percent compounded annually if the employee becomes an employee after June 30,
9.10 2006. If a person has more than one period of uninterrupted service, a separate average
9.11 salary determined under section 354.44, subdivision 6, must be used for each period and
9.12 the required reserves related to each period must be augmented by interest pursuant to
9.13 this subdivision. The sum of the augmented required reserves so determined shall be the
9.14 basis for purchasing the deferred annuity. If a person repays a refund, the service restored
9.15 by the repayment must be considered as continuous with the next period of service for
9.16 which the person has credit with this fund. If a person does not render teaching service in
9.17 any one fiscal year or more consecutive fiscal years and then resumes teaching service,
9.18 the formula percentages used from the date of the resumption of teaching service must be
9.19 those applicable to new members. The mortality table and interest assumption used to
9.20 compute the annuity must be the applicable mortality table established by the board under
9.21 section 354.07, subdivision 1, and the interest rate assumption under section 356.215 in
9.22 effect when the member retires. A period of uninterrupted service for the purposes of this
9.23 subdivision means a period of covered teaching service during which the member has not
9.24 been separated from active service for more than one fiscal year.
9.25 (c) In no case shall the annuity payable under this subdivision be less than the
9.26 amount of annuity payable pursuant to section 354.44, subdivision 6.
9.27 (d) The requirements and provisions for retirement before normal retirement age
9.28 contained in section 354.44, subdivision 6, clause (3) or (5), shall also apply to an
9.29 employee fulfilling the requirements with a combination of service as provided in section
9.30 354.60.
9.31 (e) The augmentation provided by this subdivision applies to the benefit provided
9.32 in section 354.46, subdivision 2.
9.33 (f) The augmentation provided by this subdivision shall not apply to any period in
9.34 which a person is on an approved leave of absence from an employer unit covered by the
9.35 provisions of this chapter.
10.1 (g) The retirement annuity or disability benefit of, or the survivor benefit payable on
10.2 behalf of, a former teacher who terminated service before July 1, 1997, which is not first
10.3 payable until after June 30, 1997, must be increased on an actuarial equivalent basis to
10.4 reflect the change in the postretirement interest rate actuarial assumption under section
10.5 356.215, subdivision 8, from five percent to six percent under a calculation procedure and
10.6 tables adopted by the board as recommended by an approved actuary and approved by the
10.7 actuary retained by the Legislative Commission on Pensions and Retirement.
10.8 Sec. 8. Minnesota Statutes 2004, section 354A.31, subdivision 7, is amended to read:
10.9 Subd. 7. Actuarial reduction for early retirement. This subdivision applies to
10.10 a person who has become at least 55 years old and first becomes a coordinated member
10.11 after June 30, 1989, and to any other coordinated member who has become at least 55
10.12 years old and whose annuity is higher when calculated using the retirement annuity
10.13 formula percentage in subdivision 4, paragraph (d), and subdivision 4a, paragraph (d), in
10.14 conjunction with this subdivision than when calculated under subdivision 4, paragraph
10.15 (c), or subdivision 4a, paragraph (c), in conjunction with subdivision 6. A coordinated
10.16 member who retires before the full benefit age shall be paid the retirement annuity
10.17 calculated using the retirement annuity formula percentage in subdivision 4, paragraph
10.18 (d), or subdivision 4a, paragraph (d), reduced so that the reduced annuity is the actuarial
10.19 equivalent of the annuity that would be payable to the member if the member deferred
10.20 receipt of the annuity and the annuity amount were augmented at an annual rate of three
10.21 percent compounded annually from the day the annuity begins to accrue until the normal
10.22 retirement age if the employee became an employee before July 1, 2006, and at 2.5
10.23 percent compounded annually from the day the annuity begins to accrue until the normal
10.24 retirement age if the person initially becomes a teacher after June 30, 2006.
10.25 Sec. 9. Minnesota Statutes 2004, section 354A.37, subdivision 2, is amended to read:
10.26 Subd. 2. Eligibility for deferred retirement annuity. Any coordinated member
10.27 who ceases to render teaching services for the school district in which the teachers
10.28 retirement fund association is located, with sufficient allowable service credit to meet
10.29 the minimum service requirements specified in section 354A.31, subdivision 1, shall be
10.30 entitled to a deferred retirement annuity in lieu of a refund pursuant to subdivision 1. The
10.31 deferred retirement annuity shall be computed pursuant to section 354A.31 and shall be
10.32 augmented as provided in this subdivision. The deferred annuity shall commence upon
10.33 application after the person on deferred status attains at least the minimum age specified in
10.34 section 354A.31, subdivision 1.
10.35 The monthly annuity amount that had accrued when the member ceased to render
10.36 teaching service must be augmented from the first day of the month following the month
11.1 during which the member ceased to render teaching service to the effective date of
11.2 retirement. There is no augmentation if this period is less than three months. The rate of
11.3 augmentation is three percent compounded annually until January 1 of the year following
11.4 the year in which the former member attains age 55, and five percent compounded
11.5 annually after that date to the effective date of retirement if the employee became an
11.6 employee before July 1, 2006, and at 2.5 percent compounded annually if the employee
11.7 becomes an employee after June 30, 2006. If a person has more than one period of
11.8 uninterrupted service, a separate average salary determined under section 354A.31 must
11.9 be used for each period, and the monthly annuity amount related to each period must be
11.10 augmented as provided in this subdivision. The sum of the augmented monthly annuity
11.11 amounts determines the total deferred annuity payable. If a person repays a refund, the
11.12 service restored by the repayment must be considered as continuous with the next period
11.13 of service for which the person has credit with the fund. If a person does not render
11.14 teaching services in any one fiscal year or more consecutive fiscal years and then resumes
11.15 teaching service, the formula percentages used from the date of resumption of teaching
11.16 service are those applicable to new members. The mortality table and interest assumption
11.17 used to compute the annuity are the table established by the fund to compute other
11.18 annuities, and the interest assumption under section 356.215 in effect when the member
11.19 retires. A period of uninterrupted service for the purpose of this subdivision means a
11.20 period of covered teaching service during which the member has not been separated from
11.21 active service for more than one fiscal year.
