HomeMy WebLinkAboutStaff Report 409-06City of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT: HUMAN RESOURCES
DATE:NOVEMBER 13, 2006 CMR: 409:06
SUBJECT:APPROVAL OF RESOLUTIONS AND AN ORDINANCE TO
APPROVE AN AMENDMENT TO THE CONTRACT BETWEEN
THE BOARD OF ADMINISTRATION OF THE CALIFORNIA
PUBLIC EMPLOYEES RETIREMENT SYSTEM (CALPERS) AND
THE CITY OF PALO ALTO TO PROVIDE SECTION 21354.5 (2.7 %
@ 55 FULL FORMULA) FOR MISCELLANEOUS EMPLOYEES
RECOMMENDATION
Staff recommends that Council approve the attached Resolution of Intention of the Council of
the City of Palo Alto stating its intent to amend the contract between the California Public
Employees’ Retirement System (CalPERS) and the City of Palo Alto to provide Section 21354.5
(2.7% @ 55 Full Formula) for the Local Miscellaneous employees; adopt an ordinance of the
Council of the City of Palo Alto authorizing an Amendment to the Contract between the City
Council of the City of Palo Alto and the Board of Administration of the California Public
Employees’ Retirement System; and adopt additional resolutions implementing the contract
amendment.
BACKGROUND
On October 10, 2006, the City Council approved a 38 month agreement effective May 1, 2006
through June 30, 2009 with employees represented by Service Employees’ International Union
(SEIU) Local 715. The SEIU agreement included a change from the current retirement formula,
2 percent at 55 Full Formula, to an enhanced formula, 2.7 percent at 55 Full Formula, which
increases the monthly pension benefits for all employees aged 50 and over retiring after January
6, 2007. This change was a result of the City’s continuing efforts to contain escalating
healthcare costs for existing employees and future retirees while retaining a competitive market
position. The City will reduce the maximum payments of medical premiums paid to current
employees and future retirees in return for providing a more competitive retirement benefit.
Nine of eleven labor market cities have enhanced or are in process of enhancing their retirement
formula beyond 2 percent at 55 within the last several years. This benefit change will affect not
only the 589 SEIU employees, but also the 254 non-safety management and professional
employees who are also combined in the Local Miscellaneous employees group as established by
CalPERS.
CMR: 409:06 Page 1 of 4
DISCUSSION
The change in pension formula increases the City’s CalPERS pension expense by 6.9 percent.
This change is comprised of a 5.9 percent increase to the City’s employer rate and a 1 percent
increase to the employee rate. The result is an increase to the City’s combined employee and
employer pension rate, which increases from 18.4 percent of total salary to 25.3 percent based on
2006-07 rates.
Currently City employees do not contribute anything to their pension costs. With the new
retirement formula, two percent of this increase will be paid by the employee. Under the 2
percent at 55 formula, between the years 1998 to present, employees were not required to pay
toward any retirement contribution. Effective January 6, 2007, all SEIU employees will pay 1
percent share of the expense increase, reducing the additional cost to the City to 5.9 percent.
Effective the pay period inclusive of July 1, 2007, all SEIU employees will pay an additional 1
percent, for a total of 2 percent, towards the implementation of 2.7 percent at 55, reducing the
additional cost to the City to 4.9 percent. The remaining employees in the Miscellaneous group
will be required to pay up to 2 percent on a pre-tax basis ( see attached resolution). Staff is in the
process of finalizing the details for these employees.
This benefit change is expected to increase the number of employee retirements in 2007 and
therefore provide an opportunity for the organization to restructure. Over 40 percent of the 589
SEIU employees are age 50 or over and over 50 percent of the Management and Professional
employees are age 50 or over. Executive staff is currently analyzing the potential number of
employees who may retire and the feasibility of reduced staffing and other economically
beneficial staffing options.
The procedures for implementing the amendment are established by statute. The first step in the
process is for the Council to adopt a Resolution of Intent and conduct a first reading of the
ordinance amending the contract. Because the amendment would affect employees’
contributions to CalPERS, a vote is required after the Council adopts the resolution. Once the
final ordinance is adopted and becomes effective, the contract amendment will go into effect the
following payroll date. Based on the current schedule the effective date of the contract
amendment will be January 6, 2007.
RESOURCES IMPACT
The 6.9% cost increase of this benefit change consists of two elements: (1) repayment of an
unfunded liability that covers retirement costs of employees who retire prior to the increased
benefit being fully funded and (2) increased future premiums for the added benefits. CalPERS
requires payment of the unfunded liability, to be amortized over 20 years. The net present value
(NPV) of the 2.7 percent at 55 retirement benefit for all miscellaneous employees is
approximately $25.0 million amortized over the next 20 years as required by CalPERS. This
translates into future annual costs of approximately $3.3 million in current dollars over the next
20 years. The majority of the cost increase represents the City’s contribution for previous years
of service for current employees. This cost is 5 percent of the 6.9 percent increase to the City’s
CalPERS pension contribution. This cost increase will be largely offset by employee
CMR: 409:06 Page 2 of 4
reimbursements, At the end of 20 year amortization period, the City will have completed its
contribution for previous years of service for current employees and the 5 percent will be
reduced from the City’s CalPERS pension rate. The cost of the 2.7 percent at 55 retirement
benefit will be covered by the cost avoidance that comes from placing a cap on medical costs and
the employees’ 2 percent contribution.
Implementation of this retirement benefit does not require a budget adjustment for fiscal year
2006-07 since there are sufficient funds included in the adopted budget. The budget impacts for
future years will be included in the 2007-09 proposed budget.
POLICY IMPLICATIONS
This recommendation is consistent with existing City policies.
ENVIRONMENTAL REVIEW
This action does not require an environmental review.
ATTACHMENT
1. Resolution of Intention to approve an Amendment to Contract between the Board of
Administration California Public Employees’ Retirement System and the City Council City of
Palo Alto to adopt 2.7% at 55 for Local Miscellaneous Members
2. Resolution of the Council of the City of Palo Alto describing Employer Paid Member
Contributions to the Public Employees’ Retirement System for Local Miscellaneous Members
3. Resolution of the Council of the City of Palo Alto implementing the Provisions of Section
414(h)(2) of the Internal Revenue Code on Behalf of Local Miscellaneous Members
4. Ordinance of the Council of the City of Palo Alto authorizing an Amendment to the Contract
between the City Council of the City of Palo Alto and the Board of Administration of the
California Public Employees’ Retirement System (to provide section 21354.5 (2.7% @ 55 Full
Formula) for Local Miscellaneous Members)
CMR: 409:06 Page 3 of 4
PREPARED BY: Sandra T.R. Blanch, Risk and Benefits Manager
DEPARTMENT HEAD:
RUSS CARLSEN
Director of Human Resources
CITY MANAGER APPROVAL:
E’~¢r~A-Ri~IS ON
Assistant City Manager
CMR: 409:06 Page 4 of 4
*NOT YET APPROVED*
RESOLUTION NO.
