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if ’ ' <br />Jf <br />•.I <br />f-M! <br />r'i <br />iirI r';: <br />I <br />I <br />I <br />I <br />fkz; <br />CITY OF ORONO, MINNESOTA <br />Notes to Financial Statements (continued) <br />December 31. 1991 <br />NOTE 9 - DEFINED BENEFIT PENSION PLANS • STATEWIDE (CONTINUED) <br />Th# retiring member receives the higher of step-rate benefit accrual formula (Method 1) or a level accrual <br />ftmmila (Method 2). Under Method 1, the annuity accrual rate for a Basic member is 2.0% of the <br />ivwi^c salary for each of the first ten years of service and 2.5% for each remaining year. For a <br />Coordinated member, the annuity accrual rate is 1 0% the average salary for each of the first ten years <br />•mA 1.5% for eadi remaining year. Using Method 2, the annuity accrual rate is 2.5% of the average <br />■alary for Basic members and 1.5% for Coordinated members. For PEPFF members, the annuity accrual <br />fllf is 2.5% for each year of service. For PERF members whose annuity is calculated using Method I, <br />and for all PEPFF members, a foil annuity is available when age plus years t)f service equal 90. <br />Th«‘e are different types of annuities available to members upon retirement. A normal annuity is a <br />lifetime annuity that ceases upon the death of the retiree No survivor annuity is payable. There are also <br />vviovs types of Joint and survivor annuity options available which will reduce the monthly normal <br />annuity amount, because the annuity is payable over joint lives Members may also leave their <br />fflBtfibut^nf in the fond upon termination of public service, in order to qualify for a deferred annuity <br />at retirement age. Refonds of contributions are available at any time to members who leave public <br />MTvice, but before retirement benefits begin. <br />B. Cuntributions Required and Contributions Made <br />Minnesota Stmutes Chapter 353 sets the rates for employer and employee contributions. The City makes <br />contributions to the pension plans equal to the amount required by State Statutes. According to <br />MinnaaoU Statutes Chapter 356.215. Subdivision 4(g). the date of full fonding required for the PERF <br />and die PEPFF is the year 2020. As part of the annual actuarial valuation. FERA's actuary determines <br />the nifflciency of the statutory corttributlon rates towjuds meeting the required full fonding deadline. The <br />actuary comparm the actual contribution rate to a “required" contribution rate. Curreitt coodtined <br />statutory conuibution rates and actuarially required contribution rates for the plans are as folloivs: <br />Statutorv Rates <br />Emplosees Employer <br />Required <br />Ratev <br />PERF (Basic and <br />Coordinated Plans) <br />PEPFF <br />4 44% <br />8 00% <br />4 81% <br />12 00% <br />10 04% <br />17 56%