07-10-1995 Council Packet - Laserfiche WebLink

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cnr OF ORONO, ntinnesota Notes to Financial Statements (continued) Detemher 31. 1994 NOTE 8 - DEFINED BENEFIT PENSION PLANS - STATEWIDE (CONTIM ED) Tlie City ’s contribution for the year ended December 31, 1994 to the °ERF represented 0.02'r of total employer contributions required of all participating entities. For the PEPFF, contributions b)r the year ended December 31 . 1994 represented 0.15 % of total employer contributions required of all participating entities. C.Funding Status and Progress 1.Pewion Benefit Obligation The "pension benefit obligation" is a standardized disclosure measure of the present value of pension benefus. adjusted for the effects of projected salary increases and step-rate benefits, estimated to be payable in the future as a result of employee ser\ ice to date. The measure, which is the actuarial present value of credited projected benefits, is intended to help users assess PERA’s funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due. and make comparisons among Public Employees’ Retirement Systems and among employers. PERA does not make separate measurements of assets and pension benefit obligation for individual employers. The pension benefit obligations as of June 30. 1994 are shown below: PERF PEPFF Total pension benefit obligation Net assets available for benefits, at cost (market values for PERF = $4,762,519,000. PEPFF = SI.237.484.000) Unfunded (assets in excess of) pensic.n benefit obligation $ 5.625.598.000 $ 1.020.9.50.000 4.733.845.000 1.229.769.000 891.753.000 $ (208.819.000) The measurement of the pension benefit obligation is based on an actuar. d valuation as of June 30. 1994. Net assets available to pay pension benefits were valued as of June 30. 1994. For the PERF. significant actuarial a.ssumptions used in the calculation of the pension benefit obligation include: (a) a rate of return on the inve.stment of present and future as.sets of 8.5% per year, compounded annually, prior to retirement, and 5.0% per year, compounded annually, following retirement; (b) projected salary increases taken from a select and ultimate table; (c)payroll growth at 6.0% per year, consisting of 5.0% for inflation and 1.0% due to growth in group size; (d) post-retirement benefit increases that are accounted for by the 5.0% rate of return assumption follow ing retirement; and (e) mortality rates based on the 1983 Group Annuity Mortality Table set forward one year for retired members and set back five years for each active member. -49- 9