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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2022 <br /> <br /> <br /> <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 27 years of service. In the PEPFF, salary growth assumptions range from <br />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. <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 />The following changes in actuarial assumptions and plan provisions occurred in 2022: <br /> <br />General Employees Fund <br />Changes in Actuarial Assumptions: <br /> The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021. <br /> <br />Police and Fire Fund <br />Changes in Actuarial Assumptions: <br /> The single discount rate was changed from 6.50% to 5.40%. <br /> The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021. <br /> <br />The State Board of Investment, which manages the investments of PERA, prepares an analysis of <br />the reasonableness on a regular basis of the long-term expected rate of return using a building-block <br />method in which best-estimate ranges of expected future rates of return are developed for each <br />major asset class. These ranges are combined to produce an expected long-term rate of return by <br />weighting the expected future rates of return by the target asset allocation percentages. The target <br />allocation and best estimates of geometric real rates of return for each major asset class are <br />summarized in the following table: <br /> <br />Target Long-Term Expected <br />Asset Class Allocation Real Rate of Return <br />Domestic equity 33.5% 5.10% <br />International equity 16.5% 5.30% <br />Fixed income 25.0% 0.75% <br />Private markets 25.0% 5.90% <br />Totals 100% <br />70