1.1 A bill for an act
1.2 relating to retirement; modifying the method for amortizing unfunded liabilities;
1.3 adding a definition for standards for actuarial work; making conforming changes;
1.4 amending Minnesota Statutes 2024, section 356.215, subdivisions 1, 4, 8, 11, 17.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2024, section 356.215, subdivision 1, is amended to read:
1.7 Subdivision 1.Definitions.(a) For the purposes of sections 3.85 and 356.20 to 356.23,
1.8each of the terms in the following paragraphs has the meaning given.
1.9 (b) "Actuarial valuation" means a set of calculations prepared by an actuary retained
1.10under section 356.214 if so required under section 3.85, or otherwise, by an approved
1.11actuary, to determine the normal cost and the accrued actuarial liabilities of a benefit plan,
1.12according to the entry age actuarial cost method and based upon stated assumptions including,
1.13but not limited to rates of interest, mortality, salary increase, disability, withdrawal, and
1.14retirement and to determine the payment necessary to amortize over a stated period any
1.15unfunded accrued actuarial liability disclosed as a result of the actuarial valuation of the
1.16benefit plan.
1.17 (c) "Approved actuary" means:
1.18 (1) a person who is regularly engaged in the business of providing actuarial services and
1.19who is a fellow in the Society of Actuaries; or
1.20 (2) a firm that retains a person described in clause (1) on its staff.
1.21 (d) "Entry age actuarial cost method" means an actuarial cost method under which the
1.22actuarial present value of the projected benefits of each individual currently covered by the
1Section 1.
REVISOR VH/ES 25-0540304/08/25
State of Minnesota
This Document can be made available
in alternative formats upon request
HOUSE OF REPRESENTATIVES
H. F. No. 3249
NINETY-FOURTH SESSION
Authored by Lillie04/25/2025
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
2.2service of the individual, if the benefit plan is governed by section 424A.093, or over the
2.3earnings of the individual, if the benefit plan is governed by any other law, between the
2.4entry age and the assumed exit age, with the portion of the actuarial present value which is
2.5allocated to the valuation year to be the normal cost and the portion of the actuarial present
2.6value not provided for at the valuation date by the actuarial present value of future normal
2.7costs to be the actuarial accrued liability, with aggregation in the calculation process to be
2.8the sum of the calculated result for each covered individual and with recognition given to
2.9any different benefit formulas which may apply to various periods of service.
2.10 (e) "Experience study" means a report providing experience data and an actuarial analysis
2.11of the adequacy of the actuarial assumptions on which actuarial valuations are based.
2.12 (f) "Actuarial value of assets" means the market value of all assets as of the preceding
2.13June 30, reduced by:
2.14 (1) 20 percent of the difference between the actual net change in the market value of
2.15total assets between the June 30 that occurred three years earlier and the June 30 that occurred
2.16four years earlier and the computed increase in the market value of total assets over that
2.17fiscal year period if the assets had earned a rate of return on assets equal to the annual
2.18percentage investment return assumption used in the actuarial valuation for the July 1 that
2.19occurred four years earlier;
2.20 (2) 40 percent of the difference between the actual net change in the market value of
2.21total assets between the June 30 that occurred two years earlier and the June 30 that occurred
2.22three years earlier and the computed increase in the market value of total assets over that
2.23fiscal year period if the assets had earned a rate of return on assets equal to the annual
2.24percentage investment return assumption used in the actuarial valuation for the July 1 that
2.25occurred three years earlier;
2.26 (3) 60 percent of the difference between the actual net change in the market value of
2.27total assets between the June 30 that occurred one year earlier and the June 30 that occurred
2.28two years earlier and the computed increase in the market value of total assets over that
2.29fiscal year period if the assets had earned a rate of return on assets equal to the annual
2.30percentage investment return assumption used in the actuarial valuation for the July 1 that
2.31occurred two years earlier; and
2.32 (4) 80 percent of the difference between the actual net change in the market value of
2.33total assets between the most recent June 30 and the June 30 that occurred one year earlier
2.34and the computed increase in the market value of total assets over that fiscal year period if
2Section 1.
