Employees of the City are currently covered under the California Public Employees' Retirement System (CalPERS). While the City does not participate in the Social Security System, federal mandate requires new employees to contribute 1.45% of wages to Medicare insurance coverage.
Employees Hired On or Before July 8, 2011 –
Employees hired and members of CalPERS on or prior to July 8, 2011, participate in the 2.7% at 55 formula, one-year final compensation, and 1959 survivor benefit. Employees are required to contribute the full 8% member contribution, plus an additional 1.5% towards the employer rate.
Employees Hired Between July 9, 2011 and December 31, 2012 –
Employees hired and members of CalPERS between July 9, 2012 and December 31, 2012, participate in the 2% at 60 formula, three-year final compensation, and 1959 survivor benefit. Employees are required to contribute the full 7% member contribution, plus an additional 1.5% towards the employer rate.
Employees Hired On or After January 1, 2013 –
Employees hired and members of CalPERS on or after January 1, 2013, participate in the 2% at 62 formula, three-year final compensation, and 1959 survivor benefit. The employee pays the full member contribution, which is variable. The contribution rate for new members is 50% of the normal cost rate which is subject to change. The current member contribution is 6.25%. Employees also contribute 1.5% towards the employer rate.
Employer's Contribution Rate –
Beginning July 1, 2019, the employer’s normal cost contribution rate is 9.582%, which reflects the employee pick-up of 1.5% of the employer rate.
Information About Social Security
Earnings from City employment are not covered under Social Security. When you retire, or if you become disabled, you may receive a pension based on earnings from this job. If you do, and you are also entitled to a benefit from Social Security based on either your own work or the work of your husband or wife, or former husband or wife, your pension may affect the amount of the Social Security benefit you receive. Your Medicare benefits, however, will not be affected. Under the Social Security law, there are two ways your Social Security benefit amount may be affected.
Windfall Elimination Provision
Under the Windfall Elimination Provision, your Social Security retirement or disability benefit is figured using a modified formula when you are also entitled to a pension from a job where you did not pay Social Security tax. As a result, you will receive a lower Social Security benefit than if you were not entitled to a pension from this job. For example, if you are age 62 in 2013, the maximum monthly reduction in your Social Security benefit as a result of this provision is $395.50. This amount is updated annually. This provision reduces, but does not totally eliminate, your Social Security benefit. For additional information, please refer to Social Security Publication, “Windfall Elimination Provision.”
Government Pension Offset Provision
Under the Government Pension Offset Provision, any Social Security spouse or widow(er) benefit to which you become entitled will be offset if you also receive a Federal, State or local government pension based on work where you did not pay Social Security tax. The offset reduces the amount of your Social Security spouse or widow(er) benefit by two-thirds of the amount of your pension.
For Employees Hired on or Before December 1, 2006 –
The City’s Retiree Insurances Program (RIP) is a defined benefit program that was established in July 2000 and closed to new employees January 2007. This program provides a fixed monthly allowance to eligible retirees to use towards the cost of medical, dental, and vision premiums for themselves and an eligible spouse or domestic partner.
To be eligible, an employee must retire simultaneously from the City and CalPERS, have served at least 12 continuous years of service with the City of Mission Viejo and be enrolled in the benefit program at least one full calendar year prior to their retirement date. The fixed monthly allowance is determined by the average full-time equivalency (FTE) the employee served during a designated 12-year service period of employment with the City of Mission Viejo and whether the employee has an eligible spouse or domestic partner enrolled in the medical plan. The fixed monthly allowance ranges from $412.50 to $912.00. Please see Administrative Regulation 510 for further details.
Employees Hired On or After December 2, 2006 –
The City’s Supplemental Health Account for Retired Employees (SHARE) Plan is a defined contribution health reimbursement plan, which is intended to help employees offset post-retirement healthcare costs by allowing employees to contribute pre-tax dollars from their current wages with an additional contribution from the City, into an account that can be accessed upon retirement. To be eligible for the full benefits of the SHARE Plan, an employee must reach age 55 with a total of 15 years of service with the City of Mission Viejo.
The Plan requires mandatory contributions from both the employee and the City. Contributions to the Plan will commence for an employee beginning with the first pay period that occurs after the eligible employee’s completion of one year of service with the City. Eligible employees will be required to contribute 1.5% of their salary. Deductions will be pre-tax and will be taken from each paycheck.
Starting the same date, the City contribution will be $100 per month ($50 per pay period for 24 pay periods) for full-time employees, $75 per month ($37.50 per pay period for 24 pay periods) for full-time equivalents of .750 to .999, and $50 per month ($25 per pay period for 24 pay periods) for full-time equivalents of .500 to .749, after the completion of the waiting period.