RESOLUTION OF INTENTION T~-- A~PROVE AN
AMENDMENT TO CONTRACT BETWEEN THE BOARD OF
ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES’
RETIREMENT SYSTEM AND THE CITY COUNCIL CITY
OF PALO ALTO TO ADOPT 2.7% AT 55 FOR
LOCAL MISCELLANEOUS MEMBERS
The Council of the City of Palo Alto does RESOLVE as
follows:
WHEREAS, the Public Employees’ Retirement Law permits the
participation of public agencies and their employees in the Public
Employees’ Retirement System by the execution of a contract, and
sets forth the procedure by which said public agencies may elect to
subject themselves and their employees to amendments to said Law;
and
WHEREAS, one of the steps in the procedures to amend this
contract is the adoption by the governing body of the public agency
of a resolution giving notice of its intention to approve an
amendment to said contract; and
WHEREAS, the following is a statement of the proposed
change:
To provide Section 21354.5 (2.7% @ 55 Full formula) for
local miscellaneous members.
NOW, THEREFORE, the Council of the City of Palo Alto does
RESOLVE as follows:
SECTION i. The Council of the City of Palo Alto does
hereby give notice of intention to approve an amendment to the
contract between said public agency and the Board of Administration
of the Public Employees’ Retirement System, a copy of said
//
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061108 jp 0130021
1
Attachment 1
** *NOT YET
amendment being attached hereto,
reference made a part hereof.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Senior Asst. City Attorney
Ap PROVED* *.
aS ....Exhibit A"by this
APPROVED:
Mayor
City Manager
Director of Administrative
Services
Director of Human Resources
061108 jp 0130021
2
CalPERS
EXHIBIT
EXHIBIT
California
Public Employees’ Retirement System
AMENDMENT TO CONTRACT
Board
PublicCalifornia
Between the
of Administration
Employees’ Retirement
and the
Council
Palo Alto
City
Ci ty of
System
The Board of Administration, California Public Employees’ Retirement. System,
hereinafter referred to as Board, and the governing body of the above public agency,
hereinafter referred to as Public Agency, having entered into a contract effective
January 1, 1942,. and witnessed March 9, 1942, and as amended effective January 1,
1948, April 1, 1949, January 1, 1952, July 1, 1954, February 1, 1956, November 1,
1964, September 23, 1968, December 14, 1970, February 1, 1974, July 8, 1974,
January 5, 1975, April 1, :1975, September 11, 1977, July 1, 1979, February 21, 1981,
July 11, 1981, December 12, 1981, June 12, 1982, September 17, 1983, November
12, 1983, February 11, 1991, October 15, 1994, December 10, 1994, FeSruary 27,
.1996, October 15, 1998,.January 1, 1999, October 14, 1999, July 1., 2000, October 20,
2001, March 9, 2002 and September 16, 2006 which provides for participation of
Public Agency in said System, Board and Public Agency hereby agree as follows:
Paragraphs 1 .through 12 are hereby stricken from said contract as executed
effective September 16, .2006, and hereby replaced by the following paragraphs
numbered 1 through.13 inclusive:
¸.All words and terms used herein which are defined in the Public
Employees’ Retiremen{ Law shall have the meaning as defined therein
unless otherwise specifically .provided. "Normal retirement age" shall
mean age 55 for local miscellaneous members and age 50 for local
safety members.
Public Agency shall padicipate in the ¯Public Fmployees’ Retirement
System from and after January 1, 1942 making its employees as
hereinafter provided, members of said System subject to all provisions of
the Public Empioyees’ Retirement Law except such as apply only on
election of a contracting agency and are not provided for herein and to all
amendments to said Law hereafter enacted except those, which by
express provisions thereof, apply only on the election of a contracting
agency.
Employees of Public Agency in the following classes shall become
members of said Retirement System except such in each such class as
are excluded by law or this agreement:
a.Local Fire F ghters (herein referred to as local safety members);
bo ¯ Local Police Officers (herein referred to as local safety members);
Employees other than local safety members (herein referred to as
local miscellaneous members).
In addition to the classes of employees excluded, from membership by
said Retirement Law, the following classes of employees shall not
become members of said Retirement System:
PROJECT PROFESSIONAL; PROJECT MANAGER; PROJECT
TECHNICIAN; PROJECT ASSISTANT; PROJECT LABORER;
LANDSCAPE MAINTENANCE TRAINEE; LIBRARY PAGE;
WATER SAFETY INSTRUCTOR /LIFEGUARD; RECREATION
LEADER; AND POOL MANAGER HIRED ON OR. AFTER
OCTOBER 14, 1999.
The percentage of final compensation to beprovided foreach year of
credited prior and current service as a localmiscellaneous member ¯in
employment before and not on or afterthe effective date of this
amendment to contract shall be determinedin accordance with Section
21354 of said Retirement Law (2% at age 5.5Full).
The percentage of final compensation to beprovided for each year of
credited prior and current service as a localmiscellaneous member in
employment on or after the effective date ofthis amendment to contract
shall be determined in accordance with Section 21354.5 of said
Retirement Law (2.7% at age 55 FUll).
PLDiSE DO NOTSI6N "EXHIBIT ONLY"
The percentage of fi[~a compensation to be provided for each year of
credited prior and current service as a local safety member.shall be
determined ~n accordance with Section 21362.2 of said Retirement Law
(3% at age 50 Full).
Public Agency elected and elects to be subject to the following optional
provisions:
a.Section 21571 (BaSic Level of 1959 Survivor Benefits).
Section 21222.1 (One-Time 5% Increase - 1970). Legislation
repealed said Section effective January 1, 1980.
.Section 21222.2 (One-Time 5% Increase - 197~1).. Legislation
¯ repealed said Section effective January i, 1980.
Section 21319 (One-Time 15% Increase for Local Miscellaneous
Members Who Retired or Died Prior to July 1, 1971). Legislation
repealed said Section effective January 1, 2002.
