Transcript city council presentation

City of Pasadena
Pension Reform
City Council Discussion
May 23, 2011
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Retirement Systems
Human Resources Department
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Timeline of Employer CalPERS Rates
FY09
FY10
FY11
FY12
FY13
FY14
MISCELLANEOUS PLAN
10.644%
10.855%
11.422%
15.484%
16.300%
19.000%
SAFETY PLAN
21.898%
22.977%
23.599%
26.559%
27.200%
30.200%
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Projected CalPERS Cost
FY11
FY14
MISCELLANEOUS PLAN
$12.3 M
$13.2 M
SAFETY PLAN
$9.6 M
$10.3 M
*FY11 & FY14 Rates are estimated from current payroll
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Retirement Systems
Human Resources Department
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Currently the City participates in the CalPERS
retirement plans
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Miscellaneous Plan
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2.5% @ 55
Fire & Police Safety Plan
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3% @ 55
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Both retirement plans are currently two tier
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Eligible part-time & temporary employees
participate in separate plan of PARS Retirement
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Miscellaneous
Human Resources Department
• Misc. Tier 1 Plan
• Misc. Tier 2 Plan
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Employees hired on or
before July 1, 1984
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Employees hired on or
after July 2, 1984
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115 Active Employees
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1333 Active Employees
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2.5% @ 55
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2.5% @ 55
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One (1) year final
calculation
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Three (3) year final
calculation
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2% COLA
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2% COLA
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Fire
Human Resources Department
• Fire Tier 1 Plan
• Fire Tier 2 Plan
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Employees hired on or
before April 29, 1984
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Employees hired on or
after April 30, 1984
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21 Active Employees
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145 Active Employees
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3% @ 55
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3% @ 55
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One (1) year final
calculation
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One (1) year final
calculation
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Post-Retirement Survivor
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Post-Retirement Survivor
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2% COLA
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2% COLA
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FPRS System Transfer
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Police
Human Resources Department
• Police Tier 2 Plan
• Police Tier 1 Plan
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Employees hired on or
before May 15, 1983
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Employees hired on or
after May 16, 1983
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11 Active Employees
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222 Active Employees
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3% @ 55
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3% @ 55
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One (1) year final
calculation
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One (1) year final
calculation
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Post-Retirement Survivor
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Post-Retirement Survivor
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2% COLA
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2% COLA
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FPRS System Transfer
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PARS Retirement
Human Resources Department
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Part-time and Temporary Retirement Plan
provided by PARS
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Omnibus Budget Reconciliation Act of 1990
(OBRA 90) mandated employees of public
agencies who are not members of the employer’s
existing plan be covered under an alternative plan.
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401(a) Type Plan
7.5% Shared Contribution
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City contributes 4.0%
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Employee contributes 3.5%
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Pension
Alternatives
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Reform Options
Human Resources Department
• Add a third tier to the Retirement Plan
>
>
Miscellaneous Plans
 2% @ 60
 2% @ 55
 2.5% @ 55
 2.7% @ 55
 3% @ 60
Safety Plans
 2% @ 55
 2% @ 50
 2.5% @ 55
 3% @ 55
 3% @ 50
***(Only Plans offered by CalPERS)
•Reduce/Change
Tier Options
> i.e. Final Year Calculation, Military Buyback, Sick Leave Credit,
Pre-Retirement Optional Settlement Death Benefit, PostRetirement Survivor Allowance, Death Benefit Continues, 59
Survivor Benefit Level 4, Prior Service Credit
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Reform Options
Human Resources Department
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Reduced plan with PARS Supplement
Reduce/Change Employee Contributions paid
by the City
Have employees pick up portion of City’s
PERS costs
Delay or Eliminate EPMC (PERS on PERS)
Revise all plans to 3 year final compensation
calculation
Restrict calculation of employees’ retirement
benefit to base pay only; eliminate add-ons of
specialty pays or leave banks
Eliminate Retiree Medical Options
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Reform Options
Human Resources Department
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Modify Employee Contributions
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RETIREMENT
PLAN
Current Contributions
GROUP
EMPLOYEE
CONTRIBUTION
CITY
CONTRIBUTION
TOTAL
CONTRIBUTION
CalPERS
Fire & Police Safety
0.0%
9.0%
9.0%
CalPERS
Executive & Non-Rep Mgmt
3.6%
4.4%
8.0%
CalPERS
All Other Units *
4.6%
3.4%
8.0%
PARS
Temporary & Seasonal
3.5%
4.0%
7.5%
* Some units have agreed to full pickup
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Reform Options
Human Resources Department
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Consider the “Time-in-Grade”
exception which delays the EPMC
payment for all newly hired
employees up to five years.
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The city would need to pass a resolution
and adjust its current contract with
CalPERS.
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Reform Options
Human Resources Department
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Eliminate EPMC
EPMC (PERS on PERS) is defined as
reporting the Employee Paid Member
Contribution as Compensation Earned.
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Example
 $50,000 – Employee earnings
 + 8% - EPMC
 $54,000 – Employee is reported as
earning
Note: City pays full employer and employee PERS
share of the $4,000 (which is PERS on PERS)
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Reform Options
Human Resources Department
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Actions Proposed at State Level
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Base final retirement salary on three
highest paid years worked;
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Calculate benefits only on base salary
eliminating all “spiking;
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Eliminate the purchase of “air time”;
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Eliminate the availability of Employer Paid
Member Contribution (EPMC);
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Reform Options
Human Resources Department
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Require employees to pay the employees
share of PERS;
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Remove caps on the percentage
employees can pay for the total cost of
PERS programs;
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Prohibit employees and employers from
taking contribution “holidays”;
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Change PERS vesting period to seven
years;
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Reform Options
Human Resources Department
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Have PERS provide a hybrid pension
system option that caps the Defined
Benefit PERS pension and supplement
with a risk managed PERS defined
contribution plan;
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Have PERS provide more formula choices
with lower benefit local options.
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Reform Options
Human Resources Department
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Eliminate Retiree Medical (NonSafety)
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Current Agreement

Provide 850K annually

All units must share cost
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Currently in negotiations with the
Retiree Medical Coalition
Some bargaining units have agreed to opt out
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Next Steps
Human Resources Department
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Negotiate with miscellaneous
employees’ Retirement Coalition
regarding:
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New retirement tier plan;
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Employer Paid Member Contribution
(EPMC)
Negotiate with miscellaneous
employee bargaining groups for
greater share of PERS contributions
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