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IV-37CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 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: Domestic Equity International Equity Fixed Income Asset Class Real Estate and Alternatives Cash and Equivalents Total F. Discount Rate Allocation at Measurement Date 43.00 % 9.00 26.00 4.00 18.00 100.00 % Long-Term Expected Real Rate of Return 4.95% 5.24 1.99 4.19 0.58 The discount rate used to measure the total pension liability was 5.25%. 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 one percentage point lower or one percentage point higher than the current discount rate: Description Defined Benefit Plan One Percent Decrease in Discount Rate (4.25%) $ (127.291) Current Discount Rate (5.25%) $ (205.427) One Percent Increase in Discount Rate (6.25%) $ (281.626) CITY OF ELK RIVER NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2019 H. 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, Minnesota 55330. Information about the changes in the plan's net pension liability (asset} is as follows: 2019 Total P-lon Llablllty Service Cost Interest Assumption Changes Plan Changes Differences Between Expected and Actual Experience Gainor loss Benefit Payments Other Changes Nat Change In Total Pension Llablllty Total '-Ion Llablllty-Beginning Total Pension Llablllty -Ending (a) Fiduciary Nat Poaltlon Municipal Contributions S-Contributions Nat Investment Income Net Gain or Loss on lnvestmenlB Benefit PaymenlB Administrative Expenses Other Changes Nat Changa In Fiduciary Nat Position Fiduciary Nat Position -Beginning Fiduciary Nat Poaltion -Ending (b) Association's Nat Poaltion Llablllty/ (Asset) -Ending (a) -(b) $ 107,610 146,432 39,541 645,281 (14,808) (334,581) 589,475 2,606,316 $3,195,791 $ 30,000 189,502 62,812 (287,692) (334,581) (11,861) (351,820) 3,753,038 $3,401,218 $ (205,427) 185