Section 21325 (One-Time 3% to 15% Increase For Local
Miscellaneous Members and Local Safety Members Who Retired
or Died Prior to January 1, 1974).Legislation repealed, said
Section effective January 1, 2002. -
Section 20042 (One-Year Final Compensation).
ho
Section 21317 (0he-Time 15% Increase for Certain Local Safety
Members Who Retired for Service Retirement). Legislation
repealed said Section effective January 1, 2002..
Section 21326 (One-Time 1% to 7% Increase For Local
Miscellaneous Members and Local Safety Members Who Retired
or Died Prior to July. 1, 1974). Legislation repealed said Section
effective January 1, 2002.
i.Section 21024 (Military Service Credit as Public Service).
Section 20692 (Employer Paid Member Contributions Converted .
to Payrate During the Final Compensation Period) for local
miscellaneous members and local safety members in the following
groups:
Local miscellaneous members who are Management and
confidential employees;
10.
11..
Local police members who are Management and confidential
employees;
Local fire members who are Management and confidential
employees;
Local miscellaneous members represented by Local 715, SEIU
AFL-CIO and CLC; and
Local police members represented-by the Palo Alto Peace
Officer’s Association.
Section 20434.5 ("Local Fire Fighter" shall include any officer or
employee of a fire department employed to perform hazardous
materials seEvices as described in Government Code Section
20434.5).
Section 21548 (Pre-Retirement Optional Settlement 2 Death
Benefit) for local fire members only.
Public Agency, in accordance with Government Code Section 20790,
ceased to be an "employer" for purposes Sf Section 20834 effective on
September 11, 1977. Accumulated contributions of Public Agency shall.
be fixed and determined as provided in Government Code Section
20834, and accumulated contributions thereafter shall be held by the
Board as provided in Government Code Section 20834.
Public Agency shall contribute to said Retirement System the
contributions determined by actuarial valuations of prior and future
service liability with respect to local miscellaneous members and local
safety members of said Retirement System.
Public Agency shall also contribute to said Retirement System as
follows:
A reasonable amount, as fixed by the Board, payable in one
installment within 60 days of date of contract to cover the costs of
administering said System as it affects the employees of Public
Agency, not including the costs of special valuations or of the
periodic investigation and valuations required by law.
A reasonable amount, as fixed by the Board, payable in one
installment as the occasions arise, to cover the costs of special
valuations on account, of employees of Public Agency, and costs
of the periodic investigation and valuations required by law.
12.Contributions requi.red of Public Agency and its employees shall be
subject to adjustment by Board on accoqnt of amendments to the Public
Employees’ Retirement Law, and on account of the experience under the
Retirement System as determined by the periodic investigation and
valuation required by said Retirement Law.
13.Contributions required of Public Agency and its employee~ shall be paid
by PublicAgency to the Retirement System within fifteen days after the
end of the period to which said contributions refer or as may be
prescribed by Board regulation. If more or less than the correct amount
of contributions is paid for any period, proper adjustment shall be made
in connection with subsequ,~nt remittances. Adjustments on account of
errors in contributions.re.q#"i~d of any employee may be made by direct
payments between th~ ~i’~’ioyee and the Board..
B.This amendment sha, ll,,l~’~Yfective on.the day of
BOARD OF ADMINIST, I~ION CITY COUNCIL "’
PUBLIC EMPLOYF__~b’~’ETIREMENT SYSTEM CITY OF PALO ALTO
BY <’-~ ’BY
LORI ~I~I~TLAND, CHIEF PR~ ~-
EMPt~,YER SERVICES DIVISION
PUBLIC EMPLOYEES’ RETIREMENT SYSTEM ¯
Witness Date
Attest: _\
AMENDMENT ER#14
PEI~S-CON-702A (Rev. 10\05)
CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM
Actuarial and Employer Services Branch
Public Agency Contract Services ¯
(888) CalPERS (225-7377)
SUMMARY OF MAJOR PROVISIONS
2.7% @ 55 Formula (Section 21354.5)
Local Miscellaneous Members
SERVICE RETIREMENT
To be eligible for service retirement, a member must be at least age 50 and have five years of
CalPERS credited service. There is no compulsory retirement age.
The monthly retirement allowance is determined by age at retirement, years of service credit
and final compensation. The basic benefit is 2.7% of final compensation for each year of
credited service upon retirement at age 55. If retirement is earlier than age 55, the percentage
of final compensation .decreases for each quarter year of attained age to 2% at age 50.
Final compensation is the average monthly pay rate during the last consecutive 36 months of
employment, or 12 months if provided by the employer’s contract, unless the member
designates adifferent period of 36 or 12 consecutive months when the average pay rate was
.higher.
DISABILITY RETIREMENT
Members substantially incapacitated from performing the usual duties for the position for his/her
current employer, and from performing the usual duties of the position for other CalPERS
covered employers (including State agencies, schools, and local public agencies), and where
similar positions with these other employers with reasonably comparable in pay, benefits, and
promotional opportunities are not available, would be eligible for disability retirement provided
they have at least five years of service credit. The monthly retirement allowance is 1.8% of final
compensation for each year Of servii;e. The maximum percentage for member,~ who have
between 10.000 and 18.518 years of service credit is one-third of their final compensation. If
the member is eligible for service retirement the memberwill receive the highest allowance
payable, service or disability. If provided by the employer’s contract, the benefit would be a
minimum of 30% of final compensation for the first five years of service credit, plus 1% for each
additional year of service to a maximum benefit of 50% of final compensation.
INDUSTRIAL DISABILITY RETIREMENT
If provided by the employer’s contract, members permanently incapacitated from performing
their duties, as defined above under Disability Retirement, and the disability is a result of a job-
related injury or illness may receive an Industrial Disability Retirement benefit equal to 50% of
their final compensation. If provided in the employer’s contract and the member is totally
disabled, the disability retirement allowance would equal 75% of final compensa~don in lieu of
the disability retirement allowance o{herwise provided. If the member is eligible for service
ret,rement, the service retirement allowance is payable. The. total allowance cannot exceed
90% of final compensation.
PRE-RETIREMENT DEATH BENEFITS
Basic Death Benefit: This benefit is a refund of the member’s contributions plus interest and up
to six months’ pay (one month’s salary rate for each year of current service to a maximum of six
months).
PERS-CON-57 (rev. 2/05)
1957 Survivor Benefit: An eligible beneficiary may elect to receive either the Basic .Death
Benefit or the 1957 Survivor Benefit. The 1957 Survivor Benefit provides a monthly allowance
equal to one-half of the highest service retirement allowance the member would have received
had he/she retired on the date of death. The 1957 Survivor Benefit is pay.able to the surviving
spouse or registered domestic partner until death or to eligible unmarried children until age 18.
