Chapter 3.28

1975 FEDERATED EMPLOYEES RETIREMENT PLAN

Parts:

• 1 General Provisions and Definitions 2 Administration

• 3 Retirement Fund

• 4 Membership 5 Federated City Service 6 Member Contributions 7 City Contributions 8 Benefits Generally 9 Retirement for Service 10 Retirement for Disability 10A Reemployment of Disability Retiree 11 Death Before Retirement 12 Death After Retirement 13 Optional Settlements 14 Surviving Child's School Allowance 15 Optional Membership for Certain Members of Chapter 3.32 Police and Fire Department Retirement Plan

• 16 Medical Benefits for Certain Retirees and Survivors

• 17 Dental Benefits for Retired Members and Survivors

• 18 1987 Early Retirement Incentive Program

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• 19 1992 Early Retirement Incentive Program

• 20 1993 Early Retirement Incentive Program

• 21 Reciprocity

• 22 Purchase of Prior Service Credit

• 23 Plan-Approved Domestic Relations Orders

• 3.28.030.18 "Member's accumulated prior service contributions."

• 3.28.030.19 "Member's prior service contributions."

• 3.28.030.20 "Normal contributions."

• 3.28.030.21 "Part-time service."

• 3.28.030.22 "Plan year."

• 3.28.030.23 "Prior service."

• 3.28.030.24 "Regular interest."

Part 1

GENERAL PROVISIONS AND DEFINITIONS

Sections:

• 3.28.010 Plan established - Name - Scope. 3.28.020 Effective date of Chapter 3.28 provisions.

• 3.28.030 Definitions and construction of terms.

• 3.28.030.01 "Actuarial equivalent."

• 3.28.030.02 "City."

• 3.28.030.03 "Benefit."

• 3.28.030.04 "Chapter 3.24 retirement system."

  - **3.28.030.25 "Retirement board."** 
  
  - **3.28.030.26 "Retirement fund."** 
  
  - **3.28.030.27 "Retirement system."** 
  
  - **3.28.030.28 "Tier 2 Member."** 
  
  - **3.28.030.29 "Independent medical panel."** 
  
  - **3.28.030.30 "Mandatory reduction in paid working time"** 
  
  - **3.28.030.32 "New Employee."** 
  
  - **3.28.040 Use of masculine or feminine gender.** 
  
  - **3.28.050 Overtime excluded in computing compensation.** 
  
  - **3.28.060 Notices - Deemed effective when.** 
  
  - **3.28.070 Termination of plan.** 
  

• 3.28.030.05 "Compensation."

• 3.28.030.06 "Compensation earnable."

• 3.28.030.07 "Continued service."

• 3.28.030.08 "Current service."

• 3.28.030.09 "Employee."

• 3.28.030.10 "Federated city service."

• 3.28.030.11 "Final compensation."

• 3.28.030.12 "Fiscal year."

• 3.28.030.13 "Funds directly controlled by the city."

• 3.28.030.14 "Holiday in lieu pay."

• 3.28.030.15 "Member."

• 3.28.030.16 "Member's accumulated

  • contributions."

• 3.28.030.17 "Member's accumulated normal contributions."

• A. There is hereby established a retirement plan for all persons, hereinafter in this chapter specified, who may become members thereof pursuant to the provisions of this chapter. This plan shall be known as the "1975 Federated City Employees Retirement Plan," and includes all provisions of this Chapter 3.28.

• B. Notwithstanding any provision of the code to the contrary, the elements of the retirement plan as set out in Chapters 3.16, 3.20, 3.24 and 3.28 are components of a single retirement system known as the Federated City Employees Retirement Plan.

• C. Contributions made by the city and the members of the plan to the retirement fund described in Part 3 of this chapter shall be made

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for the purpose of distributing to such members or their beneficiaries the corpus and income of the fund in accordance with the terms of this plan.

• D. The Federated City Employees Retirement Plan is established as a qualified governmental defined benefit plan pursuant to Sections 401(a) and 414(d) of the Internal Revenue Code, or such other provision of the Internal Revenue Code as applicable and applicable treasury regulations and other guidance of the internal revenue service. The board shall be authorized to adopt rules and regulations which are appropriate or necessary to maintain the qualified status of the plan.

• E. Effective September 30, 2012, the Federated City Employees Retirement Plan has been amended to provide for different retirement benefits for individuals hired or rehired by the city on and after that date. Members subject to these new benefit provisions are referred to in this chapter as Tier 2 members.

• F. Under the City Council's authority pursuant to Article XV, Section 1500 of the City Charter, the provisions of Article XV-A of the City Charter are hereby implemented into the San José Municipal Code. To the extent there is any conflict between Article XV-A of the City of San José's Charter and the provisions of the Federated City Employees' Retirement System, Article XV-A will supersede any conflicting provision in the Federated City Employees' Retirement System, except as provided in Section 3.28.350.B.

(Prior code § 2904.1000; Ords. 27838, 28885, 29120, 29174.)

