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CITY OF ELK RIVER, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31, 2015 <br />Note 6: DEFINED BENEFIT PENSION PLANS - FIRE RELIEF ASSOCIATION - CONTINUED <br />D. Pension Costs <br />At December 31, 2015, the City reported a net pension asset of $954,913 for the plan. The net pension liability (asset) was <br />measured as of December 31, 2014. The total pension liability used to calculate the net pension liability (asset) in accordance <br />with GASB 68 was determined by Van Iwaarden Associates applying an actuarial formula to specific census data certified by the <br />Department as of December 31, 2014. <br />For the year ended December 31, 2015, the City recognized pension expense of $123,228. <br />At December 31, 2015, the City reported deferred outflows of resources, including its contributions subsequent to the <br />measurement date, related to pension from the following sources: <br />Net difference between projected and <br />actual earnings on plan investments <br />Contributions to plan subsequent <br />to the measurement date <br />Total <br />Deferred <br />Outflows <br />of Resources <br />$ 43,449 <br />204,826 <br />$ 248,275 <br />Deferred outflows of resources totaling $204,826 related to pensions resulting from the City's contributions to the plan <br />subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended <br />December 31, 2016. Other amounts reported as deferred outflows and inflows of resources related to the plan will be recognized <br />in pension expense as follows: <br />2016 $ 10,862 <br />2017 10,862 <br />2018 10,862 <br />2019 10,863 <br />E. Actuarial Assumptions <br />The total pension liability at December 31, 2014 was determined using the entry age normal actuarial cost method and the <br />following actuarial assumptions: <br />Retirement eligibility <br />Age 50 or after 20 years service <br />If both age 50 and minimum 5 years of service but not 20 years, pension reduced 4% for each year less than 20 years_ <br />Salary increases 2.75% per year <br />Cost of living increases <br />Investment rate of return <br />20 year municipal bond yield <br />There were no changes in actuarial assumptions in 2014. <br />-80- <br />2.75% per year <br />6.00% <br />3.56% <br />