Minn. Stat. § 356.215
Subd. 1. Definitions.
(f) "Current assets" means:
(2) for the July 1, 2000, actuarial valuation, the market value of all assets as of June 30, 2000, reduced by:
(3) for the July 1, 2001, actuarial valuation, the market value of all assets as of June 30, 2001, reduced by:
(4) for the July 1, 2002, actuarial valuation, the market value of all assets as of June 30, 2002, reduced by:
(5) for any actuarial valuation after July 1, 2002, the market value of all assets as of the preceding June 30, reduced by:
Subd. 2. Requirements.
(a) It is the policy of the legislature that it is necessary and appropriate to determine annually the financial status of tax supported retirement and pension plans for public employees. To achieve this goal:
Subd. 2a. Projection valuation requirements.
A quadrennial projection valuation required under subdivision 2 is intended to serve as an additional analytical tool with which policy makers may assess the future funding status of public plans through forecasting and testing various potential outcomes over time if certain plan assumptions or valuation methods were to be modified. In consultation with the retirement fund directors, the state economist, the state demographer, the commissioner of finance, and the commissioner of employee relations, the actuary retained by the legislative commission on pensions and retirement shall perform the quadrennial projection valuations on behalf of the commissioner of finance, testing future implications for plan funding by modifying assumptions and methods currently in place. The commission-retained actuary shall provide advice to the commissioner as to the periods over which such projections should be made, the nature and scope of the scenarios to be analyzed, and the measures of funding status to be employed, and shall report the results of these analyses in the same manner as for quadrennial experience studies.
Subd. 3. Reports.
The actuarial valuations required annually must be made as of the beginning of each fiscal year. Two copies of the valuation must be delivered to the executive director of the legislative commission on pensions and retirement, to the commissioner of finance and to the legislative reference library, not later than the first day of the sixth month occurring after the end of the previous fiscal year. Two copies of a quadrennial experience study must be filed with the executive director of the legislative commission on pensions and retirement, with the commissioner of finance, and with the legislative reference library, not later than the first day of the 11th month occurring after the end of the last fiscal year of the four-year period which the experience study covers. For actuarial valuations and experience studies prepared at the direction of the legislative commission on pensions and retirement, two copies of the document must be delivered to the governing or managing board or administrative officials of the applicable public pension and retirement fund or plan.
Subd. 4. Actuarial valuation; contents.
The actuarial valuation must be made in conformity with the requirements of the definition contained in subdivision 1 and the most recent standards for actuarial work adopted by the legislative commission on pensions and retirement. The actuarial valuation must measure all aspects of the benefit plan of the fund in accordance with changes in benefit plans, if any, and salaries reasonably anticipated to be in force during the ensuing fiscal year. The actuarial valuation must be prepared in accordance with the entry age actuarial cost method.
The actuarial valuation required under this section must include the information required in subdivisions 4a to 4k.
Subd. 4a. Normal cost.
For a fund providing benefits in whole or in part under a defined benefit plan, the actuarial valuation must indicate the level normal cost of the benefits provided by the laws governing the fund as of the date of the valuation, calculated in accordance with the entry age actuarial cost method. The normal cost must be expressed as a level percentage of the present value of future payrolls of the active participants of the fund as of the date of the valuation.
Subd. 4b. Accrued liability.
For a fund providing benefits under a defined benefit plan, the actuarial valuation must contain an exhibit indicating the actuarial accrued liabilities of the fund. This figure is the present value of future benefits, reduced by the present value of future normal costs, calculated in accordance with the entry age actuarial cost method.
Subd. 4c. Defined contribution accumulations.
For each fund providing benefits under the money purchase or defined contribution plan, the actuarial valuation shall contain an exhibit indicating the member contributions accumulated at interest, as apportioned to members accounts, to the date of the valuation. These accumulations shall be separately tabulated in a manner which properly reflects any differences in money purchase or defined contribution annuity rates which may apply.
Subd. 4d. Interest and salary assumptions.
