1994 CAFR - Laserfiche WebLink

Home

CITY OF RAMSEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1994 Note 10. DEFINED BENEFIT PENSION PLANS - STATEWIDE (Continued) C. Funding Status and Progress (Continued) 2. Changes in Plan Provisions The 1994 legislative session did not include any benefit improvements which would impact funding costs for the PERF and the PEPFF. Changes in Actuarial Assumptions Prior to fiscal year 1994, the salary increase assumption and the mortality tables used in the calculation of pension benefit obligation for the PERF were the same as those specified for the PEPFF. For the July 1, 1994 actuarial valuation, PERA's board of trustees approved new mortality rates updated to the 1983 Group Annuity Mortality Table, salary increases which were changed to a select and ultimate table and a new payroll growth assumption which was changed from 6.5 percent to 6 percent. These changes were made to reflect actual experience of the plan. With the adoption of the actuarial assumption changes and the new mortality tables for the PERF, the pension benefit obligation increased $56,596,000. The actuarial assumption changes also necessitated a $81,201,000 transfer from the PERF Benefit Reserve to the PERF Minnesota Post Retirement Investment Fund (MPRIF) Reserve to finance the increased obligation for future retirement benefits. The change in the mortality rate assumption increased the PERF's costs because pensioners are living longer than assumed previously. The change in the salary increase assumption, however, offset some of the additional costs because lower salary increases generally translate into lower benefit liabilities in the future. Potential changes in the assumptions used for the PEPFF may be made in the future after completion of a special experience study for that fund. Completion of the PEPFF experience study is expected by February 1, 1995. D. Ten -Year Historical Trend Information Ten -year historical trend information is presented in PERA's Component Unit Financial Report for the year ended June 30, 1994. This information is useful in assessing the pension plan's accumulation of sufficient assets to pay pension benefits as they become due. E. Related Party Transactions As of June 30, 1994, and for the fiscal year then ended, PERA held no securities issued by the City or other related parties. Note 11. DEFINED CONTRIBUTION PENSION PLAN - FIRE RELIEF ASSOCIATION A. Plan Description Volunteer fire fighters of the City of Ramsey are members of the Ramsey Fire Fighter's' Relief Association. The Association is a single - employer defined contribution pension plan that operates under the provisions of Minnesota State Statutes Sections 69 and 424. It is governed by a Board of six officers and trustees elected by the members of the Association for three year terms. The Chief of the Ramsey Volunteer Fire Department, the Mayor, and the Finance Director of the City of Ramsey are ex- officio members of the Board of Trustees. The City's payroll for members of the Relief Association for the year ended December 31, 1994 was $28,425 compared to a total City payroll of $1,378,475.