1959 Survivor Benefit: (If provided by the employer’s contract and the member is not covered
under social security.) A surviving spouse or registered domestic partner and eligible children
may receive a monthly allowance as determine by .the level of coverage. This benefit is payable
in addition to the Basic Death Benefit or 1957 Survivor Benefit. Children are eligible if under
age 22 and unmarried.
Pro-Retirement Optional Settlement 2 Death Benefit: (If provided by the employer’s contract.)
The spouse or registered domestic partner of a deceased member, who was eligible to retire for
service at.the time of death, may to elect to receive the Pre-Retirement Optional Settlement 2
Death Benefit inlieu of the lump sum Basic Death Benefit. The benefit is a monthly allowance
equal to the amount the member would have rec&ived if helshe had retired for service on the
date of death and elected Optional Settlement 2, the highest monthly allowance a member can
leave a spouse or registered domestic partner.
COST-OF-LIVING ADJUSTMENTS
The cost of living allowance increases are limited to a maximum of 2% compounded annually
unless the-employer’s contract provides a 3, 4, or 5% increase.
DEATH AFTER RETIREMENT
The lump sum death benefit is $500 (or $600, $2,000, $3,000, $4,000 or $5,000 if provided by
the employer’s contract) regardless of the retirement plan chosen by the member at .the time of
retirement.
TERMINATION OF EMPLOYMENT
Members who. have separated from employment may elect to leave their contributions on
deposit or request a refund of contributions and interest. Those who leave their contributions
on deposit may apply at a later date for a monthly retirement allowance if the minimum service
and age requirements are met. Members who request a r.efund of their contributions terminate
their membership and are not eligible for any future benefits unless they return to CaIPERS
membership.
EMPLOYEE CONTRIBUTIONS
Miscellaneous members covered by the 2.7% @ 55 formuia contribute 8% of reportable
earnings. Those covered under a modified formula (coordinated with Social.Security) do not
contribute on the first $133.33 earned.
The employer al.so contributes toward.the cost of the benefits. The amount contributed by the
employer for current service retirement benefits generally exceeds the cost to the employee. In
addition, the employer bears the entire cost of prior service benefits (the period of time before
the employer provided retirement coverage under CalPERS). All employer contribution rates
are subject to adjustment by the CalPERS Board of Administration.
CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM
Actuarial and Employer Services Branch
Public Agency Contract Services ¯
(888) CaIPERS (225-7377)
SUMMARY OF MAJOR PROVISIONS
2.7% @ 55 Formula (Section 21354.5)
Local Miscellaneous Members
SERVICE RETIREMENT
To be eligible for service retirement, a member must be at least age 50 and have five years of
CalPERS credited service. There is no compulsory retirement age.
The monthly retirement allowance is determined by age at retirement, years of service credit
and final compensation. The basic benefit is 2.7% of final compensation for each year of
credited service upon retirement at age 55. If retirement is earlier than age 55, the percentage
of final compensation decreases for each quarter year Of attained age to 2% at age 50.
Final compensation is the average monthly pay rate during the last consecutive 36 months of
employment, or 12 months if provided by the employer’s contract, unless the member
designates a different period of 36 or 12 consecutive months when the average pay rate was
higher.
DISABILITY RETIREMENT
Members substantially incapacitated from performing the usual duties for the position for.his/her
current employer, and from performing the usual duties of the position for other CalPERS
covered employers (including State agencies, schools, and-local public agencies), and where
similar positions with these other employers with reasonably comparable in pay, benefits, and
promotional opportunities are not available, would be eligible for disability retirement provided
they have at least five years of service credit. The monthly retirement allowance is 1.8% of final
compensation for each year Of servi~e. The maximum percentage for members who have
between 10.000 and 18.518 years of service credit is one-third of their final compensation. If
the member is eligible for service retirement the memberwill receive the highest allowance
payable, service or disability. If provided by the employer’s contract, the benefit would be a
minimum of 30% of final compensation for the first five years of service credit, plus 1% for each
additional year of service to a maximum benefit of 50% of final compensation.
INDUSTRIAL DISABILITY RETIREMENT
If pro.vided by the employer’s contract, members permanently incapacitated from performing
their duties, as defined above under Disability Retirement, and the disability is a result of a job-
related injury or illness may receive an Industrial Disability Retirement benefit equal to 50% of
their final compensation. If previded in the employer’s contract and the member is tota!ly
disabled, the disability retirement allowance would equal 75% of final compensation in lieu of
the disability retirement allowance o{herwise provided. If the member is eligible for service
retirement, the service retirement allowance is payable. The. total allowance cannot exceed
90% of final compensation.
PRE-RETIREMENT DEATH BENEFITS
Basic Death Benefit: This benefit is a refund of the member’s contributions plus interest and up
to six months’ pay (one month’s salary rate for each year of current service to a maximum of six
months).
1957 Survivor Benefit: An eligible beneficiary may elect to receive either the Basic .Death
Benefit or the 1957 Survivor Benefit. The 1957 Survivor Benefit provides a monthly allowance
equal to one-half of the highest service retirement allowance the member would have received
had he/she retired on the date of death. The 1957 Survivor Benefit is pay.able to the surviving
spouse or registered domestic partner until death or to eligible unmarried children until age 18.
1959 Survivor Benefit: (If provided by the employer’s contract and the member is not covered
under social security.) A surviving spouse or registered domestic partner and eligible children
may receive a monthly allowance as determine by .the level of coverage. This benefit is payable
in addition to the Basic Death Benefit or 1957 Survivor Benefit. Chitdren are eligible if under
age 22 and unmarried.
Pre-Retirement Optional Settlement 2 Death Benefit: (If provided by the employer’s contract.)
The spouse or registered domestic partner of a deceased member, who was eligible to retire for
service at the time of death, may to elect to receive the Pre-Retirement Optional Settlement 2
Death Benefit in lieu of the lump sum Basic Death Benefit. The benefit is a monthly allowance
equal to the amount the member would have received if helshe had retired for service on the
date of death and elected Optional Settlement 2, the highest monthly allowance a member can
leave a spouse or registered domestic partner.
COST-OF-LIVING ADJUSTMENTS
The cost of living allowance increases are limited to a maximum of 2% compounded annually
unless theemployer’s contract provides a 3, 4, or 5% increase.
DEATH AFTER RETIREMENT
The lump sum death benefit is $500 (or $600, $2,000, $3,000, $4,000 or $5,000 if provided by
the employer’s contract) regardless of the retirement plan chosen by the member at.the time of
retirement.
