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8.A. - Page 77 <br /> is eligible to retire at age 50 at a reduced pension amount. The pension amount increases with age and <br /> length of service,with the maximum percentage factor equal to 3%. <br /> Police and fire safety employees hired on or after January 1, 2013 (Tier 3) are covered under the <br /> "2.7% at 57" formula. Under this retirement plan, an employee's retirement earnings at age 57 are <br /> calculated by multiplying 2.7%by the employee's years of service.An employee with five years of service <br /> is eligible to retire at age 50 at a reduced pension amount. The pension amount increases with age and <br /> length of service,with a maximum percentage factor equal to 2.7% at age 57. <br /> Miscellaneous employees hired before October 13, 2011 (Tier 1) are covered under the "2.7% at <br /> 55" formula. Under this retirement plan, an employee's retirement earnings, at age 55, are calculated by <br /> multiplying 2.7%by the employee's years of service. An employee with five years of service is eligible to <br /> retire at age 50 at a reduced pension amount. The pension amount increases with age and length of <br /> service. <br /> Miscellaneous employees hired on or after October 13,2011 (Tier 2)are covered under the "2% at <br /> 60" formula. Under this retirement plan, an employee's retirement earnings at age 60 are calculated by <br /> multiplying 2% by the employee's years of service. An employee with five years of service is eligible to <br /> retire at age 50 at a reduced pension amount. The pension amount increases with age and length of <br /> service. <br /> Miscellaneous employees hired on or after January 1, 2013 (Tier 3) are covered under the "2% at <br /> 62" formula. Under this retirement plan, an employee's retirement earnings at age 62 are calculated by <br /> multiplying 2% by the employee's years of service. An employee with five years of service is eligible to <br /> retire at age 52 at a reduced pension amount. The pension amount increases with age and length of <br /> service,with a maximum percentage factor equal to 2.5% at age 67. <br /> PERS determines contribution requirements using a modification of the Entry Age Normal <br /> Method. Under this method, the City's total normal benefit cost for each employee from date of hire to <br /> date of retirement is expressed as a level percentage of the related total payroll cost. Normal benefit cost <br /> under this method is the level amount the employer must pay annually to fund an employee's projected <br /> retirement benefit. This level percentage of payroll method is used to amortize any unfunded actuarial <br /> liabilities. <br /> PERS uses the market-related value method of valuing the plan's assets. An investment rate of <br /> return of 7.5% is assumed, including inflation at 2.75%. Annual salary increases are assumed to vary <br /> depending on duration of service,age,and type of employment.Initial unfunded liabilities are amortized <br /> over a closed period that depends on the plan's date of entry into PERS. Subsequent plan amendments <br /> are amortized as a level percentage of payroll over a closed 20-year period. Gains and losses that occur in <br /> the operation of the plan are amortized over a 30-year period with Direct Rate Smoothing with a 5-year <br /> ramp up/ramp down. If the plan's accrued liability exceeds the actuarial value of plan assets, then the <br /> amortization payment on the total unfunded liability may not be lower than the payment calculated over <br /> a 30-year amortization period. <br /> Appendix A <br /> Page 3 <br />