The effective date of this Chapter 3.28 and of this retirement plan is and shall be the first day of July, 1975, and unless otherwise indicated, the words "effective date of this chapter" or "effective date of this system," as used in this chapter, shall be deemed to mean and refer to said first day of July, 1975. (Prior code § 2904.1029; Ord. 29120.)

Unless the context otherwise requires, the definitions and general provisions set forth in this part govern the construction of this Chapter 3.28. (Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Actuarial equivalent" means a benefit of equal value when computed upon the basis of the mortality tables adopted and the regular interest rate fixed by the board.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"City" means the City of San José, a municipal corporation of the State of California.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Benefit" means any retirement or survivorship allowance, or the refund of any accumulated contributions, or any money or right to which any person or estate may become entitled under the provisions of this system.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Chapter 3.24 retirement system," "Chapter 3.24 system" and "Chapter 3.24 plan" each mean the San José Federated City Employees Retirement System set forth in Chapter 3.24 of Title 3 of the San José Municipal Code.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

• A. "Compensation" means the remuneration paid in cash out of funds controlled by the City, plus the monetary value, as determined by the

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Board, for time during which the member is excused from work because of holidays, sick leave, vacation, or compensating time off.

• B. "Compensation" shall include holiday in lieu pay.

• C. "Compensation" shall include incentive pay for successful completion, on an annual basis, of training in Police Anti-Terrorist Tactics as certified by the Police Department to the City Finance Department.

• D. "Compensation" shall not include the provision by the City of any medical or hospital service or care plan for its employees, any contribution by the City to meet the premium or charge for such plan, or any payment into any fund to provide any death, retirement or survivorship benefits for employees or their survivors, or to provide any health or welfare benefits for employees, value of living quarters, board, lodging, fuel, laundry, and other advantages provided by the City in payment for the member's services, or any payment by the City of the employee portion of any taxes imposed by federal law, or any payment made by the City to the federal or state government for any social security system or program. Compensation also shall not include any payments based on overtime pay; travel, uniform or expense allowances; insurance, medical, surgical or hospital benefits; workers' compensation benefits; retirement, death or survivorship benefits; per diem payments; or any other fringe benefits.

• E. Notwithstanding any other provisions of Chapter 3.28, "Compensation" shall not include any non-pensionable compensation increase, which represents a wage increase, that is effective on or after July 1, 2018. Compensation also shall not include any subsequent increases to non-pensionable compensation due to future increases to base pay, such as merit increases, step increases, and general wage increases.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 26918, 29904, 30101.)

• A. "Compensation earnable" by a member employed on a full-time basis means the average monthly (or biweekly, if compensation is paid on a biweekly basis by the city) compensation of a member, as determined by the board upon the basis of the average time put in by members in the same group or class of employment and at the same rate of pay.

• B. "Compensation earnable" by a tier 2 member employed on a full-time basis means the average monthly (or biweekly, if compensation is paid on a biweekly basis by the city) base pay actually paid to such member and shall not include premium pay or any other additional compensation.

• C. "Compensation earnable" by a member employed to render part-time service means the monthly (or biweekly, if compensation is paid biweekly) compensation actually paid to such member for such part-time service.

• D. "Compensation earnable" by a tier 2 member employed to render part-time service means the monthly (or biweekly, if compensation is paid biweekly) base pay actually paid to such member for such part-time service and shall not include premium pay or any other additional compensation.

• E. The computation for time during which a member is absent shall be based on the compensation earnable by the member at the beginning of the absence, and the computation for time prior to entering federated city service shall be based on the compensation earnable by the member in the position first held by him or her in such service.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 29120.)

"Continued service," as applied to prior service, means all prior service, regardless of interruptions; but, as to current service, it means employment in federated city service uninterrupted by a continuous absence of more than three years. The

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period for which a member receives credit for service under Section 3.28.630 while absent on military service shall be excluded in calculating such continuous absence.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Current service" means all city service rendered by a member on or after July 1, 1975, for which the member is entitled to credit under the provisions of this system.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Employee" means any person in the employ of the city, or who holds a city office, whose compensation, or at least that portion of that compensation which is provided by the city, is paid out of funds directly controlled by the city. The word "employee" shall be deemed to include the word "officer."

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Federated city service" means the service described and defined as such in Part 5 of this chapter. (Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

• A. For a member who separated from City service prior to July 1, 2001, "final compensation" means the highest average annual compensation earnable by the member during any period of three (3) consecutive years of Federated City Service, including time prior to entering Federated City Service at the compensation earnable by the member in the position first held by him or her in such service as may be necessary to complete three (3) consecutive years.

