Agenda - Council Work Session - 06/10/2025

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NOTE 10 — DEFINED BENEFIT PENSION PLANS — STATE-WIDE (CONTINUED) The Level formula allows GERF members to receive a full retirement benefit at age 65 if they were first hired before July 1, 1989, or at age 66 if they were hired on or after July 1, 1989. Early retirement begins at age 55 with an actuarial reduction applied to the benefit. Benefit increases are provided to benefit recipients each January. The post -retirement increase is equal to 50.00% of the cost -of -living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1.00% and a maximum of 1.50%. The 2024 annual increase was 1.5%. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase, will receive the full increase. Recipients receiving the annuity or benefit for a least one month, but less that a full year as of the June 30 before the effective date of the increase, will receive a prorated increase. 2. PEPFF Benefits Benefits for the PEPFF members hired before July 1, 2010, are vested after three years of service. Members hired on or after July 1, 2010, are 50.00% vested after five years of service and 100% vested after 10 years. After five years, vesting increases by 10.00% each full year of service until members are 100% vested after ten years. PEPFF members receive 3.00% of highest average salary for all years of service. PEPFF members receive a full retirement benefit when they are age 55 and vested, or when their age plus their years of service equals 90 or greater if they were first hired before July 1, 1989. Early retirement starts at age 50, and early retirement benefits are reduced by 0.417% each month members are younger than age 55. Benefit increases are provided to benefit recipients each January. The post -retirement increase is fixed at 1.00%. Recipients that have been receiving the annuity or benefit for at least 36 months as of the June 30 before the effective date of the increase, will receive the full increase. Recipients receiving the annuity or benefit for at least 25 months, but less than 36 months as of the June 30 before the effective date of the increase, will receive a prorated increase. C. Contributions Minnesota Statutes chapters 353, 353E, 353G, and 356 set the rates for employer and employee contributions. Contribution rates can only be modified by the state legislature. 1. GERF Contributions GERF members were required to contribute 6.50% of their annual covered salary in fiscal year 2024, and the City was required to contribute 7.50% for GERF members. The City's contributions to the GERF for the year ended December 31, 2024, were $454,460. The City's contributions were equal to the required contributions as set by state statutes. 2. PEPFF Contributions Plan members were required to contribute 11.80% of their annual covered salary in fiscal year 2024, and the City was required to contribute 17.70% for PEPFF members. The City's contributions to the PEPFF for the year ended December 31, 2024, were $641,383. The City's contributions were equal to the required contributions as set by state statutes. 83