HF4517 Summary — Minnesota 2025-2026
Purpose
- Establishes a formal process to change the investment return assumption used when computing joint and survivor annuities for covered retirement plans.
- Requires the investment return assumption, once approved or deemed approved, to be included in the appendix to the standards for actuarial work.
Key Provisions
1) Baseline investment return assumption for joint and survivor annuities
- The default applicable investment return assumption for computing joint and survivor annuities is set at 6.5 percent, for each covered retirement plan described in subdivision 2, unless a different percentage has been approved or deemed approved under the bill’s process.
2) Process to change the assumption
- A governing board of a covered retirement plan may propose a change to the investment return assumption.
- A change may be approved only by:
- The Legislative Commission on Pensions and Retirement (LCPR), or
- After one year has passed since the proposal was received by the LCPR without any action by the commission (i.e., deemed approved after a 12-month window if the commission does not act).
- This creates a formal mechanism and a clear timeline for reconsidering the assumption.
3) Administrative updates
- The executive director of the LCPR must update the appendix to the standards for actuarial work to reflect any change in the return assumption that is approved or deemed approved.
4) Effective date
- The section becomes effective on July 1, 2026.
Who is affected
- Covered retirement plans that compute joint and survivor annuities are directly impacted, including their governing boards responsible for proposing changes to the investment return assumption.
- The Legislative Commission on Pensions and Retirement (LCPR) administers the review and approval process.
- Actuaries and the Minnesota Department of Management and Budget (implicitly, through actuarial standards) rely on the updated appendix reflecting approved assumptions.
Procedural and Timeline Implications
- Baseline assumption set at 6.5% unless a plan obtains approval for a different rate.
- Proposal window: a covered plan may propose a change at any time, but approval requires LCPR action or a deemed approval after 12 months if no action is taken.
- Administrative update: upon approval or deemed approval, the appendix to the actuarial standards must be updated by the LCPR executive director.
- Effective date for the new framework is July 1, 2026.
Notes
- The bill focuses specifically on the process and governance around changing the investment return assumption used for joint and survivor annuity computations, not on other actuarial assumptions or general retirement plan provisions.
- The bill’s mechanism ensures oversight by the LCPR and provides a defined timeline to avoid indefinite delays in changing the assumption.
