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CITY OF HUGO, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS (CONTINUED) <br />4. Other Information (Continued) <br />C. Pension Plans (Continued) <br />Public Employees Retirement Association (PERA) - Defined Benefit (Continued <br />A. Plan Description (continued) <br />Benefits are based on a member's highest average salary for any five successive years of <br />allowable service, age, and years of credit at termination of service. Two methods are used to <br />compute benefits for PERA's Coordinated and Basic Plan members. The retiring member <br />receives the higher of step -rate benefit accrual formula (Method 1) or a level accrual formula <br />(Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2% of <br />average salary for each of the first ten years of service and 2.7% for each remaining year. The <br />annuity accrual rate for a Coordinated Plan member is 1.2% of average salary for each of the <br />first ten years and 1.7% for each remaining year. Under Method 2, the annuity accrual rate is <br />2.7% of average salary for Basic Plan members and 1.7% for Coordinated Plan members for <br />each year of service. For members hired prior to July 1, 1989, a full annuity is available when <br />age plus years of service equal 90 and normal retirement age is 65. For members hired on or <br />after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits <br />capped at 66. Disability benefits are available for vested members and are based upon years <br />of service and average high -five salary. <br />B. Contributions <br />Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. <br />Contribution rates can only be modified by the state legislature. <br />Basic Plan members and Coordinated Plan members were required to contribute 9.1% and <br />6.50%, respectively, of their annual covered salary in calendar year 2015. The City was <br />required to contribute 11.78% of pay for Basic Plan members and 7.50% for Coordinated Plan <br />members in calendar year 2015. The City's contributions to the GERF for the year ended <br />December 31, 2015 were $111,569. The City's contributions were equal to the required <br />contributions as set by state statute. <br />56 <br />