REVISOR VH/ES 25-0540304/08/25 3.1the assets had earned a rate of return on assets equal to the annual percentage investment
3.2return assumption used in the actuarial valuation for the July 1 that occurred one year earlier.
3.3 (g) "Unfunded actuarial accrued liability" means the total current and expected future
3.4benefit obligations, reduced by the sum of the actuarial value of assets and the present value
3.5of future normal costs.
3.6 (h) "Pension benefit obligation" means the actuarial present value of credited projected
3.7benefits, determined as the actuarial present value of benefits estimated to be payable in the
3.8future as a result of employee service attributing an equal benefit amount, including the
3.9effect of projected salary increases and any step rate benefit accrual rate differences, to each
3.10year of credited and expected future employee service.
3.11 (h) "Standards for actuarial work" means the standards adopted under section 3.85,
3.12subdivision 10.
3.13 EFFECTIVE DATE.This section is effective the day following final enactment.
3.14 Sec. 2. Minnesota Statutes 2024, section 356.215, subdivision 4, is amended to read:
3.15 Subd. 4.Actuarial valuation; contents.(a) The actuarial valuation must be made in
3.16conformity with the requirements of the definition contained in subdivision 1 and the most
3.17recent standards for actuarial work adopted by the Legislative Commission on Pensions
3.18and Retirement.
3.19 (b) The actuarial valuation must measure all aspects of the benefit plan of the fund in
3.20accordance with changes in benefit plans, if any, and salaries reasonably anticipated to be
3.21in force during the ensuing fiscal year. The actuarial valuation must be prepared in accordance
3.22with the entry age actuarial cost method. The actuarial valuation required under this section
3.23must include the information required in subdivisions 5 to 15.
3.24 EFFECTIVE DATE.This section is effective the day following final enactment.
3.25 Sec. 3. Minnesota Statutes 2024, section 356.215, subdivision 8, is amended to read:
3.26 Subd. 8.Actuarial assumptions.(a) The actuarial valuation must use the applicable
3.27following investment return assumption:
3.28 investment return
assumption3.29 plan
7%3.30general state employees retirement plan
73.31correctional state employees retirement plan
73.32State Patrol retirement plan
3Sec. 3.
REVISOR VH/ES 25-0540304/08/25 04.1legislators retirement plan, and for the
4.2constitutional officers calculation of total plan
4.3liabilities
74.4judges retirement plan
74.5general public employees retirement plan
74.6public employees police and fire retirement plan
74.7local government correctional service retirement
4.8plan
74.9teachers retirement plan
74.10St. Paul teachers retirement plan
64.11Bloomington Fire Department Relief Association
54.12local monthly benefit volunteer firefighter relief
4.13associations
64.14monthly benefit retirement plans in the statewide
4.15volunteer firefighter retirement plan
4.16 (b) The actuarial valuation for each of the covered retirement plans listed in section
4.17356.415, subdivision 2, and the St. Paul Teachers Retirement Fund Association must take
4.18into account the postretirement adjustment rate or rates applicable to the plan as specified
4.19in section 354A.29, subdivision 7, or 356.415, whichever applies.
4.20 (c) The actuarial valuation must use the applicable salary increase and payroll growth
4.21assumptions found in the appendix to the standards for actuarial work adopted by the
4.22Legislative Commission on Pensions and Retirement pursuant to section 3.85, subdivision
4.2310. The appendix must be updated whenever new assumptions have been approved or
4.24deemed approved under subdivision 18.
4.25 (d) The assumptions set forth in the appendix to the standards for actuarial work continue
4.26to apply, unless a different salary assumption or a different payroll increase assumption:
4.27 (1) has been proposed by the governing board of the applicable retirement plan;
4.28 (2) is accompanied by the concurring recommendation of the actuary retained under
4.29section 356.214, subdivision 1, if applicable, or by the approved actuary preparing the most
4.30recent actuarial valuation report if section 356.214 does not apply; and
4.31 (3) has been approved or deemed approved under subdivision 18.
