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8.1 Retirement - Miscellaneous Members and 2011 First Tier Retirement Formula

New employees hired on or after January 1, 2007 through January 14, 2011, will be subject to the 2%@ 55 retirement formula with retirement benefits on the highest average monthly pay rate during thirty-six consecutive months of employment. Employees in employment prior to January 1, 2007 will remain subject to the 2%@55 retirement formula with benefits based on the highest average monthly pay rate during twelve consecutive months of employment.

A.  The State and union agree to the following changes to the retirement formulas and employee retirement contributions as outlined in this agreement.

Effective January 15, 2011, First Tier retirement members first employed by the state shall be subject to the "2011 First Tier Retirement Formula."  The 2011 First Tier retirement formula would not apply to:

  • Former state employees who return to state employment on or after January 15, 2011.

  • State employees hired prior to January 15, 2011 who were subject to the Alternate Retirement Program (ARP).

  • State employees on approved leave of absence who return to active employment on or after January 15, 2011.

  • Persons who are already members or annuitants of the California Public Employees Retirement System as a state employee.

B.  The table below lists the current and 2011 First Tier age/benefit factors.

AGE AT
RETIREMENT

CURRENT FACTORS 
(2% AT AGE 55)

2011 FACTORS
 (2% AT AGE 60)

50

1.100

1.092

51

1.280

1.156

52

1.460

1.224

53

1.640

1.296

54

1.820

1.376

55

2.000

1.460

56

2.063

1.552

57

2.125

1.650

58

2.188

1.758

59

2.250

1.874

60

2.313

2.000

61

2.375

2.134

62

2.438

2.272

63 and over

2.500

2.418

C.  Miscellaneous and industrial members shall contribute an additional three percent (3%) retirement contribution.  Effective upon ratification, miscellaneous and industrial members in the First Tier retirement or the ARP, subject to social security, shall contribute eight percent (8%) of monthly compensation in excess of $513 for retirement.

Miscellaneous and Industrial members in the First Tier retirement or the ARP not subject to social security shall contribute nine percent (9%) of monthly compensation in excess of $317 for retirement.  The additional three percent (3%) employee contribution shall offset  the State’s contribution following ratification of the agreement by the Legislature.

D.  New employees hired on or after January 15, 2011, will, after completion of participation in the ARP, be subject to the 2% at age 60 retirement formula with benefits based on the highest average monthly pay rate during thirty-six (36) consecutive months of employment.

Employees in employment prior to January 15, 2011, will remain subject to the 2% at age 55 retirement formula with benefits based on the highest average monthly pay rate during thirty-six (36) consecutive months of employment.

Employees in employment prior to January 1, 2007, will remain subject to the 2% at age 55 formula with retirement benefits based on the highest average monthly pay rate during twelve (12) consecutive months of employment. 

 

8.2 Retirement - Safety Members and 2011 First Tier Retirement Formula

New employees hired on or after January 1, 2007 through January 14, 2011, will be subject to the 2.5%@55 retirement formula with retirement benefits based on the highest average monthly pay rate during thirty-six consecutive months of employment. Employees in employment prior to January 1, 2007 will remain subject to the 2.5%@55 retirement formula with benefits based on the highest average monthly pay rate during twelve consecutive months of employment.

A.  The State and the union agree to the following changes to the retirement formula and employee retirement contributions as outlined in this agreement.

Effective January 15, 2011, State Safety retirement members first employed by the state shall be subject to the "2011 State Safety Retirement Formula."  The 2011 State Safety retirement formula would not apply to:

  • Former state employees who return to state employment on or after January 15, 2011,

  • State employees hired prior to January 15, 2011 who were subject to the Alternate Retirement Program (ARP).

  • State employees on approved leave of absence who return to active employment on or after January 15, 2011.

  • Persons who are already members or annuitants of the California Public Employees Retirement System as a state employee.

B.  The table below lists the current and proposed 2011 State Safety age/benefit factors.

Age at Retirement Current Factors
(2.5% at age 55)		 2011 State Safety Factors
(2% at age 55)
50 1.700 1.426
51 1.800 1.522
52 1.900 1.628
53 2.000 1.742
54 2.250 1.866
55 and over 2.500 2.000

C.  State Safety members shall contribute an additional three percent (3%) retirement contribution.  Effective upon ratification, State Safety members shall contribute nine percent (9%) of monthly compensation in excess of $317 for retirement.  The additional three percent (3%) employee contribution shall offset the State's contribution beginning May 16, 2011 following ratification of the agreement by the Legislature.

