Benefits Summary- Fire and Police Retirement System

Benefit Summary for the Fire and Police Retirement System (As of June 30, 2006)

This section provides a brief summary of the benefits provided by the City of Fresno Fire and Police Retirement System. For more detailed information please refer to the Summary Plan Description; email retire@fresno.gov; or call the Retirement Office at (559) 621-7080 to speak to a Retirement Counselor.

Eligible Employees

All sworn Fire, Police, and Airport Safety Personnel who are full time permanent employees and entered City service before August 27, 1990 are members of Tier I of the Fire and Police Retirement System. Tier II is composed of those sworn employees hired on or after August 27, 1990.

Service Retirement

All members of the Fire and Police System are eligible for a service retirement if they have at least 10 years of service (5 years for Tier II) and are at least age 50. Service retirement benefits formulas are different for the two tiers. Tier I members have the choice between a benefit calculated using all ranks held over an entire career (at today’s salaries) called the Career Rank Method, or a method which takes into account only the final three years of actual earnings. For Tier II the formula ramps from 2% per year at age 50 to 2.7% at age 55. Please consult the Summary Plan Document for details of the benefit calculations for your situation.

You may also use the appropriate benefits calculator to estimate your retirement benefit amount.

Final Average Salary

Your final average salary (FAS) is an average of your compensation earnable over your highest three consecutive years using today’s pay rather than the pay you actually earned. That value of FAS is used with the following formula to calculate your benefit amount.

Tier I Benefit: Sum of (1) and (2)

2 3/4% of FAS times years of service before age 50, not-to-exceed 20 years
2% of FAS times years of service after age 50, not to exceed 10 years

Tier II Benefit:

Tier II benefits begin as 2% per year of service times your FAS at age 50 and ramp up every quarter year to 2.7% per year of service times your FAS at age 55 and older.

Important News!

Benefit Estimates are now available in MemberDirect. Press here to go to our MemberDirect site and produce your own real-time benefit estimate.

Or, you can try the Benefit Calculator for an estimate.

Before you retire, it is important that you contact the Retirement Office to make an appointment with a retirement counselor to discuss the options available for retirement.

Deferred Retirement Option Program (DROP) – Employees Retirement System

A sworn employee who meets the qualifications for a service retirement (age 50 with 10 years of service for Tier I and age 50 with 5 years of service for Tier II) may elect to participate in the DROP program. On entering DROP, the employee’s accrual of retirement benefits is frozen and his/her benefit amount is calculated. The resulting amount plus any retirement COLAs, any available Post Retirement Supplemental Benefit (PRSB), and interest at the rate determined by the Board is then deposited monthly into the employee’s DROP account while the employee continues to work for a period up to a maximum of 10 years.

At retirement, when the employee actually leaves City service, the monthly amount being deposited into the DROP account becomes the employee’s monthly retirement benefit amount and, in addition, the employee then makes a decision about how to take distribution of the balance of the DROP account.
Please try the DROP Projection Calculators for an estimate of what DROP could mean for you.

Disability

A disability retirement is a benefit available to a City employee who becomes unable to perform their duties by reason of bodily injuries or sickness. There are two types of disability retirement: ordinary (non service connected) and service connected.

Ordinary Disability

If you become permanently disabled and are no longer able to perform your job duties and the disability is not job related, you may be eligible for an ordinary disability retirement. To qualify you must have been employed by the City for at least ten years.

If you are granted an ordinary disability retirement, your allowance will be the highest of the following:

Tier I:
1. 36.67% of your final average salary
2. 1.65% times your years of service times your final average salary, or
3. your service retirement allowance (if you are already eligible for a service retirement)
Tier II:
1. 33% of your final average salary
2. 1.5% times your years of service times your final average salary, or
3. your service retirement allowance (if you are already eligible for a service retirement).

Service-Connected Disability

If at any time you become permanently disabled to the point that you can no longer perform your job duties and that disability was caused primarily by the performance of your job, you may be eligible to receive a service connected disability.

