Bill Text: MN SF1952 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Volunteer firefighter relief associations state auditor recommendations implementation
Sponsorship: Bipartisan Bill
Status: (Introduced - Dead) 2012-03-01 - Author added Sheran [SF1952 Detail]
Download: Minnesota-2011-SF1952-Introduced.html
1.2relating to retirement; volunteer firefighter relief associations; implementing the
1.3recommendations of the 2011-2012 state auditor volunteer fire working group;
1.4amending Minnesota Statutes 2010, sections 356.219, subdivision 8; 356A.01,
1.5subdivision 19; 356A.06, subdivision 6; 424A.016, subdivision 6; 424A.02,
1.6subdivisions 1, 7, 9.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2010, section 356.219, subdivision 8, is amended to read:
1.9 Subd. 8. Timing of reports. (a) For salaried firefighter relief associations, police
1.10relief associations, and volunteer firefighter relief associations, the information required
1.11under this section must be submitted by the due date for reports required under section
1.1269.051, subdivision 1
or 1a, as applicable. If a relief association satisfies the definition of
1.13a fully invested plan under subdivision 1, paragraph (b), for the calendar year covered
1.14by the report required under section69.051, subdivision 1 or 1a, as applicable, the chief
1.15administrative officer of the covered pension plan shall certify that compliance on a form
1.16prescribed by the state auditor. The state auditor shall transmit annually to the State Board
1.17of Investment a list or lists of covered pension plans which submitted certifications in
1.18order to facilitate reporting by the State Board of Investment under paragraph (c).
1.19(b) For theMinneapolis Teachers Retirement Fund Association, the St. Paul
1.20Teachers Retirement Fund Association, the Duluth Teachers Retirement Fund Association,
1.21theMinneapolis Employees Retirement Fund, the University of Minnesota faculty
1.22supplemental retirement plan, and the applicable administrators for the University of
1.23Minnesota faculty retirement plan and the individual retirement account plans under
1.24chapters 354B and 354D, the information required under this section must be submitted to
1.25the state auditor by June 1 of each year.
2.1(c) The State Board of Investment, on behalf of pension funds specified in
2.2subdivision 1, paragraph (c), must report information required under this section by
2.3September 1 of each year.
2.4EFFECTIVE DATE.This section is effective the day following final enactment.
2.5 Sec. 2. Minnesota Statutes 2010, section 356A.01, subdivision 19, is amended to read:
2.6 Subd. 19. Pension fund. "Pension fund" means the assets amassed and held in a
2.7pension plan, other than the general fund, as reserves for present and future payment of
2.8benefits and administrative expenses. For a retirement plan governed by section 69.77 or
2.9by chapter 424A, the term means the relief association special fund.
2.10EFFECTIVE DATE.This section is effective the day following final enactment.
2.11 Sec. 3. Minnesota Statutes 2010, section 356A.06, subdivision 6, is amended to read:
2.12 Subd. 6. Limited list of authorized investment securities. (a) Except to the
2.13extent otherwise authorized by law, a covered pension plan may invest its assets only in
2.14investment securities authorized by this subdivision if the plan does not:
2.15 (1) have pension fund assets with a book value in excess of $1,000,000;
2.16 (2) use the services of an investment advisor registered with the Securities and
2.17Exchange Commission in accordance with the Investment Advisers Act of 1940, or
2.18registered as an investment advisor in accordance with sections80A.58 , and
80A.60 , for
2.19the investment of at least 60 percent of its pension fund assets, calculated on book value;
2.20 (3) use the services of the State Board of Investment for the investment of at least 60
2.21percent of its pension fund assets, calculated on book value; or
2.22 (4) use a combination of the services of an investment advisor meeting the
2.23requirements of clause (2) and the services of the State Board of Investment for the
2.24investment of at least 75 percent of its pension fund assets, calculated on book value.
2.25 (b) Investment securities authorized for a pension plan covered by this subdivision
2.26are:
2.27 (1) certificates of deposit issued, to the extent of available insurance or
2.28collateralization, by a financial institution that is a member of the Federal Deposit
2.29Insurance Corporation or the Federal Savings and Loan Insurance Corporation, is insured
2.30by the National Credit Union Administration, or is authorized to do business in this state
2.31and has deposited with the chief administrative officer of the plan a sufficient amount of
2.32marketable securities as collateral in accordance with section118A.03 ;
3.1 (2) savings accounts, to the extent of available insurance, with a financial institution
3.2that is a member of the Federal Deposit Insurance Corporation or the Federal Savings
3.3and Loan Insurance Corporation;
3.4 (3) governmental obligations, including bonds, notes, bills, or other fixed
3.5obligations, issued by the United States, an agency or instrumentality of the United States,
3.6an organization established and regulated by an act of Congress or by a state, state agency
3.7or instrumentality, municipality, or other governmental or political subdivision that:
3.8 (i) for the obligation in question, issues an obligation that equals or exceeds the
3.9stated investment yield of debt securities not exempt from federal income taxation and of
3.10comparable quality;
3.11 (ii) for an obligation that is a revenue bond, has been completely self-supporting
3.12for the last five years; and
3.13 (iii) for an obligation other than a revenue bond, has issued an obligation backed by
3.14the full faith and credit of the applicable taxing jurisdiction and has not been in default on
3.15the payment of principal or interest on the obligation in question or any other nonrevenue
3.16bond obligation during the preceding ten years;
3.17 (4) corporate obligations, including bonds, notes, debentures, or other regularly
3.18issued and readily marketable evidences of indebtedness issued by a corporation organized
3.19under the laws of any state that during the preceding five years has had on average
3.20annual net pretax earnings at least 50 percent greater than the annual interest charges
3.21and principal payments on the total issued debt of the corporation during that period
3.22and that, for the obligation in question, has issued an obligation rated in one of the top
3.23three quality categories by Moody's Investors Service, Incorporated, or Standard and
3.24Poor's Corporation; and
3.25 (5) shares in an open-end investment company registered under the federal
3.26Investment Company Act of 1940, if the portfolio investments of the company are limited
3.27to investments that meet the requirements of clauses (1) to (4).
