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5 <br />Sensitivity Analysis <br />Under the City's current postretirement medical benefit program, future <br />increases in health plan costs will be shared between the City and <br />retirees. The actuarial valuation results are therefore very sensitive <br />to the assumed rate of increase in health plan costs ( "trend "). Because <br />trend can vary significantly from year to year, the table below shows <br />the effect on the City's Actuarial Accrued Liability and Annual Required <br />Contribution if trend is one percentage point higher or lower in each <br />future year than the assumption chosen by the City. <br />Actuarial Valuation Results using <br />Assumptions as Chosen by the City <br />Actuarial Accrued Liab.(AAL) 1/1/08 <br />Normal Cost for 2008 <br />Annual Required Contrib.(ARC), 2008 <br />Unfunded Plan <br />$329,191 <br />$22,481 <br />$41,152 <br />Results if Health Care Cost Trend is <br />1% Higher in Each Future Year <br />Actuarial Accrued Liab.(AAL) 1/1/08 $362,770 <br />➢ Percent Higher 100 <br />Normal Cost for 2008 $26,949 <br />➢ Percent Higher 20% <br />Annual Required Contrib.(ARC), 2008 $47,525 <br />➢ Percent Higher 15% <br />Results if Health Care Cost Trend is <br />1% Lower in Each Future Year <br />Actuarial Accrued Liab.(AAL) 1/1/08 $300,200 <br />➢ Percent Lower 9% <br />Normal Cost for 2008 $18,861 <br />➢ Percent Lower 150 <br />Annual Required Contrib.(ARC), 2008 $35,889 <br />➢ Percent Lower 13% <br />City of Lino Lakes Minnesota, Retiree Health Benefit Plan - November 2008 <br />