Annual Financial Report 12/31/1992

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1992 Page 13 of 19 There are different types of annuities available to members upon retirement. A normal annuity is a lifetime annuity that ceases upon the death of the retiree. No survivor annuity is payable. There are also various types of joint and survivor annuity options available which will reduce the monthly normal annuity amount, because the annuity is payable over joint lives. Members may also leave their contributions in the fund upon termination of public service, in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefits begin. Contributions Required and Contributions Made Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. The City makes annual contributions to the pension plans equal to the amount required by State Statutes. According to Minnesota Statutes Chapter 356.215, Subd. 4(g), the date of full funding required for the PERF and the PEPFF is the year 2020. As part of the annual actuarial valuation, PERA's actuary determines the sufficiency of the statutory contribution rates towards meeting the required full funding deadline. The actuary compares the actual contribution rate to a "required" contribution rate. Current combined statutory contribution rates and actuarially required contribution rates for the plans are as follows: PERF (Basic and Coordinated Plans) PEPFF Statutory Rates: Required Employees Employer Rates 4.41% 4.74% 9.95% 8.00% 12.00% 18.60% Total contributions made by the City during fiscal year 1992 were: PERF PEPFF Amount Employees _ Employer $31,986 $33,877 33,051 49,576 Totals $65,037 $83,453 Percentage of Covered Payroll Employees Employer 4.04% 4.29% 7.96% 11.95% The City's contribution for the year ended June 30, 1992 to the PERF represented .03 percent of total contributions required of all participating entities. For the PEPFF, contributions for the year ended June 30, 1992, represented .17 percent of total contributions required of all participating entities. Funding Status and Progress Pension Benefit Obligation The "pension benefit obligation" is a standardized disclosure measure of the present value of pension benefits, adjusted for the effects of projected salary increases and step -rate benefits, estimated to be payable in the future as a result of employee service to date. The measure, which is the actuarial present value of credited projected benefits, is intended to help users assess PERA's funding status on a going -concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among Public Employees Retirement Systems and among employers. PERA does not make separate measurements of assets and pension benefit obligation for individual employers.