3.28EFFECTIVE DATE.This section is effective the day following final enactment.
3.29 Sec. 4. Minnesota Statutes 2010, section 424A.016, subdivision 6, is amended to read:
3.30 Subd. 6. Deferred service pensions. (a) A member of a relief association is entitled
3.31to a deferred service pension if the member:
3.32 (1) has completed the lesser of the minimum period of active service with the fire
3.33department specified in the bylaws or 20 years of active service with the fire department;
3.34 (2) has completed at least five years of active membership in the relief association;
3.35and
4.1 (3) separates from active service and membershipbefore reaching age 50 or the
4.2minimum age for retirement and commencement of a service pension specified in the
4.3bylaws governing the relief association if that age is greater than age 50. The requirement
4.4that a member separate from active service and membership is waived for persons who
4.5have discontinued their volunteer firefighter duties and who are employed on a full-time
4.6basis under section 424A.015, subdivision 1.
4.7 (b) The deferred service pension is payable when the former member reaches
4.8at least age 50, or at least the minimum age specified in the bylaws governing the relief
4.9association if that age is greater than age 50, and when the former member makes a valid
4.10written application.
4.11 (c) A defined contribution relief association may, if its governing bylaws so provide,
4.12credit interest or additional investment performance on the deferred lump-sum service
4.13pension during the period of deferral. If provided for in the bylaws, the interest must be
4.14paid:
4.15(1) at the investment performance rate actually earned on that portion of the assets
4.16if the deferred benefit amount is invested by the relief association in a separate account
4.17established and maintained by the relief associationor;
4.18(2) at the investment performance rate actually earned on that portion of the assets
4.19if the deferred benefit amount is invested in a separate investment vehicle held by the
4.20relief association; or
4.21(2) (3) at the investment return on the assets of the special fund of the defined
4.22contribution volunteer firefighter relief association in proportion to the share of the assets
4.23of the special fund to the credit of each individual deferred member account through
4.24the accounting date on which the investment return is recognized by and credited to the
4.25special fund.
4.26 (d) Unless the bylaws of a relief association that has elected to pay interest or
4.27additional investment performance on deferred lump-sum service pensions under
4.28paragraph (c) specifies a different interest or additional investment performance method,
4.29including the interest or additional investment performance period starting date and ending
4.30date, the interest or additional investment performance on a deferred service pension
4.31is creditable as follows:
4.32(1) for a relief association that has elected to pay interest or additional investment
4.33performance under paragraph (c), clause (1) or (3), beginning on the date that the
4.34member separates from active service and membership and ending on the accounting
4.35date immediately before the deferred member commences receipt of the deferred service
4.36pension; or
5.1(2) for a relief association that has elected to pay interest or additional investment
5.2performance under paragraph (c), clause (2), beginning on the date that the member
5.3separates from active service and membership and ending on the date that the separate
5.4investment vehicle is valued immediately before the date on which the deferred member
5.5commences receipt of the deferred service pension.
5.6(e) The deferred service pension is governed by and must be calculated under
5.7the general statute, special law, relief association articles of incorporation, and relief
5.8association bylaw provisions applicable on the date on which the member separated from
5.9active service with the fire department and active membership in the relief association.
5.10EFFECTIVE DATE.(a) This section is effective January 1, 2013.
5.11(b) This section applies only to persons becoming deferred service pensioners after
5.12January 1, 2013.
5.13 Sec. 5. Minnesota Statutes 2010, section 424A.02, subdivision 1, is amended to read:
5.14 Subdivision 1. Authorization. (a) A defined benefit relief association, when its
5.15articles of incorporation or bylaws so provide, may pay out of the assets of its special
5.16fund a defined benefit service pension to each of its members who: (1) separates from
5.17active service with the fire department; (2) reaches age 50; (3) completes at least five
5.18years of active service as an active member of the municipal fire department to which the
5.19relief association is associated; (4) completes at least five years of active membership
5.20with the relief association before separation from active service; and (5) complies with
5.21any additional conditions as to age, service, and membership that are prescribed by the
5.22bylaws of the relief association. A service pension computed under this section may be
5.23prorated monthly for fractional years of service as the bylaws or articles of incorporation
5.24of the relief association so provide. The bylaws or articles of incorporation may define
5.25a "month," but the definition must require a calendar month to have at least 16 days of
5.26active service. If the bylaws or articles of incorporation do not define a "month," a
5.27"month" is a completed calendar month of active service measured from the member's
5.28date of entry to the same date in the subsequent month. The service pension earned by a
5.29volunteer firefighter under this chapter and the articles of incorporation and bylaws of the
5.30volunteer firefighters' relief association may be paid whether or not the municipality or
5.31nonprofit firefighting corporation to which the relief association is associated qualifies for
5.32the receipt of fire state aid under chapter 69.
