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Actuarial Assumptions and Methods <br />Economic Assumptions <br />Discount rate <br />Salary increase rate <br />Unfunded Funded <br />4.0% 6.0% <br />3.0% 3.0% <br />8 <br />Retiree Medical Benefit Cost Assumptions <br />Base year (2008) expected The following pre 65 expected claims cost was <br />monthly per capita plan developed by Richard Johnson, FSA. <br />costs for single retiree Plan Age 62 <br />medical coverage plus Weighted Avg. $607 <br />administration. Adjusted to other ages using a 3.5% aging <br />Spouse cost is assumed to assumption. <br />equal member cost for <br />comparable age. <br />Medical cost and retiree Year Trend <br />contribution trend rates 2008 9% <br />2009 8% <br />2010 7% <br />2011 6% <br />2012+ 5% <br />Medical plan <br />participation <br />For current retirees: actual elections, as <br />reported. Current retirees assumed to <br />continue coverage until age 65. <br />Police /Fire: 90% of future retirees are <br />assumed to continue single medical coverage <br />until age 65. 25% are assumed to elect <br />spousal coverage. <br />Other Employees: 90% of future retirees <br />assumed to elect single medical coverage <br />until age 65. No spousal coverage is <br />assumed. <br />City of Lino Lakes Minnesota, Retiree Health Benefit Plan - November 2008 <br />