TERMINATION OF EMPLOYMENT
Members who. have separated from employment may elect to leave their contributions on
deposit or request a refund of contributions and interest. Those who leave their contributions
on deposit may apply at a later date for a monthly retirement allowance if the minimum service
and age requirements are met. Members who request a refund of their contributions terminate
their membership and are not eligible for any future benefits unless they return to CalPERS
membership.
EMPLOYEE CONTRIBUTIONS
Miscellaneous members covered by the 2.7% @ 55formuia contribute 8% of reportable
earnings. Those covered under a modified formula (coordinated with Social.Security) do not
contribute on the first $133.33 earned.
The employer al.so contributes toward,the cost of the benefits. The amount contributed by the
employer for current service retirement benefits generally exceeds the cost to the employee. In
addition, the employer bears the entire cost of prior service benefits (the period of time before
the employer provided retirement coverage under Ca~PERS). All employer contribution rates
are subject to adjustment by the CalPERS Board of Administration.
PERS-CON~57 (rev. 2/05)
****NOT NET APPROVED****
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO
ALTO DESCRIBING EMPLOYER PAID MEMBER
CONTRIBUTIONS TO THE PUBLIC EMPLOYEES’
RETIREMENT SYSTEM FOR LOCAL MISCELLANEOUS
MEMBERS
WHEREAS, the governing body of the City of Palo Alto has.
the authority to implement Government Code Section 20691; and
WHEREAS, the governing body of the City of Palo Alto has
a written labor policy or agreement which specifically provides
for a portion of the normal member contributions to be paid by
the employer; and
WHEREAS, one of the steps in the procedures to implement
Section 20691 is the adoption by the governing body of the City
of Palo Alto of a Resolution to commence said Employer Paid
Member Contributions;
NOW, THEREFORE, the Council of the City of Palo Alto
does RESOLVE as follows:
SECTION i. The Council has identified the following
conditions for the purpose of its election to pay Employer Paid
Member Contributions:
a.This benefit has applied and shall continue to apply to
all local miscellaneous employees.
b. This benefit shall consist of the City of Palo Alto paying
a percentage of the normal member contributions as
described in relevant labor policies and agreements.
c.A portion of the Member Contributions may be contributed
by the individual employee.
SECTION 2. The Council elects to pay Employer Paid
Member Contributions as set forth above.
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061107 cjs 8260365
1
Attachment 2
****NOT NET APPROVED****
SECTION 3. The Council finds that this is not a project
under the California Environmental Quality Act and, therefore,
no environmental impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Mayor
APPROVED:
City Attorney City Manager
Director of Human Resources
Director of Administrative
Services
061107 cjs 8260365
NOT YET APPROVED
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO
IMPLEMENTING THE PROVISIONS OF SECTION 414(h) (2) OF
THE INTERNAL REVENUE CODE ON BEHALF OF LOCAL
MISCELLANEOUS MEMBERS
WHEREAS, the City of Palo Alto has the authority to
implement the provisions of Section 414(h) 2 of the Internal
Revenue Code (IRC) ; and
WHEREAS, the Board of Administration of the Public
Employees’ Retirement System adopted its resolution regarding
Section 414(h) (2) on September 18, 1985; and
WHEREAS, the Internal Revenue Service has stated on
December 6, 1985, that the implementation of the provisions of
Section 414(h) (2) of the IRC pursuant to the resolution of the
Board of Administration would satisfy the legal requirements of
Section 414(h) (2) of the IRC; and
WHEREAS, the City of Palo Alto has determined that even
though the implementation of the provisions of Section 414(h) (2) of
the IRC is not required by law, the tax benefit offered by Section
414(h) (2) of the IRC should be provided to its employees who are
local miscellaneous members of the Public Employees’ Retirement
System.
NOW, THEREFORE the Council of the City of Palo Alto does
hereby RESOLVE as follows:
SECTION i. The City of Palo Alto will implement the
provisions of Section 414(h) (2) of the Internal Revenue Code by
making employee contributions pursuant to California Government
Code section 20691 to the Public Employees, Retirement System on
behalf of its employees who are local miscellaneous members of the
Public Employees’ Retirement System (the "designated employees").
"Employee contributions" shall mean those contributions to the
Public Employees’ Retirement System which are deducted from the
salary of employees and are credited to individual employees’
accounts pursuant to California Government Code section 20691.
SECTION 2. The contributions made by the City of Palo Alto
tO the Public Employees’ Retirement System, although designated as
employee contributions, are being paid by the City of Palo Alto in
lieu of contributions by the designated employees, who are members
of the Public Employees’ Retirement System.
SECTION 3. The designated employees shall not have the
option of choosing to receive the contributed amounts directly
instead of having them paid by the City of Palo Alto to the Public
Employees’ Retirement System.
I
061107 cjs 8260364 Attachment 3
* * * NOT YET APPROVED
SECTION 4. The City of Palo Alto shall pay to the Public
Employees’ Retirement System the contributions designated as
employee contributions from the same source of funds as used in
paying salary.
SECTION 5. The amount of the contributions designated as
employee contributions and paid by the City of Palo Alto to the
Public Employees’ Retirement System on behalf of a designated
employee shall be the entire contribution required of the employee
by the Public Employees’ Retirement Law (California Government Code
section 20000, et seq.).
SECTION 6. The contributions designated as employee
contributions made by the City of Palo Alto to the Public
Employees’ Retirement System shall be treated for all purposes,
other than taxation, in the same way that member contributions are
treated by the Public Employees’ Retirement System.
SECTION 7. This is not a project for purposes of the
California Environmental Quality Act ("CEQA").
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:APPROVED:
City Clerk Mayor
APPROVED AS TO FORM:
Deputy City Attorney
City Manager
Director of Administrative
Services
Director of Human Resources
061107 cjs 8260364
*NOT YET APPROVED*
ORDINANCE NO.
ORDINANCE OF THE COUNCIL OF THE CITY OF
PALO ALTO AUTHORIZING AN AMENDMENT TO
CONTRACT BETWEEN THE CITY OF PALO ALTO
AND THE BOARD OF ADMINISTRATION OF THE
CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM
(TO PROVIDE SECTION 21354.5 (2.7% @ 55 FULL
FORMULA) FOR LOCAL MISCELLANEOUS MEMBERS)
The Council of the City of Palo Alto does ORDAIN as
follows:
SECTION i. The City Council hereby authorizes an
amendment to the Contract between the City Council of the City
of Palo Alto and the Board of Administration, California Public
Employees’ Retirement System, a copy of said amendment being
attached hereto, marked "Exhibit A", and by such reference made
a part hereof as though herein set .out in full.
