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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2016 <br /> <br /> <br /> <br /> <br />Amounts reported as deferred outflows and inflows of resources related to pensions will be recognized <br />in pension expense as follows: <br /> <br />Year Ended Pension <br />December 31, Expense <br />2017 ($3,325) <br />2018 (3,325) <br />2019 (3,326) <br />2020 (1,585) <br />2021 - <br />Thereafter - <br /> <br />E. ACTUARIAL ASSUMPTIONS <br /> <br />The total pension liability at December 31, 2016, was determined using the entry age normal actuarial <br />cost method and the following actuarial assumptions: <br /> <br /> Retirement eligibility at the later of age 50 or 20 years of service <br /> Investment rate of return of 6.0% <br /> Inflation rate of 3.0% <br /> <br />There were no changes in actuarial assumptions in 2016. <br /> <br /> <br />F. DISCOUNT RATE <br /> <br />The discount rate used to measure the total pension liability was 6.0%. The projection of cash flows <br />used to determine the discount rate assumed that contributions to the SVF plan will be made as <br />specified in statute. Based on that assumption and considering the funding ratio of the plan, the <br />fiduciary net position was projected to be available to make all projected future benefit payments of <br />current active and inactive members. Therefore, the long-term expected rate of return on pension plan <br />investments was applied to all periods of projected benefit payments to determine the total pension <br />liability. <br /> <br /> <br />G. PENSION LIABILITY SENSITIVITY <br /> <br />The following presents the City’s net pension liability for the SVF plan, calculated using the discount <br />rate disclosed in the preceding paragraph, as well as what the City’s net pension liability would be if it <br />were calculated using a discount rate 1% lower or 1% higher than the current discount rate: <br /> <br />1% Decrease in 1% Increase in <br />Discount Rate (5.0%) Discount Rate (6.0%) Discount Rate (7.0%) <br />Net pension liability $16,471 $10,713 $5,405 <br /> <br />73