Comprehensive Annual Financial Report - Minnesota State ...

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Letter of Transmittal (Continued) An important measure of the health of a retirement system is the level of funding. The better the level of funding is, the larger the ratio of assets to accrued liabilities and the greater the level of investment income potential. Also, a better level of funding gives participants a higher degree of assurance that their pensions are secure. A pension plan is fully funded when it has present and projected assets sufficient to cover the liabilities for present and future annuities, benefits and refunds and the projected cost of fund administration. The Association’s progress toward meeting the full funding objective is displayed on the Schedule of Funding Progress on page 32. This report shows the funding levels using the entry age normal actuarial cost method, and reflects various changes in actuarial assumptions. At the end of fiscal year 2012, the ratio of assets to liabilities of the PERF was 73.5 percent. For the PEPFF and the PECF, the ratios were 78.3 percent and 89.3 percent, respectively. The funded ratio of the MERF was 69.1 percent. Major Initiatives PERA’s staff worked on several large-scale projects during the year. Due to various efficiencies built in to our underlying systems over the past few years, we were able to keep up with an increasing work load while developing and implementing these new initiatives without needing to increase staff size. Legislation was passed in 2011 that merged the Minneapolis Police Relief Association and Minneapolis Fire Relief Association into PERA’s Police & Fire Fund effective December 30, 2011. The merger included 26 active members and 1,302 benefit recipients. Legislation was passed in 2012 that merged the Virginia Fire Relief Association and the Fairmont Police Relief Association into PERA’s Police & Fire Fund effective June 29, 2012. Each of those associations had 13 benefit recipients, and neither had any active members. In fiscal year 2012, seventeen fire departments joined the Statewide Volunteer Firefighter (SVF) Retirement Plan, which more than doubled the membership in that plan. The SVF was created in 2010, so is a very new plan with about 750 members from 35 different fire departments. Public Employees Retirement Association of Minnesota We worked closely with the other two statewide public pension plans, our actuaries and the State Board of Investment to develop legislation that would lower our assumed rate of return on investments from 8.5 percent to 8.0 percent for the next five years. During those five years we will monitor actual returns to determine if we should seek further legislation to keep the return assumption below 8.5 percent. PERA’s staff continued to work toward our vision of making pension information available to members 24 hours a day/7 days a week. In fiscal year 2012, we expanded the number of members who could create their own benefit estimates online. Over 100,000 members have now registered to use My PERA, our online tool. Members prepared over 105,000 benefit estimates themselves using My PERA in FY12. We will continue to enhance our suite of on-line tools available to members and employers. Our focus is continuous improvement to our systems and services so that we can accommodate the needs of all stakeholders and constituencies of PERA. Professional Services Actuarial consulting services during the fiscal year were provided by Mercer. The State’s Attorney General continued to provide PERA with legal counsel. The State’s Department of Health provided medical services used for determining disability benefits. The State Board of Investment continued to manage and invest the assets of PERA’s funds, and the State’s Legislative Auditor provided professional financial auditing services. Membership Report This report is complemented by an annual financial newsletter that discloses, in summary form, the contents of this report. This financial newsletter is mailed in January of each year to all PERA members, including active and deferred members and benefit recipients. In addition, this report is reproduced, in its entirety, on PERA’s website, www.mnpera.org.
National Recognition PERA has an outstanding staff and they are very dedicated to the utmost professionalism in administering the plans entrusted to the governance of the PERA Board of Trustees. In 2012 PERA received the Public Pension Coordinating Council’s Public Pension Standards Award for Administration. This award is given in recognition of meeting professional standards that have been developed by three national organizations created to provide support and advocacy of the nation’s public employee pension systems. PERA also received national recognition as a leader in pension fund administration and disclosure of financial information. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to PERA for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2011. This is the 27th time PERA has received this honor. The Certificate of Achievement is a prestigious national award, recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized CAFR. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for one year only. We believe our current report continues to meet the Certificate of Achievement Program’s requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgments As a compendium of financial, investment, actuarial and other statistical information, PERA’s Comprehensive Annual Financial Report provides complete and reliable information on which management decisions may be based and through which compliance with statutory requirements may be assessed. In addition, the report serves as the primary source through which the effectiveness of the Trustees’ management and administration of PERA and its funds may be judged. We are sure you join with us in expressing gratitude and appreciation to the staff and PERA’s advisors for their efforts in producing this report and for their loyal and dedicated service to the Association and its members, annuitants, beneficiaries, and participating local governmental employers. Respectfully submitted, Introductory Section Mary Most Vanek David DeJonge Executive Director Assistant Executive Director Public Employees Retirement Association of Minnesota
Page 1 and 2: Pink Lady Slipper, Minnesota State
Page 3 and 4: Board of Trustees Don Rambow — Bo
Page 5 and 6: Achievement Awards President's Repo
Page 7 and 8: Achievement Awards GFOA The Governm
Page 9 and 10: December 27, 2012 Board of Trustees
Page 11: Economic Conditions and Outlook Alt
Page 15 and 16: Ross E. Arneson General Membership
Page 17 and 18: The Public Employees Police and Fir
Page 19 and 20: Pre-Age 62 Increase — This pensio
Page 21 and 22: Legislative Auditor’s Report Mana
Page 23 and 24: Legislative Auditor’s Report O L
Page 25 and 26: Financial Highlights å PERA’s Ne
Page 27 and 28: made in 2010 and contribution rate
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Page 31 and 32: Statewide Public Employees Agency F
Page 33 and 34: Financial Section Minneapolis Emplo
Page 35 and 36: facilities. Elected officials and a
Page 37 and 38: are recognized as revenues when due
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Page 43 and 44: age of pay, and are specified in st
Page 45 and 46: Employer pension contributions for
Page 47 and 48: Schedule of Employer Contributions
Page 49 and 50: Source of Expenses Schedule of Inve
Page 51 and 52: Investment Report Investment Result
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Page 55 and 56: 25% 20% 15% 10% 5% 0% -5% -10% -15%
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Actuary’s Certification Letter De
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General Employees Retirement Fund A
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Other Assumptions Separation GERF u
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Public Employees Correctional Fund
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Public Employees Correctional Fund
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Introduction Schedule of Changes in
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Introduction December 14, 2012 Publ
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Statistical Section 2007 2008 2009
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Fire Department Statistical Section
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Statistical Section Schedule of New
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General Employees Retirement Fund S
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Schedule of Benefit Recipients by T
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Top 10 States by PERA Annuitant Pop
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General Employees Retirement Fund P
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ISANTI ISLE IVANHOE JACKSON JANESVI
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DEER CREEK DEER PARK DEER RIVER DEE
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PIERZ PIKE PIKE BAY PIKE CREEK PILL
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BROOKLYN CENTER ISD-286 BROOTEN ISD
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VILLARD ISD-615 VIRGINIA ISD-706 WA
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CROW WING COUNTY SWCD CURRIE DUVRAY
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2012 Comprehensive Financial Report
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