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NOTE 8 — DEFINED BENEFIT PENSION PLANS — STATE-WIDE (CONTINUED) 2. PEPFF Benefits Benefits for the PEPFF members first hired after June 30, 2010, but before July 1, 2014, vest on a prorated basis from 50% after five years up to 100% after ten years of credited service. Benefits for PEPFF members first hired after June 30, 2014, vest on a prorated basis from 50% after ten years up to 100% after twenty years of credited service. The annuity accrual rate is 3% of average salary for each year of service. A full, unreduced pension is earned when members are age 55 and vested, or for members who were first hired prior to July 1, 1989, when age plus years of service equal at least 90. Benefit increases are provided to benefit recipients each January. PEPFF benefit recipients receive a future annual 1% increase. An annual adjustment will equal 2.5 % any time the plan exceeds a 90 percent funded ratio for two consecutive years. If the adjustment is increased to 2.5% and the funded ratio falls below 80 percent for one year or 85 percent for two consecutive years, the post -retirement benefit increase will be lowered to 1%. A benefit recipient who has been receiving a benefit for at least 12 full months as of June 30 will receive a full increase. Members receiving benefits for at least one month but less than 12 full months as ofJune 30 will receive a pro rata increase. For retirements after May 31, 2014, the first increase will be delayed two years. C. Contributions Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified by the state legislature. 1. GERF Contributions Coordinated Plan members were required to contribute 6.50% of their annual covered salary in fiscal year 2018 and the City was required to contribute 7.50% for Coordinated Plan members. The City's contributions to the GERF for the year ended December 31, 2018, were $271,321. The City's contributions were equal to the required contributions as set by state statute. 2. PEPFF Contributions Plan members were required to contribute 10.8% of their annual covered salary in fiscal year 2018. The City was required to contribute 16.20% of pay for members. The City's contributions to the PEPFF for the year ended December 31, 2018, were $382,968. The City's contributions were equal to the required contributions as set by state statute. D. Pension Costs 1. GERF Pension Costs At December 31, 2018, the City reported a liability of $2,923,581 for its proportionate share of the GERF's net pension liability. The City's net pension liability reflected a reduction due to the State of Minnesota's contribution of $16 million to the fund in 2018. The State of Minnesota is considered a non -employer contributing entity and the state's contribution meets the definition of a special funding situation. The State of Minnesota's proportionate share of the net pension liability associated with the City totaled $95,848. The net pension liability was measured as ofJune 30, 2018, and the total pension liability used to calculate the net pension liability was deteiniined by an actuarial valuation as of that date. 81