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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2022 <br /> <br /> <br /> <br /> <br />F. DISCOUNT RATE <br /> <br />The discount rate for the GERF used to measure the total pension liability in 2022 was 6.5%. The <br />projection of cash flows used to determine the discount rate assumed that contributions from plan <br />members and employers will be made at rates set in Minnesota Statutes. Based on these assumptions, <br />the fiduciary net position of the GERF was projected to be available to make all projected future benefit <br />payments of current plan members. Therefore, the long-term expected rate of return on pension plan <br />investments was applied to all periods of projected benefit payments to determine the total pension <br />liability. <br /> <br />In the PEPFF, the fiduciary net position was projected to be available to make all projected future <br />benefit payments of current plan members through June 30, 2060. Beginning in fiscal year ended June <br />30, 2061, projected benefit payments exceed the funds' projected fiduciary net position. Benefit <br />payments projected after were discounted at the municipal bond rate of 3.69% (based on the weekly rate <br />closest to but not later than the measurement date of the Fidelity "20-Year Municipal GO AA Index"). <br />The resulting equivalent single discount rate of 5.40% for the PEPFF was determined to give <br />approximately the same present value of projected benefits when applied to all years of projected <br />benefits as the present value of projected benefits using 6.5% applied to all years of projected benefits <br />through the point of asset depletion and 3.69% thereafter. <br /> <br /> <br />G. PENSION LIABILITY SENSITIVITY <br /> <br />The following presents the City’s proportionate share of the net pension liability, calculated using the <br />discount rate disclosed in the preceding paragraph, as well as what the City’s proportionate share of the <br />net pension liability would be if it were calculated using a discount rate one percentage point lower or <br />one percentage point higher than the current discount rate: <br /> <br />1% Decrease in Current 1% Increase in <br />Discount Rate Discount Rate Discount Rate <br />Proportionate share of the <br /> GERF net pension liability $5,354,326 $3,389,774 $1,778,539 <br />Proportionate share of the <br /> PEPFF net pension liability $15,588,106 $10,300,249 $6,025,333 <br /> <br />H. PENSION PLAN FIDUCIARY NET POSITION <br /> <br />Detailed information about each pension plan’s fiduciary net position is available in a separately-issued <br />PERA financial report that includes financial statements and required supplementary information. That <br />report may be obtained at www.mnpera.org. <br /> <br /> <br />71