2003-03-26 CC Packet - Laserfiche WebLink

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CITY OF CENTBRVILLB, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2002 Note 4: DEFINED BENEFIT PENSION PLANS - STATEWIDE - CONTINUED Two methods are used to compute benefits for PERF's Coordinated and Basic Plan members. The retiring member receives the higher of a step-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 is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For all PERF members whose annuity is calculated using Method 1, a full annuity is available when age plus years of service equal 90. A reduced retirement annuity is also available to eligJ.ble members seeking early retirement , , . , 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 payable. 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 contnbutions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contnbutions are available at any time to members who 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 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. PERA issues a publicly available financial report that includes financial statements and required supplementary information for PERF. That report may be obtained on the web at www.mnpera.com. by writing to PERA, 60 Empire Drive, Suite 200, St Paul, Minnesota 55103-1855 or by calling 651-296-7460 or 1-800-652-9026. B. Funding Polley Minnesota statutes Chapter 353 sets the rates for employer and employee contnbutions. These statutes are established and amP.nded by the state legislature. The City makes annual contnbutions to the pension plans equal to the amount required by Minnesota statute. PERF Basis Plan members and Coordinated Plan members are required to contribute 9.10 percent and 5.10 percent, respectively, of their annual covered salary. The City is required to contribute the following percentages of annual covered payroll: 11.78 percent for Basic Plan PERF members and 5.53 percent for Coordinated Plan PERF members. The City's'contn'butions to the PERF for the year ended December 31,2002,2001 and 2000 were $20,932, $15,963 and $15,736, respectively. The City's contributions were equal to the contractually required contributions for each year as set by Minnesota statutes. Note 5: OTHER INFORMATION A. Risk Management The City is exposed to various risks ofloss related to torts; theft o~ damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters for which the City carries insurance. The City obtains 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 prescn'bed dollar amount for each insurance event Settled claims 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 estimated. 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 -22-