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8.B. - Page 69 of 122 service, times 2 percent, times his average salary. 36 A New Member retiring before age 62 would have a pension that is further reduced. For instance, at age 55, a New Member is entitled to a pension equal to his years of service, times 1.3 percent, times his average salary.37 Many Classic Members are entitled to more generous Benefits. For example, many City of San Carlos Classic employees under Miscellaneous Plans have pensions calculated according to a "2.7 percent at 55" formula.38 Such an employee with 30 years of government service is entitled to a pension equal to 81 percent of their salary at age 55.39 By comparison, a New Member with 30 years of government service would be entitled to a pension equal to just 39 percent of salary at that same age, 40 or less than 50 percent of what a Classic Member would receive. PEPRA specifies similar but more complex reductions for New Members under Safety Plans. 41 • Caps on annual salary basis for calculation. PEPRA also caps the amount of annual salary that can be used to calculate pensions for New Members at $113,700 (if Social Security is also offered) plus cost of living adjustments (COLAs), or $136,440 (if Social Security is not offered) plus COLA.42 These caps are less than the salaries of many middle and upper management government employees.43 Classic Members are not subject to salary caps in calculating their pensions. 44 • Averaging of salaries for calculation. PEPRA requires, in calculating the annual salary used to calculate pensions, that New Members use the average of the three highest consecutive years salary.45 In contrast, some public agencies allow Classic Members to use just their highest salary year. • Prohibition on "spiking" salaries. PEPRA also prohibits "spiking" salaries used to calculate pensions by including overtime, bonuses, cash payouts for unused vacation or sick leave, severance pay and the like. 46 36 Ca1PERS, Summary Public Employee Reform Act, p. 2. 31 Ca1PERS, Retirement Formulas and Benefit Factors: Your Benefits / Your Future What You Need to Know About Your CaIPERS Local Miscellaneous Benefits, p. 28, <http://www.reedley.ca. ov�/departments/administrative/pdfs/CalPERS%202016-01- 01%20Local%20Miscellaneous%20Pub%208.pdf>. ss City of San Carlos, Teamsters Group — Benefits Summary 2018, p. 3. s9 Ca1PERS, Retirement Formulas and Benefit Factors, pp. 32-33. 40 Ibid., pp. 28-29. " Ca1PERS, Summary Public Employee Reform Act, p. 2. 42 Ibid., p. 3. 4a Interviews by Grand Jury. Ca1PERS, Summary Public Employee Reform Act, p. 3. 41 Ibid., pp. 9-10. 46 Ibid., pp. 8-9. 2017-2018 San Mateo County Civil Grand Jury 11 295