5.33(b) In the case of a member who has completed at least five years of active service as
5.34an active member of the fire department to which the relief association is associated on
5.35the date that the relief association is established and incorporated, the requirement that
6.1the member complete at least five years of active membership with the relief association
6.2before separation from active service may be waived by the board of trustees of the relief
6.3association if the member completes at least five years of inactive membership with the
6.4relief association before the date of the payment of the service pension. During the
6.5period of inactive membership, the member is not entitled to receive disability benefit
6.6coverage, is not entitled to receive additional service credit towards computation of a
6.7service pension, and is considered to have the status of a person entitled to a deferred
6.8service pension under subdivision 7.
6.9(c) No municipality or nonprofit firefighting corporation may delegate the power to
6.10take final action in setting a service pension or ancillary benefit amount or level to the
6.11board of trustees of the relief association or to approve in advance a service pension or
6.12ancillary benefit amount or level equal to the maximum amount or level that this chapter
6.13would allow rather than a specific dollar amount or level.
6.14(d) No relief association as defined in section
424A.001, subdivision 4, may pay a
6.15defined benefit service pension or disability benefit to a former member of the relief
6.16association if that person has not separated from active service with the fire department to
6.17which the relief association is directly associated, unless:
6.18(1) the person is employed subsequent to retirement by the municipality or the
6.19independent nonprofit firefighting corporation, whichever applies, to perform duties within
6.20the municipal fire department or corporation on a full-time basis;
6.21(2) the governing body of the municipality or of the corporation has filed its
6.22determination with the board of trustees of the relief association that the person's
6.23experience with and service to the fire department in that person's full-time capacity
6.24would be difficult to replace; and
6.25(3) the bylaws of the relief association were amended to provide for the payment of
6.26a service pension or disability benefit for such full-time employees.
6.27EFFECTIVE DATE.This section is effective the day following final enactment.
6.28 Sec. 6. Minnesota Statutes 2010, section 424A.02, subdivision 7, is amended to read:
6.29 Subd. 7. Deferred service pensions. (a) A member of a defined benefit relief
6.30association is entitled to a deferred service pension if the member:
6.31 (1) has completed the lesser of either the minimum period of active service with
6.32the fire department specified in the bylaws or 20 years of active service with the fire
6.33department;
6.34 (2) has completed at least five years of active membership in the relief association;
6.35and
7.1 (3) separates from active service and membershipbefore reaching age 50 or the
7.2minimum age for retirement and commencement of a service pension specified in the
7.3bylaws governing the relief association if that age is greater than age 50. The requirement
7.4that a member separate from active service and membership is waived for persons who
7.5have discontinued their volunteer firefighter duties and who are employed on a full-time
7.6basis under section 424A.015, subdivision 1.
7.7 (b) The deferred service pension is payable when the former member reaches
7.8at least age 50, or at least the minimum age specified in the bylaws governing the relief
7.9association if that age is greater than age 50, and when the former member makes a valid
7.10written application.
7.11 (c) A defined benefit relief association that provides a lump-sum service pension
7.12governed by subdivision 3 may, when its governing bylaws so provide, pay interest on the
7.13deferred lump-sum service pension during the period of deferral. If provided for in the
7.14bylaws, interest must be paid in one of the following manners:
7.15 (1) at the investment performance rate actually earned on that portion of the assets
7.16if the deferred benefit amount is invested by the relief association in a separate account
7.17established and maintained by the relief associationor;
7.18(2) at the investment performance rate actually earned on that portion of the assets if
7.19the deferred benefit amount is invested in a separate investment vehicle held by the relief
7.20association; or
7.21(2) (3) at an interest rate of up to five percent, compounded annually, as set by the
7.22board of directors and approved as provided in subdivision 10.
7.23 (d) Interest under paragraph (c), clause(2) (3), is payable following the date on
7.24which the municipality has approved the deferred service pension interest rate established
7.25by the board of trustees.
7.26 (e) Unless the bylaws of a relief association that has elected to pay interest or
7.27additional investment performance on deferred lump-sum service pensions under
7.28paragraph (c) specifies a different interest or additional investment performance method,
7.29including the interest or additional investment performance period starting date and ending
7.30date, the interest or additional investment performance on a deferred service pension
7.31is creditable as follows:
7.32(1) for a relief association that has elected to pay interest or additional investment
7.33performance under paragraph (c), clause (1) or (3), beginning on the date that the
7.34member separates from active service and membership and ending on the accounting
7.35date immediately before the deferred member commences receipt of the deferred service
7.36pension; or
8.1(2) for a relief association that has elected to pay interest or additional investment
8.2performance under paragraph (c), clause (2), beginning on the date that the member
8.3separates from active service and membership and ending on the date that the separate
8.4investment vehicle is valued immediately before the date on which the deferred member
8.5commences receipt of the deferred service pension.
