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CITY OF CENTERVIlLE, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003 Note 4: DEFINED BENEFIT PENSION PLANS - STATEWIDE - CONTINUED Two methods are used to compute benefits for PERF's Coordinated and Basic Plan membeIs. The retiring member receives the higher of a step-rate benefit accrual formula (Method I) or a level accrual formula (Method 2). Under Method I, 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 aversge salary for Basic Plan ntembers and 1.7 percent for Coordinated Plan members for each year of service. 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 rednced retirement annuity is also avai1able to eligible members seeking early retirement. There are different types of annuities available to membeIs 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, bnt 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 lime they last terminated their public service. PERA issues a publicly available financial report that inclndes financial statements and required supplementary information for PERF. That report may be obtained on the web at www.nmpera.org, by writing to PERA, 60 Empire Drive, Suite 200, SI. Paul, Minnesota 55103-1855 or by calling 651-296-7460 or 1-800-652-9026. B. Funding Policy Minnesota statutes, chapter 353 sets the rates for employer and employee contributions. The.e statute. are established and amended by the State legi.lature. The City make. annual contributions to the pension plans equal to the amount required by Minnesota .tatute. PERF Basi. 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 contnbute 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 contnbutions to the PERF for the year ended December 31, 2003, 2002 and 2001 were $23,440, $20,932 and $15,963, respectively. The City'. eontnbntions were equal to the eontractually required contributions for each year as set by Minnesota statutes.