6.2. SR 06-02-2014 - Laserfiche WebLink

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CITY OF ELK RIVER,MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2013 Note 4: OTHER INFORMATION–CONTINUED Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step-rate benefit accrual formula(Method 1)or a level accrual formula (Method 2). Under Method 1,the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first 10 years and 1.7 percent for each remaining year. Under Method 2,the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For PEPFF members,the annuity accrual rate is 3.0 percent for each year of service. For all PEPFF and GERF members hired prior to July 1, 1989 whose annuity is calculated using Method 1,a full annuity is available when age plus years of service equal 90. Normal retirement age is 55 for PEPFF members and 65 for Basic and Coordinated members hired prior to July 1, 1989. Normal retirement age is the age for unreduced Social Security benefits capped at 66 for Coordinated members hired on or after July 1, 1989. A reduced retirement annuity is also available to eligible members seeking early retirement. There are different types of annuities available to members upon retirement. A single-life 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 be 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. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested,terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for GERF and PEPFF. That report may be obtained on the internet at www.mnpera.org,by writing to PERA, 60 Empire Drive#200, St.Paul,Minnesota,55103-2088 or by calling(651)296-7460 or 1-800-652- 9026. b. Funding Policy Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. GERF Basic Plan members and Coordinated Plan members are required to contribute 9.1%and 6.25%,respectively,of their annual covered salary in 2013. PEPFF members were required to contribute 9.6%of their annual covered salary in 2013. In 2013,the City of Elk River was required to contribute the following percentages of annual covered payroll: 11.78%for Basic Plan members, 7.25%for Coordinated Plan members,and 14.4%for PEPFF members. The City's contributions to the General Employees Retirement Fund for the years ending December 31,2013,2012 and 2011 were$584,075,$553,395 and$528,696,respectively. The City's contributions to the Public Employees Police&Fire Fund for the years ending December 31,2013,2012 and 2011 were$383,545,$369,421 and$355,670,respectively. The City's contributions were equal to the contractually required contributions for each year as set by state statute. c. Defined Contribution Plan Three council members of the City of Elk River are covered by the Public Employees Defined Contribution Plan(PEDCP),a multiple-employer deferred compensation plan administered by the Public Employees Retirement Association of Minnesota(PERA). The PEDCP is a tax qualified plan under Section 401(a)of the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until time of withdrawal. 56