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6.G. - Pa Reed oocT$i7 <br />City <br />Notes to the Basic Financial Statements <br />For the fiscal year ended June 30, 2018 <br />NOTE 9 — EMPLOYEE BENEFITS (CONTINUED) <br />A. Pension Plan, Continued <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, 2018, the following employees were covered by the benefit terms for <br />each Plan: <br />Miscellaneou <br />Safety <br />s <br />Inactive employees or beneficiaries currently receiving benefits 515 320 <br />Inactive employees entitled to but notyet receiving benefits 458 56 <br />Active employees 404 176 <br />Total 1,377 552 <br />Contributions — Section 20814(C) of the California PERL requires that the employer contribution rates for <br />all 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' <br />annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to <br />finance the costs of benefits earned by employees during the year, with additional amount to finance any <br />unfunded accrued liability. The employer is required to contribute the difference between the actuarially <br />determined rate and the contribution rate of employees. For the measurement period ended June 30, <br />2017 (the measurement date), the average active employee contribution rate is 7.607 percent of annual <br />pay for the Miscellaneous Plan and 9.124 percent of annual pay for the Safety Plan, and employer <br />contribution rate is 8.78 percent of annual payroll for the Miscellaneous Plan and 21.27 percent of annual <br />payroll for the Safety Plan. <br />Net Pension Liability: <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, <br />2017, using an annual actuarial valuation as of June 30, 2016 rolled forward to June 30, 2017 using <br />standard update procedures. A summary of principal assumptions and methods used to determine the <br />net pension liability is shown below. <br />68 274 <br />