• B. For a member, other than a Tier 2 member, who separated from City service on or after July 1, 2001, "final compensation" means the highest average annual compensation earnable by the member during any period of twelve (12) consecutive months of Federated City Service, including time prior to entering Federated City Service at the compensation earnable by the member in the position first held by him or her in such service as may be necessary to complete twelve (12) consecutive months; provided, however, that such final compensation shall not exceed one hundred eight percent (108%) of the second-highest average annual compensation earnable by the member during any twelve (12) consecutive months, excluding all of the months used to determine the highest average annual compensation earnable; and provided further if the member has been subject to a mandatory reduction in paid working time, the calculation for compensation earnable shall include the compensation that would have been earnable had the member not been subject to a mandatory reduction in paid working time.

• C. For Tier 2 members, "final compensation" means the average annual compensation earnable as defined for Tier 2 members in Section 3.28.030.06, by the member during the highest three (3) consecutive years of Federated City Service. "Final compensation" will consist only of base pay, excluding premium pay and any other additional compensation.

• D. For the purposes of this Chapter, periods of service separated by breaks in service may be aggregated to constitute a period of three (3) consecutive years or twelve (12) consecutive months, as applicable, if the periods of service are consecutive except for such breaks. If a break in service did not exceed six (6) months in duration, time included in the break and compensation earnable during such time shall be included in computation of final compensation. If a break in service exceeded six (6) months in duration, the first six (6) months

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thereof and the compensation earnable during those six (6) months shall be included in computation of final compensation, but time included in the break which is in excess of six (6) months, and the compensation earnable during such excess time shall be excluded in computation of final compensation.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 26828, 28603, 29120, 29904.)

On and after July 1, 1975, the "fiscal year," for purposes of this chapter, is any year commencing on July 1st and ending on June 30th next following. (Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Funds directly controlled by the city" include funds deposited in and disbursed from the city treasury in payment of compensation regardless of their source.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

butions and the member's accumulated prior service contributions, made by the member and standing to the credit of the member's individual account. (Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Member's accumulated normal contributions" means the sum of all normal contributions made by a member and standing to the credit of the member's individual account, plus regular interest thereon.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Member's accumulated prior service contributions" means the sum of all prior service contributions made by a member and standing to the credit of the member's individual account, plus regular interest thereon.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Holiday in lieu pay" means remuneration paid by the city to a member, as a percentage of the member's compensation, in lieu of holiday benefits provided to other city employees.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Member" means a person who becomes a member of this system pursuant to the provisions of Part 4 of this chapter whose membership shall not have been terminated pursuant to provisions of this chapter. No other persons are members. (Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Member's accumulated contributions" means the sum of a member's accumulated normal contri-

"Member's prior service contributions" means contributions made by a member on account of city service rendered prior to July 1, 1975.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Normal contributions" means contributions made by a member on account of current service at the normal rates of contribution fixed by the board. (Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Part-time service" means any service rendered by an employee of the city on a part-time basis. It also means and includes any service which

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is paid for on a part-time per diem, per hour or any basis other than annual, monthly or biweekly basis. "Part-time-employee" means any person employed by the city to render part-time service for the city. (Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353.)

"Plan year" means July 1 to June 30. (Ord. 28885.)

"Prior service" means all city service rendered by a member prior to July 1, 1975, for which the member is entitled to credit under the provisions of this system.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 28885.)

"Regular interest" means interest at the annual rate fixed by the board, compounded annually, plus such additional interest as the board may credit from year to year. (Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 28885.)

"Retirement board" or "board" means the board of administration referred to and specified in Section 3.28.100 of this chapter.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 28885.)

"Retirement fund" or "fund" means the retirement fund specified in Section 3.28.300 of this chapter.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 28885.)

"Retirement system," "Retirement plan," "this system" or "this plan" means the 1975 federated city employees' retirement plan created by the provisions of this Chapter 3.28.

(Prior code §§ 1001 - 1010, 1012 - 1025, 1027; Ords. 25368, 26353, 28885, 29120.)

• A. "Tier 2 member" means any person who is hired, rehired or reinstated by the City on or after September 30, 2012 except for any person who is eligible and elects to participate in a defined contribution plan established under the San José Municipal Code.

• B. Notwithstanding subsection 3.28.030.28.A., the following persons who do not elect to participate in a defined contribution plan established under the San José Municipal Code shall not be considered Tier 2 members under this Plan and their benefits shall be determined under the same terms as those members hired prior to September 30, 2012:

  1. Any person who was a member of this Plan prior to September 30, 2012, and terminated employment with the City and did not take a return of contributions, and returned to employment with the City in a position covered by this Plan on or after September 30, 2012; or

  2. Any person accepting employment on or after September 30, 2012 who is otherwise eligible for this Plan and who was an active member in another California public retirement system, with which this Plan has reciprocity under Part 21, and who has a break in service of less than six (6) months from that covered employment and employment with the City, other than those who meet the definition of a new member as defined by Government Code Section 7522.04(f) as may be amended, or are rehired or reinstated City employees without a work history prior to September 30, 2012; or

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3. Any person who, prior to August 4, 2013, was a Police member of the Police and Fire Department Retirement Plan established under Chapter 3.24 or the 1961 Police and Fire Department Retirement Plan established under Chapter 3.36, and terminated employment with the City without a return of his or her contributions, and later returned to employment with the City in a position covered by this Plan on or after August 4, 2013; or

4. Any person who, prior to January 2, 2015, was a Fire Department member of the Police and Fire Department Retirement Plan established under Chapter 3.24 or the 1961 Police and Fire Department Retirement Plan established under Chapter 3.36, and terminated employment with the City without a return of his or her contributions, and later returned to employment with the City in a position covered by this Plan on or after January 2, 2015.

