06-02-25 - Council Work Session Agenda

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CITY OF LINO LAKES, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO RSI December 31, 2024 PERA — Public Employees Police and Fire Fund 2024 Changes in Plan Provisions: • The State contribution of $9.0 million per year will continue until the earlier of 1) both the Police & Fire Plan and the State Patrol Retirement Fund attain 90 percent funded status for three consecutive years (on an actuarial value of assets basis) or 2) July 1, 2048. The contribution was previously due to expire after attaining a 90 percent funded status for one year. • The additional $9.0 million contribution will continue until the Police & Fire Plan is fully funded for a minimum of three consecutive years on an actuarial value of assets basis, or July 1, 2048, whichever is earlier. This contribution was previously due to expire upon attainment of fully funded status on an actuarial value of assets basis for one year (or July 1, 2048 if earlier). 2023 Changes in Actuarial Assumptions: • The investment return assumption was changed from 6.50% to 7.00%. • The single discount rate changed from 5.40% to 7.00% 2023 Changes in Plan Provisions: • An additional one-time direct state aid contribution of $19.4 million was contributed to the Plan on October 1, 2023. • Vesting requirement for new hires after June 30, 2014, was changed from a graded 20-year vesting schedule to a graded 10-year vesting schedule, with 50% vesting after five years, increasing incrementally to 100% after 10 years. • A one-time, non -compounding benefit increase of 3.00% will be payable in a lump sum for calendar year 2024 by March 31, 2024. • Psychological treatment is required effective July 1, 2023, prior to approval for a duty disability benefit for a psychological condition relating to the member's occupation. • The total and permanent duty disability benefit was increased, effective July 1, 2023. 2022 Changes in Actuarial Assumptions: • The single discount rate changed from 6.50% to 5.4%. • The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021. 2021 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%. 2020 Changes in Actuarial Assumptions: • The mortality projection scale was changed from MP-2018 to MP-2019. 105