SECTION 2. The Mayor of the City of Palo Alto is hereby
authorized and directed to execute said amendment for and on
behalf of the City of Palo Alto.
SECTION 3. The City Council finds that this is not a
project under the California Environmental Quality Act,and
therefore, no environmental impact assessment is necessary.
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061108 syn 0130023 Attachment 4
***NOT YET APPROVED* **
SECTION 4. This ordinance shall be effective on the
thirty-first day after the date of its adoption.
INTRODUCED:
PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Mayor
APPROVED:
Senior Asst. City Attorney City Manager
Director of Human Resources
Director of Administrative
Services
061108 syn 0130023 2
CalPER5
EXHIBIT
California
Public Employees’ Retirement System
AMENDMENT
EXHIBIT
TO CONTRACT
California
Between the
Board of Administration
Public Employees’ Retirement
and the
City Council
City of Palo Alto
System
The Board of Administration, California Public Employees’ Retirement. System,
hereinafter referred to as Board, and the governing body of the above public agency,
hereinafter referred to as Public Agency, having entered into a contract effective
January 1, 1942,. and witnessed March 9, 1942, and as amended effective January 1,
1948, April 1, 1949, January 1, 1952, July 1, 1954, February 1, 1956, November 1,
1964, September 23, 1968, December 14, 1970, February 1, 1974, July 8, 1974,
January 5, 1975, April 1, :1975, September 11, 1977, July 1, 1979, February 21, 1981,
July 11, 1981, December 12, 1981, June 12, 1982, September 17, 1983, November
12, 1983, February 11, 1991, October 15, 1994, December 10, 1994, February 27,
1996, October 15, 1998,.January 1, 1999, October 14, 1999, July 1., 2000, October 20,
2001, March 9, 2002 and September 16, 2006 which provides for participation of
Public Agency in said System, Board and Public Agency hereby agree as follows:
Paragraphs 1 -through 12 are I~ereby stricken from said contract as executed
effective September 16, .2006, and hereby replaced by the following paragraphs
numbered 1 through.13 inclusive:
All words and terms: used herein which are defined in the Public
Employees’ Retirement Law shall have the meaning as defined therein
unless otherwise specifically .provided. "Normal retirement age" shall
mean age 55 for local miscellaneous members and age 50 for local
safety members
.3.
5.
Pubiic Agency shall-participate in the Public Fmployees’ Retirement
System from and after January 1, 1942 making its employees as
hereinafter provided~ members of said System subject to all provisions of
the Public Empioyees’ Retirement Law except such as apply only on
election of a contracting agency and are not provided for herein and to all
amendments to said Law hereafter enacted except those, which by
express provisions thereof, apply only on the election of a contracting
agency.
Employees of Public Agency in the following classes shall become
members of said Retirement System except such in each such class as
are excluded by law or this agreement:
a.Local Fire Fighters (herein referred to as local safety members);
b.- Local Police Officers (herein referred to as local safety members);
Employees other than local safety members (herein referred to as
local miscellaneous members).
In addition to the classes of employees excluded, from member~ship by
said Retirement Law, the following classes of employees shall not
become members of said Retirement System:
PROJECT PROFESSIONAL; PROJECT MANAGER; PROJECT
TECHNICIAN;PROJECT ASSISTANT; PROJECT LABORER;
LANDSCAPE MAINTENANCE .TRAINEE;LIBRARY PAGE;
WATER SAFETY INSTRUCTOR /LIFEGUARD; RECREATION
LEADER; AND POOL MANAGER HIRED ON OR AFTER
OCTOBER 14, 1999.
The percentage of final compensation to beprovided foreach year of
credited prior and current service .as a localmiscellaneous member in
employment before and not on or afterthe effective date of this
amendment to contract shall be determinedin accordance With Section
21354 of said Retirement Law (2% at age 5,~Ful!).
The percentage of final compensation to beprovided for each year of
credited prior and current service as a localmiscellaneous member in
employment on or after the effective date ofthis amendment to Contract
shall be determined in accordance with Section 21354.5 of said
Retirement Law (2.7% at age 55 FUll).
.... DO NOTSIGN EXHIBIT 01 ILY"
The percentage of final compensation to be provided for each year of
credited prior and current service as a local safety member, shall be
determined in accordance with Section 21362.2 of said Retirement Law
(3% at age 50 Full).
Public Agency elected and elects to be subject to the following optional
prov.isions:
Section 21571 (BaBic Level of 1959 Survivor Benefits).
Section 21222.1 (One-Time 5% Increase- 1970)
repealed said Section effective January 1, 1980.
Legislation
.Section 21222.2 (One-Time 5% Increase - 19-7t): Legislation
¯ repealed said Section effective January i, I980.
Section 21319 (One-Time 15% Increase for Local Miscellaneous
Members Who R-etired or-Died Prior to July 1, 1971). Legislation
repealed said Section effective January 1, 2002.
Section 21325 (One-Time 3% to 15% Increase For Local
Miscellaneous Members and Local Safety Members Who Retired
or Died Prior to January 1, 1974). Legislation repealed, said
Section effective January 1, 2002.
Section 20042 (One-Year Final Compensation).
Section 21317 (0ne-Time 15% Increase for Certain Local Safety
Members Who Retired for Service Retirement). Legislation
repealed said Section effective January 1, 2002.
Section 21326 (One-Time 1% to 7% Increase For Local
Miscellaneous Members and Local Safety Members Who Retired
or Died Prior to July. 1, 1974). Legislation repealed said Section
effective January 1,2002.
Section 21024 (Military Service Credit as Public Service).
Sectior) 20692 (Employer Paid Member Contributions Converted -
to Payrate D.uring the Final Compensation Period) for .local
miscellaneo, us members and local safety members in the following
groups:
Local miscellaneous members who are Mhnagement and
confidential employees;
SIGN "’EXHIBIT. 0bIL\(’’
Local police members who are Management and confidential
employees;
Local fire members who are Management and confidential
employees; ,
Local miscellaneous members represented by Local 715, SEIU
AFL-CIO and CLC; and
Local police members represented-by the Palo Alto Peace
¯ Officer’s Association.
10.
11..
Section 20434.5 ("Local Fire Fighter" shall include any officer or
employee of a fire department employed to perform hazardous
materials services as described in Government Code Section
20434.5).
