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6.1.D. - Page 90 <br />Notes to the Basic Financial Statements <br />For the fiscal year ended June 30, 2016 <br />NOTE 9 — EMPLOYEE BENEFITS (CONTINUED) <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 service. <br />Miscellaneous employees hired on or after October 13, 2011 (Tier 2) are covered under the "2% at 60" <br />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 62" <br />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 />Employees Covered — At June 30, 2016, the following employees were covered by the benefit terms for <br />each Plan: <br />Miscellaneous Safety <br />Inactive employees or beneficiaries currently 500 307 <br />receiving benefits <br />Inactive employees entitled to but not yet 457 60 <br />receiving benefits <br />Active employees 384 174 <br />Total 1,341 541 <br />Contributions— Section 20814(C) of the California PERIL requires that the employer contribution rates for all <br />public employers be determined on an annual basis by the actuary and shall be effective on the July 1 <br />following notice of a change in the rate. The total plan contributions are determined through CalPERS' annual <br />actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the <br />costs of benefits earned by employees during the year, with additional amount to finance any unfunded <br />accrued liability. The employer is required to contribute the difference between the actuarially determined <br />rate and the contribution rate of employees. For the measurement period ended June 30, 2015 (the <br />measurement date), the average active employee contribution rate is 7.47 percent of annual pay for the <br />Miscellaneous Plan and 7.65 percent of annual pay for the Safety Plan, and employer contribution rate is <br />21.65 percent of annual payroll for the Miscellaneous Plan and 31.59 percent of annual payroll for the Safety <br />Plan. <br />Net Pension Liabilitv: <br />The City's net pension liability for each Plan is measured as the total pension liability, less the pension <br />plan's fiduciary net position. The net pension liability of each of the Plans is measured as of June 30, 2015, <br />using an annual actuarial valuation as of June 30, 2014 rolled forward to June 30, 2015 using standard <br />update procedures. A summary of principal assumptions and methods used to determine the net pension <br />liability is shown below. <br />63 <br />