11.22 The augmentation provided by this subdivision applies to the benefit provided in
11.23 section 354A.35, subdivision 2. The augmentation provided by this subdivision does
11.24 not apply to any period in which a person is on an approved leave of absence from an
11.25 employer unit.
11.26 Sec. 10. Minnesota Statutes 2004, section 356.30, subdivision 1, is amended to read:
11.27 Subdivision 1. Eligibility; computation of annuity. (a) Notwithstanding any
11.28 provisions of the laws governing the retirement plans enumerated in subdivision 3, a
11.29 person who has met the qualifications of paragraph (b) may elect to receive a retirement
11.30 annuity from each enumerated retirement plan in which the person has at least one-half
11.31 year of allowable service, based on the allowable service in each plan, subject to the
11.32 provisions of paragraph (c).
11.33 (b) A person may receive, upon retirement, a retirement annuity from each
11.34 enumerated retirement plan in which the person has at least one-half year of allowable
11.35 service, and augmentation of a deferred annuity calculated at the appropriate rate under
11.36 the laws governing each public pension plan or fund named in subdivision 3, based on
12.1 the date of the person's initial entry into public employment from the date the person
12.2 terminated all public service if:
12.3 (1) the person has allowable service totaling an amount that allows the person to
12.4 receive an annuity in any two or more of the enumerated plans; and
12.5 (2) the person has not begun to receive an annuity from any enumerated plan or the
12.6 person has made application for benefits from each applicable plan and the effective
12.7 dates of the retirement annuity with each plan under which the person chooses to receive
12.8 an annuity are within a one-year period.
12.9 (c) The retirement annuity from each plan must be based upon the allowable service,
12.10 accrual rates, and average salary in the applicable plan except as further specified or
12.11 modified in the following clauses:
12.12 (1) the laws governing annuities must be the law in effect on the date of termination
12.13 from the last period of public service under a covered retirement plan with which the
12.14 person earned a minimum of one-half year of allowable service credit during that
12.15 employment;
12.16 (2) the "average salary" on which the annuity from each covered plan in which
12.17 the employee has credit in a formula plan must be based on the employee's highest five
12.18 successive years of covered salary during the entire service in covered plans;
12.19 (3) the accrual rates to be used by each plan must be those percentages prescribed by
12.20 each plan's formula as continued for the respective years of allowable service from one
12.21 plan to the next, recognizing all previous allowable service with the other covered plans;
12.22 (4) the allowable service in all the plans must be combined in determining eligibility
12.23 for and the application of each plan's provisions in respect to reduction in the annuity
12.24 amount for retirement prior to normal retirement age; and
12.25 (5) the annuity amount payable for any allowable service under a nonformula plan
12.26 of a covered plan must not be affected, but such service and covered salary must be used
12.27 in the above calculation.
12.28 (d) This section does not apply to any person whose final termination from the last
12.29 public service under a covered plan was before May 1, 1975.
12.30 (e) For the purpose of computing annuities under this section, the accrual rates
12.31 used by any covered plan, except the public employees police and fire plan, the judges'
12.32 retirement fund, and the State Patrol retirement plan, must not exceed the percent specified
12.33 in section 356.315, subdivision 4, per year of service for any year of service or fraction
12.34 thereof. The formula percentage used by the judges' retirement fund must not exceed the
12.35 percentage rate specified in section 356.315, subdivision 8, per year of service for any
12.36 year of service or fraction thereof. The accrual rate used by the public employees police
13.1 and fire plan and the State Patrol retirement plan must not exceed the percentage rate
13.2 specified in section 356.315, subdivision 6, per year of service for any year of service or
13.3 fraction thereof. The accrual rate or rates used by the legislators retirement plan and the
13.4 elective state officers retirement plan must not exceed 2.5 percent, but this limit does not
13.5 apply to the adjustment provided under section 3A.02, subdivision 1, paragraph (c), or
13.6 352C.031, paragraph (b).
13.7 (f) Any period of time for which a person has credit in more than one of the covered
13.8 plans must be used only once for the purpose of determining total allowable service.
13.9 (g) If the period of duplicated service credit is more than one-half year, or the person
13.10 has credit for more than one-half year, with each of the plans, each plan must apply its
13.11 formula to a prorated service credit for the period of duplicated service based on a fraction
13.12 of the salary on which deductions were paid to that fund for the period divided by the total
13.13 salary on which deductions were paid to all plans for the period.
13.14 (h) If the period of duplicated service credit is less than one-half year, or when
13.15 added to other service credit with that plan is less than one-half year, the service credit
13.16 must be ignored and a refund of contributions made to the person in accord with that
13.17 plan's refund provisions.
13.18 Sec. 11. EFFECTIVE DATE.
13.19 Sections 1 to 10 are effective July 1, 2006.
13.20 ARTICLE 3
13.21 TEACHER RETIREMENT ASSOCIATION
13.22 COVERAGE AND BENEFIT RESTRUCTURING"
13.23 Amend the title accordingly