Section 21548 (Pre-Retirement Optional Settlement 2 Death
Benefit) for local fire members only.
Public Agency, in accordance with Government Code Section 20790,
ceased to be an "employer" for purposes ~f Section 20834 effective on
September 11, 1977. Accumulated contributions of Public Agency shall
be fixed and determined as provided in Government Code Secfion
20834, and accumulated contributions thereafter shall be held by the
Board as provided in Government Code Section 20834.
Public Agency shall contribute to said Retirement System the
contributions determined by actuarial valuations of prior and future
service liability with respect to local miscellaneous members and local
safety members of said Retirement System.
Public Agency shall aiso contribute to said Retirement System as
follows:
A reasonable amount, as fixed by the Board, payable in one
installment within 60 days of date of contract to cover the costs of
administering said System as it affects the employees of Public
Agency, not including the costs of special valuations or of the-
periodic investigation and valuations required by law.
A reasonable amount, as fixed by the Board, payable in one
installment as the occasions arise, to cover the costs of special
valuations on account, of employees of Public Agency; and costs
of the periodic investigation and valuations required by law.
12.Contributions required of Public Agency and its employees shall be
subject to adjustment by Board on account of amendments to the Public
Employees’ Retirement Law, and on account of the experience under the
Retirement System as determined by the periodic investigation and
valuation required by said Retirement Law.
13.Contributions required of Public Agency and its emplo:~ees shall be paid
by PublicAgency to the Retirement System within fifteen days after the
end of the period to which Said contributions refer or as may be
prescribed by Board regulation. If more or Jess than the correct amount
of contributions is paid for any period, proper adjustment shall be made
’ in .connection with subsequ,~nt remittances. Adjustments on account of
errors in contributions re.~c]’i~d of any employee may be made by direct
payments between th,,~ ~i"p’~oyee and the Board..
B..This amendment sh ,a,l~.,bb’K~"~ective onthe __ day of ,
BOARD OF ADMINIST,@ION CITY cOUNCIL ’
PUBLIC EMPLOYmF~bxI~ETIREMENT SYSTEM CITY OF PALO ALTO "
B’Y BY
LORI ND, CHIEF PRESIDING OFFICER
SERVICES DIVISION
IC EMPLOYEES’ RETIREMENT SYSTEMPU
AMENDMENT ER#14
PEf~S-CON-702A (Rev. 10\05)
CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM
Actuarial and Employer Services Branch
Public Agency Contract Services
(888) CalPERS (225-7377)
SUMMARY OF MAJOR PROVISIONS
2.7% @ 55 Formula (Section 21354.5)
Local Miscellaneous Members
SERVICE RETIREMENT
TO be eligible for service retirement, a member must be at least age 50 and have five years of
CalPERS credited service. There is no compulsory retirement age.
The monthly retirement allowance is determined by age at retirement, years of service credit
and final compensation, The basic benefit is 2.7% of final compensation for each year of
credited service upon retirement at age 55. If retirement is earlier than age 55, the percentage
of final compensation .decreases for each quarter year of attained age to 2% at age 50.
Final compensation is the average monthly pay rate ~luring the last consecutive 36 months of
employment, or 12 months if provided by the employer’s contract, unless the member
designates a. different period of 36 or 12 consecutive months when the average pay rate was
.higher.
DISABILITY RETIREMENT
Members substantially incapacitated from performing the usual duties for the position for.his/her
current employer, and from performing the usual duties of the position for other CalPERS
covered employers (including State agencies, schools, and local public agencies), and where
similar positions with these other employers with reasonably comparable in pay, benefits, and
promotional opportunities are not available, would be eligible for disability retirement provided
they have at least five years of service credit. The monthly retirement allowance is 1.8% of final
compensation for each year of servi~e. The maximum percentage for member~ who have
between 10.000 and 18.518 years of service credit is one-third of their final compensation. If
the member is eligible for service retirement the memberwill receive the highest allowance
payable, service or disability. If I?rovided by the employer’s contract, the benefit would be a
minimum of 30% of final compensation for the first five years ofservice credit, plus 1% for each
additiunat year of service to a maximum benefit of 50% of final compensation.
INDUSTRIAL DISABILITY RETIREMENT
If provided bythe employer’s contract, members permanently incapacitated from performing
their duties, as defined above under Disability Retirement, and the disability is a result of a job-
related injury or illness may receive an Industrial Disability Retirement benefit equal to 50% of
their final compensation. If provided in the employer’s contract and the member is totally
disabled, the disability retirement allowance would equal 75% Of final compensa;don in lieu of
the disability retirement allowance o{herwise provided, tf the member is eligible for service
retirement, the service retirement allowance is payable. The. total allowance cannot exceed
90% of final compensation.
PRE-RETIREMENT DEATH BENEFITS
Basic Death Benefit: This benefit is a refund of the member’s contributions plus interest and up
to six months’ pay (one month’s salary rate for each year of current servi~;e to a maximum of six
months).
PERS-CON-57 (rev. 2/05)
1957 Survivor Benefit: An eligible beneficiary may elect to receive either the Basic .Death
Benefit or the 1957. Survivor Benefit. The 1957 Survivor Benefit provides a monthly allowance
equal to one-half: of the highest service retirement allowance the member would have received
had he/she retired on the date of death. The 1957 Survivor Benefit is pay.able to the surviving
spouse or registered domestic partner until death or to eligible unmarried children until age 18.
1959 Survivor Benefit: (If providedby the employer’s, contract and the member is not covered
under social security.) A surviving spouse or registered domestic partner and eligible children
may receive a monthly allowance as determine by :the level of coverage. This benefit is payable
in addition to the Basic Death Benefit or 1957 Survivor Benefit. Children are eligible if under
age 22 and unmarried.
Pre-Retirement Optional Settlement 2 Death Benefit: (If provided by the employer’s contract.)
The spouse or registered domestic partner of a deceased member, who was eligible to retire for
service at.the time of death, may to elect to receive the Pre-Retirement Optional Settlement 2
¯ Death Benefit inlieu of the lump sum Basic Death Benefit. The benefit is a monthly allowance
equal to the amount the member would have rec&ived if he/she had retired for service on the
date of death and elected Optional Settlement 2, the highest monthly allowance a member can
leave a spouse or registered domestic partner.
COST-OF-LIVING ADJUSTMENTS
The cost of living allowance increases are limited to a maximum of 2% compounded annually
unless theemployer’s contract provides a 3, 4, or 5% increase.
