06-13-2022 City Council Packet - Laserfiche WebLink

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2021 The following changes in actuarial assumptions and plan provisions occurred in 2021: General Employees Fund Changes in Actuarial Assumptions: • The investment return and single discount rates were changed from 7.50% to 6.50% for financial reporting purposes. • The mortality improvement scale was changed from Scale MP-2019 to Scale MP-2020. Police and Fire Fund Changes in Actuarial Assumptions: • The investment return and single discount rates were changed from 7.50% to 6.50% for financial reporting purposes. • The inflation assumption was changed from 2.50% to 2.25%. • The payroll growth assumption was changed from 3.25% to 3.00%. • The base mortality tables for healthy annuitants, disabled annuitants and employees were changed from RP-2014 tables to Pub-2010 Public Safety Mortality tables. The mortality improvement scale was changed from MP-2019 to MN-2020. • Assumed salary increase and retirement rates were modified as recommended in the July 14, 2020 experience study. The changes result in a decrease in gross salary increase rates, slightly more unreduced retirements and fewer assumed early retirements. • Assumed rates of withdrawal were changed from select and ultimate rates to service -based rates. The changes result in more assumed terminations. • Assumed rates of disability were increased for ages 25-44 and decreased for ages over 49. Overall, proposed rates result in more projected disabilities. • Assumed percent married for active female members was changed from 60% to 70%. The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a regular basis of the long-term expected rate of return using a building-block method in which best -estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are summarized in the following table: Target Long -Term Expected Asset Class Allocation Real Rate of Return Domestic equity 33.5% 5.10% International equity 16.5% 5.30% Fixed income 25.0% 0.75% Private markets 25.0% 5.90% Totals 1000/0 67