(a) The actuarial valuation must use the applicable following preretirement interest assumption and the applicable following postretirement interest assumption:
preretirement postretirement interest rate interest rate plan assumption assumption general state employees retirement plan 8.5% 6.0% correctional state employees retirement plan 8.5 6.0 state patrol retirement plan 8.5 6.0 legislators retirement plan 8.5 6.0 elective state officers retirement plan 8.5 6.0 judges retirement plan 8.5 6.0 general public employees retirement plan 8.5 6.0 public employees police and fire retirement plan 8.5 6.0 local government correctional service retirement plan 8.5 6.0 teachers retirement plan 8.5 6.0 Minneapolis employees retirement plan 6.0 5.0 Duluth teachers retirement plan 8.5 8.5 Minneapolis teachers retirement plan 8.5 8.5 St. Paul teachers retirement plan 8.5 8.5 Minneapolis police relief association 6.0 6.0 other local police relief associations 5.0 5.0 Minneapolis fire department relief association 6.0 6.0 other local salaried firefighters relief associations 5.0 5.0 local monthly benefit volunteer firefighters relief associations 5.0 5.0
(b) The actuarial valuation must use the applicable following single rate future salary increase assumption or the applicable following graded rate future salary increase assumption:
(1) single rate future salary increase assumption
future salary plan increase assumption legislators retirement plan 5.0% elective state officers retirement plan 5.0 judges retirement plan 5.0 Minneapolis police relief association 4.0 other local police relief associations 3.5 Minneapolis fire department relief association 4.0 other local salaried firefighters relief associations 3.5
(2) modified single rate future salary increase assumption
future salary plan increase assumption Minneapolis employees prior calendar year amount retirement plan increased by 1.0198 percent to prior fiscal year date and by 4.0 percent annually for each future year
(3) select and ultimate future salary increase assumption or graded rate future salary increase assumption
future salary plan increase assumption general state employees select calculation and retirement plan assumption A correctional state employees retirement plan assumption H state patrol retirement plan assumption H general public employees select calculation and retirement plan assumption B public employees police and fire fund retirement plan assumption C local government correctional service retirement plan assumption H teachers retirement plan assumption D Duluth teachers retirement plan assumption E Minneapolis teachers retirement plan assumption F St. Paul teachers retirement plan assumption G select calculation: during the ten-year select period, 0.2 percent is multiplied by the result of ten minus T, where T is the number of completed years of service, and is added to the applicable future salary increase assumption. future salary increase assumption: age A B C D E F G H 16 6.95% 6.95% 11.50% 8.20% 8.00% 7.50% 7.25% 7.7500 17 6.90 6.90 11.50 8.15 8.00 7.50 7.25 7.7500 18 6.85 6.85 11.50 8.10 8.00 7.50 7.25 7.7500 19 6.80 6.80 11.50 8.05 8.00 7.50 7.25 7.7500 20 6.75 6.75 11.50 8.00 8.00 7.50 7.25 7.7500 21 6.70 6.70 11.50 7.95 8.00 7.50 7.25 7.1454 22 6.65 6.65 11.00 7.90 8.00 7.50 7.25 7.0725 24 6.66 6.55 10.00 7.80 7.80 7.30 7.20 7.0363 25 6.50 6.50 9.50 7.75 7.70 7.20 7.15 7.0000 26 6.45 6.45 9.20 7.70 7.60 7.10 7.10 7.0000 27 6.40 6.40 8.90 7.65 7.50 7.00 7.05 7.0000 28 6.35 6.35 8.60 7.60 7.40 6.90 7.00 7.0000 29 6.30 6.30 8.30 7.55 7.30 6.80 6.95 7.0000 30 6.25 6.30 8.00 7.50 7.20 6.70 6.90 7.0000 31 6.20 6.25 7.80 7.45 7.10 6.60 6.85 7.0000 32 6.15 6.21 7.60 7.40 7.00 6.50 6.80 7.0000 33 6.10 6.17 7.40 7.30 6.90 6.40 6.75 7.0000 34 6.05 6.09 7.20 7.10 6.80 6.30 6.70 7.0000 35 6.00 6.05 7.00 7.00 6.70 6.20 6.65 7.0000 36 6.95 6.01 6.80 6.85 6.60 6.10 6.60 6.9019 37 5.90 5.97 6.60 6.70 6.50 6.00 6.55 6.8074 38 5.85 5.93 6.40 6.55 6.40 5.90 6.50 6.7125 39 5.80 5.89 6.20 6.40 6.30 5.80 6.40 6.6054 40 5.75 5.85 6.00 6.25 6.20 5.70 6.30 6.5000 41 5.70 5.81 5.90 6.10 6.10 5.60 6.20 6.3540 42 5.65 5.77 5.80 5.95 6.00 5.50 6.10 6.2087 43 5.60 5.73 5.70 5.80 5.90 5.45 6.00 6.0622 44 5.55 5.69 5.60 5.65 5.80 5.40 5.90 5.9048 45 5.50 5.65 5.50 5.50 5.70 5.35 5.80 5.7500 46 5.45 5.62 5.45 5.45 5.60 5.30 5.70 5.6940 47 