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IMi| <br />DATE: April 22,2004 <br />ITEM NO: <br />REQUEST FOR COUNCIL ACTION <br />f(^0 2004 <br />cn Y Oh OHONO <br />Dcparimcnt Approval: <br />Name Ronald J. Moorsc <br />Title City Administrator <br />Administrator Reviewed: <br />Us Agenda Section: <br />City Administrator's Report <br />Item Description: Long Term Plan and Policy for Long Lake Fire Department Pension <br />'Ilic Long Lake Fire Commission has developed a recommendation regarding a plan and policy <br />for on-going adjustments to the pension benefit for the Long Lake Firefighters, nic pension <br />benefit has not been increased for several years. The current benefit level is in the lower portion <br />of the range of pension benefits provided by other area Fire Departments. I'hc recommendation <br />is based on the pension benefit framework described below. <br />Recommendation <br />'llie recommendation calls for the pension benefit to be increa.sed from $2,282 per year of serv’icc <br />to $2,375 per year of service for 2003. and to be increased by 3% per year going forward. As <br />indicated in the pension benefit framework below, the proposed level of increases does not <br />require any contribution by the Cities. <br />Pension Bene fit Framework <br />The Long Lake Fire Commission has met with the City's Auditor and with Kelly Shaughnessy, <br />repre.senting the Long L.ake Fire Relief As.sociation, to determine the current status of the <br />pension fund, and to discuss the elements of a framework for determining pension benefit <br />increa.ses. These discussions have provided the basis for developing a policy to guide pension <br />benefit increases over the long term. Tlie following is an outline of the key elements of the <br />framework for determining pension benefit increases. <br />1 . I'hcrc arc five variables in the pension funding equation <br />A. I hc rate of return on the assets in the pension fund (determined by the investment <br />strategy of the Relief Association) <br />n. The level of pension benefit paid to each firefighter at retirement (determined by <br />tlie Cities) <br />C. The amount of 2% State Aid <br />D. The contribution to the pension fund by tlic Cities (determined by the Cities) <br />E. The level at which the pension liabilities arc funded (determined by the Cities <br />ba.scd on generally accepted pension funding principles)