Shorter vesting schedules phased in for defined contribution and defined benefit firefighters relief associations.

A bill for an act

relating to retirement; firefighters relief associations; phasing in shorter vesting

schedules for defined contribution and defined benefit firefighters relief

associations; amending Minnesota Statutes 2024, sections 424A.016, subdivision

3; 424A.02, subdivision 2.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 424A.016, subdivision 3, is amended to read:

Subd. 3.

Vesting schedule.

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(a)
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If the articles of incorporation or bylaws of a defined

contribution relief association provide a vesting schedule that satisfies the requirements of

this subdivision, the relief association may pay a reduced service pension to a retiring

member. For purposes of this section, "vests," "vesting," or "vested" means a nonforfeitable,

unconditional, or legally enforceable right. A member vests in the member's account in

accordance with the vesting schedule set forth in the relief association's articles of

incorporation or bylaws. Provided a member meets the minimum age and service

requirements of subdivision 2, the member is entitled to a service pension equal to the

member's account, but only to the extent vested as provided in the vesting schedule set forth

in the articles of incorporation or bylaws.
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In no event may the articles of incorporation or

bylaws:
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(1) require that a member have more than 20 years of active service to become 100

percent vested in the member's account; or

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(2) provide for a larger vesting percentage than is provided in the following schedule

with respect to the completed number of years of active service indicated in the schedule:

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Completed Years of Active Service

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Vested Percentage of Pension Amount

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5

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40 percent

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6

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52 percent

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7

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64 percent

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8

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76 percent

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9

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88 percent

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10

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or more

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100 percent

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(b) The vesting schedule in the articles of incorporation or bylaws must not require more

active service than the following:

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(1) through December 31, 2027, 20 years of active service to become 100 percent vested,

with each member vesting in four percent increments for each completed year of active

service, beginning with 40 percent upon completion of five years of active service;

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(2) beginning on January 1, 2028, through December 31, 2029, 15 years of active service

to become 100 percent vested, with each member vesting in six percent increments for each

completed year of active service, beginning with 40 percent upon completion of five years

of active service; and

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(3) beginning on January 1, 2029, ten years of active service to become 100 percent

vested, with each member vesting in 12 percent increments for each completed year of

active service, beginning with 40 percent upon completion of five years of active service.

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Sec. 2.

Minnesota Statutes 2024, section 424A.02, subdivision 2, is amended to read:

Subd. 2.

Vesting schedule.

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(a)
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If the articles of incorporation or bylaws of a defined

benefit relief association provide a vesting schedule that satisfies the requirements of this

subdivision, the relief association may pay a reduced service pension to a retiring member.

For purposes of this section, "vests," "vesting," or "vested" means a nonforfeitable,

unconditional, or legally enforceable right. A member vests in the member's accrued service

pension in accordance with the vesting schedule set forth in the relief association's articles

of incorporation or bylaws. Provided a member meets the minimum age and service

requirements of subdivision 1, the member is entitled to the member's accrued service

pension, but only to the extent vested as provided in the vesting schedule set forth in the

articles of incorporation or bylaws.
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In no event may the articles of incorporation or bylaws:
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(1) require that a member have more than 20 years of active service to become 100

percent vested in the member's accrued service pension; or

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(2) provide for a larger vesting percentage than is provided in the following schedule

with respect to the completed number of years of active service indicated in the schedule:

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Completed Years of Active Service

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Vested Percentage of Pension Amount

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5

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40 percent

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6

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52 percent

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7

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64 percent

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8

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76 percent

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9

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88 percent

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10

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or more

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100 percent

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(b) The vesting schedule in the articles of incorporation or bylaws must not require more

active service than the following:

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(1) through December 31, 2027, 20 years of active service to become 100 percent vested,

with each member vesting in four percent increments for each completed year of active

service, beginning with 40 percent upon completion of five years of active service;

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(2) beginning on January 1, 2028, through December 31, 2029, 15 years of active service

to become 100 percent vested, with each member vesting in six percent increments for each

completed year of active service, beginning with 40 percent upon completion of five years

of active service; and

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(3) beginning on January 1, 2029, ten years of active service to become 100 percent

vested, with each member vesting in 12 percent increments for each completed year of

active service, beginning with 40 percent upon completion of five years of active service.

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Sec. 3.
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EFFECTIVE DATE.
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Sections 1 and 2 are effective the day following final enactment.

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