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Resolution 1860 RESOLUTION NO, 1860 RESOLUTION OF INTENTION TO APPROVE AN AMENDMENT TO yONTRACT BETWEEN THE BOARD OF ADMINISTRATION OF THE PUBLIC EMPLOYEES RETIREMENT SYSTEM AND THE CITY COUNCIL OF THE CITY OF GILROY, WHEREAS} the Public Employees' Retirement Law permits the par- ticipation 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 required in the procedure to amend this contract is the adoption by the legislative body of the public agency of a reso- lution giving notice of its intention to approve an amendment to said contract, which resolution shall contain a summary of the changes proposed in said con- tract; and WHEREASJ attached is a summary of the major provisions of the pro- posed plan; NOW} THEREFORE} BE IT RESOLVED} that the City Council of the City of Gilroy gives, and it does hereby give, notice of intention to approve an amendment to contract between said City Council and the Board of Adminis- tration of the Public Employees' Retirement System, a copy of said amendment and a summary of the major provisions of the proposed change being attached hereto, marked Exhibits IIAII, "B", "C", and "D", and by this reference made a part hereof. PASSED AND ADOPTED this 4th day of November, 1974, by the fol- lowing vote: NOES: COUNCIL MEMBERS: DeBELL, DUFFIN, HUGHAN, PATE, SILVA, STOUT and GOODRICH. COUNCIL MEMBERS: None AYES: ABSENT: COUNCIL MEMBERS: None APPROVED: ~A/IrV?~/5go.6~~ Mayor RESOLUTION NO. 1860 ," :.~~ .~-- t?:, ~t'\;. 0 ID"JIIBIT A :> ...."- -.- "_J.' ri''';;~,:\C~ \t .AMENDMEN~ TO CONTRACT :&""'TWEEN 'filE , ,;;.,..,.~. BOARD OF ADMINISTRATION .j PUBLIC EMPLOYEES t RETIREMENT SYSTEM AND THE .', .,~ '," ~.. . .;;.\'" '. " ,~;<..:J CITY COONCIL OF THE CITY 0' GILROY .{ ;J>;.~ . ,f.+ii:' :\ .'..... The :Board of Administration, Public Employees' Retirement System, hereinafter referred to as :Board, and the CITY COUNCIL of the CITY 0' GILROY, hereinafter re- ferred to as Public Agency, having entered into a contract under date of May 21, . 1968, effective July 1, 1968, as amended effective November 3, 1971 and August 1, 1913, ,and as provided by Chapters 170 and 316, Statutes of 1911, which provide for participation of Public Agency in said System, Board and Public Agency- hereby agree as follows: A. Paragraphs 1 through 11 are hereby stricken from said contract as executed effective July 1, 1968, and are hereby replaced by the following paragraphs numbered 1 through 9 inclusive: 1. All words and terms used herein which are det1ned in the Public Employ- ees' Retirement Law shall have the meaning as defined therein unless otherwise specifically provided. "Normal retirement age" shall mean age 60 for miscellaneous members and age 55 for local safety m.embers. 2. Public Agency shall participate in the Public Employees' Retirement System from and after July 1, 1968, m~king its employees as herein- . after provided, members of said System subject to all provisions of the Public Employees I 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 such as by express provision thereof apply only on the election of contracting agencies. 3. Employees of Public Agency in the following classes shall become mem- bers of said Retirement System except such in each such class as are excluded by law or this agreement: a. Local firemen (herein referred to as local. safety members); b. Local policemen (herein referred to as local safety members); c. Employees other than local safety members (herein referred to as miscellaneous members). The folloWing employees shall be excluded from membership in said--'--- - --.- H Retirement System: PERSONS COMPENSATED ON AN HOURLYl3ASIS. ELECTED OFFICIALS. Ret. Form 102-1 , .~..\~,~ C ~,.~~~ . ; ~ , ,~::;., .\ 4. i:~sa~~s"accumulated with respect to members in the local Retirement S~stem were transferred to the Public Employees' Retirement System within four months of the effective date of this contract and applied against the liability for prior service incurred hereunder. '\ '::... 6. The follOwing additional. provisions of the Public Employees' Retire- ment Law which apply only upon election of a contracting agency sball apply to the Public Agency and its employees: a. The fraction of final compensation to be provided for each year of credited prior and current service as a local safety member shall b~ that provided in Section 21252.1 of the Retirement Law. b. Section 20952.5 (proViding for age 50 as the minimum voluntary retirement age for local safety members with benefit payments commencing prior to age 55 subject to actuarial discount). c. Section 21380-7 (providing for allowances for survivors of mem- bers covered under the program upon death before retirement). d. Section 21361.5 (providing that years of service rendered as a member of the Local Retirement System prior to the effective date of this contract shall be included in the computation of the basic death benefit provided in Section 21361 upon the death of any member who was also a member of said local system). e. Section 21.222.1 (providing for increases in allowances to wh:ich the annual cost-of'-living provisions apply, payable for time commencing on August 1, 1973 to or on account of persons retired or members deceased on or prior to December 31, 1970). 