8.6(f) For a deferred service pension that is transferred to a separate account established
8.7and maintained by the relief association or separate investment vehicle held by the relief
8.8association, the deferred member bears the full investment risk subsequent to transfer and
8.9in calculating the accrued liability of the volunteer firefighters relief association that pays
8.10a lump-sum service pension, the accrued liability for deferred service pensions is equal
8.11to the separate relief association account balance or the fair market value of the separate
8.12investment vehicle held by the relief association.
8.13(f) (g) The deferred service pension is governed by and must be calculated under
8.14the general statute, special law, relief association articles of incorporation, and relief
8.15association bylaw provisions applicable on the date on which the member separated from
8.16active service with the fire department and active membership in the relief association.
8.17EFFECTIVE DATE.(a) This section is effective January 1, 2013.
8.18(b) This section applies only to persons becoming deferred service pensioners after
8.19January 1, 2013.
8.20 Sec. 7. Minnesota Statutes 2010, section 424A.02, subdivision 9, is amended to read:
8.21 Subd. 9. Limitation on ancillary benefits. A defined benefit relief association,
8.22including any volunteer firefighters relief association governed by section69.77 or any
8.23volunteer firefighters division of a relief association governed by chapter 424, may only
8.24pay ancillary benefits which would constitute an authorized disbursement as specified in
8.25section424A.05 subject to the following requirements or limitations:
8.26 (1) with respect to a defined benefit relief association in which governing bylaws
8.27provide solely for a lump-sum service pension to a retiring member, or provide a retiring
8.28member the choice of either a lump-sum service pension or a monthly service pension
8.29and the lump-sum service pension was chosen, no ancillary benefit may be paid to any
8.30former member or paid to any person on behalf of any former member after the former
8.31member (i) terminates active service with the fire department and active membership
8.32in the relief association; and (ii) commences receipt of a service pension as authorized
8.33under this section; and
8.34 (2) with respect to any defined benefit relief association, no ancillary benefit paid or
8.35payable to any member, to any former member, or to any person on behalf of any member
9.1or former member, may exceed in amount the total earned service pension of the member
9.2or former member. The total earned service pension must be calculated by multiplying
9.3the service pension amount specified in the bylaws of the relief association at the time of
9.4death or disability, whichever applies, by the years of service credited to the member or
9.5former member. The years of service must be determined as of (i) the date the member or
9.6former member became entitled to the ancillary benefit; or (ii) the date the member or
9.7former member died entitling a survivor or the estate of the member or former member to
9.8an ancillary benefit. The ancillary benefit must be calculated without regard to whether the
9.9member had attained the minimum amount of service and membership credit specified in
9.10the governing bylaws. For active members, the amount of a permanent disability benefit
9.11or a survivor benefit must be equal to the member's total earned service pension except
9.12that the bylaws of a defined benefit relief association may provide for the payment of a
9.13survivor benefit in an amount not to exceed five times the yearly service pension amount
9.14specified in the bylaws on behalf of any member who dies before having performed five
9.15years of active service in the fire department with which the relief association is affiliated.
9.16(3)(i) If a lump sum survivor or death benefit is payable under the articles of
9.17incorporation or bylaws, the benefit must be paid:
9.18(A) as a survivor benefit to the surviving spouse of the deceased firefighter;
9.19(B) as a survivor benefit to the surviving children of the deceased firefighter if
9.20no surviving spouse;
9.21(C) as a survivor benefit to a designated beneficiary of the deceased firefighter if no
9.22surviving spouse or surviving children; or
9.23(D) as a death benefit to the estate of the deceased active or deferred firefighter if no
9.24surviving children and no beneficiary designated.
9.25(ii) If there are no surviving children, the surviving spouse may waive, in writing,
9.26wholly or partially, the spouse's entitlement to a survivor benefit.
9.27(4)(i) If a monthly benefit survivor or death benefit is payable under the articles of
9.28incorporation or bylaws, the benefit must be paid:
9.29(A) as a survivor benefit to the surviving spouse of the deceased firefighter;
9.30(B) as a survivor benefit to the surviving children of the deceased firefighter if
9.31no surviving spouse;
9.32(C) as a survivor benefit to a designated beneficiary of the deceased firefighter if no
9.33surviving spouse or surviving children; or
9.34(D) as a death benefit to the estate of the deceased active or deferred firefighter if no
9.35surviving spouse, no surviving children, and no beneficiary designated.
10.1(ii) If there are no surviving children, the surviving spouse may waive, in writing,
10.2wholly or partially, the spouse's entitlement to a survivor benefit.
10.3(iii) For purposes of this clause, if the relief association bylaws authorize a monthly
10.4survivor benefit payable to a designated beneficiary, the relief association bylaws may
10.5limit the total survivor benefit amount payable.
