AgdaPkt 2017-12-18 Special Joint SA PFA

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City of Redwood City Notes to the Basic Financial Statements For the fiscal year ended June 30, 2017 NOTE 9 – EMPLOYEE BENEFITS (CONTINUED) Miscellaneous employees hired before October 13, 2011 (Tier 1) are covered under the "2.7% at 55" formula. Under this retirement plan, an employee's retirement earnings, at age 55, are calculated by multiplying 2.7% by the employee's years of service. An employee with five years of service is eligible to retire at age 50 at a reduced pension amount. The pension amount increases with age and length of service. Miscellaneous employees hired on or after October 13, 2011 (Tier 2) are covered under the “2% at 60” formula. Under this retirement plan, an employee’s retirement earnings at age 60 are calculated by multiplying 2% by the employee’s years of service. An employee with five years of service is eligible to retire at age 50 at a reduced pension amount. The pension amount increases with age and length of service. Miscellaneous employees hired on or after January 1, 2013 (Tier 3) are covered under the “2% at 62” formula. Under this retirement plan, an employee’s retirement earnings at age 62 are calculated by multiplying 2% by the employee’s years of service. An employee with five years of service is eligible to retire at age 52 at a reduced pension amount. The pension amount increases with age and length of service, with a maximum percentage factor equal to 2.5% at age 67. Employees Covered – At June 30, 2017, the following employees were covered by the benefit terms for each Plan: Miscellaneous Safety Inactive employees or beneficiaries currently receiving benefits 398 174 Inactive employees entitled to but not yet receiving benefits 457 60 Active employees 512 339 Total 1,367 573 Contributions – Section 20814(C) of the California PERL requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with additional amount to finance any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the measurement period ended June 30, 2016 (the measurement date), the average active employee contribution rate is 7.83 percent of annual pay for the Miscellaneous Plan and 9.04 percent of annual pay for the Safety Plan, and employer contribution rate is 9.27 percent of annual payroll for the Miscellaneous Plan and 22.03 percent of annual payroll for the Safety Plan. Net Pension Liability: The City’s net pension liability for each Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of each of the Plans is measured as of June 30, 2016, using an annual actuarial valuation as of June 30, 2015 rolled forward to June 30, 2016 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below. 65 6.1.E. - Page 88