1.1                          A bill for an act
  1.2             relating to retirement; authorizing revision of the 
  1.3             articles of incorporation and bylaws of the St. Paul 
  1.4             teachers retirement fund association governing 
  1.5             postretirement adjustments for the association; 
  1.6             amending Minnesota Statutes 1995 Supplement, section 
  1.7             354A.31, subdivision 4. 
  1.8   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.9      Section 1.  Minnesota Statutes 1995 Supplement, section 
  1.10  354A.31, subdivision 4, is amended to read: 
  1.11     Subd. 4.  [COMPUTATION OF THE NORMAL COORDINATED RETIREMENT 
  1.12  ANNUITY; MINNEAPOLIS AND ST. PAUL FUNDS.] (a) This subdivision 
  1.13  applies to the coordinated programs of the Minneapolis teachers 
  1.14  retirement fund association and the St. Paul teachers retirement 
  1.15  fund association.  
  1.16     (b) The normal coordinated retirement annuity shall be an 
  1.17  amount equal to a retiring coordinated member's average salary 
  1.18  multiplied by the retirement annuity formula percentage.  
  1.19  Average salary for purposes of this section shall mean an amount 
  1.20  equal to the average salary upon which contributions were made 
  1.21  for the highest five successive years of service credit, but 
  1.22  which shall not in any event include any more than the 
  1.23  equivalent of 60 monthly salary payments.  Average salary must 
  1.24  be based upon all years of service credit if this service credit 
  1.25  is less than five years. 
  1.26     (c) This paragraph, in conjunction with subdivision 6, 
  2.1   applies to a person who first became a member or a member in a 
  2.2   pension fund listed in section 356.30, subdivision 3, before 
  2.3   July 1, 1989, unless paragraph (d), in conjunction with 
  2.4   subdivision 7, produces a higher annuity amount, in which case 
  2.5   paragraph (d) will apply.  The retirement annuity formula 
  2.6   percentage for purposes of this paragraph is one 1.2 percent per 
  2.7   year for each year of coordinated service for the first ten 
  2.8   years and 1.5 1.7 percent for each year of coordinated service 
  2.9   thereafter.  
  2.10     (d) This paragraph applies to a person who has become at 
  2.11  least 55 years old and who first becomes a member after June 30, 
  2.12  1989, and to any other member who has become at least 55 years 
  2.13  old and whose annuity amount, when calculated under this 
  2.14  paragraph and in conjunction with subdivision 7 is higher than 
  2.15  it is when calculated under paragraph (c), in conjunction with 
  2.16  the provisions of subdivision 6.  The retirement annuity formula 
  2.17  percentage for purposes of this paragraph is 1.5 1.7 percent for 
  2.18  each year of coordinated service.  
  2.19     Sec. 2.  [ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION 
  2.20  POSTRETIREMENT ADJUSTMENT.] 
  2.21     Subdivision 1.  [ARTICLES OF INCORPORATION AND BYLAWS.] As 
  2.22  provided in Minnesota Statutes, section 354A.12, subdivision 4, 
  2.23  permission is granted for the St. Paul teachers retirement fund 
  2.24  association to amend its articles of incorporation and bylaws to 
  2.25  provide postretirement adjustments as provided in subdivisions 2 
  2.26  to 6. 
  2.27     Subd. 2.  [POSTRETIREMENT ADJUSTMENT MODIFICATION.] Any 
  2.28  postretirement adjustment described in the articles and bylaws 
  2.29  of St. Paul teachers retirement fund must be computed and paid 
  2.30  as described in this section. 
  2.31     Subd. 3.  [CALCULATION OF POSTRETIREMENT ADJUSTMENTS.] (a) 
  2.32  Annually, after June 30, the board of trustees must determine 
  2.33  the amount of any postretirement adjustment using the procedures 
  2.34  in this subdivision and subdivision 4. 
