2012-04-11 CC Packet - Laserfiche WebLink

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CITY OF CENTERV I L L E, MINNESOTA NOTESTOTHE FINANCIAL STATEMENTS DECEMBER 31, 2011 Note 4: DEFINED BENEFIT PENSION PLANS- STATEWIDE A. Plan description All full -time and certain part- time employeesof the City are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administersthe General Employees Retirement Fund (GERF), which is a cost-sharing, multiple - employer retirement plan. The plan isestablished and administered in accordance with Minnesota statutes, chapters 353 and 356. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. PERA provides retirement benefitsaswell asdisability benefitsto members, and benefitsto survivors upon death of eligible members. Benefits are established by Minnesota statute, and vest after three years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive yearsof allowable service, age and yearsof credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic Ran members. The retiring member receivesthe higher of astep -rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first 10 years and 1.7 percent for each remaining year. Under Method 2, the annuity accrual rate is2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For all GERF members hired prior to July 1, 1989 whose annuity iscalculated using Method 1, afull annuity is available when age plus years of service equal 90. Normal retirement age is 65 for Basic and Coordinated members hired prior to July 1, 1989. Normal retirement age isthe agefor unreduced Social Security benefitscapped at 66 for coordinated members hired after July 1, 1989. A reduced retirement annuity is also availableto eligible members seeking early retirement. There are different types of annuities avai I abl a to members upon retirement. A normal annuity is a lifetime annuity that ceases upon the death of the retiree - no survivor annuity is payable. There are also various types of joint and survivor annuity options avai I abl e whi ch w i l l reduce the monthly normal annuity amount, because the annuity is payable over joint lives. Members may also leavetheir contributions in thefund upon termination of public service in order to qualify for adeferred annuity at retirement age. Refundsof contributions are available at any time to memberswho leave public service, but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employeeswho are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the ti me they last terminated their public service. PERA issuesa publicly avai lable financial report that includes financial statements and required supplementary information for GERF. That report may be obtai ned on the Internet at www.mnpera.org, by writing to PERA at 60 Empire Drive, Suite 200, St. Paul, Minnesota 55103 -2088 or by calling 651- 296 -7460 or 1 -800- 652 -9026. -65-