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City of Elk River <br />Notes to Basic Financial Statements <br />NOTE 11 — PENSION PLANS (CONTINUED) <br />Public Employees' Retirement Association (Continued) <br />F. Actuarial Methods and Assumptions (Continued) <br />Police and Fire Fund (Continued) <br />Changes in Actuarial Assumptions (Continued) <br />• Assumed rates of disability were increased for ages 25-44 and decreased for ages over 49. <br />Overall, proposed rates resulted in more projected disabilities. <br />• Assumed percent married for active female members was changed from 60% to 70%. Minor <br />changes to form of payment assumptions were applied. <br />Changes in Plan Provisions <br />There have been no changes since the previous valuation. <br />G. Discount Rate <br />The discount rate used to measure the total pension liability in 2021 was 6.5%. The projection of cash <br />flows used to determine the discount rate assumed that contributions from Plan members and employers <br />will be made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net positions <br />of the General Employees Fund and the Police and Fire Fund were projected to be available to make all <br />projected future benefit payments of current Plan members. Therefore, the long-term expected rate of <br />return on pension plan investments was applied to all periods of projected benefit payments to determine <br />the total pension liability. <br />H. Pension Liability Sensitivity <br />The following presents the City's proportionate share of the net pension liability for all plans it <br />participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what <br />the City's proportionate share of the net pension liability would be if it were calculated using a discount <br />rate 1 percentage point lower or 1 percentage point higher than the current discount rate: <br />City's proportionate share of <br />the General Employees Fund <br />net pension liability <br />City's proportionate share of <br />the Police and Fire Fund <br />net pension liability (asset) <br />1% Decrease in Current 1% Increase in <br />Discount Rate Discount Rate Discount Rate <br />(5.5%) (6.5%) (7.5%) <br />$ 13,534,616 <br />1% Decrease in <br />Discount Rate <br />$ 6,636,276 <br />Current <br />Discount Rate <br />$ 975,768 <br />1% Increase in <br />Discount Rate <br />(5.5%) (6.5%) (7.5%) <br />$ 2,434,851 $ 2,376,415 $ (635,312) <br />We <br />