(Ords. 29120, 29174, 29904, 30145.)

"Independent medical panel" means the independent medical review panel or disability review panel appointed by the Retirement Board as specified in Section 3.28.150 of this Chapter. (Ord. 29904.)

"Mandatory reduction in paid working time" shall mean any time period during which a member's paid working time is mandatorily reduced, as calculated on an annual basis, to less than two thousand eighty hours, but not less than one thousand seven hundred thirty nine hours, pursuant to an agreement with a recognized employee organization that represents the member. (Ord. 28603.)

"New Employee" means, except as may be provided in Part 16 or Part 17 of this Plan, any employee initially hired on or after September 30, 2012.

(Ord. 29904.)

Whenever the context so requires, the masculine gender includes the feminine and the feminine includes the masculine.

(Prior code § 2904.1028.)

When the compensation of a member is a factor in any computation to be made under this chapter, there shall be excluded from such computation any compensation based on overtime put in by a member. For purposes of this chapter, overtime is the aggregate service performed by an employee in excess of the hours of work considered normal for employees on a full-time basis, and for which monetary compensation is paid. (Prior code § 2904.1011.)

Any notice or order given by the retirement board to any person shall be effective upon the deposit of such notice or order in the United States mail, postage prepaid, addressed to such person at the address of such person as said address is shown on the records of the retirement board. A member may at any time file with said board a change of address.

(Prior code § 2904.1026.)

• A. Upon the termination of this plan or upon the complete discontinuance of contributions under the plan, the rights of each member, former member and beneficiary to benefits accrued to the date of such termination or discontinuance, to the extent then funded, shall be nonforfeitable.

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• B. Upon the termination of this plan, the board shall perform all of the following:

  1. Liquidate the assets of the retirement fund.

  2. Pay all of the accrued administrative expenses of the plan, including the expenses of liquidation.

  3. Determine the rights of each member, former member and beneficiary to benefits accrued to the date of termination, and ensure that all such benefits have been or are paid to the respective persons.

• C. Upon the termination of this plan and the satisfaction of all liabilities described in Subsection B. above, the board shall allocate any remaining assets of the retirement fund to the members of the plan on the basis of years of service and final compensation credited to the member at the time of termination of the plan.

• (Ords. 27838, 29174.)

Part 2

• 3.28.160 Actuarial investigations - Determination of rate of interest.

• 3.28.170 Financial reports.

• 3.28.180 Authority to determine employee status and benefits.

• 3.28.190 Change in employee status - Board notification required.

• 3.28.200 Authority to Adopt Tables, Revise Contribution Rates.

• 3.28.210 Determination of age, service and compensation when records are inadequate.

• 3.28.230 Adjustment of contributions and payments.

• 3.28.240 Hearings authorized when.

• 3.28.250 Power to administer oaths, issue subpoenas.

• 3.28.260 Retirement board - Annual report.

• 3.28.270 Direct transfers of eligible rollover distributions.

• 3.28.275 Review of proposed amendments.

• 3.28.280 Direct trustee-to-trustee transfers.

ADMINISTRATION

Sections:

• 3.28.100 Retirement board - Designated. 3.28.110 Retirement board - Powers and duties.

• 3.28.115 Retirement Board - Personnel matters.

• 3.28.120 Retirement board - Accounts and recordkeeping required.

• 3.28.130 Retirement board - Prohibited financial transactions.

• 3.28.140 Retirement board - Authority to make and enforce rules and regulations.

• 3.28.150 Retirement board - Authority to Secure medical service and advice.

• 3.28.155 Authority to secure other contractual services.

The retirement system established by the provisions of this Chapter 3.28, and the retirement fund provided for in this chapter, shall be managed, administered and controlled by that certain board of administration entitled "board of administration for federated city employees retirement system" which has been established by and pursuant to the provisions of Sections 2.08.1000 through 2.08.1090, inclusive, of the San José Municipal Code. (Prior code § 2904.1050.)

The retirement board shall have all the powers and duties given it by the provisions of this Chapter 3.28, including but not limited to, the powers and duties specified in this Part 2. Notwithstanding anything in this part to the contrary, the retirement board shall not engage in a transaction prohibited by Section 503(b) of the Internal Revenue Code. (Prior code § 2904.1051; Ord. 28885.)