5.40 5.59 5.40 5.40 5.50 5.25 5.65 5.6375 48 5.35 5.56 5.35 5.35 5.45 5.20 5.60 5.5822 49 5.30 5.53 5.30 5.30 5.40 5.15 5.55 5.5404 50 5.25 5.50 5.25 5.25 5.35 5.10 5.50 5.5000 51 5.20 5.45 5.25 5.20 5.30 5.05 5.45 5.4384 52 5.15 5.40 5.25 5.15 5.25 5.00 5.40 5.3776 53 5.10 5.35 5.25 5.10 5.25 5.00 5.35 5.3167 54 5.05 5.30 5.25 5.05 5.25 5.00 5.30 5.2826 55 5.00 5.25 5.25 5.00 5.25 5.00 5.25 5.2500 56 5.00 5.20 5.25 5.00 5.25 5.00 5.25 5.2500 57 5.00 5.15 5.25 5.00 5.25 5.00 5.25 5.2500 58 5.00 5.10 5.25 5.00 5.25 5.00 5.25 5.2500 59 5.00 5.05 5.25 5.00 5.25 5.00 5.25 5.2500 60 5.00 5.00 5.25 5.00 5.25 5.00 5.25 5.2500 61 5.00 5.00 5.25 5.00 5.25 5.00 5.25 5.2500 62 5.00 5.00 5.25 5.00 5.25 5.00 5.25 5.2500 63 5.00 5.00 5.25 5.00 5.25 5.00 5.25 5.2500 64 5.00 5.00 5.25 5.00 5.25 5.00 5.25 5.2500 65 5.00 5.00 5.25 5.00 5.25 5.00 5.25 5.2500 66 5.00 5.00 5.25 5.00 5.25 5.00 5.25 5.2500 67 5.00 5.00 5.25 5.00 5.25 5.00 5.25 5.2500 68 5.00 5.00 5.25 5.00 5.25 5.00 5.25 5.2500 69 5.00 5.00 5.25 5.00 5.25 5.00 5.25 5.2500 70 5.00 5.00 5.25 5.00 5.25 5.00 5.25 5.2500 71 5.00 5.00 5.00
(c) The actuarial valuation must use the applicable following payroll growth assumption for calculating the amortization requirement for the unfunded actuarial accrued liability where the amortization retirement is calculated as a level percentage of an increasing payroll:
payroll growth plan assumption general state employees retirement plan 5.00% correctional state employees retirement plan 5.00 state patrol retirement plan 5.00 legislators retirement plan 5.00 elective state officers retirement plan 5.00 judges retirement plan 5.00 general public employees retirement plan 6.00 public employees police and fire retirement plan 6.00 local government correctional service retirement plan 6.00 teachers retirement plan 5.00 Duluth teachers retirement plan 5.00 Minneapolis teachers retirement plan 5.00 St. Paul teachers retirement plan 5.00
Subd. 4e. Other assumptions.
The actuarial valuation must use assumptions concerning mortality, disability, retirement, withdrawal, retirement age, and any other relevant demographic or economic factor. These must be set at levels consistent with those determined in the most recent quadrennial experience study completed under subdivision 5, if required, or representative of the best estimate of future experience, if a quadrennial experience study is not required. The actuarial valuation must contain an exhibit indicating any actuarial assumptions used in preparing the valuation report.
Subd. 4f. Public sector accounting disclosure information.
The actuarial valuation must contain those actuarial calculations necessary to allow the retirement plan administration or participating employing units to prepare the pension-related portions of annual financial reporting that meet generally accepted accounting principles for the public sector.
Subd. 4g. Amortization contributions.
(c) For any fund or plan other than the Minneapolis employees retirement fund, after the first actuarial valuation date occurring after June 1, 1989, if there has been a change in any or all of the actuarial assumptions used for calculating the actuarial accrued liability of the fund, a change in the benefit plan governing annuities and benefits payable from the fund, a change in the actuarial cost method used in calculating the actuarial accrued liability of all or a portion of the fund, or a combination of the three, and the change or changes, by themselves and without inclusion of any other items of increase or decrease, produce a net increase in the unfunded actuarial accrued liability in the fund, the established date for full funding must be determined using the following procedure:
Subd. 4h. Actuarial gains and losses.
The actuarial valuation must contain an exhibit consisting of an analysis by the actuary explaining the net increase or decrease in the unfunded actuarial accrued liability since the last valuation. The explanation must subdivide the net increase or decrease in the unfunded actuarial accrued liability into at least the following parts:
(c) increases or decreases in the unfunded actuarial accrued liability attributable to actuarial gains or losses resulting from any experience deviations from the assumptions on which the valuation is based, as follows:
Subd. 4i. Membership tabulation.
