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06-04-2018 Council Work Session Packet
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06-04-2018 Council Work Session Packet
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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2017 <br /> <br /> <br /> <br /> <br />rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, <br />the annuity accrual rate for a Basic Plan member is 2.2% of average salary for each of the first ten <br />years of service and 2.7% for each remaining year. The annuity accrual rate for a Coordinated Plan <br />member is 1.2% of average salary for each of the first ten years and 1.7% for each remaining year. <br />Under Method 2, the annuity accrual rate is 2.7% of average salary for Basic Plan members and <br />1.7% for Coordinated Plan members for each year of service. For members hire prior to July 1, <br />1989, a full annuity is available when age plus years of service equal 90 and normal retirement age <br />is 65. For members hired on or after July 1, 1989, normal retirement age is the age for unreduced <br />Social Security benefits capped at 66. <br /> <br />2. PEPFF Benefits <br /> <br />Benefits for the PEPFF members first hired after June 30, 2010, but before July 1, 2014, vest on a <br />prorated basis from 50% after five years up to 100% after ten years of credited service. Benefits <br />for PEPFF members first hired after June 30, 2014, vest on a prorated bases from 50% after ten <br />years up to 100% after twenty years of credited service. The annuity accrual rate is 3% of average <br />salary for each year of service. For PEPFF members who were first hired prior to July 1, 1989, a <br />full annuity is available when age plus years of service equal at least 90. <br /> <br /> <br />C. CONTRIBUTIONS <br /> <br />Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution <br />rates can only be modified by the state legislature. <br /> <br />1. GERF Contributions <br /> <br />Basic Plan members and Coordinated Plan members were required to contribute 9.1% and 6.5%, <br />respectively, of their annual covered salary in calendar year 2017. The City was required to <br />contribute 11.78% of pay for Basic Plan members and 7.5% for Coordinated Plan members in <br />calendar year 2017. The City contributions to the GERF for the year ended December 31, 2017 <br />were $192,510. The City contributions were equal to the required contributions as set by state <br />statute. <br /> <br />2. PEPFF Contributions <br /> <br />Plan members were required to contribute 10.8% of their annual covered salary in calendar year <br />2017. The City was required to contribute 16.2% of pay for PEPFF members in calendar year <br />2017. The City contributions to the PEPFF for the year ended December 31, 2017 were $416,665. <br />The City contributions were equal to the required contributions as set by state statute. <br /> <br /> <br />D. PENSION COSTS <br /> <br />1. GERF Pension Costs <br /> <br />At December 31, 2017, the City reported a liability of $2,642,949 for its proportionate share of <br />GERF’s net pension liability. The City’s net pension liability reflected a reduction due to the State <br />of Minnesota’s contribution of $6 million to the fund in 2017. The State of Minnesota is <br />considered a non-employer contributing entity and the state’s contribution meets the definition of a <br />special funding situation. The State of Minnesota’s proportionate share of the net pension liability <br />65
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