Comprehensive Annual Financial Report 12/31/2017

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2017 Amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended Pension December 31, Expense 2018 ($6,955) 2019 (6,956) 2020 (5,215) 2021 (3,633) 2022 - Thereafter - E. ACTUARIAL ASSUMPTIONS The total pension liability at December 31, 2017, was determined using the entry age normal actuarial cost method and the following actuarial assumptions: • Retirement eligibility at the later of age 50 or 20 years of service • Investment rate of return of 6.0% • Inflation rate of 3.0% There were no changes in actuarial assumptions in 2017 F. DISCOUNT RATE The discount rate used to measure the total pension liability was 6.0%. The projection of cash flows used to determine the discount rate assumed that contributions to the SVF plan will be made as specified in statute. Based on that assumption and considering the funding ratio of the plan, the fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. G. PENSION LIABILITY SENSITIVITY The following presents the City's net pension asset for the SVF plan, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City's net pension asset would be if it were calculated using a discount rate 1% lower or 1% higher than the current discount rate: 1% Decrease in 1% Increase in Discount Rate (5.0%) Discount Rate (6.0%) Discount Rate (7.0%) Net pension asset $118,348 $127,994 $136,963 73