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CITY OF ROSEVILLE, MINNESOTA <br /> NOTES TO FINANCIAL STATEMENTS <br /> December 31, 2016 <br /> <br /> <br /> <br /> <br /> D. Contributions <br /> <br /> Minnesota Statutes Chapter 424A.092 specifies minimum support rates required on an annual <br /> basis. The minimum support rates from the municipality and from State aids are determined as <br /> the amount required to meet the normal cost plus amortizing any existing prior service costs <br /> over a ten year period. The City's obligation is the financial requirement for the year less state <br /> aids. Any additional payments by the City shall be used to amortize the unfunded liability of the <br /> relief association. The Association is comprised of volunteers: therefore, there are no payroll <br /> expenditures (i.e. there are no covered payroll percentage calculations). During the year, the <br /> City recognized as revenue and as an expenditure an on behalf payment of $ 221,324 made by <br /> the State of Minnesota for the Relief Association. <br /> <br />E. Net Pension Liability <br /> <br /> The City's net pension liability was measured as of December 31, 2016 and the total pension <br /> liability used to calculate the net pension liability was determined by an actuarial valuation as <br /> of that date. <br /> <br /> Actuarial assumptions: <br /> The total pension liability in the December 31, 2016 actuarial valuation was determined using <br /> the following actuarial assumptions, applied to all periods included in the measurement: <br /> <br />Inflation rate 2.75% <br />Discount rate 7.50% percent average, including inflation <br />Investment Rate of Return 7.50% percent , net of pension plan investment expense <br />including inflation <br /> <br /> The value of death benefits is similar to the value of the retirement pension. Because of low <br /> retirement ages, the plan assumes no pre-retirement mortality. Post-retirement mortality does <br /> not apply as the benefit structure and form of payment do not reflect lifetime benefits. <br /> <br /> The long-term return on assets has been set based on the plan's target investment allocation <br /> along with long-term return expectations by asset class. When there is sufficient historical <br /> evidence of market outperformance, historical average returns may be considered. Best <br /> estimates of arithmetic real rates of return for each major asset class included in the pension <br /> plan's target asset allocation as of the measurement date are summarized in the following table: <br /> <br /> <br />71 <br />Item 8: Attachment D