6.6. SR 06-04-2018 - Laserfiche WebLink

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CITY OF ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2017 66 NOTE 11: DEFINED BENEFIT PENSION PLANS – FIRE RELIEF ASSOCIATION - CONTINUED E.Actuarial Assumptions (Continued) The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Long-term Target Expected Real Allocation Rate of Return Domestic equities 42.88 %5.58 % International equities 12.09 5.71 Fixed income 29.51 2.27 Real estate and alternative 1.74 4.44 Cash and cash equivalents 13.78 0.84 Total 100.00 % Asset Class F.Discount Rate The discount rate used to measure the total pension liability was 6.00%. The projection of cash flows used to determine the discount rate assumed that contributions to the plan will be made as specified in statute. Based on that assumption and considering the funding ratio of the plan, the fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. G.Pension Liability Sensitivity The following presents the City’s net pension liability (asset) for the plan, calculated using the discount rate disclosed in the preceding paragraph, as well as what the City’s net pension liability (asset) would be if it were calculated using a discount rate 1 percent lower or 1 percent higher than the current discount rate: 1% Lower (5.00%)Current 1% Higher (7.00%) Net pension liability (asset)($696,350) ($749,793) ($801,918) F.Pension Plan Fiduciary Net Position The Association issues a publicly available financial report. The report may be obtained by writing to the Elk River Fire Department Relief Association, 13073 Orono Parkway, Elk River, MN 55330.