10.6(5) For purposes of this section, for a monthly benefit volunteer fire relief association
10.7or for a combination lump-sum and monthly benefit volunteer fire relief association where
10.8a monthly benefit service pension has been elected by or a monthly benefit is payable with
10.9respect to a firefighter, a designated beneficiary must be a natural person. For purposes
10.10of this section, for a lump-sum volunteer fire relief association or for a combination
10.11lump-sum and monthly benefit volunteer fire relief association where a lump-sum service
10.12pension has been elected by or a lump-sum benefit is payable with respect to a firefighter,
10.13a trust created under chapter 501B may be a designated beneficiary. If a trust is payable to
10.14the surviving children organized under chapter 501B as authorized by this section and
10.15there is no surviving spouse, the survivor benefit may be paid to the trust, notwithstanding
10.16a requirement of this section to the contrary.
10.17EFFECTIVE DATE.This section is effective January 1, 2013.
1.3recommendations of the 2011-2012 state auditor volunteer fire working group;
1.4amending Minnesota Statutes 2010, sections 356.219, subdivision 8; 356A.01,
1.5subdivision 19; 356A.06, subdivision 6; 424A.016, subdivision 6; 424A.02,
1.6subdivisions 1, 7, 9.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2010, section 356.219, subdivision 8, is amended to read:
1.9 Subd. 8. Timing of reports. (a) For salaried firefighter relief associations, police
1.10relief associations, and volunteer firefighter relief associations, the information required
1.11under this section must be submitted by the due date for reports required under section
1.13a fully invested plan under subdivision 1, paragraph (b), for the calendar year covered
1.14by the report required under section
1.15administrative officer of the covered pension plan shall certify that compliance on a form
1.16prescribed by the state auditor. The state auditor shall transmit annually to the State Board
1.17of Investment a list or lists of covered pension plans which submitted certifications in
1.18order to facilitate reporting by the State Board of Investment under paragraph (c).
1.19(b) For the
1.20Teachers Retirement Fund Association, the Duluth Teachers Retirement Fund Association,
1.21the
1.22supplemental retirement plan, and the applicable administrators for the University of
1.23Minnesota faculty retirement plan and the individual retirement account plans under
1.24chapters 354B and 354D, the information required under this section must be submitted to
1.25the state auditor by June 1 of each year.
2.1(c) The State Board of Investment, on behalf of pension funds specified in
2.2subdivision 1, paragraph (c), must report information required under this section by
2.3September 1 of each year.
2.4EFFECTIVE DATE.This section is effective the day following final enactment.
2.5 Sec. 2. Minnesota Statutes 2010, section 356A.01, subdivision 19, is amended to read:
2.6 Subd. 19. Pension fund. "Pension fund" means the assets amassed and held in a
2.7pension plan, other than the general fund, as reserves for present and future payment of
2.8benefits and administrative expenses. For a retirement plan governed by section 69.77 or
2.9by chapter 424A, the term means the relief association special fund.
2.10EFFECTIVE DATE.This section is effective the day following final enactment.
2.11 Sec. 3. Minnesota Statutes 2010, section 356A.06, subdivision 6, is amended to read:
2.12 Subd. 6. Limited list of authorized investment securities. (a) Except to the
2.13extent otherwise authorized by law, a covered pension plan may invest its assets only in
2.14investment securities authorized by this subdivision if the plan does not:
2.15 (1) have pension fund assets with a book value in excess of $1,000,000;
2.16 (2) use the services of an investment advisor registered with the Securities and
2.17Exchange Commission in accordance with the Investment Advisers Act of 1940, or
2.18registered as an investment advisor in accordance with sections
2.19the investment of at least 60 percent of its pension fund assets, calculated on book value;
2.20 (3) use the services of the State Board of Investment for the investment of at least 60
2.21percent of its pension fund assets, calculated on book value; or
2.22 (4) use a combination of the services of an investment advisor meeting the
2.23requirements of clause (2) and the services of the State Board of Investment for the
2.24investment of at least 75 percent of its pension fund assets, calculated on book value.