7.' Public Agency shall contribute to said Retirement System as follows: a. With respect to miscellaneous members, the public agency shaJ.l contribute the following percentages of monthly salaries earned as miscellaneous members of said. System: (1) 1.63 percent until June 30, 1980 on account of the liability for prior service benefits. (2) 7.67 percent on account of the liabill ty for current service benefi ts. (3) 1.00 percent on account of the liability for the 1959 Survivors program. Ret. Form 702-2 b. With rQect to local safety members, ~ public agency shall con- tribute the following percentages of monthly salaries earned as local saf'ety members of said System: . (1) 2.998 percent until June 30, 1988 on account of the liability for prior service benefits. (2) 9.930 percent on account of the liability for current service benefits. (3) 0.500 percent on account of the liability for the 1959 Surv:ivors program. c. A reasonable amount per annum, as 1'1xed by Board to cover the costs of administering said System as it affects the employees of Public Agency, not including the costs of special valuations or the period- ical investigation and valuation required by law. d. A reasonable amount as fixed by the Board, payable in one install- ment as the occasions arise, to cover costs of special valuations on account of employees of Public Agency, and costs of the period- ical investigation and valuation required by law. 8. Contributions required by Publ1cAgency and its employees shall besut>- 3ect 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 periodical investigation and valuation required by said Retirement Law. 9. Contributions required of Public Agency and its employees shall be paid by Public Agency to the Retirement System wi thin thirty days after the end of the period to which said contributions refer. If more or less than the correct amount of contributions is paid for any period, proper adjustment shall be made in connection with subsequent remittances, or adjustments on account of errors in contributions required of any employee may be made by direct cash payments between the employee and Board. Payments by Public Agency to Board may be made in the form. of warrants, bank checks, bank drafts, certified checks, money orders, or cash. B. This amendment shall be attached to said contract and shall be effective on the day of . day of CITY COUNCIL OF THE CITY OF GILROY Wi tness our hands this BOARD OF ADMINISTRATION PUBLIC EMPLOYEES' RETIREMENT SYSTEM BY William E. Payne, Executive Officer BY Presiding Officer. ,t' .~ k~:: .~~ ~S '4. ~, ''''~~~ \ .1,' ~" ~~,.~~....'~, t,; '. '{~'c\::'" ~ .' ....','~. ",;,.",.;~, ." "t:,: ~ .~ .....~ ~~ Attest: . ~.'" . , Clerk Rp.t:. Fo1"'ll1 70?- ~ o .~ EXHD3IT B SUMMARY OF MAJOR PROVISIONS 1/50 Retirement Program Local Miscellaneous Members (Por service after termination of Social Security) MEMBERSHIP Membership is compulsory for all employees, other than elected officials, who are employed one-half time or more except those excluded under the contract. SERVICE RETIREMENT The earliest retirement age is 55; the normal. retirement age is 60; and the compulsory retirement age is 67. An employee may retire any time between these ages, 55 ~d 67, provided he meets the min;nnilJl requirements that he either have 5 years of service 2E. have attained the compulsory retirement age of 67. The monthly income is determined by age at retirement, years of credited service, and "final compensation". The basic benefit will be 2% of tlfinal com- pensation" for each year of 'credited service upon retirement at age 60. If re- tirement is deferred beyond age 60, the percentages of "final compensationll for ea.ch year of service are increased tip to age 63 but not beyond. If retirement is earlier than age 60, the percentages of "final compensationll for each year of service are decreased. Service credit prior to Social Sec~~~~~~2~~s computed on the modified 1/50 formula with all service on or after termination 'of-Social Security computed on:the=~furliGmlJ a.--~~--~-~-----~~--~=-=O . ~ --"-'~-.;;::;.-.:;.'~-:;: -,-,~"-~---,-,,,-.