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<br />ARTICLE XIV <br /> <br />14.0 RETIREMENT <br /> <br />14.1 General. The terms of the existing contract between the <br />City and California Public Employees' Retirement System <br />(CalPERS) governing the retirement benefits of employees <br />covered by this Agreement are incorporated by reference <br />herein. The City shall continue to make contributions to <br />CalPERS in accordance with its contract with CalPERS for <br />employees covered by said contract. <br /> <br />14.2 Deferred Retirement. The City shall continue to make <br />payment to CalPERS on behalf of each affected employee <br />covered by this Agreement in an amount equal to one hundred <br />percent (100%) of each employee's individual employee <br />retirement contribution. Such payments shall be credited to <br />the individual employee's CalPERS account. <br /> <br />Such payments are not increases in base salary and no salary <br />rate range applicable to any of the employees covered by <br />this Agreement shall be changed or deemed to have been <br />changed by reason thereof. As a result, the City will not <br />treat these payments as ordinary income and, thus will not <br />withhold Federal or state income tax from said payments. <br />The City has received an opinion or ruling from the Internal <br />Revenue Service confirming that these payments are deferred <br />compensation, not ordinary income. <br /> <br />In the event that the City receives a subsequent ruling from <br />the Internal Revenue Service that such payments are ordinary <br />income of the employees instead of deferred compensation, <br />the City's obligation to make such payments shall <br />discontinue and in place thereof the base salary of each <br />said employee shall forthwith be increased eighteen (18) <br />salary rate ranges (approximately 9%) for "safety-member" <br />employees covered under the "3% at Age 50" CalPERS formula <br />and fourteen (14) salary rate ranges (approximately 7%) for <br />"miscellaneous member" employees covered under the "2% at Age <br />55" CalPERS formula by this Agreement. <br /> <br />For the purpose of reporting an employee's compensation to <br />CalPERS, the City shall include these payments as if they <br />were a part of the employee's base salary. <br /> <br />52 <br />