Minnesota 2025-2026 Regular Session

Minnesota House Bill HF3249 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1.1 A bill for an act
2	2	1.2 relating to retirement; modifying the method for amortizing unfunded liabilities;
3	3	1.3 adding a definition for standards for actuarial work; making conforming changes;
4	4	1.4 amending Minnesota Statutes 2024, section 356.215, subdivisions 1, 4, 8, 11, 17.
5	5	1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
6	6	1.6 Section 1. Minnesota Statutes 2024, section 356.215, subdivision 1, is amended to read:
7	7	1.7 Subdivision 1.Definitions.(a) For the purposes of sections 3.85 and 356.20 to 356.23,
8	8	1.8each of the terms in the following paragraphs has the meaning given.
9	9	1.9 (b) "Actuarial valuation" means a set of calculations prepared by an actuary retained
10	10	1.10under section 356.214 if so required under section 3.85, or otherwise, by an approved
11	11	1.11actuary, to determine the normal cost and the accrued actuarial liabilities of a benefit plan,
12	12	1.12according to the entry age actuarial cost method and based upon stated assumptions including,
13	13	1.13but not limited to rates of interest, mortality, salary increase, disability, withdrawal, and
14	14	1.14retirement and to determine the payment necessary to amortize over a stated period any
15	15	1.15unfunded accrued actuarial liability disclosed as a result of the actuarial valuation of the
16	16	1.16benefit plan.
17	17	1.17 (c) "Approved actuary" means:
18	18	1.18 (1) a person who is regularly engaged in the business of providing actuarial services and
19	19	1.19who is a fellow in the Society of Actuaries; or
20	20	1.20 (2) a firm that retains a person described in clause (1) on its staff.
21	21	1.21 (d) "Entry age actuarial cost method" means an actuarial cost method under which the
22	22	1.22actuarial present value of the projected benefits of each individual currently covered by the
23	23	1Section 1.
24	24	REVISOR VH/ES 25-0540304/08/25
25	25	State of Minnesota
26	26	This Document can be made available
27	27	in alternative formats upon request
28	28	HOUSE OF REPRESENTATIVES
29	29	H. F. No. 3249
30	30	NINETY-FOURTH SESSION
31	31	Authored by Lillie04/25/2025
32	32	The bill was read for the first time and referred to the Committee on State Government Finance and Policy 2.1benefit plan and included in the actuarial valuation is allocated on a level basis over the
33	33	2.2service of the individual, if the benefit plan is governed by section 424A.093, or over the
34	34	2.3earnings of the individual, if the benefit plan is governed by any other law, between the
35	35	2.4entry age and the assumed exit age, with the portion of the actuarial present value which is
36	36	2.5allocated to the valuation year to be the normal cost and the portion of the actuarial present
37	37	2.6value not provided for at the valuation date by the actuarial present value of future normal
38	38	2.7costs to be the actuarial accrued liability, with aggregation in the calculation process to be
39	39	2.8the sum of the calculated result for each covered individual and with recognition given to
40	40	2.9any different benefit formulas which may apply to various periods of service.
41	41	2.10 (e) "Experience study" means a report providing experience data and an actuarial analysis
42	42	2.11of the adequacy of the actuarial assumptions on which actuarial valuations are based.
43	43	2.12 (f) "Actuarial value of assets" means the market value of all assets as of the preceding
44	44	2.13June 30, reduced by:
45	45	2.14 (1) 20 percent of the difference between the actual net change in the market value of
46	46	2.15total assets between the June 30 that occurred three years earlier and the June 30 that occurred
47	47	2.16four years earlier and the computed increase in the market value of total assets over that
48	48	2.17fiscal year period if the assets had earned a rate of return on assets equal to the annual
49	49	2.18percentage investment return assumption used in the actuarial valuation for the July 1 that
50	50	2.19occurred four years earlier;
51	51	2.20 (2) 40 percent of the difference between the actual net change in the market value of
52	52	2.21total assets between the June 30 that occurred two years earlier and the June 30 that occurred
53	53	2.22three years earlier and the computed increase in the market value of total assets over that
54	54	2.23fiscal year period if the assets had earned a rate of return on assets equal to the annual
55	55	2.24percentage investment return assumption used in the actuarial valuation for the July 1 that
56	56	2.25occurred three years earlier;
57	57	2.26 (3) 60 percent of the difference between the actual net change in the market value of
58	58	2.27total assets between the June 30 that occurred one year earlier and the June 30 that occurred
59	59	2.28two years earlier and the computed increase in the market value of total assets over that
60	60	2.29fiscal year period if the assets had earned a rate of return on assets equal to the annual
61	61	2.30percentage investment return assumption used in the actuarial valuation for the July 1 that
62	62	2.31occurred two years earlier; and
63	63	2.32 (4) 80 percent of the difference between the actual net change in the market value of
64	64	2.33total assets between the most recent June 30 and the June 30 that occurred one year earlier
65	65	2.34and the computed increase in the market value of total assets over that fiscal year period if
66	66	2Section 1.
