HomeMy WebLinkAboutG- 2 Public Employee Retirement c _ 2 )- 3
4.41111
®® 0 OF AZUSA
Finance Department■ 213 E.Foothill Blvd.•P.O.Box 1395 •Azusa,CA 91702-1395
Tel: (818)812-5203• FAX(818)334-6358
AGENDA ITEM
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: GEOFF CRAIG, DIRECTOR OF FINANC
VIA: HENRY GARCIA, CITY ADMINISTRATOR
DATE: FEBRUARY 18, 1997
SUBJECT: AMENDMENT TO CONTRACT WITH PUBLIC EMPLOYEES'
RETIREMENT SYSTEM TO PROVIDE SECTION 21382.5 (FOURTH
LEVEL OF 1959 SURVIVOR BENEFITS) FOR LOCAL
MISCELLANEOUS MEMBERS AND LOCAL POLICE MEMBERS
Background
As part of the negotiations which culminated in the new four-year contracts (and revised existing
contracts)with the various bargaining units, management agreed that, effective as soon as
possible, the City shall amend its contract with the Public Employees Retirement System(PERS)
to include the highest level (Fourth Level) of the"1959" Survivor Benefit. This report explains
the procedure and the cost.
Findings
Unfortunately, there are occasions when, due to accident, injury or illness, a City employee passes
away prior to reaching age 50, which is the minimum age to retire with a pension from the Public
Employees' Retirement System. At its inception, the City's contract with the Public Employees'
Retirement System made no provision for the survivor of such an employee to receive any type of
monthly allowance. In many cases, this resulted in severe hardship. In 1959, State law was
amended to allow employers to provide a minimum monthly allowance to the survivor of an
employee who passes away prematurely. The cost is 93 cents per pay period per employee. For
the City of Azusa this amounts to approximately$ 7,311.46 per year.
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Fortunately, use of this retirement contract provision has been low enough that the employer
contributions plus PERS' tremendous investment capacity have placed the fund in a nearly
self-sufficient position. Recently, PERS has offered to Azusa the option to increase the amount
of the monthly allowance to the survivor of a prematurely-deceased employee, at no additional
cost for 25 or more years. Following is a comparison of the current versus the proposed benefit:
Current Monthly Benefit Proposed Monthly Benefit
Survivor $350 $950
Survivor+ 1 Dependent 700 1,900
Survivor+ 2 or more Dependents 840 2,280
Insamuch as the City of Azusa has contracted with the Public Employees' Retirement System
since 1949, staff believes that it would be appropriate to participate in and benefit from the
System's return on the investment of 1959 Survivor Benefit contributions. To do so requires that
Council pass a Resolution and adopt an Ordinance. Staff is requesting authorization to present
these items for Council Consideration at the March 3 regular meeting.
Recommendations
Staff recommends that at the March 3 regular meeting, Council authorize the presentation of
drafts of the Resolution and Ordinance that would authorize amending the City's contract with
the Public Employees' Retirement System to include the Fourth Level of the "1959" Survivor
Benefit.
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