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CITY OF ELK RIVER, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31, 2017 <br />64 <br />NOTE 11: DEFINED BENEFIT PENSION PLANS – FIRE RELIEF ASSOCIATION <br />A.Plan Description <br />All members of the Elk River Fire Department (the Department) are covered by a defined benefit plan administered by <br />the Elk River Fire Department Relief Association (the Association). As of December 31, 2017, the plan covered 44 <br />active firefighters and 6 vested terminated fire fighters whose pension benefits are deferred. The plan is a single <br />employer retirement plan and is established and administered in accordance with Minnesota Statute, Chapter 69. <br />The Association maintains a separate Special fund to accumulate assets to fund the retirement benefits earned by the <br />Department’s membership. Funding for the Association is derived from an insurance premium tax in accordance with the <br />Volunteer Firefighter’s Relief Association Financing Guidelines Act of 1971 (Chapter 261 as amended by Chapter 509 <br />of Minnesota Statutes 1980). Funds are also derived from investment income. <br />B.Benefits Provided <br />A fire fighter who completes at least 20 years as an active member of the Department is entitled, after age 50, to a full <br />service pension upon retirement. <br />The bylaws of the Association also provide for an early vested service pension for a retiring member who has completed <br />fewer than 20 years of service. The reduced pension, available to members with a minimum of 5 years of service, shall <br />be equal to 40% of the pension as prescribed by the bylaws. This percentage increases 4% per year so that at 20 years of <br />service, the full amount prescribed is paid. Members who retire with less than 20 years of service and have reached the <br />age of 50 years and have completed at least 5 years of active membership are entitled to a reduced service pension not to <br />exceed the amount calculated by multiplying the member's service pension for the completed years of service times the <br />applicable non-forfeitable percentage of pension. <br />C.Contributions <br />Minnesota Statutes, Chapters 424 and 424A authorize pension benefits for volunteer fire relief associations. The plan is <br />funded by fire state aid, investment earnings and, if necessary, employer contributions as specified in Minnesota Statutes <br />and voluntary City contributions (if applicable). The state of Minnesota contributed $182,297 in fire state aid to the plan <br />on behalf of the City Fire Department for the year ended December 31, 2017, which was recorded as revenue. Required <br />employer contributions are calculated annually based on statutory provisions. The City’s statutorily-require contribution <br />to the plan for the year ended December 31, 2017 was $0 but the City voluntarily contributed $30,000. <br />D.Pension Costs <br />At December 31, 2017, the City reported a net pension asset of $749,793 for the plan. The net pension liability (asset) <br />was measured as of December 31, 2016. The total pension liability used to calculate the net pension liability (asset) in <br />accordance with GASB 68 was determined by Van Iwaarden Associates applying an actuarial formula to specific census <br />data certified by the Department as of December 31, 2016. <br />For the year ended December 31, 2017, the City recognized pension expense of $24,126.