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REPORT <br />To the Honorable Mayor and City Council <br />From the City Manager <br /> <br />September 22, 2014 <br /> <br />SUBJECT <br />Notice of Intention to Change the Reporting Value of Employer Paid Member <br />Contributions (EPMC) for Tier 1 and Tier 2 Executive Management, Redwood City <br />Management Employees’ Association (RCMEA), and Chief Officers’ Association (COA) <br />members <br /> <br />RECOMMENDATION <br />Adopt a resolution approving a modification of the employer and employee contribution <br />amounts for Employer Paid Member Contribution (EPMC) for Tier 1 and Tier 2 <br />Executive Management, Redwood City Management Employees’ Association <br />(RCMEA), and Chief Officers’ Association (COA) members. <br /> <br />BACKGROUND <br />In an effort to address the escalating cost of CalPERS pension benefits, the City has <br />worked with employees and labor groups to implement a series of structural reforms in <br />order to maintain an equitable and fiscally sustainable compensation program. In <br />January, 2014, Council adopted a new Summary of Benefits for Executive Management <br />employees which included an increase in the amount that the employee contributes to <br />the cost of the pension benefit. The City negotiated similar changes with management <br />employee associations, including the Chief Officers Association (COA) and the <br />Redwood City Management Employees Association (RCMEA), and these changes were <br />incorporated in the new Memoranda of Understanding approved by Council on June 9, <br />2014. <br /> <br />Prior to the adoption of the current Executive Management Summary of Benefits and <br />Memoranda of Understanding with RCMEA and COA, the City paid seven percent (7%) <br />of the required member contribution on behalf of management employees as an <br />Employer Paid Member Contribution (EPMC). This 7% contribution has been added to <br />the eligible compensation for the purpose of calculating pension benefits in accordance <br />with established rules and regulations governing such contributions. EPMC has been <br />paid for all employees in these management groups who are in the City’s Tier 1 and <br />Tier 2 pension plans. The Tier 1 formula applies to employees hired before October 24, <br />2011.The Tier 2 formula was established by Council effective October 24, 2011 with a <br />reduced benefit formula, and applies to new hires after that date. On January 1, 2013, <br />the Public Employees Pension Reform Act (PEPRA) was implemented, creating a third <br />tier (Tier 3) with a further reduced formula for all new employees hired by the City who <br />meet the definition of a new member under CalPERS. New hires after January 1, 2013 <br />7.3.B. - Page 1