The actuarial valuation must contain a tabulation of active membership and annuitants in the fund. If the membership of a fund is under more than one general benefit program, a separate tabulation must be made for each general benefit program. The tabulations must be prepared by the administration of the pension fund and must contain the following information:
(1) Active members Number As of last valuation date New entrants Total Separations from active service Refund of contributions Separation with deferred annuity Separation with neither refund nor deferred annuity Disability Death Retirement with service annuity
Total separations As of current valuation date (2) Annuitants Number As of last valuation date New entrants Total Terminations Deaths Other
Total terminations As of current valuation date
The tabulation required under clause (2) must be made separately for each of the following classes of benefit recipients:
Subd. 4j. Administrative expenses.
The actuarial valuation must indicate the administrative expenses of the fund, expressed both in dollars and as a percentage of covered payroll. Administrative expenses are costs incurred by the retirement plans excluding investment expenses. Investment expenses include all expenses incurred for the retention of professional external investment managers and professional investment consultants, custodian bank fees, investment transaction costs, and the costs incurred by the retirement plans to manage investment portfolios or assets internally. Investment expenses must be deducted from investment return in the actuarial valuation, and not included in administrative expenses when calculating the allowance for expenses.
Subd. 4k. Plan summary.
The actuarial valuation must contain a summary of the principal provisions of the plan upon which the valuation is based.
Subd. 5. Quadrennial experience study; contents.
A quadrennial experience study, if required, must contain an actuarial analysis of the experience of the fund and a comparison of the experience with the actuarial assumptions on which the most recent actuarial valuation of the retirement fund was based.
Subd. 6. Actuarial services by approved actuaries.
Subd. 7. Establishment of actuarial assumptions.
Actuarial assumptions used for actuarial valuations under this section that are other than those set forth in this section may be changed only with the approval of the legislative commission on pensions and retirement. A change in the applicable actuarial assumptions may be proposed by the governing board of the applicable pension fund or relief association, by the actuary retained by the legislative commission on pensions and retirement, by the actuarial advisor to a pension fund governed by chapter 352, 353, 354, or 354A, or by the actuary retained by a local police or firefighters relief association governed by sections 69.77 or 69.771 to 69.776, if one is retained.
* NOTE: Subdivision 4d was also amended by Laws 1997, *chapter 233, article 1, section 58, to read as follows:
* "Subd. 4d. Interest and salary assumptions. (a) For *funds governed by chapter 352B, and by sections 352.90 through *352.951 and 353.63 through 353.68, the actuarial valuation must *use a preretirement interest assumption of 8.5 percent, a *postretirement interest assumption of six percent, and a future *salary increase assumption of 6.5 percent.
* (b) For funds governed by chapter 354A, the actuarial *valuation must use preretirement and postretirement assumptions *of 8.5 percent and a future salary increase assumption of 6.5 *percent, but the actuarial valuation must reflect the payment of *postretirement adjustments to retirees, based on the methods *specified in the bylaws of the fund as approved by the *legislature. For a fund governed by chapter 422A, the actuarial *valuation shall use a preretirement interest assumption of six *percent, a postretirement interest assumption of five percent, *and an assumption that in each future year the salary on which a *retirement or other benefit is based is 1.04 multiplied by the *salary for the preceding year.
* (c) For all other funds not specified in paragraph (a), *(b), (d), or (e), the actuarial valuation must use a *preretirement interest assumption of five percent, a *postretirement interest assumption of five percent, and a future *salary increase assumption of 3.5 percent.
* (d) For funds governed by chapters 3A, 352C, and 490, the *actuarial valuation must use a preretirement interest assumption *of 8.5 percent, a postretirement interest assumption of six *percent, and a future salary increase assumption of 6.5 percent *in each future year in which the salary amount payable is not *determinable from section 3.099, 15A.081, subdivision 6, or *15A.083, subdivision 1, whichever applies, or from applicable *compensation council recommendations under section 15A.082.
* (e) For funds governed by sections 352.01 through 352.86, *353.01 through 353.46, and chapter 354, the actuarial valuation *must use a preretirement interest assumption of 8.5, a *postretirement interest assumption of six percent, and a graded *rate future salary increase assumption as follows:
General state General public
employees employees Teachers
retirement retirement retirement
Age plan plan plan
27 7.0000 7.39 7.00
28 7.0000 7.30 7.00
29 7.0000 7.20 7.00
30 7.0000 7.20 7.00
31 7.0000 7.10 7.00
32 7.0000 7.10 7.00
33 7.0000 7.00 7.00
34 7.0000 7.00 7.00
35 7.0000 6.90 7.00