-~,,:,,~..;;.;::'.,,,,-:,=-,=,,~ ":Flnal 'Compensation" is the highest average annual compensation (excluding overtime) earnable by a member during the three consecutive years of employment immediately preceding the effective date of retirement or during any other period of three consecutive years designated by the member. A m;nhmtlJl service retirement allowance of $100 per month is guaranteed upon compulsory retirement with credit for prior service. DISABILITY RETIREMENT An employee becoming disabled to the extent that he is incapable of performing his duties shall be eligible for disability retirement provided he has at least 5 years of service. The monthly retirement allowance is l.~ of "final compensa- tion" for each year of service with a minimum guarantee of one-third of final compensation for most employees who have rendered at least 10 years of service. The disability retirement allowance shall under no circumstances exceed the service retirement allowance payable upon retirement for service at age 60 if employment could be continued to that age. If his disability is such that he is also entitled to a disability income from Social Security, the State System benefit will be reduced by the amount of his Social Security benefit. ~ "IEATH BENEFITS o o Death Before Retirement Basic Death Benefit This benefit is a reftmd of the member's accumulated contributions plus six months' salary provided he has been a member for six years or more. For those who die before completing six years of membership, the benefit is one month's salary for each year of aembership plus refund of contributions. The salary referred to is ' that earned during the year preceding death. Prior service does not. count toward this benefit. 1957 Survivor Benefit Employees with 5 or more years of service who have reached the minimum age for service retirement have further death protection tmder this item. Here the surviving widow can elect to :receive either the basic death benefit or a monthly income equal to one-half the munodified retirement allowance the employee was eligible for on the date of his death. The monthly income lasts tmtil the widow' s death or remarriage with a guarantee that the System will pay .. as much as under the basic death benefit. ,.. .-.--. 1959 Survivor Benefit A mont;lly ~owance shall be paid to certain sur- vivors of a member who dies before retirement. ~ ..- -~: Death After Retirement , The death benefit is $500 if death occurs after retirement. This amotmt will be in addition to any payments which might be made under an optional, retirement benefit chosen by the member at his retirement. TERMINATION OF EMPLOnlENT Upon termination of employment, an employee with 5 or more years of service may either leave his contributions with the System and receive, upon attaining retirement age, the retirement benefit he has earned, or he may withdraw his contributions (plu$ interest), thus, terminating his membership in the System and receiving no retirement benefits. Except, (1) a member with less than 5 years of service shall not have the privilege of leaving his contributions with the System, but shall automatically have his contributions, plus interest, refunded upon termination of employment and (2) a member who is transferring to employment with another agency which is covered tmder the System shall not have the right of withdrawing his accumulated contributions. EMPLOYEE CONTRIBUTIONS Each mis ce 11 aneous member, whether a new member or a member with years of member- ship, will start contributing at the unifonn rate of 7% of salary earned, exclusive of overtime, on the date this fonnula becomes effective. The employer also contributes toward the cost of the benefits. The amotmt con- tributed by the employer for current service retirement benefits will, on the average, exceed the cost to the employee. In addition, the employer bears the entire cost of prior service benefits and disability benefits. All contribution rates are subject to revision by the Board of Administration. .0 o EXHIBIT C SUMMARY OF MAJOR PROVISIONS Local Safety Members - One-Half Pay at 55 Retirement Program MEMBERSHIP Membership is compulsory for all employees, other than elected officials, who are employed one-half time or more, except those excluded under the contract. SERVICE RETIREMENT The earliest retirement age is 50, discounted basis; the nomal retirement age is 55; and the compulsory retirement age is 65. An employee may retire any time after age 50 provided he has at least 5 years of service or has attained the com- pulsory retirement age of 65. At noma! retirement at 'age 55 the unmodified life allowance will be 50% of "final compensation" for those who have completed 20 or more yec1rs of service continuously to that age. Those who have completed less than 20 years of service after 55 will receive an unmodified life allowance of two and one-half (2~%) percent of final ~ompensation for each year of service so rendered. "Final compensation" is average monthly salary (excluding overtime) eanted during the final 36 consecutive months unless member