DEATH AFTER RETIREMENT
The lump sum death benefit is $500 (or $600, $2,000, $3,000, $4,000 or $5,000 if provided by
the employer’.s contract) regardless of the retirement plan chosen by the member at the time of
relirement. ¯
TERMINATION OF EMPLOYMENT
Members who. have separated from employment may elect to leave their contributions on
deposit or request a refund of contributions and interest. ThoSe who leave their contributions
on deposit may apply at a later date for a monthly retirement allowance if the minimum service
and age requirements are met. Members who request a refund of their contributions terminate
their membership and are not eligible for any future benefits unless they return to CalPERS
membership.
EMPLOYEE CONTRIBUTION,g.
Miscellaneous members covered by the 2.7% @ 55 formula contribute 8% of reportable
earnings. Those covered under a modified formula (coordinated with Social Security) do not
contribute on the first $133.33 earned. ¯
The employer also contributes toward the cost of the benefits. The amount contributed by the
employer fo~ current service retirement benefits generally exceeds the cost to the employee. In
add t on, the employer bears the entire cost of prior service benefits (the period of time before
the employer provided retirement coverage under CalPERS). All employer c~ntribution rates
are subject to adjustment by the CaIPERS Board of Administration.
PERS-CON-57 0-ev. 2/05)
I
CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM
Actuarial and Employer Services Branch
Public Agency Contract Services .
(888) CalPERS (225-7377)
SUMMARY OF MAJOR PROVISIONS
2.7% @ 55 Formula (Section 21354.5)
Local Miscellaneous Members
SERVICE RETIREMENT
TO be eligible for service retirement, a member must be at least age 50 and have five years of
CalPERS credited service. There is no compulsory retirement age.
The monthly retirement allowance is determined by age at retirement, years of service credit
and final compensation. The basic benefit is 2.7% of final compensation for each year of
credited service upon retirement at age 55. If retirement is earlier than age 55, the percentage
of final compensation decreases for each quarter year of attained age to 2% at age 50.
Final compensation is the average monthly pay rate ~luring the last consecutive 36 months of
employment, or 12 months if provided by the dmptoyer’s contract, unless the member
designates a. different period of 36 or 12 consecutive months when the average pay ra~te was
.higher.
DISABILITY RETIREMENT
Members substantially incapacitated, from performing the usual duties for the position for.his/her
current employer, and from performing the usual duties of the position for other CalPERS
covered employers (including State agencies, schools, and-local public agencies), and where
similar positions with these other employers with reasonably comparable in pay, benefits, and
promotional opportunities are not available, would be eligible for disability retirement provided
they have at least five years of service credit. The monthly retirement allowance is 1.8% of final
compensation for each year bf servi~e. The maximum percentage for member~ who have
between 10.000 and 18.518 years of service credit is one-third of their final compensation. If
the member is eligible for service retirement the memberwill receive the highest allowance
payable, service or disability. If provided by the employer’s contract, the benefit would be a
minimum of 30% of final compensation for the first five years of service credit, plus 1% for each
additional year of service to a maximum benefit of 50% of final compensation.
INDUSTRIAL DISABILITY RETIREMENT
If provided by the emplo.yer’s contract, members permanently incapacitated from performing
their duties, as defined above under Disability Retirement, and the disability is a result of a job-
related injury or illness may receive an Industrial Disability Retirement benefit equal to 50% of
their final compensation. If provided in the employer’s uontract and the. member is totally
disabled, the disability retirement allowance would equal 75% Of final compensa;[ion in lieu of
the disability retirement allowance o{herwise provided, tf the member is eligible for service
retirement, the service retirement allowance is payable. The. total allowance cannot exceed
90% of final compensation.
PRE-RETIREMENT DEATH BENEFITS
Basic Death Benefit: This benefit is a refund of the member’s contributions plus interest and up
to six months’ pay (one month’s salary rate for each year of current servi~e to a maximum of six
months).
PERS-CON-57 (rev. 2/05)
~957 Survivor Benefit: An eligible beneficiary may elect to receive either the Basic Death
Benefit or the 1957. Survivor Benefit. The 1957 SurvivOr Benefit provides a.monthly allowance
equal to one-half of the highest service retirement allowance the member would have received
had he/she retired on the date of death. The 1957 Survivor Benefit is pay.able to the surviving
spouse or registered domestic padner until death or to eligible unmarried children until age 18.
1959 Survivor Benefit: (If provided by the employer’s contract and the member is not covered
under social security.) A surviving spouse or registered domestic partner and eligible children
may receive a monthly allowance as determine by .the level of coverage. This benefit is payable
in addition to the Basic Death Benefit or 1957 Survivor Benefit. Children are eligible if under
age 22 and unmarried.
Pre-Retirement Optional Settlement 2 Death Benefit: (If provided by the employer’s contract.)
The spouse or registered domestic partner of a deceased member, who was eligible to retire for
service at the time of death, may to elect to receive the Pre-Retirement Optional Settlement 2
Death Benefit inlieu of the lump sum Basic Death Benefit. The benefit is a monthly allowance
equal to the amount the member would have rec&ived if helshe had retired for service on the
date of death and elected Optional Settlement 2, the highest monthly allowance a member can
leave a spouse or registered domestic partner.
COST-OF-LIVING ADJUSTMENTS
The cost of living allowance increases are limited to a maximum of 2% compounded annually
unless theemployer’s contract provides a 3, 4, or 5% increase.
DEATH AFTER RETIREMENT
The lump sum death benefit is $500 (or $600, $2,000, $3,000, $4,000 or $5,000 if provided by
the employer’s contract) regardless of the retirement plan chosen by the member at.the time of
retirement.
TERMINATION OF EMPLOYMENT
Members who have separated from employment may elect to leave their contributionson
deposit or request a refund of contributions and interest. Those who leave their Contributions
on deposit may apply at a later date for a monthly retirement allowance if the minimum service
and age requirements are met. Members who request a r.efund of their contributions terminate
their membership and are no~ eligible for any future benefits unless they return to CalPERS
membership.
EMPLOYEE CONTRIBUTIONS
Miscellaneous members covered by the 2.7% @ 55formula contribute 8% of reportable
earnings. Those covered under a modified formula (coordinated with Sodal.Security) do not
contribute on the first $133.33 earned.
The employer al.so contributes toward’the cost of the benefits. The amount contributed by the
employer for current service retirement benefits generally exceeds the cost to the employee. In
addition, the employer bears the entire cost of prior service benefits (the period of time before
the employer provided retirement coverage under CalPERS). All employer contribution rates
are subject to adjustment by the CalPERS Board of Administration_