67	67	REVISOR VH/ES 25-0540304/08/25 3.1the assets had earned a rate of return on assets equal to the annual percentage investment
68	68	3.2return assumption used in the actuarial valuation for the July 1 that occurred one year earlier.
69	69	3.3 (g) "Unfunded actuarial accrued liability" means the total current and expected future
70	70	3.4benefit obligations, reduced by the sum of the actuarial value of assets and the present value
71	71	3.5of future normal costs.
72	72	3.6 (h) "Pension benefit obligation" means the actuarial present value of credited projected
73	73	3.7benefits, determined as the actuarial present value of benefits estimated to be payable in the
74	74	3.8future as a result of employee service attributing an equal benefit amount, including the
75	75	3.9effect of projected salary increases and any step rate benefit accrual rate differences, to each
76	76	3.10year of credited and expected future employee service.
77	77	3.11 (h) "Standards for actuarial work" means the standards adopted under section 3.85,
78	78	3.12subdivision 10.
79	79	3.13 EFFECTIVE DATE.This section is effective the day following final enactment.
80	80	3.14 Sec. 2. Minnesota Statutes 2024, section 356.215, subdivision 4, is amended to read:
81	81	3.15 Subd. 4.Actuarial valuation; contents.(a) The actuarial valuation must be made in
82	82	3.16conformity with the requirements of the definition contained in subdivision 1 and the most
83	83	3.17recent standards for actuarial work adopted by the Legislative Commission on Pensions
84	84	3.18and Retirement.
85	85	3.19 (b) The actuarial valuation must measure all aspects of the benefit plan of the fund in
86	86	3.20accordance with changes in benefit plans, if any, and salaries reasonably anticipated to be
87	87	3.21in force during the ensuing fiscal year. The actuarial valuation must be prepared in accordance
88	88	3.22with the entry age actuarial cost method. The actuarial valuation required under this section
89	89	3.23must include the information required in subdivisions 5 to 15.
90	90	3.24 EFFECTIVE DATE.This section is effective the day following final enactment.
91	91	3.25 Sec. 3. Minnesota Statutes 2024, section 356.215, subdivision 8, is amended to read:
92	92	3.26 Subd. 8.Actuarial assumptions.(a) The actuarial valuation must use the applicable
93	93	3.27following investment return assumption:
94	94	3.28 investment return
95	95	assumption3.29 plan
96	96	7%3.30general state employees retirement plan
97	97	73.31correctional state employees retirement plan
98	98	73.32State Patrol retirement plan
99	99	3Sec. 3.
100	100	REVISOR VH/ES 25-0540304/08/25 04.1legislators retirement plan, and for the
101	101	4.2constitutional officers calculation of total plan
102	102	4.3liabilities
103	103	74.4judges retirement plan
104	104	74.5general public employees retirement plan
105	105	74.6public employees police and fire retirement plan
106	106	74.7local government correctional service retirement
107	107	4.8plan
108	108	74.9teachers retirement plan
109	109	74.10St. Paul teachers retirement plan
110	110	64.11Bloomington Fire Department Relief Association
111	111	54.12local monthly benefit volunteer firefighter relief
112	112	4.13associations
113	113	64.14monthly benefit retirement plans in the statewide
114	114	4.15volunteer firefighter retirement plan
115	115	4.16 (b) The actuarial valuation for each of the covered retirement plans listed in section
116	116	4.17356.415, subdivision 2, and the St. Paul Teachers Retirement Fund Association must take
117	117	4.18into account the postretirement adjustment rate or rates applicable to the plan as specified
118	118	4.19in section 354A.29, subdivision 7, or 356.415, whichever applies.
119	119	4.20 (c) The actuarial valuation must use the applicable salary increase and payroll growth
120	120	4.21assumptions found in the appendix to the standards for actuarial work adopted by the
121	121	4.22Legislative Commission on Pensions and Retirement pursuant to section 3.85, subdivision
122	122	4.2310. The appendix must be updated whenever new assumptions have been approved or
123	123	4.24deemed approved under subdivision 18.
124	124	4.25 (d) The assumptions set forth in the appendix to the standards for actuarial work continue
125	125	4.26to apply, unless a different salary assumption or a different payroll increase assumption:
126	126	4.27 (1) has been proposed by the governing board of the applicable retirement plan;
127	127	4.28 (2) is accompanied by the concurring recommendation of the actuary retained under
128	128	4.29section 356.214, subdivision 1, if applicable, or by the approved actuary preparing the most
129	129	4.30recent actuarial valuation report if section 356.214 does not apply; and
130	130	4.31 (3) has been approved or deemed approved under subdivision 18.
