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<br />ARTICLE XIII <br />13.0 RETIREMENT <br />13.1 General. The terms of the existing contract between the City and California Public <br />Employees' Retirement System (CaIPERS) governing the City retirement benefits <br />for affected employees are incorporated by reference herein. The City shall <br />continue to make contributions to CalPERS in accordance with its contract with <br />CalPERS for affected employees covered by said contract as amended. <br />13.2 Deferred Retirement. The City will continue to make payment to CalPERS on <br />behalf of each affected employee, in an amount necessary to pay one hundred <br />percent (100%) of his or her individual retirement contribution which is equal to <br />seven percent (7%) of base salary. Such payments shall be credited to the <br />individual employee's CalPERS account. <br />Such payments are not increases in base salary and no salary rate range applicable <br />to any of the employees covered by this Agreement shall be changed or deemed <br />to have been changed by reason thereof. As a result, the City will not treat these <br />payments as ordinary income and, thus will not withhold Federal or State income <br />tax from said payments. The City has received an opinion or ruling from the Internal <br />Revenue Service confirming that these payments are deferred compensation, and <br />not ordinary income. In the event that the City receives a ruling from the Internal <br />Revenue Service that such payments are ordinary income ofthe employees instead <br />of deferred compensation, the City's obligation to make such payments shall <br />discontinue and in place thereof the base salary of each said employee shall <br />forthwith be increased by fourteen (14) salary rate ranges (Administrative <br />-59- <br />