2.25 (b) Investment securities authorized for a pension plan covered by this subdivision
2.26are:
2.27 (1) certificates of deposit issued, to the extent of available insurance or
2.28collateralization, by a financial institution that is a member of the Federal Deposit
2.29Insurance Corporation or the Federal Savings and Loan Insurance Corporation, is insured
2.30by the National Credit Union Administration, or is authorized to do business in this state
2.31and has deposited with the chief administrative officer of the plan a sufficient amount of
2.32marketable securities as collateral in accordance with section
3.1 (2) savings accounts, to the extent of available insurance, with a financial institution
3.2that is a member of the Federal Deposit Insurance Corporation or the Federal Savings
3.3and Loan Insurance Corporation;
3.4 (3) governmental obligations, including bonds, notes, bills, or other fixed
3.5obligations, issued by the United States, an agency or instrumentality of the United States,
3.6an organization established and regulated by an act of Congress or by a state, state agency
3.7or instrumentality, municipality, or other governmental or political subdivision that:
3.8 (i) for the obligation in question, issues an obligation that equals or exceeds the
3.9stated investment yield of debt securities not exempt from federal income taxation and of
3.10comparable quality;
3.11 (ii) for an obligation that is a revenue bond, has been completely self-supporting
3.12for the last five years; and
3.13 (iii) for an obligation other than a revenue bond, has issued an obligation backed by
3.14the full faith and credit of the applicable taxing jurisdiction and has not been in default on
3.15the payment of principal or interest on the obligation in question or any other nonrevenue
3.16bond obligation during the preceding ten years;
3.17 (4) corporate obligations, including bonds, notes, debentures, or other regularly
3.18issued and readily marketable evidences of indebtedness issued by a corporation organized
3.19under the laws of any state that during the preceding five years has had on average
3.20annual net pretax earnings at least 50 percent greater than the annual interest charges
3.21and principal payments on the total issued debt of the corporation during that period
3.22and that, for the obligation in question, has issued an obligation rated in one of the top
3.23three quality categories by Moody's Investors Service, Incorporated, or Standard and
3.24Poor's Corporation; and
3.25 (5) shares in an open-end investment company registered under the federal
3.26Investment Company Act of 1940, if the portfolio investments of the company are limited
3.27to investments that meet the requirements of clauses (1) to (4).
3.28EFFECTIVE DATE.This section is effective the day following final enactment.
3.29 Sec. 4. Minnesota Statutes 2010, section 424A.016, subdivision 6, is amended to read:
3.30 Subd. 6. Deferred service pensions. (a) A member of a relief association is entitled
3.31to a deferred service pension if the member:
3.32 (1) has completed the lesser of the minimum period of active service with the fire
3.33department specified in the bylaws or 20 years of active service with the fire department;
3.34 (2) has completed at least five years of active membership in the relief association;
3.35and
4.1 (3) separates from active service and membership
4.2
4.3
4.4that a member separate from active service and membership is waived for persons who
4.5have discontinued their volunteer firefighter duties and who are employed on a full-time
4.6basis under section 424A.015, subdivision 1.
4.7 (b) The deferred service pension is payable when the former member reaches
4.8at least age 50, or at least the minimum age specified in the bylaws governing the relief
4.9association if that age is greater than age 50, and when the former member makes a valid
4.10written application.
4.11 (c) A defined contribution relief association may, if its governing bylaws so provide,
4.12credit interest or additional investment performance on the deferred lump-sum service
4.13pension during the period of deferral. If provided for in the bylaws, the interest must be
4.14paid:
4.15(1) at the investment performance rate actually earned on that portion of the assets
4.16if the deferred benefit amount is invested by the relief association in a separate account
4.17established and maintained by the relief association
4.18(2) at the investment performance rate actually earned on that portion of the assets
4.19if the deferred benefit amount is invested in a separate investment vehicle held by the
4.20relief association; or
4.21
4.22contribution volunteer firefighter relief association in proportion to the share of the assets
4.23of the special fund to the credit of each individual deferred member account through
4.24the accounting date on which the investment return is recognized by and credited to the
4.25special fund.
4.26 (d) Unless the bylaws of a relief association that has elected to pay interest or
4.27additional investment performance on deferred lump-sum service pensions under
4.28paragraph (c) specifies a different interest or additional investment performance method,
4.29including the interest or additional investment performance period starting date and ending
4.30date, the interest or additional investment performance on a deferred service pension
4.31is creditable as follows:
4.32(1) for a relief association that has elected to pay interest or additional investment
4.33performance under paragraph (c), clause (1) or (3), beginning on the date that the
4.34member separates from active service and membership and ending on the accounting
4.35date immediately before the deferred member commences receipt of the deferred service
4.36pension; or
5.1(2) for a relief association that has elected to pay interest or additional investment
5.2performance under paragraph (c), clause (2), beginning on the date that the member
5.3separates from active service and membership and ending on the date that the separate
5.4investment vehicle is valued immediately before the date on which the deferred member
5.5commences receipt of the deferred service pension.
5.6(e) The deferred service pension is governed by and must be calculated under
5.7the general statute, special law, relief association articles of incorporation, and relief
5.8association bylaw provisions applicable on the date on which the member separated from
5.9active service with the fire department and active membership in the relief association.
5.10EFFECTIVE DATE.(a) This section is effective January 1, 2013.
5.11(b) This section applies only to persons becoming deferred service pensioners after
5.12January 1, 2013.