4.32 EFFECTIVE DATE.This section is effective the day following final enactment.
4.33 Sec. 4. Minnesota Statutes 2024, section 356.215, subdivision 11, is amended to read:
4.34 Subd. 11.Amortization contributions.(a) In addition to the exhibit indicating the level
4.35normal cost, The actuarial valuation of the retirement each pension plan listed in subdivision
4Sec. 4.
REVISOR VH/ES 25-0540304/08/25 5.18, paragraph (a), other than the legislators retirement plan and relief association plans, must
5.2contain an exhibit for financial reporting purposes indicating the additional annual
5.3contribution sufficient to amortize on a level percent of payroll basis the unfunded actuarial
5.4accrued liability and must contain an exhibit indicating the additional contribution sufficient
5.5to amortize the unfunded actuarial accrued liability. For the retirement plans listed in
5.6subdivision 8, paragraph (a), but excluding the legislators retirement plan, the Bloomington
5.7Fire Department Relief Association, and the local monthly benefit volunteer firefighter
5.8relief associations, the additional contribution must be calculated on a level percentage of
5.9covered payroll basis by the established date for full funding in effect when the valuation
5.10is prepared, assuming annual payroll growth at the applicable percentage rate set forth in
5.11the appendix described in subdivision 8, paragraph (c). For the legislators retirement plan,
5.12the additional annual contribution must be calculated on a level annual dollar amount basis.
5.13resulting from any of the following changes, over the period specified for that change:
5.14 (1) experience gain or loss: 15 years;
5.15 (2) assumption or method change: 20 years;
5.16 (3) benefit change for active members: 15 years;
5.17 (4) long-term benefit change for inactive members: 15 years;
5.18 (5) short-term benefit change for inactive members: the number of years during which
5.19the benefit change will be in effect; and
5.20 (6) an annual contribution that is more or less than the actuarially determined contribution:
5.2115 years.
5.22 (b) The amortization periods specified in paragraph (a) apply unless the standards for
5.23actuarial work state otherwise and except that:
5.24 (1) the pension plan's unfunded actuarial accrued liability as of July 1, 2024, must be
5.25amortized over a period that ends June 30, 2048; and
5.26 (2) for the legislators retirement plan, the additional annual contribution sufficient to
5.27amortize the unfunded actuarial accrued liability must be calculated on a level dollar basis
5.28with an amortization period of one year.
5.29 (b) This paragraph applies only if the calculation under this paragraph for a retirement
5.30plan results in an established date for full funding that is earlier than the established date
5.31for full funding applicable to the retirement plan under paragraph (c). For any retirement
5.32plan, if there has been a change in any or all of the actuarial assumptions used for calculating
5.33the actuarial accrued liability of the fund, a change in the benefit plan governing annuities
5Sec. 4.