131	131	4.32 EFFECTIVE DATE.This section is effective the day following final enactment.
132	132	4.33 Sec. 4. Minnesota Statutes 2024, section 356.215, subdivision 11, is amended to read:
133	133	4.34 Subd. 11.Amortization contributions.(a) In addition to the exhibit indicating the level
134	134	4.35normal cost, The actuarial valuation of the retirement each pension plan listed in subdivision
135	135	4Sec. 4.
136	136	REVISOR VH/ES 25-0540304/08/25 5.18, paragraph (a), other than the legislators retirement plan and relief association plans, must
137	137	5.2contain an exhibit for financial reporting purposes indicating the additional annual
138	138	5.3contribution sufficient to amortize on a level percent of payroll basis the unfunded actuarial
139	139	5.4accrued liability and must contain an exhibit indicating the additional contribution sufficient
140	140	5.5to amortize the unfunded actuarial accrued liability. For the retirement plans listed in
141	141	5.6subdivision 8, paragraph (a), but excluding the legislators retirement plan, the Bloomington
142	142	5.7Fire Department Relief Association, and the local monthly benefit volunteer firefighter
143	143	5.8relief associations, the additional contribution must be calculated on a level percentage of
144	144	5.9covered payroll basis by the established date for full funding in effect when the valuation
145	145	5.10is prepared, assuming annual payroll growth at the applicable percentage rate set forth in
146	146	5.11the appendix described in subdivision 8, paragraph (c). For the legislators retirement plan,
147	147	5.12the additional annual contribution must be calculated on a level annual dollar amount basis.
148	148	5.13resulting from any of the following changes, over the period specified for that change:
149	149	5.14 (1) experience gain or loss: 15 years;
150	150	5.15 (2) assumption or method change: 20 years;
151	151	5.16 (3) benefit change for active members: 15 years;
152	152	5.17 (4) long-term benefit change for inactive members: 15 years;
153	153	5.18 (5) short-term benefit change for inactive members: the number of years during which
154	154	5.19the benefit change will be in effect; and
155	155	5.20 (6) an annual contribution that is more or less than the actuarially determined contribution:
156	156	5.2115 years.
157	157	5.22 (b) The amortization periods specified in paragraph (a) apply unless the standards for
158	158	5.23actuarial work state otherwise and except that:
159	159	5.24 (1) the pension plan's unfunded actuarial accrued liability as of July 1, 2024, must be
160	160	5.25amortized over a period that ends June 30, 2048; and
161	161	5.26 (2) for the legislators retirement plan, the additional annual contribution sufficient to
162	162	5.27amortize the unfunded actuarial accrued liability must be calculated on a level dollar basis
163	163	5.28with an amortization period of one year.
164	164	5.29 (b) This paragraph applies only if the calculation under this paragraph for a retirement
165	165	5.30plan results in an established date for full funding that is earlier than the established date
166	166	5.31for full funding applicable to the retirement plan under paragraph (c). For any retirement
167	167	5.32plan, if there has been a change in any or all of the actuarial assumptions used for calculating
168	168	5.33the actuarial accrued liability of the fund, a change in the benefit plan governing annuities
169	169	5Sec. 4.