5.13 Sec. 5. Minnesota Statutes 2010, section 424A.02, subdivision 1, is amended to read:
5.14 Subdivision 1. Authorization. (a) A defined benefit relief association, when its
5.15articles of incorporation or bylaws so provide, may pay out of the assets of its special
5.16fund a defined benefit service pension to each of its members who: (1) separates from
5.17active service with the fire department; (2) reaches age 50; (3) completes at least five
5.18years of active service as an active member of the municipal fire department to which the
5.19relief association is associated; (4) completes at least five years of active membership
5.20with the relief association before separation from active service; and (5) complies with
5.21any additional conditions as to age, service, and membership that are prescribed by the
5.22bylaws of the relief association. A service pension computed under this section may be
5.23prorated monthly for fractional years of service as the bylaws or articles of incorporation
5.24of the relief association so provide. The bylaws or articles of incorporation may define
5.25a "month," but the definition must require a calendar month to have at least 16 days of
5.26active service. If the bylaws or articles of incorporation do not define a "month," a
5.27"month" is a completed calendar month of active service measured from the member's
5.28date of entry to the same date in the subsequent month. The service pension earned by a
5.29volunteer firefighter under this chapter and the articles of incorporation and bylaws of the
5.30volunteer firefighters' relief association may be paid whether or not the municipality or
5.31nonprofit firefighting corporation to which the relief association is associated qualifies for
5.32the receipt of fire state aid under chapter 69.
5.33(b) In the case of a member who has completed at least five years of active service as
5.34an active member of the fire department to which the relief association is associated on
5.35the date that the relief association is established and incorporated, the requirement that
6.1the member complete at least five years of active membership with the relief association
6.2before separation from active service may be waived by the board of trustees of the relief
6.3association if the member completes at least five years of inactive membership with the
6.4relief association before the date of the payment of the service pension. During the
6.5period of inactive membership, the member is not entitled to receive disability benefit
6.6coverage, is not entitled to receive additional service credit towards computation of a
6.7service pension, and is considered to have the status of a person entitled to a deferred
6.8service pension under subdivision 7.
6.9(c) No municipality or nonprofit firefighting corporation may delegate the power to
6.10take final action in setting a service pension or ancillary benefit amount or level to the
6.11board of trustees of the relief association or to approve in advance a service pension or
6.12ancillary benefit amount or level equal to the maximum amount or level that this chapter
6.13would allow rather than a specific dollar amount or level.
6.14
6.15
6.16
6.17
6.18
6.19
6.20
6.21
6.22
6.23
6.24
6.25
6.26
6.27EFFECTIVE DATE.This section is effective the day following final enactment.
6.28 Sec. 6. Minnesota Statutes 2010, section 424A.02, subdivision 7, is amended to read:
6.29 Subd. 7. Deferred service pensions. (a) A member of a defined benefit relief
6.30association is entitled to a deferred service pension if the member:
6.31 (1) has completed the lesser of either the minimum period of active service with
6.32the fire department specified in the bylaws or 20 years of active service with the fire
6.33department;
6.34 (2) has completed at least five years of active membership in the relief association;
6.35and
7.1 (3) separates from active service and membership
7.2
7.3
7.4that a member separate from active service and membership is waived for persons who
7.5have discontinued their volunteer firefighter duties and who are employed on a full-time
7.6basis under section 424A.015, subdivision 1.
7.7 (b) The deferred service pension is payable when the former member reaches
7.8at least age 50, or at least the minimum age specified in the bylaws governing the relief
7.9association if that age is greater than age 50, and when the former member makes a valid
7.10written application.
7.11 (c) A defined benefit relief association that provides a lump-sum service pension
7.12governed by subdivision 3 may, when its governing bylaws so provide, pay interest on the
7.13deferred lump-sum service pension during the period of deferral. If provided for in the
7.14bylaws, interest must be paid in one of the following manners:
7.15 (1) at the investment performance rate actually earned on that portion of the assets
7.16if the deferred benefit amount is invested by the relief association in a separate account
7.17established and maintained by the relief association
7.18(2) at the investment performance rate actually earned on that portion of the assets if
7.19the deferred benefit amount is invested in a separate investment vehicle held by the relief
7.20association; or
7.21
7.22board of directors and approved as provided in subdivision 10.
7.23 (d) Interest under paragraph (c), clause
7.24which the municipality has approved the deferred service pension interest rate established
7.25by the board of trustees.
7.26 (e) Unless the bylaws of a relief association that has elected to pay interest or
7.27additional investment performance on deferred lump-sum service pensions under
7.28paragraph (c) specifies a different interest or additional investment performance method,
7.29including the interest or additional investment performance period starting date and ending
7.30date, the interest or additional investment performance on a deferred service pension
7.31is creditable as follows:
7.32(1) for a relief association that has elected to pay interest or additional investment
7.33performance under paragraph (c), clause (1) or (3), beginning on the date that the
7.34member separates from active service and membership and ending on the accounting
7.35date immediately before the deferred member commences receipt of the deferred service
7.36pension; or
8.1(2) for a relief association that has elected to pay interest or additional investment
8.2performance under paragraph (c), clause (2), beginning on the date that the member
8.3separates from active service and membership and ending on the date that the separate
8.4investment vehicle is valued immediately before the date on which the deferred member
8.5commences receipt of the deferred service pension.
8.6(f) For a deferred service pension that is transferred to a separate account established
8.7and maintained by the relief association or separate investment vehicle held by the relief
8.8association, the deferred member bears the full investment risk subsequent to transfer and
8.9in calculating the accrued liability of the volunteer firefighters relief association that pays
8.10a lump-sum service pension, the accrued liability for deferred service pensions is equal
8.11to the separate relief association account balance or the fair market value of the separate
8.12investment vehicle held by the relief association.