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The city manager shall seek the advice and consent of the retirement board on the appointment, evaluation, discipline or termination of the director of retirement services, and the hiring, evaluation, discipline or termination of the assistant director of retirement services, or their equivalent positions. Notwithstanding the foregoing, the city manager may appoint, hire, evaluate, discipline or terminate the director of retirement services or the assistant director of retirement services with or without the advice or consent of the retirement board. Nothing in this chapter shall limit any authority of the city manager under the San José City Charter, San José Municipal Code, and any applicable city policies. (Ord. 29139.)

• A. The retirement board shall keep or cause to be kept any and all records and accounts reasonably necessary for the management, administration or control of this retirement system, including but not limited to records of all contributions made by any and all members of the system or made by the city, and records of all moneys in the retirement fund and of the investment and distribution of such moneys.

• B. In particular, the board shall keep such records and accounts as may be necessary to show:

  1. The total accumulated normal contributions of members;

  2. The total accumulated prior service contributions of members;

  3. The accumulated contributions of the city held for the benefit of members on account of current service;

  4. All other accumulated contributions of the city, which shall include the amounts available to meet the obligation of the city on account of prior service of members.

5. The names of all persons receiving benefits under the retirement system, the nature of such benefits and the amounts paid to each person therefor.

(Prior code § 2904.1060; Ord. 25993.)

A board member or employee of the board shall not, directly or indirectly:

• A. Have any interest in the making of any investment, or in the gains or profits accruing therefrom;

• B. For himself, or as an agent or partner of others, borrow any funds or deposits of this system, nor use such funds or deposits in any manner except to make such current and necessary payments as are authorized by the board;

• C. Become an endorser, surety or obligor on investments by the board.

(Prior code § 2904.1065.)

Subject to the provisions of this chapter and to all applicable provisions of the Charter of the City of San José, the board may make and enforce reasonable rules and regulations for the administration, management and control of the provisions of this chapter and of the retirement system and fund provided for herein; and each member of this system, each person retired hereunder and each person or estate entitled to or receiving any benefits under the provisions of this chapter is and shall be subject to the provisions of this chapter and to said rules and regulations.

(Prior code § 2904.1052.)

• A. The Board may enter into contractual arrangements for such medical service and advice, and may secure and pay reasonable compensation for such independent medical examiners, as

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the Board deems necessary to effectuate the terms of this Chapter. Such contracts for medical services shall be entered into in the name of the Board of Administration for the Federated City Employees Retirement System. The cost of obtaining such medical services and advice, and any cost for appeals therefrom to an administrative law judge shall be administrative expenses of the Plan.

• B. Effective as of June 16, 2017 with respect to applications for disability benefits under the Plan, the Board shall appoint an independent medical panel of three (3) medical experts to evaluate and approve or deny, by a majority vote, all disability applications. The Board shall establish processes and procedures by which the independent medical panel shall carry out and document its responsibilities. Once the independent medical panel is formed, responsibility for reviewing disability applications and making disability determinations will be the sole responsibility of the independent medical panel, or, if the decision of the independent medical panel is appealed, an administrative law judge. The independent medical panel may, upon its own initiative or upon request, reassess the status of a disability retirement recipient to confirm whether the recipient's disability continues. The individuals who may be appointed to such panel by the Board shall be determined as follows:

  1. Individuals shall be recruited to serve on the independent medical panel by the Board using the City's established request for proposal process.

  2. Each individual selected to serve on the independent medical panel shall be approved by a vote of no less than five (5) of the seven (7) members of the Board and shall serve for a four (4)-year term.

  3. Individuals serving on the independent medical panel shall have experience in varying fields of medicine and shall meet the following minimum qualifications:

     • a. Ten (10) years of practice after completion of residency; and

• b. Practicing or retired Board Certified physician; and

• c. Except for prior service on the independent medical panel established under this Section 3.28.150, is not providing or has not provided medical services to the City or retirement boards; and

• d. No prior experience as a Qualified Medical Evaluator.

(Prior code § 2904.1054; Ords. 25092, 29904, 30017.)

• A. In addition to the authority to enter into contractual arrangements for medical services as provided in Section 3.28.150 and the authority to enter into contractual arrangements for investment related services as provided in Part 3 of this chapter, the board is authorized to select, enter into contractual arrangements with, and pay reasonable compensation to persons to perform the following services for the board:

  1. Actuarial services.

  2. Auditing services.

  3. Investment manager search services.

  4. Investment performance evaluation services.

  5. Proxy voting services.

  6. Other consultant services which the board deems necessary to carry out its duties and responsibilities under this retirement plan.

• B. The contracts described in subsection A. shall be entered into in the name of the board of administration for the federated city employees retirement system.

• (Ords. 24696, 25092.)

The board shall keep in convenient form such data as is necessary for the actuarial evaluation of this system. The board shall cause an actuarial

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investigation to be made from time to time and as often as it may deem such to be reasonably necessary to keep the plan actuarially sound, but not less frequently than once each five years, commencing from and after July 1, 1975. The actuarial investigation shall consist of a report as to the mortality, service and compensation experience of members and persons receiving benefits, an actuarial valuation of the assets and liabilities of this system, and such other actuarial investigations as may be relevant to and for the benefit of the system. From time to time the board shall determine the rate of interest being earned on the retirement fund. (Prior code § 2904.1055.)

