04-1116_OC EMPLOYEES RETIREMENT SYSTEM_Early Retirement Incentive Agr (2)EARLY RETIREMENT INCENTIVE AGREEMENT
BY AND BETWEEN
THE CITY OF SAN JUAN CAPISTRANO
AND THE
ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM
This Agreement is entered into effective the 16th of November, 2004, and is by and
between the CITY OF SAN JUAN CAPISTRANO ("CITY"), a district pursuant to
Government Code Section 31557, and the ORANGE COUNTY EMPLOYEES
RETIREMENT SYSTEM ("OCERS"), a public retirement system organized and
operating under the provisions of the County Employees Retirement Law of 1937 (Govt.
Code Sections 31450-31899.10);
WHEREAS, the CITY wishes to offer some of its employees additional retirement
service credit pursuant to Government Code Section 31641.04, as an incentive for
those employees to retire early ("Early Retirement Incentive Plan"); and,
WHEREAS, under Government Code Section 31641.04, there are certain
conditions that must be met before employees may receive additional retirement service
credit pursuant to such statute, including the condition that the CITY must pay into the
retirement fund a sum of money determined by the Board of Retirement of OCERS to be equal
to the actuarial equivalent of the difference between the retirement allowance the employee
receives after the receipt of such additional retirement service credit and the amount the
employee would have received without such service credit, and that such payment shall be
made in a manner and time period mutually acceptable to CITY and the Board of Retirement of
OCERS; and
WHEREAS, the purpose of this agreement is to set forth the manner and time period in
which the CITY will make the payments to OCERS as required by Government Code Section
31641.04; NOW, THEREFORE, IT IS MUTUALLY AGREED BY AND BETWEEN the CITY
and OCERS as follows:
1. At various times between November 17, 2004 and May 16, 2005, the CITY may offer
to some of its employees additional retirement service credit pursuant to Government Code
Section 31641.04, as an incentive for those employees to retire. Such additional service credit
shall not exceed two (2) years of service credit per eligible employee.
2. In granting such additional retirement service credit, the CITY will comply with all of
the conditions and requirements set forth in Government Code Section 31641.04, including, but
not limited to, the requirement that the San Juan Capistrano City Council must adopt one or
more resolutions containing all of the information required by said Section 31641.04. From and
after the date of this Agreement, each resolution adopted by the CITY in connection with the
Early Retirement Incentive Plan shall also state that notwithstanding any other provision of the
resolution, the amount of additional retirement service credit granted to employees pursuant to
such resolution will in no event cause the retirement allowance of any employee to exceed the
maximum benefit allowed under Section 415 of the Internal Revenue Code (including all special
Government plan limits), for participants of tax -qualified retirement plans.
3. In accordance with subsection (a)(3) of Government Code Section 31641.04, for
each CITY employee who receives additional retirement service credit pursuant to said statute,
the CITY must transfer to OCERS an amount of money determined by the Board of Retirement
Exhibit A
to be the actuarial equivalent of the difference between the retirement allowance such employee
receives after the receipt of service credit under this section and the amount he or she would
have received without such service credit. It is impractical to calculate this amount until after the
employees who receive such additional service credit have actually retired. Therefore, the
parties agree that the calculation of such amounts, and time and manner of payment (including
interest), shall be as follows:
(a) As soon as practicable after May 16, 2005, OCERS will provide its actuary
with relevant information pertaining to all employees of the CITY who retired between November
17, 2004 and May 16, 2005, and who were granted additional retirement service credit pursuant
to Government Code Section 31641.04. Based on the information provided by OCERS, the
actuary will calculate, for each such employee, the actuarial equivalent of the difference
between the allowance the retired employee receives with such additional service credit, and
the amount the retiree would have received without such service credit.
(b) As soon as practicable after May 16, 2005, OCERS will provide the CITY with
a statement that sets forth the amounts calculated by the actuary pursuant to the preceding
paragraph, and the CITY will be obligated to pay such amount to OCERS in accordance with
Government Code Section 31641.04. The CITY will pay OCERS the present value amount per
the actuary calculations to be paid in full no later than December 31, 2005. Interest will accrue
on all unpaid amounts from the date the employee retires until the date of payment. The
interest rate will be the same as the actuarial interest assumption rate, which is currently eight
(8) percent per year, but may be periodically adjusted pursuant to Government Code Section
31453 up to an amount not to exceed ten (10) percent per year.
4. If, for any reason, the CITY fails to make the payment required under this agreement
on or before the date such payment is due (for any reason), the Board of Retirement of OCERS
may make a demand to the CITY for immediate payment of the amount due. The CITY shall
then, within 30 days, transfer the amount required to the County Advance Reserve Account of
the Retirement Fund.
WHEREFORE, the parties have entered into this agreement as of the date first written
above.
CITY OF SAN JUAN CAPISTRANO
By:
tt }:art , :Mayor
Approved as to Form:
By:
City Attorney
City of San Juan Capistrano
ATTEST:
M aret R. Monahan, City Clerk
ORANGE COUNTY EMPLOYEES
RETIREMENT SYSTEM
Approved as to Form:
By:
ie Wyne
eneral Counsel, OWRS
Exhibit A