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Comprehensive Annual Financial Report - Minnesota State ...

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FY12 Contribution Rates<br />

14%<br />

12%<br />

10%<br />

8%<br />

6%<br />

4%<br />

2%<br />

Notes<br />

Coordinated<br />

38<br />

(Continued)<br />

Employee<br />

Employer<br />

Basic<br />

Police & Fire<br />

Correctional<br />

MERF<br />

Administrative<br />

expenses of<br />

PERA are paid during<br />

the year from<br />

the GERF. At year<br />

end, a portion of the<br />

expenses are allocated<br />

to the other<br />

covered funds based<br />

on membership<br />

counts.<br />

Public Employees<br />

Retirement Association<br />

of <strong>Minnesota</strong><br />

payable in FY13 but calculated and billed<br />

in FY12 and each employer’s share of a<br />

$3.9 million annual contribution payable<br />

in FY13 but calculated and billed in FY12.<br />

Contributions in FY12 also include the $27<br />

million employer supplemental contribution<br />

payable in FY13 but calculated and billed in<br />

FY12.<br />

D. NEW RETIREMENT PLANS<br />

The <strong>State</strong>wide Volunteer Firefighter<br />

Retirement Plan (SVF), was created by the<br />

<strong>Minnesota</strong> legislature in 2009 and first<br />

received members and a corresponding<br />

transfer of assets from six relief associations<br />

or entities operating fire departments<br />

on December 31, 2009. Seventeen additional<br />

fire departments joined the plan on<br />

December 30, 2011. The amount of assets<br />

transferred, $3,075,477, is shown as an<br />

“Other Addition” in PERA’s <strong>State</strong>ment of<br />

Changes in Plan Net Assets for FY12. The<br />

plan is an agent lump-sum defined benefit<br />

plan. Each entity has a separate account and<br />

retains its own assets and liabilities.<br />

Four independent police and fire relief<br />

associations were merged into PERA’s<br />

Police & Fire Fund in FY12, including the<br />

Minneapolis Firefighters Relief Association,<br />

the Minneapolis Police Relief Association, the<br />

Virginia Firefighters Relief Association, and<br />

the Fairmont Police Relief Association. All<br />

four relief associations were formed in the<br />

late 1800’s to early 1900’s and all four had<br />

separate Boards and their own benefit provisions.<br />

They were all closed defined benefit<br />

plans. The Minneapolis plans were merged<br />

on December 30, 2011. Virginia Fire was<br />

consolidated as a separate plan on December<br />

30, 2011 and then was merged into the<br />

PEPFF on June 29, 2012. Fairmont Police<br />

was also merged into the PEPFF on June<br />

29, 2012. The amount of assets transferred<br />

into the PEPFF, $487,935,862, is shown as<br />

an “Other Addition” in PERA’s <strong>State</strong>ment of<br />

Changes in Plan Net Assets for FY12. An<br />

additional municipal contribution will be<br />

calculated in FY13 and paid annually over a<br />

specified number of years should there be<br />

an unfunded accrued actuarial liability for<br />

each of those four associations as of June 30,<br />

2012.<br />

E. OTHER NOTES<br />

1. Administrative Expenses<br />

Administrative expenses of the Public<br />

Employees Retirement Association are paid<br />

during the year from the GERF. At year-end,<br />

a portion of the expenses are allocated to<br />

the PEPFF, the PECF and MERF, based on<br />

membership counts. The PEDCP reimburses<br />

the GERF to the extent of fees collected for<br />

recovery of administrative costs. The SVF<br />

reimburses the GERF $30 per firefighter.<br />

The applicable amounts are reported as<br />

expenses of the five funds and reported on<br />

the <strong>State</strong>ment of Plan Net Assets as a payable<br />

to other funds or due from other funds.<br />

Administrative costs are funded from investment<br />

income for the defined benefit plans.<br />

For fiscal year 2012, administrative expenses<br />

allocated to GERF, PEPFF, PECF, MERF, SVF<br />

and PEDCP totaled $9,649,817, $855,176,<br />

$229,322, $171,807, $21,086 and $144,581<br />

respectively.<br />

2. Participating Pension Plan<br />

All employees of the Public Employees<br />

Retirement Association are covered by the<br />

GERF Coordinated Plan and eligible for<br />

the plan provisions described in Note A.4.<br />

<strong>Minnesota</strong> Statute 353.27 sets the rates<br />

for employee and employer contributions.<br />

These statutes are established and amended<br />

by the state legislature. Contribution rates<br />

are shown in Figure 9. Total covered payroll<br />

for PERA employees during fiscal year<br />

2012 was approximately $5.5 million.<br />

Fig. 9 Retirement Plan Contribution Rates<br />

Effective GERF<br />

Date Contributor Basic Coordinated PEPFF PECF MERF<br />

1/1/2011 Member 9.10% 6.25% 9.60% 5.83% 9.75%<br />

Employer 11.78% 7.25% 14.40% 8.75% 12.43%

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