The board shall cause to be issued, as of the date of the investigation and valuation made pursuant to Section 3.28.160, a financial statement showing an actuarial valuation of the assets and liabilities of this system. A statement as to the accumulated cash and securities in the retirement fund as certified by the auditor shall also be submitted at the same time.

(Prior code § 2904.1061.)

The Board, subject to the provisions of this Chapter, shall determine who are employees of the City eligible for membership in this Retirement System. Except as provided in Section 3.28.150 regarding decisions of the independent medical panel or, where the independent medical panel's determination is appealed to an administrative law judge, the Board is the sole judge of the conditions under which persons may be admitted to and received or continue to receive benefits under this system, and shall determine, modify or terminate benefits for service or disability or death or any other benefits provided for in this Chapter.

(Prior code § 2904.1053; Ord. 29904.)

The director of human resources shall give to the board such notice as it may require of the

change of status of any member, resulting from transfer, promotion, leave of absence, resignation, reinstatement, dismissal or death, and other pertinent information.

(Prior code § 2904.1063; Ord. 29120.)

• A. Upon the basis of any or all of such investigations, valuations and determinations, the Board shall adopt such mortality, service and other tables, actuarially assumed annual rate of return, and other actuarial assumptions as it may deem reasonably necessary, and, subject to such limitations as are set forth elsewhere in this Chapter, it shall fix and from time to time make such revisions or changes in the rates of contribution required of members and of the City as it may determine reasonably necessary to provide the benefits provided for by this Retirement Plan and make this System at all times actuarially sound in a manner consistent with Article XVI, Section 17 of the California Constitution (the "1992 California Pension Protection Act"); provided that, as may be otherwise provided elsewhere in this Chapter, the share of the normal cost portion of contributions made to the Plan on behalf of the City and members who are not Tier 2 members shall at all times be shared in the ratio of three to eight (3:8), except as provided for in Section 3.28.200 A.1. and Section 3.28.200 A.2. with the City bearing the total cost of any associated actuarially accrued unfunded liability for such members. For Tier 2 members, except as provided in Section 3.28.200 B., the proportionate share of contributions on behalf of the City and Tier 2 members shall at all times be in the ratio of one for the City to one for the Tier 2 members (1:1) (sharing equally), including any unfunded actuarially accrued liability.

  1. Notwithstanding the foregoing, the following shall apply to the manner of determining and making additional contributions attributable to the cost associated

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with reclassifying prior members of this Plan, who became Tier 2 members between September 30, 2012 and June 18, 2017, and thereafter remain in the Plan but are no longer considered Tier 2 members as defined under Section 3.28.030.28 ("Reclassified Tier 1 Member"). The additional contributions described in this Section 3.28.200 A.1. are attributable to the entire cost associated with treating Tier 2 service earned by a Reclassified Tier 1 Member as Tier 1 service, including any increase in the unfunded actuarial accrued liability of the benefits. The entire cost associated with treating such Tier 2 service as Tier 1 service, including the increased UAL cost will be referred to as the "Total UAL Increase." The Total UAL Increase shall be determined for each affected member individually by the Board's actuary based upon that member's age, years of service, salary, length of Tier 2 service and other relevant actuarial factors As a result, the amortization schedule for each Reclassified Tier 1 Member's Total UAL Increase may vary. Notwithstanding the cost sharing ratio for Tier 1 members described in the first paragraph of this Section 3.28.200 A. above, the Total UAL Increase attributable to Reclassified Tier 1 Members shall be shared in a ratio of one for the City and one for the Reclassified Tier 1 Member (1:1) and will be reflected as soon as practicable as an increase in the contribution rates of the Reclassified Tier 1 Members. As a condition of receiving his or her full Tier 1 benefit, a Reclassified Tier 1 Member must:

• i. pay his or her Total UAL Increase plus accrued interest on the Reclassified Tier 1 Member's Total UAL Increase at the Plan's assumed rate of return from the date the Total UAL Increase is calculated until Sep-

tember 3, 2020 (the "Reclassified Tier 1 Member Obligation"). Effective the first full pay period following the effective date of Ordinance No. [xxxxx] amending Chapter 3.28.200 A(1)(i) of the 1975 Federated Employees Retirement Plan in the San José Municipal Code, the City will pay a one-time amount equivalent to the expected future interest accrual on the Tier 1 Reclassified Member Obligation calculated as to the anticipated date to be repaid. In no event shall the City's payment cover interest accrued on the Reclassified Tier 1 Member Obligation prior to the first full pay period following the effective date of the ordinance amendment adding this provision and all interest accrued on the Reclassified Tier 1 Member Obligation prior to such date remains the obligation of the Reclassified Tier 1 Member whether or not previously paid by the Reclassified Tier 1 Member; and

