(a) A member who belongs to Tier 2 shall contribute, by salary deduction, to the Retirement Fund at an actuarially determined rate sufficient to fund seventy-five percent (75%) of normal costs and fifty percent (50%) of any unfunded liability for Tier 2. The member contribution is paid solely for the purpose of providing benefits for the member and, unlike Tier 1, does not include a survivor contribution.
The initial contribution rate for the first four (4) years of Tier 2 shall be ten percent (10%) of the compensation earnable for each member. The Board shall establish the Tier 2 member contribution rate every three (3) years thereafter, with the first such determination to be effective July 1, 2017, for the following three (3) years. The Board shall establish the member contribution rate as a percentage of compensation earnable for each member, and the rate established shall be actuarially determined to be sufficient to fund seventy-five (75%) of normal costs and fifty percent (50%) of any unfunded liability for Tier 2. The City contribution shall be determined annually by the Board in a percentage that, when combined with the member contribution, is sufficient to fully meet the actuarial funding requirements.
(b) For purposes of this Article:
(1) Member contributions shall be credited to each member’s individual account, and no portion of a member’s contribution shall be paid into the 401(h) account;
(2) Member contributions are subject to the provisions of Charter Section 1162, including the right to be credited with interest;
(3) Compensation earnable shall consist of base salary and shall not include any bonuses or premium pay;
(4) Normal costs and unfunded liability shall include costs associated with funding the Retirement Fund’s 401(h) account for purposes of establishing the member contribution rate except that, if for any reason the determination of the member contribution rate at the time of an adjustment results in a member contribution rate that exceeds the amount necessary to fund one hundred percent (100%) of normal costs and unfunded liability excluding all costs associated with funding the 401(h) account, then the member’s contribution rate shall be reduced accordingly to assure that no part of a member contribution is used to fund the 401(h) account since, if member contributions were paid into the 401(h) account, these contributions would become non-refundable and could not be paid on a pre-tax basis pursuant to Chapter 15 of Division 4 of this Code;
(5) The unfunded liability used to determine rate adjustments shall be based upon the average of the last three (3) years’ amortization payments toward the unfunded liability for Tier 2 as determined by the Board’s actuary;
(6) The normal costs used to determine rate adjustments shall be based upon the average of the last three (3) years’ normal costs for Tier 2 as determined by the Board’s actuary.
(c) Notwithstanding the provisions of this section, the City Council shall have the discretionary right to adopt an ordinance to temporarily reduce the member contribution rate for a period not to exceed three (3) years. Members of Tier 2 shall not obtain any vested right to a lower contribution rate on account of any such reduction. Further, the Council explicitly retains the right to amend this Code, by ordinance, to delete this provision. Any ordinance adopted pursuant to this paragraph shall be adopted in the same manner as provided in Charter Section 1168.
(d) The City shall pick up all employee contributions payable by salary deduction pursuant to this Section as provided in Sections 4.1500 through 4.1504 of Chapter 15 of Division 4 of this Code.
SECTION HISTORY
Added by Ord. No. 182,629, Eff. 7-25-13.