D.  New employees hired on or after January 15, 2011, will be subject to the 2% at age 55 retirement formula with retirement benefits based on the highest average monthly pay rate during thirty-six (36) consecutive months of employment.

Employees in employment prior to January 15, 2011, will remain subject to the 2.5% at age 55 retirement formula with retirement benefits based on the highest average monthly pay rate during thirty-six (36) consecutive months of employment.

Employees in employment prior to January 1, 2007, will remain subject to the 2.5% at age 55 formula with retirement benefits based on the highest average monthly pay rate during twelve (12) consecutive months of employment.      

 

8.3 Second-Tier Retirement Plan

CAPS and the State agree to participate in the Second -Tier Retirement Plan as prescribed by law. Any Unit 10 employee mandatorily enrolled in the Tier II plan shall be encouraged to participate in the Savings Plus Program administered by DPA.

8.4 Savings Plus Program

A. The Savings Plus Program is comprised of an IRC 457 plan, and IRC 401(k) plan. All Unit 10 employees shall be eligible to participate in these program options. Participation shall be voluntary.

B. The Savings Plus Program shall maintain a brokerage option available to all participants. The brokerage option offered shall provide the broadest array and number of investments practicable included in the program. All costs for the brokerage option shall be paid by participants enrolled in the brokerage program.

C. DPA agrees to continue the Savings Plus Advisory Committee. Members shall include DPA staff and interested management, legislative and employee organization representatives.

8.5 Items Excluded from Compensation for Retirement Purposes

The State and CAPS agree that the following items shall be excluded from compensation for the purposes of retirement contributions:

ARTICLE/SECTION TITLE

Article 6, Section 4

Uniform Replacement Allowance

Article 2, Section 7

Diving Pay

Article 19, Section 6

Transportation Incentives

8.6 Enhanced Industrial Retirement

The state agrees to provide enhanced industrial disability benefits as described in Government Code Section 20047 when a Unit 10 scientist has been injured as a result of a violent act by a patient or client in a forensic facility.

8.7 Employer-Paid Retirement Contributions

In accordance with that Executive Order and with Internal Revenue Service guidance under Revenue Ruling 2006-43, this formalizes the implementation of section 414(h)(2) with regard to Employee Contributions to CalPERS that are made by the Employer on behalf of its employees.  For this purpose, “Employee Contributions” means those contributions that are deducted from employees’ salary and credited to individual employees’ accounts under CalPERS.  This Article specifically covers Employee Contributions made on behalf of employees covered by the collective bargaining agreement to which the Article relates.

A.  Pick-up of Employee Contributions

In accordance with section 414(h)(2) of the Internal Revenue Code, the Employer may “pick up” the Employee Contributions under the following terms and conditions:

  • The contributions made by the Employer to CalPERS, although designated as Employee Contributions, are being paid by the Employer in lieu of contributions by the employees who are members of CalPERS;

  • Employees do not have the option of choosing to receive the contributed amounts directly instead of having them paid by the Employer to CalPERS;

  • The Employer is paying to CalPERS the contributions designated as Employee Contributions from the same source of funds as used in paying salary; and

  • The amount of the contributions designated as Employee Contributions and paid by the Employer to CalPERS on behalf of an employee is the entire contribution required of the employee under CalPERS. 

B.  Tax Characterization of Picked-up Employee Contributions

All Employee Contributions picked up by the Employer in accordance with Section 414(h)(2) of the Internal Revenue Code are, for tax purposes, treated as employer contributions and therefore are not includable in employee’s taxable income until distributed from CalPERS.  This Article formalizes the Employer’s continuing characterization of Employee Contributions as employer contributions under section 414(h)(2).  Accordingly, Employee Contributions covered by this Article will continue to be excluded from employees' taxable income under section 414(h)(2).

C.  Wage Adjustment

Notwithstanding anything to the contrary, employees’ salary will be reduced by the amount of Employee Contributions that are made by the Employer in accordance with the terms of this Article.

D.  Limitations to Operability

This Article will be operative only as long as the Employer pick-up of Employee Contributions continues to be excludable from employees’ taxable income under the Internal Revenue Code.

E.  No Arbitration

The parties agree that nothing in this Article will be subject to the grievance and arbitration procedures set out in the collective bargaining agreement to which the Article applies.