• ii. in addition to making the required Tier 1 member contributions, be individually responsible for his or her Reclassified Tier 1 Member Obligation and commence paying his or her Reclassified Tier 1 Member Obligation as soon as practicable after the board determines the amount of such obligation; and

• iii. execute a legally binding agreement with the City setting forth the terms and conditions of his or her Reclassified Tier 1 Member status under the Plan and payment of his or her Reclassified Tier 1 Member Obligation; and

• iv. fully satisfy any outstanding balance of his or her Reclassified Tier 1 Member Obligation on or before

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the later of sixty (60) calendar days following the date of the Reclassified Tier 1 Member's separation from City service or receipt of the final remaining balance calculation of such member's Reclassified Tier 1 Member Obligation from the Board. If the entire balance of the Reclassified Tier 1 Member Obligation is not satisfied by such date, benefits for such Reclassified Tier 1 Member shall be determined in accordance with Section 3.28.820 E.

2. The City shall pay its share of the Total UAL Increase through the Plan's amortization of the Plan's UAL as determined by the Board upon the recommendation of its actuary. The City's obligation includes any actuarial gains and losses associated with the Total UAL Increase, including interest from time to time at the Plan's assumed rate or return.

3. Notwithstanding the foregoing, subdivisions 1 and 2 of this Section 3.28.200 A., the following shall apply to the manner of determining contributions on behalf of the City and members who accept employment on or after September 30, 2012 who is otherwise eligible for this Plan and who was an active member in another California public retirement system, with which this Plan has reciprocity under Part 21, and who has a break in service of less than six (6) months from that covered employment and employment with the City, other than those who meet the definition of new members as defined by Government Code Section 7522.04(f) as may be amended, but on and after June 16, 2017 remain in the Plan but are no longer considered Tier 2 members under the definition of Tier 2 member under Section 3.28.030.28. Any and all costs, including but not limited to any unfunded actuarial accrued liability,

directly or indirectly associated with benefit changes adopted on June 16, 2017 for such members and any and all amounts associated with moving such members from Tier 2 status to non-Tier 2 status, will be amortized as a separate liability over twenty (20) years or such other period determined by the Board. Further, notwithstanding the cost sharing ratio for non-Tier 2 members described in the first paragraph of Section 3.28.200 A. above, any and all costs described in this subsection 3.28.200 A.3. shall at all times be shared in the ratio of one for the City and one for the non-Tier 2 members who became a member as a result of Part 21 of Chapter 3.28 of the San José Municipal Code and is not a Tier 2 Member as defined under Section 3.28.030.28 (1:1) and will be reflected as soon as practicable in the contribution rates for such members.

• B. Notwithstanding Section 3.28.200 A., the following shall apply to the manner of determining contributions on behalf of the City and members who are Tier 2 members on or after June 16, 2017:

1. The costs, including any unfunded actuarial accrued liability, associated with the Tier 2 benefit changes adopted on June 16, 2017 for members who were Tier 2 members prior to June 16, 2017, will be amortized as a separate liability over twenty (20) years or other period determined by the Board and will be reflected as soon as practicable in contribution rates to be shared equally among the City and all Tier 2 members and such increased rates shall not be subject to the incremental increases in amounts associated with unfunded actuarial accrued liability described in Section 3.28.200 B.2.

   2. Other than provided in Section 3.28.200 A., in determining member contribution rates, to the extent an unfunded actuarial

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accrued liability is determined to exist with respect to the Plan, Tier 2 members will contribute toward the amount of such amortized unfunded actuarial accrued liability by increasing the Tier 2 member contribution rate by one-third of one percent (0.33%) of compensation each year until such time as the cost of the unfunded actuarial accrued liability is being shared equally by the Tier 2 members and the City. Until such time as the Tier 2 members and the City are sharing such cost equally, the City will include in its contribution rate the amount of the amortized unfunded actuarial accrued liability that would otherwise have been paid by the Tier 2 members in such year. (Prior code § 2904.1056; Ords. 27436, 29904, 30017, 30145, 30183, 30441.)

• A. Whenever it is impractical for the retirement board to determine from the records of the city and from other evidence before it the length of service, the compensation or the age of any member in this retirement system, it may estimate for the purposes hereof such length of service, compensation or age. Each employee shall file with the board such information respecting his age, length of service or compensation or any other information which may affect his status as the board may require.

• B. If there is a disagreement between any member and the board with respect to the length of service, compensation or age of any member, or if any member refuses or fails to give the board a statement of his city service, compensation or age or other information requested by the board, the board shall hold a hearing and upon the basis of available testimony and available records determine such length of service, compensation or age.

(Prior code § 2904.1058.)

If more or less than the correct amount of contribution required of members or the city is paid, proper adjustment shall be made in connection with subsequent payments, or such adjustments may be made by direct cash payments between the member or the city and the board. Adjustments to correct any other errors in payments to or by the board may be made in the same manner.

