SANTA ANA POLICE BENEVOLENT ASSOCIATION (4)

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City on behalf of employees, to purchase group health and/or group dental and/or group L.T.D. insurance coverage through the Association or its Agent; provided, however, all members of the Association waive, in writing, coverage under City-sponsored group health and/or group dental and/or group L.T.D. ARTICLE XIII r RETIREMENT Section 1 - General. The terms of the existing contract between the City and the California Public Employees' Retirement System (P.E.R.S.) governing the retirement benefits of employees covered by this Agreement, as said contract was amended effective October 1981 to provide for a different schedule of benefits for employees hired after the effective date of such amendment, are incorporated by reference herein. The City shall continue to make contributions to P.E.R.S. in accordance with its contract with P.E.R.S. for employees covered by said contract as amended. Section 2. - Deferred Retirement. The City shall continue to make payment to the P.E.R.S. on behalf of each employee covered by this Agreement in accordance with the following schedule: A. With respect to sworn, "safety-member" employees covered under the 2% at age 50 Benefit Formula, the City shall pay an amount equal to seven-ninths (7/9ths) of his or her individual employee retirement contribution. B. With respect to sworn, "safety-member" employees covered under the 2% at age 55 Benefit Formula and "miscellaneous-member" employees, covered by this Agreement, the City shall pay an amount equal to 100% of his or her individual employee retirement contribution. Such payments shall be credited to the individual employee's P.E.R.S. account. Such payments are not increases in base salary and no salary rate range applicable to any of the employees covered by this Agreement shall be changed or deemed to have been changed by reason thereof. As a result, the City will not treat these payments as ordinary income and, thus, will not withhold federal or state income tax from said payments. The City has received an opinion or ruling from the Internal Revenue Service confirming that these payments are deferred compensation not ordinary income. In the event that the City receives a subsequent ruling from the Internal Revenue Service that such payments are ordinary income of the employees instead of deferred compensation, the City's obligation to make such payments shall discontinue and in place thereof the base salary of each affected employee shall forthwith be increased by fourteen (14) salary rate ranges (7.0%). For the purpose of reporting an employee's compensation to P.E.R.S., the City shall include these payments as if they were a part of the employee's base salary. 27