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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2024 <br /> <br /> <br /> <br /> <br />The following changes in actuarial assumptions and plan provisions occurred in 2024: <br /> <br />General Employees Fund <br />Changes in Actuarial Assumptions: <br /> Rates of merit and seniority were adjusted, resulting in slightly higher rates. <br /> Assumed rates of retirement were adjusted as follows: increase the rate of assumed unreduced <br />retirements, slight adjustments to Rule of 90 retirement rates, and slight adjustments to early retirement <br />rates for Tier 1 and Tier 2 members. <br /> Minor increase in assumed withdrawals for males and females. <br /> Lower rates of disability. <br /> Continued use of Pub-2010 general mortality table with slight rate adjustments as recommended in the <br />most recent experience study. <br /> Minor changes to form of payment assumptions for male and female retirees. <br /> Minor changes to assumptions made with respect to missing participant data. <br /> <br />Changes in Plan Provisions: <br /> The workers’ compensation offset for disability benefits was eliminated. The actuarial equivalent <br />factors updated to reflect the changes in assumptions. <br /> <br />Police and Fire Fund <br />Changes in Plan Provisions: <br /> The State contribution of $9.0 million per year will continue until the earlier of 1) both the Police & <br />Fire Plan and the State Patrol Retirement Fund attain 90 percent funded status for three consecutive <br />years (on an actuarial value of assets basis) or 2) July 1, 2048. The contribution was previously due to <br />expire after attaining a 90 percent funded status for one year. <br /> The additional $9.0 million contribution will continue until the Police & Fire Plan is fully funded for a <br />minimum of three consecutive years on an actuarial value of assets basis, or July 1, 2048, whichever is <br />earlier. This contribution was previously due to expire upon attainment of fully funded status on an <br />actuarial value of assets basis for one year (or July 1, 2048 if earlier). <br /> <br />The State Board of Investment, which manages the investments of PERA, prepares an analysis of the <br />reasonableness on a regular basis of the long-term expected rate of return using a building-block method in <br />which best-estimate ranges of expected future rates of return are developed for each major asset class. <br />These ranges are combined to produce an expected long-term rate of return by weighting the expected <br />future rates of return by the target asset allocation percentages. The target allocation and best estimates of <br />geometric real rates of return for each major asset class are 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 /> <br />71 <br />Page 107 of 353