170	170	REVISOR VH/ES 25-0540304/08/25 6.1and benefits payable from the fund, a change in the actuarial cost method used in calculating
171	171	6.2the actuarial accrued liability of all or a portion of the fund, or a combination of the three,
172	172	6.3and the change or changes, by itself or by themselves and without inclusion of any other
173	173	6.4items of increase or decrease, produce a net increase in the unfunded actuarial accrued
174	174	6.5liability in the fund, the established date for full funding must be determined using the
175	175	6.6following procedure:
176	176	6.7 (i) the unfunded actuarial accrued liability of the fund must be determined in accordance
177	177	6.8with the plan provisions governing annuities and retirement benefits and the actuarial
178	178	6.9assumptions in effect before an applicable change;
179	179	6.10 (ii) the level annual dollar contribution or level percentage, whichever is applicable,
180	180	6.11needed to amortize the unfunded actuarial accrued liability amount determined under item
181	181	6.12(i) by the established date for full funding in effect before the change must be calculated
182	182	6.13using the investment return assumption specified in subdivision 8 in effect before the change;
183	183	6.14 (iii) the unfunded actuarial accrued liability of the fund must be determined in accordance
184	184	6.15with any new plan provisions governing annuities and benefits payable from the fund and
185	185	6.16any new actuarial assumptions and the remaining plan provisions governing annuities and
186	186	6.17benefits payable from the fund and actuarial assumptions in effect before the change;
187	187	6.18 (iv) the level annual dollar contribution or level percentage, whichever is applicable,
188	188	6.19needed to amortize the difference between the unfunded actuarial accrued liability amount
189	189	6.20calculated under item (i) and the unfunded actuarial accrued liability amount calculated
190	190	6.21under item (iii) over a period of 30 years from the end of the plan year in which the applicable
191	191	6.22change is effective must be calculated using the applicable investment return assumption
192	192	6.23specified in subdivision 8 in effect after any applicable change;
193	193	6.24 (v) the level annual dollar or level percentage amortization contribution under item (iv)
194	194	6.25must be added to the level annual dollar amortization contribution or level percentage
195	195	6.26calculated under item (ii);
196	196	6.27 (vi) the period in which the unfunded actuarial accrued liability amount determined in
197	197	6.28item (iii) is amortized by the total level annual dollar or level percentage amortization
198	198	6.29contribution computed under item (v) must be calculated using the investment return
199	199	6.30assumption specified in subdivision 8 in effect after any applicable change, rounded to the
200	200	6.31nearest integral number of years, but not to exceed 30 years from the end of the plan year
201	201	6.32in which the determination of the established date for full funding using the procedure set
202	202	6.33forth in this clause is made and not to be less than the period of years beginning in the plan
203	203	6.34year in which the determination of the established date for full funding using the procedure
204	204	6Sec. 4.
205	205	REVISOR VH/ES 25-0540304/08/25 7.1set forth in this clause is made and ending by the date for full funding in effect before the
206	206	7.2change; and
207	207	7.3 (vii) the period determined under item (vi) must be added to the date as of which the
208	208	7.4actuarial valuation was prepared and the date obtained is the new established date for full
209	209	7.5funding.
210	210	7.6 (c) The established date for full funding is the date provided for each of the following
211	211	7.7plans:
212	212	7.8 (i) for the general employees retirement plan of the Public Employees Retirement
213	213	7.9Association, the established date for full funding is June 30, 2048;
214	214	7.10 (ii) for the Teachers Retirement Association, the established date for full funding is June
215	215	7.1130, 2048;
216	216	7.12 (iii) for the correctional state employees retirement plan and the State Patrol retirement
217	217	7.13plan of the Minnesota State Retirement System, the established date for full funding is June
218	218	7.1430, 2048;
219	219	7.15 (iv) for the judges retirement plan, the established date for full funding is June 30, 2048;
220	220	7.16 (v) for the local government correctional service retirement plan and the public employees
221	221	7.17police and fire retirement plan, the established date for full funding is June 30, 2048;
222	222	7.18 (vi) for the St. Paul Teachers Retirement Fund Association, the established date for full
223	223	7.19funding is June 30, 2048; and
224	224	7.20 (vii) for the general state employees retirement plan of the Minnesota State Retirement
225	225	7.21System, the established date for full funding is June 30, 2048.
226	226	7.22 (d) For the retirement plans for which the annual actuarial valuation indicates an excess
227	227	7.23of valuation assets over the actuarial accrued liability, the valuation assets in excess of the
228	228	7.24actuarial accrued liability must be recognized as a reduction in the current contribution
229	229	7.25requirements by an amount equal to the amortization of the excess expressed as a level
230	230	7.26percentage of pay over a 30-year period beginning anew with each annual actuarial valuation
231	231	7.27of the plan.
232	232	7.28 EFFECTIVE DATE.This section is effective beginning with the July 1, 2025, actuarial
233	233	7.29valuations.
234	234	7Sec. 4.
235	235	REVISOR VH/ES 25-0540304/08/25 8.1 Sec. 5. Minnesota Statutes 2024, section 356.215, subdivision 17, is amended to read:
236	236	8.2 Subd. 17.Actuarial services by approved actuaries.(a) The actuarial valuation or
237	237	8.3quadrennial experience study must be made and any actuarial consulting services for a
238	238	8.4retirement fund or plan must be provided by an approved actuary. The actuarial valuation
239	239	8.5or quadrennial experience study must include a signed written declaration that it has been
240	240	8.6prepared according to sections 356.20 to 356.23 and according to the most recent standards
241	241	8.7for actuarial work adopted by the Legislative Commission on Pensions and Retirement.
242	242	8.8 (b) Actuarial valuations or experience studies prepared by an approved actuary retained
243	243	8.9by a retirement fund or plan must be submitted to the Legislative Commission on Pensions
244	244	8.10and Retirement within ten days of the submission of the document to the retirement fund
245	245	8.11or plan.
246	246	8.12 EFFECTIVE DATE.This section is effective the day following final enactment.
247	247	8Sec. 5.
248	248	REVISOR VH/ES 25-0540304/08/25