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NOTE 9—EMPLOYEE BENEFITS A. Retlrement System PERS Safety and Miscellaneous Employees'Plans Substantially all City employees are eligible to participate in pension plans offered by California Public Employees'Retirement System(PERS), an agent multiple-employer defined benefit pension plan which acts as a common investment and administrative agent for its participating member employers. PERS provides retirement and disability benefits, annual cost of living adjustments, and death benefits to plan members who must be public employees and beneficiaries. The City's employees participate in the separate safety (police and fire) and miscellaneous (all other) employee plans. Benefit provisions under both plans are established by state statute and City resolution. Benefits are based on years of credited service, equal to one year of full time employment. Funding contributions for both plans are determined annually on an actuarial basis as of June 3 0 by PERS; the City must contribute these amounts. The plans' provisions and benefits in effect at June 30,2007 are summarized as follows: Public Safety Miscellaneous Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life Retirement age 50 50 Monthly benefits, as a%of annual salary 3% 2.000%-2.700% Required employee contribution rates 9% 8% Employer contributions are determined by PERS as a percentage of covered payroll and represent the actuarially required contribution. The employer contributions for the past three years are: Police Safety Fire Safety Miscellaneous 2005 34.048% 36.963% 7.102% 2006 36.564% 36.564% 11.215% 2007 29.583% 29.583% 16.014% Since the City consistently applied the employer contribution rates, as determined by PERS, the City's annual pension cost equaled the City's actuarially required contribution for the fiscal year ended June 3 0, 2007. All qualified permanent and probationary employees are eligible to participate in PERS. A credited service year is one year of full time employment. In accordance with the memorandums of understanding with the various employee groups,the City may contribute a portion of the employee contribution. This contribution varies from group to group. These benefit provisions and all other requirements are established by state statute and City ordinance. Contributions necessary to fund PERS on an actuarial basis are determined by PERS and its Board of Administration. Police and fire safety employees are covered under the "3% at 50" formula. Under this retirement plan, an employee's retirement earnings at age 50 is calculated by multiplying 3%by the employee's years of service. This percentage factor increases with the employee's age upon retirement. Miscellaneous employees 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. 50