05-11-2022 Council Packet - Laserfiche WebLink

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CITY OF LITTLE CANADA, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2021 NOTE 7 DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED) Sensitivity Analysis (In Thousands) Net Pension Liability (Asset) at Different Discount Rates General Employees Fund 1% Lower 5.50% $1,541,588 Current Discount Rate 6.50% $755,868 1% Higher 7.50% $111,140 H. Pension Plan Fiduciary Net Position Detailed information about each pension plan’s fiduciary net position is available in a separately- issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained on the Internet at www.mnpera.org. NOTE 8 DEFINED CONTRIBUTION PENSION PLANS A. Public Employees Defined Contribution Plan Three council members of the City are covered by the Public Employees Defined Contribution Plan (PEDCP), a multiple-employer deferred compensation plan administered by the Public Employees Retirement Association of Minnesota (PERA). The Defined Contribution Plan is a tax qualified plan under Section 401(a) of the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until time of withdrawal. Funding Policy Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses. Minnesota Statutes, Chapter 353D.03, specifies plan provisions including the employee and employer contribution rates for those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5% of the salary which is matched by the elected official’s employer. For ambulance services personnel, employer contributions are determined by the employer, and for salaried employees must be a fixed percentage of salary. Employer contributions for volunteer personnel may be a unit value for each call or period of alert duty. Employees who are paid for their services may elect to make member contributions in an amount not to exceed the employer share. Employer and employee contributions are combined and used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment Fund. For administering the plan, PERA receives 2% of employer contributions and twenty-five hundredths of the 1% of the assets in each member’s account annually. Total contributions made by the City and plan members in 2021, 2020, and 2019 were $1,213, $1,220, and $1,213, respectively. NOTE 9 OTHER POSTEMPLOYMENT BENEFITS The City does not provide postemployment benefits other than permitting retired employees to continue in the City’s group health insurance plan, as required by Minnesota Statutes. The retiree is required to pay 100% of the premium. The premium charged is a single common premium for both active and retired employees. This practice has the potential to create an OPEB liability based on the theory that retirees have higher utilization of health care benefits than active employees (implicit rate subsidy). 71