specifically requests another 36 consecutive months period. A minimum service retirement allowance of $100 per month is guaranteed upon compulsory retirement with credit for prior service. DISABILITY RETIRE~mNT An employee becoming disabled to the extent that he is incapable of perfoming his duties shall be retired for disability. His disability will be either employ- ment connected (industrial disability) or otherwise (nonindustrial disability). An employee who becomes disabled while a member of this System for reasons arising out of his employment, will be eligible for a life income of fifty (50%) percent of his final compens at i on. If his disabili ty is such that he is also entitled to a disability income from Social Security, the State System benefit will be reduced by the amount of his Social Security benefit. o o An employee becoming disabled for reasons not connected with his employment shall be eligible for disability retirement provided he has at least 5 years of service; such disability allO\o1anCe is equal to 1.8% of final compensation for each year of service~ with a guarantee of one-third of such final compensation for most employees who have rendered at least 10 years of service. The "ordinary" disability retirement allowance shall under no circumstances exceed the service retirement allowance which would become payable at age 60 if employment could be continued to that age. DEATH BENEFITS Death Before Retirement Basic Death Benefit This benefit is a refund of the member's accumulated contributions plus six months' salary provided he has been a member for six years or more. For those who die before completing six years of membership ~ the benefit is one month "s salary for each year of membership plus refund of contribu,tions. The salary referred to is that earned during the year preceding death. Prior service does not count toward this benefit. Industrial Death If death is service-connected in the judgment of the Industrial Accident Commission~ a monthly income is paid to the widow for life (or until remarriage) instead of the above basic death benefit. However~ if she is also eligible for survivor benefits from Social Security because of the member's death~ the State system benefit will be reduced by the amount of such Social Se,:urity so long as Social Security benefits are payable (usually until the youngest child reaches 18 and after the widow' reaches age 62). The total ~ including Social Securi ty ~ would be 50% of "final compensation". If death was caused by. external violence or physical force~ the total benefit (including Social Security) would be increased to the following percentages of "final compensation" so long as the widow lives and does not remarry: Widow with 3 or more children under 18 Widow with 2 children under 18 Widow with 1 child under 18 75% 70% 62~% 1957 Survivor Benefit Employees with 5 or more years of service who have reached the minimum age for service retirement have further death protection under this item. Here the surviving widow can elect to receive either the basic death benefit or a monthly income equal to one-half the unmodified retirement allowance the employee was eligible for on the date of his death. The monthly income lasts until the widow's death or remarriage with a guarantee that the System will pay as much as under the basic death benefit. 1959 Survivor Benef! t A monthly allowance shall be paid to certain sur- vivors of a member who dies before retirement. Death After Retirement The death benefit is $500 if death occurs after retirement. This amount will be in addition to any payments which might be made under an optional retirement benefit chosen by the member at his retirement. . ,.; o o TERMINATION OF EMPLOYHENT . Upon termination of employment ~ an employee with at least 5 years of service may either leave his contributions with the System and receive, upon attaining retirement age, the retirement benefit he has earned, or he may withdraw his contri- butions (plus interest), thus, terminating his membership in the System and receiving no retirement benefits. Except, (1) a member with less than 5 years of service shall not have the privilege of leaving his contributions with the System, but shall auto- matically have his contributions, plus interest, refunded upon termination of employ- ment and (2) a member who is transferring to employment with another agency which is covered under the system shall not have the right of withdrawing his accwnulated contributions. E4PLOYEE CONTRIBUTIONS Each member makes monthly contributions to the System which are deducted from his salary. The rate of contribution (percentage of pay) depends upon a member's sex and age at entry into safety service, Such contributions, for male employees, currently range from a minimlUIl of 5.64% of salary to a maximmu of 12.55% of