If you are granted a service connected disability retirement, your allowance will be the highest of the following:

Tier I:
1. 55% of your final average salary, or
2. your service retirement allowance (if you are already eligible for a service retirement).
Tier II:
1. 50% of your final average salary, or
2. your service retirement allowance (if you are already eligible for a service retirement).

A portion of your service connected disability will be eligible for favorable IRS tax treatment.

Contribution Rates

The basic provision for contribution rates for both the City and the Employees are outlined in the Fresno Municipal Code and may not be changed by the Retirement Board. Normal or basic rates for Tier I depend upon the employee’s age at entry into the System. Tier II members pay a flat 9% which is provided in the Code. The cost of cost-of-living (COLA) increases is born entirely by the City.

Both employer and employee rates are recalculated by the independent actuary as a component of the Annual Actuarial Valuation Study, and the results of those calculations are reviewed and adopted by the Fire and Police Retirement Board at a public hearing each year.

In accordance with Fresno Municipal Code provisions, Tier 2 employees pay a flat contribution rate of 9%.

Contribution Rates as of June 30, 2006 (file size: 41 KB)

Cost of Living Adjustment (COLA)

Tier I I COLAs depend on the type of method chosen by the employee at retirement. If the employee chose the Career Rank method, the COLA is a recalculation of his/her retirement based on the new salaries adopted for the current year. If the method chosen by the retiree is the final 3 year method, the COLA is based on the change in the weighted mean average compensation attached to all ranks in the department with a cap of five percent (5%) per year. Any excess over the 5% is banked for use in years when the COLA calculation is less than 5%.

Tier II COLAs are based on the change in the Consumer price index (for all Urban Wage Earners and all Clerical Workers – U.S. City Average) as provided in the Municipal Code. Retirement staff must research the percentage change and propose that percent to the Fire and Police Retirement Board as the COLA to be adopted for the following fiscal year. This procedure must be complete by the end of April each year for implementing in January of the following calendar year. The COLA is limited to a three percent (3%) maximum change per year and any excess over 3% is banked for the retiree for use in a year where the percent of CPI change is less than 3%.

Tier II retirees are eligible for a COLA in January of the second calendar year following retirement or entry into the DROP program.

Death Before Retirement

Before eligible to retire

If you should die while still working and before you have qualified to retire (10 years of service and attainment of age 50 for Tier I and 5 years of service and age 50 for Tier II), your beneficiary will receive the following benefit:

One month’s salary for each year of service, not-to-exceed six months.
Return of contributions with interest.

While eligible for service retirement:

If you should die while still working and after you have qualified to retire (10 years of service and attainment of age 50 for Tier I and 5 years of service and age 50 for Tier II), your qualified beneficiary (refer to Summary Plan Document) will receive 2/3 of the service retirement benefit you had earned as a monthly payment for life or may have the option to choose the benefit outlined above. If your death is service connected your qualified beneficiary would receive 55% of your final average salary for a Tier I member or 50% of final average salary for Tier II member as a lifetime benefit.

Death After Retirement

If you die after retirement and leave a qualified beneficiary, that beneficiary will receive a benefit based upon the option you have chosen at your retirement. Please refer to the Summary Plan Document for an explanation of your retirement options or call the Retirement Office (559-621-7080) for an appointment with a Retirement Counselor who will explain the options and show you calculations of what each one would mean for you.

Health and Welfare

The Retirement Office is only involved with the health care plan as a conduit to deduct the Health care premiums from the retiree’s monthly benefit amount and forward those premiums to the City Health and Welfare Trust Administrator on the retiree’s behalf.

The City of Fresno provides active sworn employees with health care coverage through the City of Fresno Health and Welfare Trust which covers all City of Fresno employees.

The City does not fund health coverage for retirees; however, employees are given the option of continuing in the City health plan after retirement at their own expense. At age 65, the City’s health plan becomes secondary to Medicare for those who are Medicare eligible. Premium levels become more expensive at age 65 for those who are not eligible for Medicare.

