Annual Financial Report 12/31/1989

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CITY OF LINO LAKES, MINNESOTA Page 15 of 21 NOTES TO FINANCIAL STATEMENTS December 31, 1989 NOTE 2 DETAIL NOTES ON ALL FUND AND ACCOUNT GROUPS (Continued) RETIREMENT - MULTIPLE EMPLOYER PERS (Continued) 2. Changes in Actuarial Methods and Benefit Provisions. A number of benefit improvements became effective during fiscal year 1989. Some of the major improvements affecting each fund include a reduction in the period required for vesting from five years to three years; an option for members hired before July 1, 1989, to have their annuity calculated under a level benefit accrual formula; the interest rate credited on refunds of member contributions increased from 5 percent to 6 percent; and the provision for an automatic bounce back feature for all joint and survivor annuity options. In the PEPFF, age and/or service requirements were reduced for eligibility for a normal retirement annuity, and early retirement annuity, and for certain disability and survivor benefits. For each fund, there were changes in the actuarial assumptions used in the annual actuarial valuation. Effective for all funds beginning in fiscal year 1989, the preretirement interest rate assumption was increased from 8 percent to 8.5 percent. Additionally for the PERF and the PEPFF, the amortization target date has been changed to 2020. Shown below are the effects on the pension benefit obligation of these changes in plan benefits and actuarial assumptions. Increase (Decrease) in Pension Benefit Obligation Due to: (In Thousands) PERF PEPFF Changes in plan benefits $127,472 $27,851 Changes in actuarial assumptions (84,154) (25,963) Net increase in pension benefit obligation $43,318 $1,888 Ten -Year Historical Trend Information Ten -year historical trend information is presented in PERA's Comprehensive Annual Financial Report for the year ended June 30, 1989. This information is useful in assessing the pension plan's accumulation of sufficient assets to pay pension benefits as they become due. Related Party Investments As of June 30, 1989, and for the fiscal year then ended, PERA held no securities issued by the City or other related parties.