REVISOR VH/ES 25-0540304/08/25 6.1and benefits payable from the fund, a change in the actuarial cost method used in calculating
6.2the actuarial accrued liability of all or a portion of the fund, or a combination of the three,
6.3and the change or changes, by itself or by themselves and without inclusion of any other
6.4items of increase or decrease, produce a net increase in the unfunded actuarial accrued
6.5liability in the fund, the established date for full funding must be determined using the
6.6following procedure:
6.7 (i) the unfunded actuarial accrued liability of the fund must be determined in accordance
6.8with the plan provisions governing annuities and retirement benefits and the actuarial
6.9assumptions in effect before an applicable change;
6.10 (ii) the level annual dollar contribution or level percentage, whichever is applicable,
6.11needed to amortize the unfunded actuarial accrued liability amount determined under item
6.12(i) by the established date for full funding in effect before the change must be calculated
6.13using the investment return assumption specified in subdivision 8 in effect before the change;
6.14 (iii) the unfunded actuarial accrued liability of the fund must be determined in accordance
6.15with any new plan provisions governing annuities and benefits payable from the fund and
6.16any new actuarial assumptions and the remaining plan provisions governing annuities and
6.17benefits payable from the fund and actuarial assumptions in effect before the change;
6.18 (iv) the level annual dollar contribution or level percentage, whichever is applicable,
6.19needed to amortize the difference between the unfunded actuarial accrued liability amount
6.20calculated under item (i) and the unfunded actuarial accrued liability amount calculated
6.21under item (iii) over a period of 30 years from the end of the plan year in which the applicable
6.22change is effective must be calculated using the applicable investment return assumption
6.23specified in subdivision 8 in effect after any applicable change;
6.24 (v) the level annual dollar or level percentage amortization contribution under item (iv)
6.25must be added to the level annual dollar amortization contribution or level percentage
6.26calculated under item (ii);
6.27 (vi) the period in which the unfunded actuarial accrued liability amount determined in
6.28item (iii) is amortized by the total level annual dollar or level percentage amortization
6.29contribution computed under item (v) must be calculated using the investment return
6.30assumption specified in subdivision 8 in effect after any applicable change, rounded to the
6.31nearest integral number of years, but not to exceed 30 years from the end of the plan year
6.32in which the determination of the established date for full funding using the procedure set
6.33forth in this clause is made and not to be less than the period of years beginning in the plan
6.34year in which the determination of the established date for full funding using the procedure
6Sec. 4.
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
7.2change; and
7.3 (vii) the period determined under item (vi) must be added to the date as of which the
7.4actuarial valuation was prepared and the date obtained is the new established date for full
7.5funding.
7.6 (c) The established date for full funding is the date provided for each of the following
7.7plans:
7.8 (i) for the general employees retirement plan of the Public Employees Retirement
7.9Association, the established date for full funding is June 30, 2048;
7.10 (ii) for the Teachers Retirement Association, the established date for full funding is June
7.1130, 2048;
7.12 (iii) for the correctional state employees retirement plan and the State Patrol retirement
7.13plan of the Minnesota State Retirement System, the established date for full funding is June
7.1430, 2048;
7.15 (iv) for the judges retirement plan, the established date for full funding is June 30, 2048;
7.16 (v) for the local government correctional service retirement plan and the public employees
7.17police and fire retirement plan, the established date for full funding is June 30, 2048;
7.18 (vi) for the St. Paul Teachers Retirement Fund Association, the established date for full
7.19funding is June 30, 2048; and
7.20 (vii) for the general state employees retirement plan of the Minnesota State Retirement
7.21System, the established date for full funding is June 30, 2048.
7.22 (d) For the retirement plans for which the annual actuarial valuation indicates an excess
7.23of valuation assets over the actuarial accrued liability, the valuation assets in excess of the
7.24actuarial accrued liability must be recognized as a reduction in the current contribution
7.25requirements by an amount equal to the amortization of the excess expressed as a level
7.26percentage of pay over a 30-year period beginning anew with each annual actuarial valuation
7.27of the plan.
7.28 EFFECTIVE DATE.This section is effective beginning with the July 1, 2025, actuarial
7.29valuations.
7Sec. 4.
REVISOR VH/ES 25-0540304/08/25 8.1 Sec. 5. Minnesota Statutes 2024, section 356.215, subdivision 17, is amended to read:
8.2 Subd. 17.Actuarial services by approved actuaries.(a) The actuarial valuation or
8.3quadrennial experience study must be made and any actuarial consulting services for a
8.4retirement fund or plan must be provided by an approved actuary. The actuarial valuation
8.5or quadrennial experience study must include a signed written declaration that it has been
8.6prepared according to sections 356.20 to 356.23 and according to the most recent standards
8.7for actuarial work adopted by the Legislative Commission on Pensions and Retirement.
8.8 (b) Actuarial valuations or experience studies prepared by an approved actuary retained
8.9by a retirement fund or plan must be submitted to the Legislative Commission on Pensions
8.10and Retirement within ten days of the submission of the document to the retirement fund
8.11or plan.
8.12 EFFECTIVE DATE.This section is effective the day following final enactment.
8Sec. 5.
REVISOR VH/ES 25-0540304/08/25