HF3512

Purpose

• The bill changes how a specific local fire department (Maple Plain) participates in Minnesota’s statewide Volunteer Firefighter Pension Plan, managed by the Public Employees Retirement Association (PERA). It aims to modify how a termination from the plan is handled and how any surplus assets in Maple Plain’s account are distributed to departing firefighters. It also requires the PERA executive director to reinvest Maple Plain’s plan assets in low-risk investments to reduce the chance of investment losses.

Main Provisions

• Section 1: Investment of Maple Plain assets

  • The PERA executive director must direct the State Board of Investment to reinvest Maple Plain’s plan assets into low-risk investments within 10 days after the section’s effective date, aiming to minimize investment risk between the effective date and the distribution date.

• Section 2: Termination and allocation of surplus

  • How termination works:
  • The Maple Plain fire department’s participation in the statewide plan ends when the termination requirements are met and all assets in its account are distributed.
  • The Maple Plain city governing board must pass required resolutions and send them to the PERA executive director.
  • The executive director must fully vest all departing firefighters as of the termination date and determine each departing firefighter’s present value of accrued benefits, considering the current benefit level.
  • The executive director must calculate accrued liabilities (including expected administrative costs) and compare them to the assets in Maple Plain’s account, continuing to use low-risk investments.
  • Allocation of any surplus:
  • If Maple Plain’s account has more assets than liabilities, the surplus is distributed to departing firefighters in two stages:
    • Stage 1: Each qualifying departing firefighter under age 50 receives an allocation equal to their years of service multiplied by the current benefit level, minus the present value of their accrued benefits.
    • Stage 2: Any remaining surplus is allocated to departing firefighters in proportion to their years of service relative to all departing firefighters.
    • If the first stage has insufficient surplus to cover all under-50 firefighters, the executive director may reduce the benefit level used in Stage 1 for those under 50 so the total allocations exhaust the surplus, while still applying the same reduced level to all under-50 firefighters.
  • Distribution timing and method:
    • The executive director must distribute the calculated benefit in a lump sum to each departing firefighter (or as a direct rollover if the firefighter chooses).
    • If a departing firefighter is deceased, benefits go to the firefighter’s survivor as allowed by law, or as a direct rollover if elected by the survivor.
  • Supplemental benefits:
    • The executive director may pay supplemental benefits under statute 424A.10, but only to the extent reimbursement is permitted under that statute.
  • Other aspects:
  • In general, the provisions for termination and allocation follow and modify existing rules under Minnesota Statutes section 353G.18.

• Section 3: Remaining provisions of section 353G.18 apply

  • The standard rules in 353G.18 for termination apply to Maple Plain’s departure from the statewide plan.

• Section 4: (Not shown)

  • The text provided ends with Sec. 4, but no content for this section is included.

Significant Changes to Existing Law

• Introduces a formal, two-stage surplus allocation method for Maple Plain when terminating from the statewide Volunteer Firefighter Plan, aiming to distribute any surplus to departing firefighters in a structured way based on years of service and age.
• Requires reinvestment of Maple Plain’s plan assets into low-risk investments to minimize potential losses between termination and distribution dates.
• Establishes explicit vesting and benefit valuation steps at termination, including present value calculations and assessment of accrued liabilities and assets.
• Allows lump-sum distributions (or rollovers) to departing firefighters or their survivors, with potential for supplemental benefits under other statutes, subject to reimbursement rules.
• Codifies the interaction of Maple Plain’s termination with existing sections of 353G.18, ensuring current termination procedures apply in a modified framework.

Relevant Terms

Public Employees Retirement Association, statewide volunteer firefighter plan, Maple Plain fire department, low-risk investments, termination, vesting, present value, accrued benefit, assets, liabilities, surplus, two-stage allocation, benefit level, age 50, lump-sum distribution, rollover, survivor benefits, Minnesota Statutes 353G.18, 353G.11, 353G.12, 424A.10, State Board of Investment, supplemental benefits.