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CITY OF LAKE ELMO, MINNESOTA NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2023 64 NOTE 4 DEFINED BENEFIT PENSION PLAN – FIREFIGHTERS RELIEF ASSOCIATION (Continued) Benefits Provided Each member who is at least 50 years of age, has retired from the Lake Elmo Fire Department, has served at least 20 years of active service with such department before retirement shall be entitled to a lump sum service pension in the amount of $5,850 for each year of active Fire Department service. Members electing retirement with at least 10 years of service will be eligible for at least 60 percent of this benefit, increasing by 4 percent for each additional year of service up to 20 years. If a member of the Association shall become permanently or totally disabled, the Association shall pay the sum $5,850 for each year the member was an active member of the City of Lake Elmo Fire Department. A death benefit is also available, which is payable to a survivor. Minnesota Statutes Section 424A.10 provides for the payment of a supplemental benefit equal to 10% of a regular lump sum distribution up to a maximum of $1,000. The supplemental benefit is in lieu of state income tax exclusion for lump sum distributions and will no longer be available if State tax law is modified to exclude lump sum distributions from State income tax. The Association qualifies for these benefits. Contributions Minnesota Statutes Chapter 424A.092 specifies minimum support rates required on an annual basis. The minimum support rates from the municipality and from state aid are determined as the amount required to meet the normal cost plus amortizing any existing prior service costs over a 10-year period. The significant actuarial assumptions used to compute the municipal support are specified in Minnesota Statutes. The association is comprised of volunteers; therefore, there are no payroll expenditures (i.e. there are no covered payroll percentage calculations). The plan is funded in part by fire state aid and, if necessary, City contributions. The State of Minnesota distributed to the City $117,613 in fire state aid, which the City remitted to the Relief Association during the year ended December 31, 2023. Required employer contributions are calculated annually based on statutory provisions. The City did not have a statutorily-required contribution to the plan for the year ended December 31, 2023. Pension Costs At December 31, 2023, the City of Lake Elmo reported a net pension asset of $565,242 for the Firefighters Relief Association’s plan. The net pension asset was measured as of December 31, 2022, as determined by an actuarial valuation as of January 1, 2023. For the year ended December 31, 2023, the City recognized pension expense of negative $79,352 for the Association. The City also recognized $101,778, as pension expense (and grant revenue) for State of Minnesota’s contributions to the Association during the measurement period.