Bill Text: MN SF2641 | 2013-2014 | 88th Legislature | Introduced

Bill Title: Public retirement plans interest rate and postretirement adjustment rate actuarial assumptions modifications

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2014-03-13 - Referred to State and Local Government [SF2641 Detail]

Download: Minnesota-2013-SF2641-Introduced.html

1.1A bill for an act
1.2relating to retirement; modifying interest rate and postretirement adjustment
1.3rate actuarial assumptions; replacing an implicit postretirement adjustment rate
1.4actuarial assumption with an explicit actuarial assumption;amending Minnesota
1.5Statutes 2013 Supplement, section 356.215, subdivision 8; repealing Minnesota
1.6Statutes 2012, section 356.415, subdivision 3.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8    Section 1. Minnesota Statutes 2013 Supplement, section 356.215, subdivision 8,
1.9is amended to read:
1.10    Subd. 8. Interest and salary assumptions. (a) The actuarial valuation must use
1.11the applicable following preretirement interest assumption and the applicable following
1.12postretirement interest assumption:
1.13(1) select and ultimate interest rate assumption
1.14
1.15
1.16
1.17
 plan
 ultimate
preretirement
interest rate
assumption
 ultimate
postretirement
interest rate
assumption
1.18
 general state employees retirement plan
 8.5%
 6.0%
1.19
 correctional state employees retirement plan
 8.5
 6.0
1.20
 State Patrol retirement plan
 8.5
 6.0
1.21
1.22
1.23
 legislators retirement plan, and for the
constitutional officers calculation of total plan
liabilities
 0.0
0.0
1.24
 judges retirement plan
 8.5
 6.0
1.25
 general public employees retirement plan
 8.5
 6.0
1.26
 public employees police and fire retirement plan
 8.5
 6.0
1.27
1.28
 local government correctional service
retirement plan
 8.5
 6.0
1.29
 teachers retirement plan
 8.5
 6.0
2.1
 Duluth teachers retirement plan
 8.5
 8.5
2.2
 St. Paul teachers retirement plan
 8.5
 8.5
2.3Except for the legislators retirement plan and the constitutional officers calculation
2.4of total plan liabilities, the select preretirement interest rate assumption for the period
2.5after June 30, 2012, through June 30, 2017, is 8.0 percent. Except for the legislators
2.6retirement plan and the constitutional officers calculation of total plan liabilities, the select
2.7postretirement interest rate assumption for the period after June 30, 2012, through June
2.830, 2017, is 5.5 percent, except for the Duluth teachers retirement plan and the St. Paul
2.9teachers retirement plan, each with a select postretirement interest rate assumption for the
2.10period after June 30, 2012, through June 30, 2017, of 8.0 percent.
2.11(2) single rate preretirement and postretirement interest rate assumption
2.12
2.13
 plan
 interest rate
assumption
2.14
 Bloomington Fire Department Relief Association
 6.0
2.15
2.16
 local monthly benefit volunteer firefighters relief
associations
 5.0
2.17(b)(1) If the retirement plan has met the applicable minimum funded percentage for
2.18the full percentage postretirement adjustment rate under section 354A.27, subdivision
2.196a; 354A.29, subdivision 8; or 356.415, subdivision 1a, 1b, 1c, 1d, 1e, or 1f, as of the
2.20valuation date, and the applicable percentage postretirement adjustment rate specified in
2.21section 354A.27, subdivision 7; 354A.29, subdivision 9; or 356.415, subdivision 1, is in
2.22effect, the actuarial valuation must use the applicable full postretirement adjustment rate
2.23as the postretirement adjustment rate actuarial assumption.
2.24(2) If clause (1) does not apply, the actuarial valuation must use the applicable
2.25postretirement adjustment rate actuarial assumption for the applicable period or periods:
2.26
 plan
 rate and duration
2.27
2.28
 general state employees retirement plan
 2.0% until December 31,
2040, 2.5% thereafter
2.29
2.30
 correctional state employees retirement plan
 2.0% until December 31,
2038, 2.5% thereafter
2.31
2.32
 State Patrol retirement plan
 1.0% until December 31,
2037, 2.5% thereafter
2.33
2.34
 legislators retirement plan, including constitutional officers
