Agenda - Council - 06/09/2026 - Laserfiche WebLink

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NOTE 10 — DEFINED BENEFIT PENSION PLANS — STATE-WIDE (CONTINUED) 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 2025, 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, 2025, were $531,570. 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 2025, 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, 2025, were $698,091. The City's contributions were equal to the required contributions as set by state statutes. D. Pension Costs 1. GERF Pension Costs At December 31, 2025, the City reported a liability of $2,415,103 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. 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 $58,260. 83