Report to Mayor and City Council
Tuesday, November 21, 2017
Consent
SUBJECT:
Title
OVERVIEW OF EMPLOYEE PENSION PLAN ANNUAL REPORT (CITY COUNCIL)
Body
I. SUMMARY
The City provides a defined benefit pension to employees, and contracts with the California Public Employees Retirement System (CalPERS) to manage the plan. Each year, CalPERS publishes an Actuarial Valuation Report (AVR) for the City's pension plan. The purpose of this agenda report is to provide a summary of the most recent AVR as of June 30, 2016 (Exhibit A).
II. RECOMMENDATION
Recommendation
RECEIVE and FILE this report.
Body
III. ALTERNATIVES
TAKE another action deemed appropriate by City Council.
IV. BACKGROUND
The AVR includes actual results through June 30, 2016. Projections for future activity and funding requirements are based upon actuarial assumptions, including investment returns and retiree mortality rates. The AVR sets the City's employer contribution rate for FY18-19, and projects estimated annual contributions through FY24-25 (6 years of projections).
There are 3 contributions to the employee pension plan:
* Contributions made by employees, deducted from their wages;
* Employer Normal Cost contribution; and
* Employer contribution towards the Unfunded Liability.
All full-time employees are enrolled in the pension plan. The City has 109 part-time employees who have previously worked more than 1,000 hours during a fiscal year; and were required to be enrolled in CalPERS. The total number of part-time employees ranges from about 400 to 600 based upon the season. Therefore, about one-fifth of the City's part-time employees receive a pension benefit. Pension benefits are summarized below.
Employer Contributions
The City, as the employer, makes two different contributions to the employee pension plan. The Normal Cost contribution is for the current accrual of benefits. For example, an employee works an additional 2 weeks; and the City contributes a percentage of wa...
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