Purpose of the Bill

The purpose of this bill is to modify the method used to amortize unfunded liabilities in pension plans and to add a definition for standards related to actuarial work. These changes aim to improve the management and evaluation of retirement benefit plans in Minnesota.

Main Provisions

• Amortizing Unfunded Liabilities: The bill introduces a new method for calculating and spreading out unfunded liabilities over time, which are financial shortfalls in pension plans.
• New Definitions: It provides new definitions related to actuarial valuations and introduces a standard for actuarial work.
  
• Entry Age Actuarial Cost Method: This method will be used to allocate the actuarial present value of projected benefits in a level manner over the employee's service period.
• Actuarial Value of Assets: The value of assets in pension plans will be based on a market valuation reduced by certain percentages over the past four years' changes in market value.
• Pension Benefit Obligation: Describes the calculation of benefits that are expected to be payable in the future as a result of current employee service.

Significant Changes to Existing Law

• The bill modifies Minnesota Statutes, Section 356.215, by redefining and adding terms that affect how actuaries perform valuations, aiming for more consistent and transparent financial reporting and analysis.
• It establishes specific standards for actuarial work, likely leading to more uniformity and precision in actuarial evaluations applied to public pension plans.

Relevant Terms

• Actuarial Valuation
• Amortization
• Unfunded Liabilities
• Entry Age Actuarial Cost Method
• Actuarial Value of Assets
• Pension Benefit Obligation
• Standards for Actuarial Work