06-02-25 - Council Work Session Agenda

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2024 Amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended Pension December 31, Expense 2025 ($3,768) 2026 24,712 2027 19,724 2028 (20,509) 2029 (1,313) Thereafter (9,192) E. ACTUARIAL ASSUMPTIONS The total pension liability at December 31, 2023 was determined using the entry age normal actuarial cost method and the following actuarial assumptions: • Retirement eligibility at the later of age 50 or 20 years of service • Investment rate of return of 6.0% • Inflation rate of 3.0% There were no changes in actuarial assumptions in 2023. F. DISCOUNT RATE The discount rate used to measure the total pension liability was 6.0%. The projection of cash flows used to determine the discount rate assumed that contributions to the Volunteer Firefighter Fund will be made at a rate equal to the actuarially determined contribution rate. Based on these assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. G. PENSION LIABILITY SENSITIVITY The following presents the City's net pension asset for the Volunteer Firefighter Fund, calculated using the assumed discount rate as well as what the City's net pension asset would be if it were calculated using a discount rate 1% lower or 1% higher than the current discount rate: 1% Decrease in Current 1% Increase in Discount Rate (5.0%) Discount Rate (6.0%) Discount Rate (7.0%) Net pension asset $661,372 $695,585 $728,343 75