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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2021 <br /> <br /> <br /> <br /> <br />The $241,688 reported as deferred outflows of resources related to pensions resulting from City <br />contributions subsequent to the measurement date will be recognized as a reduction of the net <br />pension liability in the year ended December 31, 2022. Other amounts reported as deferred <br />outflows and inflows of resources related to pensions will be recognized in pension expense as <br />outflows: <br /> <br />Year Ended Pension <br />December 31, Expense <br />2022 ($1,075,095) <br />2023 (491,054) <br />2024 (258,660) <br />2025 (396,124) <br />2026 536,389 <br />Thereafter - <br /> <br />The net pension liability will be liquidated by the general, water and sewer funds. <br /> <br /> <br />E. ACTUARIAL ASSUMPTIONS <br /> <br />The total pension liability in the June 30, 2021 actuarial valuation was determined using an <br />individual entry-age normal actuarial cost method and the following actuarial assumptions: <br /> <br />Inflation 2.25% per year <br />Investment Rate of Return 7.50% <br /> <br />The long-term investment rate of return is based on a review of inflation and investment return <br />assumptions from a number of national investment consulting firms. The review provided a range <br />of investment return rates deemed to be reasonable by the actuary. An investment return of 6.50% <br />was deemed to be within that range of reasonableness for financial reporting purposes. <br /> <br />Salary growth assumptions in the GERF range in annual increments from 10.25% after one year of <br />service to 3.0% after 29 years of service and 6.0% per year thereafter. In the PEPFF, salary growth <br />assumptions range from 11.75% after one year of service to 3.0% after 24 years of service. <br /> <br />Mortality rates for GERF were based on the Pub-2010 General Employee Mortality Table. <br />Mortality rates for PEPFF were based on the Pub-2010 Public Safety Employee Mortality tables. <br />The tables are adjusted slightly to fit PERA’s experience. Cost of living benefit increases after <br />retirement are assumed to be 1.25% per year for GERF and 1.0% per year for PEPFF. <br /> <br />Actuarial assumptions for GERF are reviewed every four years. The most recent four-year <br />experience study for GERF was completed in 2019. The assumption changes were adopted by the <br />Board and become effective with the July 1, 2020 actuarial valuation. The most recent four-year <br />experience study for PEPFF was completed in 2020 and adopted by the Board and became effective <br />with the July 1, 2021 actuarial valuation. <br /> <br />66