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THE CITY OF 22 "' CITY COUNCIL AGENDA REPORT pLEASANTONo November 20, 2012 Administrative Services TITLE: ADOPT AN ORDINANCE TO AMEND THE CONTRACT BETWEEN THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE CITY OF PLEASANTON TO INCLUDE SECTION 20475 (DIFFERENT LEVEL OF BENEFITS), SECTION 21363.1 (3% @ 55 FULL FORMULA) AND SECTION 20037 (THREE-YEAR FINAL COMPENSATION) PROVIDING A DIFFERENT TIER OF RETIREMENT BENEFITS FOR NEW EMPLOYEES COVERED BY INTERNATIONAL ASSOCIATION OF FIREFIGHTERS LOCAL 1974 SUMMARY On November 16, 2012, the City Council adopted a resolution of intention and introduced an ordinance to amend the contract between the California Public Employees Retirement System (CaIPERS) and the City of Pleasanton to implement the new tier of retirement program for newly hired lateral candidates of the Livermore- Pleasanton Fire Department. By adopting the newly negotiated 3%@55/three-year final compensation retirement formula, the LPFD will be able to offer newly hired Lateral Employees moving from other CaIPERS agencies the less expensive 3%@55 retirement program instead of the current 3%@50 retirement program. As explained in the November 16, 2012 report (Attachment 1), this does not apply to employees who are joining the CaIPERS system for the first time; these employees are covered by the recently enacted statewide pension reform bill. RECOMMENDATION Waive the second reading and adopt the ordinance to amend the contract between CaIPERS and the City of Pleasanton to implement the new tier of retirement program for newly hired lateral candidates of the LPFD (Attachment 2). FINANCIAL STATEMENT According to the CaIPERS actuary, there will be no immediate employer contribution rate impact from this amendment. Instead, the employer normal cost will gradually decrease as the ratio of new "second tier" employees increases, and as those changes are reflected in CaIPERS actuarial valuations (a three-year lag). The CaIPERS actuary has estimated that the full decrease in the employer rate would be 2.9% assuming no change in employee demographic characteristics.