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CCP 05-19-2003
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CCP 05-19-2003
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<br />. <br /> <br />CITY OF ARDEN HILLS, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2002 <br /> <br />. <br />-. <br /> <br />Note 4: DEFINED BENEFIT PENSION PLANS - STATEWIDE <br /> <br />A. Plan Description <br /> <br />All full-time and certain part-time employees of the City are covered by defined benefit plans administered by the <br />Public Employees Retirement Association ofMinncsola (PERA). PERA administers the Public Employees <br />Retirement Fund (PERF), which is a cost-sharing, multiple-employer retirement plan. This plan is established <br />and administered in accordance with Minnesota statutes, chapters 353 and 356. <br /> <br />. <br /> <br />PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered <br />by Social Security and Basic Plan members are not. All lle\V members must participate in the Coordinated Plan. <br /> <br />. <br /> <br />PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death <br />of eligible members. Benefits are established by Minnesota statute, and vest after three years of credited service. <br />The defined retirement benefits are based on a member's highest average salary for any five successive years of <br />allowable service, age and years of credit at termination of service. <br /> <br />I <br /> <br />. <br /> <br />Two methods are used to compute benefits for PERF's Coordinated and Basic Plan members. The retiring <br />member receives the higher of a step-rate benefit accrual formula (Method I) or a level accrual formula (Method <br />2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of <br />the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated <br />Plan member is 1.2 percent of average salary for each of the first 10 years and 1. 7 percent for each remaining <br />year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 <br />percent for Coordinated Plan melnbers for each year of service. A reduced retirement annuity is also available to <br />eligible members seeking early retirement. <br /> <br />There are different types of annuities available to members upon retirement. A single-life annuity is a lifetime e. <br />annuity that ceases upon the death of the retiree - - no survivor annuity is payable. There are also various types of <br />joint and survivor annuity options available which will be payable over joint lives. Members may also leave their . <br />contributions in the fund upon termination of public service in order to qualify for a deferred annuity at <br />retirement age. Refunds of contributions are available at any time to members who leave public service, but <br />before retirement benefits begin. <br /> <br />. <br /> <br />. <br /> <br />The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active <br />plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are <br />bound by the provisions in effect at the time they last terminated their public service. <br /> <br />. <br /> <br />PERA issues a publicly available financial report that includes [maneial statements and required supplementary <br />infonnation for PERF and PEPFF. That report may be obtained on the web at www.lnnpcra.com. by writing to <br />PERA, 60 Empire Drive, Suite 200, St. Paul, Minnesota 55103-1855 or by calling 651-296-7460 or <br />800-652-9026. <br /> <br />. <br /> <br />. <br /> <br />B, <br /> <br />Funding Policy <br /> <br />. <br /> <br />Minnesota statutes, chapter 353 sets the rates for employer and employee contributions. These statutes are <br />established and amended by the State legislature. The City makes annual contributions to the pension plans equal <br />to the amount required by Minnesota statutes. PERF Basic Plan members and Coordinated Plan members are <br />required to contribute 9.10 percent and 5.10 percent, respectively, of their annual covered salary. The City is <br />required to eontribute the following percentages of arumal covered payroll: 11.78 percent for Basic Plan PERF <br />members, and 5.53 percent for Coordinated Plan PERF members. The City's contributions to the PERF for the . <br />years ending December 31, 2002, 2001, and 2000 were $52,340, $43,560, and $42,624, respectively. The City's <br />contrIbutIons were equal to the contractually required contributions for each year as set by Minnesota statute. . <br /> <br />. <br /> <br />. <br /> <br />-23- <br /> <br />. <br />
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