5.1 ERMUSR 05-11-2021 - Laserfiche WebLink

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- 24 - Employee Pensions All full-time employees and certain part-time employees of the City are covered by defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF),which are cost-sharing multiple-employer retirement plans. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated members are covered by Social Security and Basic members are not. All new members must participate in the Coordinated Plan. All police officers, fire fighters and peace officers who qualify for membership by statute are covered by PEPFF. PERA provides retirement and disability benefits to its members, and to survivors upon death of eligible members. Benefits are established by State statute; vest after three years of service; and are based on a member’s highest average salary for any five successive years of allowable service, age, and a formula multiplier based on years of credit at termination of service. The City’s contributions to TRA and GERF are represented in the District’s Comprehensive Annual Financial Reports. Three Council members of the City are covered by the Public Employees Defined Contribution Plan (PEDCP), a multiple-employer deferred compensation plan administered by 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 the time of withdrawal. Plan benefits depend solely on the amounts contributed to the plan plus investment earnings less administrative expenses. An eligible elected official who chooses to participate in the plan contributes 5% of their salary, which is matched by the elected official’s employer. For salaried employees, employer contributions are determined by the employer and must be a fixed percentage of salary. Employees who are paid for their services may elect to make member contributions in an amount not to exceed the employer share. PERA receives 2% of employer contributions and 0.25% of the assets in each member’s account annually for administering the plan. The City’s contributions to PEDCP are represented in the District’s Comprehensive Annual Financial Reports. The Elk River Fire Relief Association (the “Association”) is the administrator of a single employer public employee defined benefit retirement system established to provide benefits for members of the Elk River Fire Department (the “Fire Department”). The Association maintains a separate special fund to accumulate assets to fund the retirement benefits earned by the Fire Department’s membership. Funding for the Association is derived primarily from an insurance premium tax in accordance with the Volunteer Firefighter's Relief Association Financing Guidelines Act of 1971 (Chapter 261 as amended by Chapter 509 of Minnesota Statutes 1980). Funds are also derived from investment income. The financial requirements of the special fund are determined in accordance with Minnesota Statutes, which requires the payment of pension benefits in a lump sum or optionally in annual installments. The Association is comprised of volunteers and, therefore, members do not have any contribution requirements, but the City has voluntarily contributed $30,000 for the past five years in addition to contributions made by the State of Minnesota. For more information regarding the liability of the City with respect to its employees, please reference “Note 9, Defined Pension Plans – State-Wide,” “Note 10, Defined Contribution Plan,” “Note 11, Defined Benefit Pension Plans – Fire Relief Association,” and “Required Supplementary Information” of the City’s Comprehensive Annual Financial Report for fiscal year ended December 31, 2019, an excerpt of which is included as Appendix IV of this Official Statement. (The City’s Comprehensive Annual Financial Report for the fiscal year ended December 31, 2020 is not yet available.) GASB 68 The Government Accounting Standards Board (GASB) issued Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68) and related GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date-an amendment to GASB 68, which revised existing standards for measuring and reporting pension liabilities for pension plans provided to City employees and require recognition of a liability equal to the City’s proportionate share of net pension liability, which is measured as the total pension liability less the amount of the pension plan's fiduciary net position. The City’s proportionate 133