Health premiums are set by the Health and Welfare Board for the Health and Welfare Trust Plan. The health and welfare premiums may be viewed on the following linked page:

HEALTHCOMP (HEALTH & WELFARE TRUST)

Post Retirement Supplemental Benefit (PRSB)

On August 27, 1998, the City Council adopted the Post Retirement Supplemental Benefit (PRSB) Program which is an arrangement among the City, the active employees, and the retirees to share any surplus earnings of the System. Annually, after an actuarial study has been performed, the Fire and Police Retirement Board will review the availability of surplus earnings in the System and determine whether a benefit can be paid to eligible PRSB recipients. If a surplus is declared by the Board, PRSB benefit payments will be calculated for eligible retiree and DROP participant recipients and payments or DROP deposits for the following calendar year will begin in January.

Reciprocity

Reciprocity is an agreement between the City of Fresno and the California Public Employees’ Retirement System (PERS) which provides certain benefits to members who move between one or more systems that have reciprocity with PERS. Over 1,200 governmental agencies in California have reciprocal agreements with PERS. If you have eligible service in a reciprocal system, your CFRS contribution rate, creditable service required to “vest,” and benefit amount could be more favorable if you elect to use reciprocity.

Under current law, you must begin employment with the new reciprocal agency within 180 days after terminating employment with the prior agency to be eligible for reciprocity. In addition, you must leave your contributions on deposit with the prior agency’s system until you retire. (Separate accounts are maintained by each individual retirement system.)

You must retire from all systems simultaneously, at which time you will receive benefits separately from each system based on that system’s formula, but all systems will confer and will use your highest final average salary from any of the systems.

Safety employees should consult a retirement counselor before applying for reciprocity because establishing reciprocity may limit eligibility for benefits in the event of a service connected disability.

If you worked for a PERS-covered employer in the past and withdrew your PERS contributions, you may be eligible to redeposit your contributions and restore your PERS service credit. If you would like additional information regarding PERS-covered employment, contact PERS at (800) 352-2238 or visit their website at: http://www.calpers.ca.gov.

For more detailed information:

Reciprocity Handbook | Reciprocity Coordination with Other Public Retirement Systems

Divorce/Termination of Registered Domestic Partnership

California is a community property state and retirement benefits earned while married or in a registered domestic partnership for any length of time are considered assets that are divisible in a divorce action or the dissolving of a registered domestic partnership.

If you are considering one of these actions please read the Community Property Guidelines and be sure to address your retirement benefits in your settlement agreement. Have the Retirement Office review any proposed domestic relations order before it is submitted to the court to insure it is written in a manner which the Retirement Office can administer.

Please refer to the sample domestic relations orders on the website for examples of orders which comply with the requirements of the Retirement Office.

Terminating Employment

Withdrawal of Contributions

When you terminate employment for any reason (other than a retirement for service or disability), you may request a refund of the retirement contributions you contributed to the System and any interest earned.

Contributions and Interest Rollover

As an alternative to receiving a refund of contributions, you may rollover the pre-tax portion of your account balance to an IRA or another employer’s qualified plan. Post-tax contributions cannot be rolled over and will be paid to you as a separate check.

Reciprocal Systems

If you terminate employment from the City of Fresno and begin employment within 180 days at another government agency within California, you may be eligible for Reciprocity.

Refer to the Reciprocity section above for more detailed information.

Deferred Retirement (Vesting)

You are eligible for a deferred retirement if you have at least ten years of service with the City of Fresno for Tier I or five years of service with the City of Fresno for Tier II. Upon termination, Deferred Retirement eligibility allows you to leave your contributions on account with CFRS and qualify for benefits on the date you become age-eligible. Review the vesting section of your retirement handbook for further details.

If you are terminating employment, please contact the Retirement Office at (559) 621-7080 for an appointment with a benefits counselor. During this appointment you will have an opportunity to discuss the rollover payment method and its advantages, as well as receive the required rollover forms.

City of Fresno's Deferred Compensation Program