2.0% until December 31,
2040, 2.5% thereafter
2.35
2.36
 judges retirement plan
 1.75% until December 31,
2039, 2.5% thereafter
2.37
2.38
 general public employees retirement plan
 1.0% until December 31,
2031, 2.5% thereafter
2.39
2.40
 public employees police and fire retirement plan
 1.0% until December 31,
2039, 2.5% thereafter
3.1
3.2
 local government correctional service retirement plan
 1.0% until December 31,
2015, 2.5% thereafter
3.3
3.4
 MERF division of the Public Employees Retirement
Association
 1.0% until December 31,
2031, 2.5% thereafter
3.5
3.6
 teachers retirement plan
 2.0% until December 31,
2037, 2.5% thereafter
3.7
3.8
 Duluth teachers retirement plan
 1.0% until December 31,
2039, 2.5% thereafter
3.9
3.10
 St. Paul teachers retirement plan
 1.0% until December 31,
2038, 2.5% thereafter
3.11    (b) (c) The actuarial valuation must use the applicable following single rate future
3.12salary increase assumption, the applicable following modified single rate future salary
3.13increase assumption, or the applicable following graded rate future salary increase
3.14assumption:
3.15    (1) single rate future salary increase assumption
3.16
 plan
 future salary increase assumption
3.17
 legislators retirement plan
 5.0%
3.18
 judges retirement plan
 3.0
3.19
3.20
 Bloomington Fire Department Relief
Association
 4.0
3.21    (2) age-related future salary increase age-related select and ultimate future salary
3.22increase assumption or graded rate future salary increase assumption
3.23
 plan
 future salary increase assumption
3.24
 local government correctional service retirement plan
 assumption C
3.25
 Duluth teachers retirement plan
 assumption A
3.26
 St. Paul teachers retirement plan
 assumption B
3.27For plans other than the Duluth teachers
3.28retirement plan, the select calculation
3.29is: during the designated select period, a
3.30designated percentage rate is multiplied by
3.31the result of the designated integer minus T,
3.32where T is the number of completed years
3.33of service, and is added to the applicable
3.34future salary increase assumption. The
3.35designated select period is ten years and
3.36the designated integer is ten for the Duluth
3.37Teachers Retirement Fund Association
3.38and for the local government correctional
3.39service retirement plan and 15 for the St.
4.1Paul Teachers Retirement Fund Association.
4.2The designated percentage rate is 0.2
4.3percent for the St. Paul Teachers Retirement
4.4Fund Association. The select calculation
4.5for the Duluth Teachers Retirement Fund
4.6Association is 8.00 percent per year for
4.7service years one through seven, 7.25 percent
4.8per year for service years seven and eight,
4.9and 6.50 percent per year for service years
4.10eight and nine.
4.11    The ultimate future salary increase assumption is:
4.12
 age
 A
 B
 C
4.13
 16
 6.00%
 5.90%
 9.00%
4.14
 17
 6.00
 5.90
 9.00
4.15
 18
 6.00
 5.90
 9.00
4.16
 19
 6.00
 5.90
 9.00
4.17
 20
 6.00
 5.90
 9.00
4.18
 21
 6.00
 5.90
 8.75
4.19
 22
 6.00
 5.90
 8.50
4.20
 23
 6.00
 5.85
 8.25
4.21
 24
 6.00
 5.80
 8.00
4.22
 25
 6.00
 5.75
 7.75
4.23
 26
 6.00
 5.70
 7.50
4.24
 27
 6.00
 5.65
 7.25
4.25
 28
 6.00
 5.60
 7.00
4.26
 29
 6.00
 5.55
 6.75
4.27
 30
 6.00
 5.50
 6.75
4.28
 31
 6.00
 5.45
 6.50
4.29
 32
 6.00
 5.40
 6.50
4.30
 33
 6.00
 5.35
 6.50
4.31
 34
 6.00
 5.30
 6.25
4.32
 35
 6.00
 5.25
 6.25
4.33
 36
 5.86
 5.20
 6.00
4.34
 37
 5.73
 5.15
 6.00
4.35
 38
 5.59
 5.10
 6.00
4.36
 39
 5.45
 5.05
 5.75
4.37
 40
 5.31
 5.00
 5.75
4.38
 41
 5.18
 4.95
 5.75
4.39
 42
 5.04
 4.90
 5.50
4.40
 43
 4.90
 4.85
 5.25
4.41
 44
 4.76
 4.80
 5.25
5.1
 45
 4.63
 4.75
 5.00
5.2
 46
 4.49
 4.70
 5.00
5.3
 47
 4.35
 4.65
 5.00
5.4
 48
 4.21
 4.60
 5.00
5.5
 49
 4.08
 4.55
 5.00
5.6
 50
 3.94
 4.50
 5.00
5.7
 51
 3.80
 4.45
 5.00
5.8
 52
 3.66
 4.40
 5.00
5.9
 53
 3.53
 4.35
 5.00
5.10
 54
 3.39
 4.30
 5.00
5.11
 55
 3.25
 4.25
 4.75
5.12
 56
 3.25
 4.20
 4.75
5.13
 57
 3.25
 4.15
 4.50
5.14
 58
 3.25
 4.10
 4.25
5.15
 59
 3.25
 4.05
 4.25
5.16
 60
 3.25
 4.00
 4.25
5.17
 61
 3.25
 4.00
 4.25
5.18
 62
 3.25