salary. The employer also contributes toward the cost of the benefits. The amount contributed by the employer for current service retirement benefits will, on the average, exceed the cost t9 the employee, In addition, the employer bears the entire cost of prior service benefits, the industrial death and disability benefits. All contribution rates are subject to revision by the Board of Administration. EXHIro:~ D o o Benefits to Employees Under PERS SURVIVOR BENEFITS (Benafits provided by Sections 21380-21387 of the Retirement Law) BENEFITS Survivors of members who elect coverage under the PERS survivor program and whose death occurs before retirement will receive a monthly life income as follows: ltlidow and two or more dependent children $430 or Three or :nore dependent children, alone ltlidow and one dependent child $360 or Two dependent children, alone Wido\v, alone, age 62 ( wido,",er age 65) $180 or One dependent child, alone If there is no widow or dependent child, then to each dependent parent (mother 62, father 65) $180 Conditions~ 1. A dependent child is one under the age of 18 and unmarried, or a disabled child of any ase who has been continuously disabled since age 18. (For purposes of the 1959 Survivor allowance, a person shall be considered under the age of 18 if he is an unmarried, full-time student ~etween the aGes of 18 and 220) 20 A widow ceaS8S to be eligible for a benefit upon her remarriage. 3. A vJ~dOVJC1- will be eligible for a benefit the same as a widow provided he W23 dependent upon the deceased member for at least one-half of his SQPP~~t_ 4. A wid0W (or widower) Th~st be married to member prior to the occurrence of the injury or onset of the illness which resulted in death. 5. The basic death benefit currently included in your retirement program prv-' videa that shQl.:.ld a member die prior to his retirement, his beneficiary would be paid tee member's accumulated contributions plus an additional r:l.iliC!;.~rt equal to one-month' s salary for each year of service, up to a max- i~um GI six ~0nths. The above survivor benefits will be payable in additio!l to any basic death benefit the survivor may be entitled to receive. 6. If a r:<c;::'b81' is covered under both the PERS 1959 Survivor Benefit described above and the survivor benefits as provided in Section 21365.5 (1957 SU"!'vivors Ber~fit) of the Retirement La\Ii, the survivor will be paid both b.::1efits. ' (. Section 21383 - If survivor is entitled to special death benefit and at the same time is entitled to receive a survivor allo\~nce, the survivor allowance payable in any month shall be reduced by the amount of the special death benefit allowance. o o COST TO THE EMPLOYEE Each employee will contribute $2.00 a month in addition to his normal retire- ment contributions. He will continue to pay this additional amount until either terminatioll of employment or retirement and under no circumstances will these coutributions be refundable. EFFECTIVE DATE These survivor benefits will become effective on (Date). All present members of the System will be given the opportunity by written ballot to select this survivor coverage. Persons who choose coverage will remain covered until they terminate their employment or retire. For agencies not covered under Social Security all future employees would be mandatorily covered under this program. For agencies who are covered under Social Security all future employees are mandatorily covered under Social Security and, therefore, are not eligible for the PERS survivor benefits. EXAMPLE Under the PERS survivor program, if a member passes away before retirement leaving a widow and four children, the widow would receive a monthly income of $430 until such time as the three oldest children have passes age 18 (so that she now only has one child under the age of 018) at which time her benefit would be reduced to $360. The $360 would continue to be paid until the last child passes the age of 18 at which time the payment would cease until the widow reaches the age of 62. She would then receive $180 a month for the remainder of her lifetime. The widow ceases to be eligible for her benefit when she remarries although benefits would continue to any remaining children under the age of 18. For purposes of the 1959 Survivor allowance, a person shall be considered 1lnder the age of 18 if he is an unmarried, full-time student between the ages of 18 and 22. PERS-ACT-DO-l (1/72) I, SUSANNE E. STEINMETZ, City Clerk of the City of Gilroy~ do hereby certify that the attached ResolutIon No. 1860 Is an original resolution, duly adopted by the Council of the City of Gilroy at a regular meeting of said Council held on the 4th day of November , 19 Zi-, at which meetIng a quorum was present. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Gilroy, this 7th day of November , 19~.