8.13
8.14the general statute, special law, relief association articles of incorporation, and relief
8.15association bylaw provisions applicable on the date on which the member separated from
8.16active service with the fire department and active membership in the relief association.
8.17EFFECTIVE DATE.(a) This section is effective January 1, 2013.
8.18(b) This section applies only to persons becoming deferred service pensioners after
8.19January 1, 2013.
8.20 Sec. 7. Minnesota Statutes 2010, section 424A.02, subdivision 9, is amended to read:
8.21 Subd. 9. Limitation on ancillary benefits. A defined benefit relief association,
8.22including any volunteer firefighters relief association governed by section
8.23volunteer firefighters division of a relief association governed by chapter 424, may only
8.24pay ancillary benefits which would constitute an authorized disbursement as specified in
8.25section
8.26 (1) with respect to a defined benefit relief association in which governing bylaws
8.27provide solely for a lump-sum service pension to a retiring member, or provide a retiring
8.28member the choice of either a lump-sum service pension or a monthly service pension
8.29and the lump-sum service pension was chosen, no ancillary benefit may be paid to any
8.30former member or paid to any person on behalf of any former member after the former
8.31member (i) terminates active service with the fire department and active membership
8.32in the relief association; and (ii) commences receipt of a service pension as authorized
8.33under this section; and
8.34 (2) with respect to any defined benefit relief association, no ancillary benefit paid or
8.35payable to any member, to any former member, or to any person on behalf of any member
9.1or former member, may exceed in amount the total earned service pension of the member
9.2or former member. The total earned service pension must be calculated by multiplying
9.3the service pension amount specified in the bylaws of the relief association at the time of
9.4death or disability, whichever applies, by the years of service credited to the member or
9.5former member. The years of service must be determined as of (i) the date the member or
9.6former member became entitled to the ancillary benefit; or (ii) the date the member or
9.7former member died entitling a survivor or the estate of the member or former member to
9.8an ancillary benefit. The ancillary benefit must be calculated without regard to whether the
9.9member had attained the minimum amount of service and membership credit specified in
9.10the governing bylaws. For active members, the amount of a permanent disability benefit
9.11or a survivor benefit must be equal to the member's total earned service pension except
9.12that the bylaws of a defined benefit relief association may provide for the payment of a
9.13survivor benefit in an amount not to exceed five times the yearly service pension amount
9.14specified in the bylaws on behalf of any member who dies before having performed five
9.15years of active service in the fire department with which the relief association is affiliated.
9.16(3)(i) If a lump sum survivor or death benefit is payable under the articles of
9.17incorporation or bylaws, the benefit must be paid:
9.18(A) as a survivor benefit to the surviving spouse of the deceased firefighter;
9.19(B) as a survivor benefit to the surviving children of the deceased firefighter if
9.20no surviving spouse;
9.21(C) as a survivor benefit to a designated beneficiary of the deceased firefighter if no
9.22surviving spouse or surviving children; or
9.23(D) as a death benefit to the estate of the deceased active or deferred firefighter if no
9.24surviving children and no beneficiary designated.
9.25(ii) If there are no surviving children, the surviving spouse may waive, in writing,
9.26wholly or partially, the spouse's entitlement to a survivor benefit.
9.27(4)(i) If a monthly benefit survivor or death benefit is payable under the articles of
9.28incorporation or bylaws, the benefit must be paid:
9.29(A) as a survivor benefit to the surviving spouse of the deceased firefighter;
9.30(B) as a survivor benefit to the surviving children of the deceased firefighter if
9.31no surviving spouse;
9.32(C) as a survivor benefit to a designated beneficiary of the deceased firefighter if no
9.33surviving spouse or surviving children; or
9.34(D) as a death benefit to the estate of the deceased active or deferred firefighter if no
9.35surviving spouse, no surviving children, and no beneficiary designated.
10.1(ii) If there are no surviving children, the surviving spouse may waive, in writing,
10.2wholly or partially, the spouse's entitlement to a survivor benefit.
10.3(iii) For purposes of this clause, if the relief association bylaws authorize a monthly
10.4survivor benefit payable to a designated beneficiary, the relief association bylaws may
10.5limit the total survivor benefit amount payable.
10.6(5) For purposes of this section, for a monthly benefit volunteer fire relief association
10.7or for a combination lump-sum and monthly benefit volunteer fire relief association where
10.8a monthly benefit service pension has been elected by or a monthly benefit is payable with
10.9respect to a firefighter, a designated beneficiary must be a natural person. For purposes
10.10of this section, for a lump-sum volunteer fire relief association or for a combination
10.11lump-sum and monthly benefit volunteer fire relief association where a lump-sum service
10.12pension has been elected by or a lump-sum benefit is payable with respect to a firefighter,
10.13a trust created under chapter 501B may be a designated beneficiary. If a trust is payable to
10.14the surviving children organized under chapter 501B as authorized by this section and
10.15there is no surviving spouse, the survivor benefit may be paid to the trust, notwithstanding
10.16a requirement of this section to the contrary.
10.17EFFECTIVE DATE.This section is effective January 1, 2013.
