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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2020 <br /> <br /> <br /> <br /> <br />Joint & Survivor option changed from 15% to 30%. The corresponding number of married new <br />retirees electing the Life annuity option was adjusted accordingly. <br /> <br />Changes in Plan Provisions: <br /> Augmentation for current privatized members was reduced to 2.0% for the period July 1, 2020 <br />through December 31, 2023 and 0.0% after. Augmentation was eliminated for privatizations <br />occurring after June 30, 2020. <br /> <br />Police and Fire Fund <br />Changes in Actuarial Assumptions: <br /> The mortality projection scale was changed from MP-2018 to MP-2019. <br /> <br />The State Board of Investment, which manages the investments of PERA, prepares an analysis of the <br />reasonableness on a regular basis of the long-term expected rate of return using a building-block method in <br />which best-estimate ranges of expected future rates of return are developed for each major asset class. These <br />ranges are combined to produce an expected long-term rate of return by weighting the expected future rates <br />of return by the target asset allocation percentages. The target allocation and best estimates of geometric <br />real rates of return for each major asset class are summarized in the following table: <br /> <br />Target Long-Term Expected <br />Asset Class Allocation Real Rate of Return <br />Domestic Stocks 35.5% 5.10% <br />International Stocks 17.5% 5.30% <br />Bonds (Fixed Income) 20.0% 0.75% <br />Alternative Assets (Private Markets) 25.0% 5.90% <br />Cash 2.0% 0.00% <br />Totals 100% <br /> <br />F. DISCOUNT RATE <br /> <br />The discount rate used to measure the total pension liability in 2020 was 7.5%. The projection of cash <br />flows used to determine the discount rate assumed that contributions from plan members and employers <br />will be made at the rate set in Minnesota statutes. Based on that assumption, the fiduciary net position <br />of the GERF and the PEPFF was projected to be available to make all projected future benefit payments <br />of current plan members. Therefore, the long-term expected rate of return on pension plan investments <br />was applied to all periods of projected benefit payments to determine the total pension liability. <br />68