 4.00
 4.25
5.19
 63
 3.25
 4.00
 4.25
5.20
 64
 3.25
 4.00
 4.25
5.21
 65
 3.25
 4.00
 4.00
5.22
 66
 3.25
 4.00
 4.00
5.23
 67
 3.25
 4.00
 4.00
5.24
 68
 3.25
 4.00
 4.00
5.25
 69
 3.25
 4.00
 4.00
5.26
 70
 3.25
 4.00
 4.00
5.27(3) service-related ultimate future salary increase assumption
5.28
5.29
 general state employees retirement plan of the
Minnesota State Retirement System
 assumption A
5.30
5.31
 general employees retirement plan of the Public
Employees Retirement Association
 assumption B
5.32
 Teachers Retirement Association
 assumption C
5.33
 public employees police and fire retirement plan
 assumption D
5.34
 State Patrol retirement plan
 assumption E
5.35
5.36
 correctional state employees retirement plan of the
Minnesota State Retirement System
 assumption F
5.37
5.38
 service
length
 A
 B
 C
 D
 E
 F
5.39
 1
 10.50%
 12.03%
 12.00%
 13.00%
 8.00%
 6.00%
5.40
 2
 8.10
 8.90
 9.00
 11.00
 7.50
 5.85
5.41
 3
 6.90
 7.46
 8.00
 9.00
 7.00
 5.70
5.42
 4
 6.20
 6.58
 7.50
 8.00
 6.75
 5.55
5.43
 5
 5.70
 5.97
 7.25
 6.50
 6.50
 5.40
6.1
 6
 5.30
 5.52
 7.00
 6.10
 6.25
 5.25
6.2
 7
 5.00
 5.16
 6.85
 5.80
 6.00
 5.10
6.3
 8
 4.70
 4.87
 6.70
 5.60
 5.85
 4.95
6.4
 9
 4.50
 4.63
 6.55
 5.40
 5.70
 4.80
6.5
 10
 4.40
 4.42
 6.40
 5.30
 5.55
 4.65
6.6
 11
 4.20
 4.24
 6.25
 5.20
 5.40
 4.55
6.7
 12
 4.10
 4.08
 6.00
 5.10
 5.25
 4.45
6.8
 13
 4.00
 3.94
 5.75
 5.00
 5.10
 4.35
6.9
 14
 3.80
 3.82
 5.50
 4.90
 4.95
 4.25
6.10
 15
 3.70
 3.70
 5.25
 4.80
 4.80
 4.15
6.11
 16
 3.60
 3.60
 5.00
 4.80
 4.65
 4.05
6.12
 17
 3.50
 3.51
 4.75
 4.80
 4.50
 3.95
6.13
 18
 3.50
 3.50
 4.50
 4.80
 4.35
 3.85
6.14
 19
 3.50
 3.50
 4.25
 4.80
 4.20
 3.75
6.15
 20
 3.50
 3.50
 4.00
 4.80
 4.05
 3.75
6.16
 21
 3.50
 3.50
 3.90
 4.70
 4.00
 3.75
6.17
 22
 3.50
 3.50
 3.80
 4.60
 4.00
 3.75
6.18
 23
 3.50
 3.50
 3.70
 4.50
 4.00
 3.75
6.19
 24
 3.50
 3.50
 3.60
 4.50
 4.00
 3.75
6.20
 25
 3.50
 3.50
 3.50
 4.50
 4.00
 3.75
6.21
 26
 3.50
 3.50
 3.50
 4.50
 4.00
 3.75
6.22
 27
 3.50
 3.50
 3.50
 4.50
 4.00
 3.75
6.23
 28
 3.50
 3.50
 3.50
 4.50
 4.00
 3.75
6.24
 29
 3.50
 3.50
 3.50
 4.50
 4.00
 3.75
6.25
 30 or more
 3.50
 3.50
 3.50
 4.50
 4.00
 3.75
6.26    (c) (d) The actuarial valuation must use the applicable following payroll growth
6.27assumption for calculating the amortization requirement for the unfunded actuarial
6.28accrued liability where the amortization retirement is calculated as a level percentage
6.29of an increasing payroll:
6.30
 plan
 payroll growth assumption
6.31
6.32
 general state employees retirement plan of the
Minnesota State Retirement System
 3.75%
6.33
 correctional state employees retirement plan
 3.75
6.34
 State Patrol retirement plan
 3.75
6.35
 judges retirement plan
 3.00
6.36
6.37
 general employees retirement plan of the Public
Employees Retirement Association
 3.75
6.38
 public employees police and fire retirement plan
 3.75
6.39
 local government correctional service retirement plan
 3.75
6.40
 teachers retirement plan
 3.75
6.41
 Duluth teachers retirement plan
 3.50
6.42
 St. Paul teachers retirement plan
 4.00
7.1    (d) (e) The assumptions set forth in paragraphs (b) (c) and (c) (d) continue to apply,
7.2unless a different salary assumption or a different payroll increase assumption:
7.3    (1) has been proposed by the governing board of the applicable retirement plan;
7.4    (2) is accompanied by the concurring recommendation of the actuary retained under
7.5section 356.214, subdivision 1, if applicable, or by the approved actuary preparing the
7.6most recent actuarial valuation report if section 356.214 does not apply; and
7.7    (3) has been approved or deemed approved under subdivision 18.
7.8EFFECTIVE DATE.This section is effective June 30, 2014, and applies to
7.9actuarial valuation reports prepared on or after that date.

7.10    Sec. 2. REPEALER.
7.11Minnesota Statutes 2012, section 356.415, subdivision 3, is repealed.
7.12EFFECTIVE DATE.This section is effective June 30, 2014, and applies to
7.13actuarial valuation reports prepared on or after that date.

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