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CITY OF ARDEN HILLS, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 DEFINED BENEFIT PENSION PLANS - STATEWIDE - CONTINUED I accrual rates increase by 0.2 percent (to 1.2 percent of average salary for each of the fIrst 10 July I, 1997. Annuity accrual rates increase 0.2 percent for members who retire on or after July I, 1997. For all PERF members whose annuity is calculated using Method I, a full annuity is available when age plus years of service equal 90. A reduced retirement annuity is also available to eligible members seeking early retirement. .1 I Note 4: There are different types of annuities available to members upon retirement. A normal annuity is a lifetime annuity that ceases upon the death of the retiree -- no survivor annuity is payahle. There are also various types of joint and survivor annuity options available which will reduce the monthly normal annuity amount, because the annuity is payable over joint lives. Members may also leave their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefIts begin. I I The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefIts but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. I PERA issues a publicly available fmancial report that includes fInancial statements and required supplementary information for PERF. That report may be obtained by writing to PERA, 514 St. Peter Street, #200, St. Paul, Minnesota 55102 or by calling (612) 296-7460 or 1-800-652-9026. I I B. Funding Policy Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. PERF Basic Plan members and Coordinated Plan members are required to contribute 8.75 and 4.75 percent, respectively, of their annual covered salary. The City is required to I contribute the following percentages of annual covered payroll; I 1.43 percent for Basic Plan PERF members e and 5.18 percent for Coordinated Plan PERF members. The City's contributions to the Public Employees Retirement Fund for the years ending December 3], 1998, 1997 and 1996 were $39,552, $33,671 and $28,578, respectively. The City's contributions were equal to the contractually required contributions for each year as set by state statute. I I Note 5: OTHER INFORMATION A. Risk Management I The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters for which the City carries insurance The City obtains I insurance through participation in the League of Minnesota Cities Insurance Trust (LMCIT) which is a risk sharing pool with approximately 800 other governmental units. The City pays an annual premium to LMCIT for its workers compensation and property and casualty insurance. The LMCIT is self sustaining through member premiums and will reinsure for claims above a prescribed dollar amount for each insurance event. Settled claims I have not exceeded the City's coverage in any of the past three fiscal years. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably I estimated. An excess coverage insurance policy covers individual claims in excess of $1,000,000. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The City's management is not aware of any incurred but not reported claims. I I el -21- I