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CITY OF FALCON HEIGHTS, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />For the Year Ended December 31, 2003 <br />NOTE 4 -OTHER INFORMATION <br />B. Employee Retirement Systems and Pension Plans (Continued) <br />Pension Plans -Primary Government (Continued) <br />1. Defined Benefit Pension Plans -Statewide (Continued) <br />Plan Description (Continued) <br />PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated <br />Plan members are covered by Social Security and Basic Plan members are not. All new <br />members must participate in the Coordinated Plan. All police officers, firefighters and <br />peace officers who qualify for membership by statute are covered by the PEPFF. <br />PER.A provides retirement benefits as well as disability benefits to members, and benefits <br />to survivors upon death of eligible members. Benefits are established by state statute, and <br />vest after three years of credited service. The defined retirement benefits are based on a <br />member's highest average salary for any five successive years of allowable service, age <br />and years of credit at termination of service. <br />wo methods are used to com ute benefits for PERF's Coordinated and Basic Plan • <br />T P <br />:members. The retiring member receives the higher of a step-rate benefit accrual formula. <br />:,(Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual <br />rate for a Basic Plan member is 2.2% of average salary for each of the first 10 years of <br />service and 2.7% for each remaining year. The annuity accrual rate for a Coordinated <br />Plan member is 1.2% of average salary for each of the first 10 years and 1.7% for each <br />remaining year. Under Method 2, the annuity accrual rate is 2.7% of average salary for <br />Basic Plan members and 1.7% for Coordinated Plan members for each year of service. <br />For PEPFF members, the annuity accrual rate is 3.0% for each year of service. <br />For all PEPFF members and for PERF members hired prior to July 1, 1989, whose <br />annuity is calculated using Method 1, a full annuity is available when age plus years of <br />service equal 90. Normal retirement age is 55 for PEPFF members and 65 for Basic <br />and Coordinated members hired prior to July 1, 1989. Normal retirement age for <br />unreduced Social Security benefits capped at 66 for Coordinated members hired on or <br />after July 1, 1989. A reduced retirement annuity is also available to eligible members <br />seeking early retirement. <br />• <br />59 <br />