  2.35     (b) Each eligible person who has been receiving an annuity 
  2.36  or benefit under the articles of incorporation or the bylaws for 
  3.1   at least 12 months as of the end of the fiscal year shall 
  3.2   receive a postretirement adjustment.  The postretirement 
  3.3   adjustment is payable each January 1.  The postretirement 
  3.4   adjustment shall be equal to the lesser of the following 
  3.5   percentages, applied to the annuity or benefit to which the 
  3.6   person is entitled before payment of the adjustment:  
  3.7      (1) the increase in the consumer price index for urban wage 
  3.8   earners and clerical workers all items index as published by the 
  3.9   United States Department of Labor Bureau of Labor Statistics for 
  3.10  the 12 months ending June 30 of the year in which the 
  3.11  calculation is made; or 
  3.12     (2) 2.5 percent. 
  3.13     Subd. 4.  [ADDITIONAL INCREASE.] (a) In addition to the 
  3.14  postretirement increase granted under subdivision 3, an 
  3.15  additional percentage increase must be computed and paid under 
  3.16  this subdivision. 
  3.17     (b) The board of trustees shall determine the number of 
  3.18  annuitants or eligible benefit recipients who have been 
  3.19  receiving an annuity or benefit for at least 12 months as of the 
  3.20  current June 30.  These recipients are entitled to receive the 
  3.21  surplus investment earnings additional postretirement increase. 
  3.22     (c) Annually, as of June 30, the board shall determine the 
  3.23  five-year annualized rate of return attributable to the assets 
  3.24  of the St. Paul teachers retirement fund association under the 
  3.25  formula or formulas specified in Minnesota Statutes, section 
  3.26  11A.04, clause (11). 
  3.27     (d) The board shall determine the amount of excess 
  3.28  five-year annualized rate of return over the preretirement 
  3.29  interest assumption specified in section 356.215. 
  3.30     (e) The additional percentage increase must be determined 
  3.31  by multiplying the quantity one minus the rate of contribution 
  3.32  deficiency, as specified in the most recent actuarial report of 
  3.33  the actuary retained by the legislative commission on pensions 
  3.34  and retirement, times the rate of return excess as determined in 
  3.35  paragraph (d). 
  3.36     (f) The additional increase is payable to all annuitants or 
  4.1   eligible benefit recipients on the following January 1. 
  4.2      Subd. 5.  [EFFECT ON ANNUITY.] The increases calculated 
  4.3   under subdivisions 3 and 4 must be included in all annuities or 
  4.4   benefits paid to the recipient after the increases take effect. 
  4.5      Subd. 6.  [LUMP-SUM POSTRETIREMENT ADJUSTMENT TRANSITION.] 
  4.6   This subdivision applies to all annuitants and beneficiaries of 
  4.7   the association who received a lump-sum postretirement 
  4.8   adjustment before the calculation of the first postretirement 
  4.9   adjustment under subdivisions 3 to 5.  Before the calculation of 
  4.10  the first postretirement adjustment under subdivisions 3 to 5, 
  4.11  the annual retirement annuity or benefit of such a person must 
  4.12  be increased by the lesser of the following amounts: 
  4.13     (1) the amount of the lump-sum postretirement adjustment 
  4.14  paid to the person in 1996 before the effective date of this 
  4.15  section; or 
  4.16     (2) the percentage increase in the consumer price index for 
  4.17  urban wage earners and clerical workers all items index 
  4.18  published by the United States Department of Labor Bureau of 
  4.19  Labor Statistics, from the date of retirement of the person 
  4.20  whose service is the basis of the benefit to June 30, 1996, 
  4.21  applied to the annual annuity or benefit to which the person is 
  4.22  entitled before calculation of the first postretirement 
  4.23  adjustment under subdivisions 3 to 5.  
  4.24     Sec. 3.  [EFFECTIVE DATE.] 
  4.25     Sections 1 and 2 are effective the day following final 
  4.26  enactment.