Agenda - Council Work Session - 06/28/2016

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NOTE 10—DEFINED CONTRIBUTION PENSION PLAN—FIRE RELIEF ASSOCIATION (CONTINUED) B. Pension Benefits Minnesota Statutes Chapters 424 and 424A authorize pension benefits for volunteer fire relief associations. In order to be entitled to a pension benefit, a firefighter must have completed a minimum of 10 years of service with the fire department, 10 years membership in the Association, and attain the age of 50 years. The firefighter will then be 60%vested with every year after that at 4%per year until the 20th year when 100% vesting will occur. Because this plan is a defined contribution plan, the amount of the retirement benefit is not predetermined, but rather is based on the individual member's allocable portion of contributions made during the participation period. Firefighters also have the availability of other pensions such as deferred pension,disability pension,death benefits, and supplemental death benefits. Each of these other pensions are determined based on age and years of service. C. Contributions Required and Contributions Made Contributions to the plan include State Fire Aid pursuant to Minnesota Statutes Chapter 69. In addition, the City is allowed to make voluntary contributions of other public funds pursuant to Minnesota Statutes Chapter 69. The City's contribution to the Association in 2015,including both city and state fire aid passed through the City totaled $170,654. This contribution represents nearly 89% of the current 2015 covered payroll of$191,284. There were no current year changes in plan provisions. NOTE 11—OTHER POST-EMPLOYMENT BENEFITS PLAN A. Plan Description The City provides post-employment healthcare benefits as required by Minnesota Statute 471.61 subdivision 2b. Active employees,who retire from the City when eligible to receive a retirement benefit from the Public Employees Retirement Association (PERA) of Minnesota and do not participate in any other health benefits program providing coverage similar to that herein described, will be eligible to continue coverage with respect to both themselves and their eligible dependent(s) under the City health benefits program. Retirees are required to pay 100%of the total group rate. Since the premium is a blended rate determined on the entire active and retiree population,the retirees,whose costs are statistically higher than the group average,are receiving an implicit rate"subsidy". The City has used the alternative valuation method set forth in GASB Statement No. 45 to determine the materiality of Other Post-Employment Benefits, OPEB. The plan does not issue a publicly available financial report. B. Funding Policy The required contribution is based on projected pay-as-you-go financing requirements. The City Council may change the funding policy at any time. 86