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CITY OF HUGO, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS (CONTINUED) <br />4. <br />X <br />Other Information (Continued) <br />Pension Plans (Continued) <br />2. Hugo Firefighter's Relief Association <br />D. Pension Costs (continued) <br />Amounts reported as deferred outflows and inflows of resources related to pensions will be <br />recognized in pension expense as follows: <br />Pension Expense <br />Year ending June 30: Amount <br />2017 $ 11,444 <br />2018 11,444 <br />2019 11,446 <br />2020 13,689 <br />E. Actuarial Assumptions <br />The total pension liability at December 31, 2016 was determined using the entry age normal <br />actuarial cost method and the following actuarial assumptions: <br />• Retirement eligibility at the later of age 50 or 20 years of service <br />• Investment rate of return of 6.50% <br />• Inflation rate 0% <br />The following changes in actuarial assumptions occurred in 2016: the discount rate changed <br />from 6.75% to 6.50% and the inflation rate changed from 4.0% to 0.0%. <br />F. Discount Rate <br />The discount rate used to measure the total pension liability was 6.50%. The projection of <br />cash flows used to determine the discount rate assumed that contributions to the Plan will be <br />made as specified in statute. Based on that assumption and considering the funding ratio of <br />the plan, the fiduciary net position was projected to be available to make all projected future <br />benefit payments of current active and inactive members. Therefore, the long-term expected <br />rate of return on pension plan investments was applied to all periods of projected benefit <br />payments to determine the total pension liability. <br />