(Prior code § 2904.1064.)

• A. The Board in its discretion may hold hearings for the purpose of determining any question presented to it involving any right, benefit or obligation of any person under this Chapter. Any applicant for any benefits may file an application for rehearing of his or her application for benefits within thirty (30) days after written notice of the determination of the Retirement Board has been sent by mail to the applicant or his or her attorney of record, upon any of the following grounds:

  1. That the Retirement Board acted without and in excess of its powers;

  2. That the order, decision or award was procured by fraud;

  3. That the evidence does not justify the determination of the Retirement Board;

  4. That the applicant has discovered new evidence material to him or her which he or she could not with reasonable diligence have discovered or procured at the hearing.

• B. The determination of the Retirement Board on any said application for rehearing shall be made within sixty (60) days from and after the date of filing of said application.

• C. Notwithstanding the foregoing, any decisions regarding a determination related to a member's disability shall be subject to review only in accordance with the process described in

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Sections 3.28.1250, 3.28.1370.C, 3.28.1410, 3.28.1445 and/or 3.28.1449, as may be applicable.

(Prior code § 2904.1059; Ord. 29904.)

The retirement board shall have the power to administer or require oaths and affirmations, to issue subpoenas to compel the attendance of witnesses or the production of books, papers and documents, and to take and hear testimony concerning any matter pending before the board. If any person so subpoenaed neglects or refuses to appear or produce any book, paper or document as required by said subpoena, or shall refuse to testify before the board or answer any questions which a majority of the board decides to be proper and pertinent, the board shall have the power to initiate proceedings in the proper court to have such person declared guilty of contempt. The chief of police shall, on request of the board, have such subpoenas served by a police officer or officers. (Prior code § 2904.1066.)

Within ninety days after the end of each fiscal year, or if later, within thirty days after the submission to the city council of an audited annual fiscal report of the retirement system's funds required by ordinance, the board shall submit to the city council and city manager an annual report for such preceding fiscal year. The report shall contain a statement of the board's work for such period, and shall show all receipts and disbursements and the balance remaining in the retirement fund after such payments. The report may contain recommendations for or against changes in the retirement system.

(Prior code § 2904.1062; Ord. 18767 § 4, 1977, 25993.)

• A. If, under the provisions of this chapter, a person becomes entitled to a distribution which is

an eligible rollover distribution, the person may elect to have the distribution or any portion thereof paid directly to an eligible retirement plan specified by the person.

• B. The election made pursuant to this section shall be in accordance with the terms and conditions established by the board.

• C. Upon the exercise of the election by a person pursuant to this section, the distribution from the retirement fund of the amount designated by the person, once distributable under the provisions of this chapter, shall be made in the form of a direct transfer to the eligible retirement plan so specified.

• D. For the purposes of this section, "eligible rollover distribution" means a distribution from the retirement fund which constitutes an eligible rollover distribution within the meaning of Section 401(a)(31)(C) of the Internal Revenue Code, consisting of any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or the life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Internal Revenue Code; the portion of any distribution that is not includible in gross income; and any other distribution which the internal revenue service does not consider eligible for rollover treatment, such as certain corrective distributions necessary to comply with the provisions of Section 415 of the Internal Revenue Code or any distribution that is reasonably expected to total less than two hundred dollars during the year. Effective January 1, 2002, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax em-

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• ployee contributions that are not includible in gross income. However, such portion may be transferred only: (i) to an individual retirement account or annuity described in Section 408(a) or (b) of the Internal Revenue Code or to a qualified defined contribution plan described in Section 401(a) of the Internal Revenue Code; (ii) on or after January 1, 2007, to a qualified defined benefit plan described in Section 401(a) of the Internal Revenue Code or to an annuity contract described in Section 403(b) of the Internal Revenue Code, that agrees to separately account for amounts so transferred (and earnings thereon), including separately accounting for the portion of the distribution that is includible in gross income and the portion of the distribution that is not so includible; or (iii) on or after January 1, 2008, to a Roth IRA described in Section 408A of the Internal Revenue Code. Effective January 1, 2002, the definition of eligible rollover distribution also includes a distribution to a surviving spouse or to a spouse or former spouse who is an alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Internal Revenue Code. For purposes of this Section 3.36.480, "spouse" has the meaning set forth in federal law.

• E. For purposes of this section, "eligible retirement plan" means a plan which constitutes an eligible retirement plan within the meaning of Section 401(a)(31)(D) of the Internal Revenue Code, consisting of one or more of the following:

  1. An individual retirement account described in Section 408(a) of the Internal Revenue Code;

  2. An individual retirement annuity described in Section 408(b) of the Internal Revenue Code;

  3. An annuity plan described in Section 403(a) of the Internal Revenue Code;

  4. A qualified trust described in Section 401(a) of the Internal Revenue Code;

  5. Effective January 1, 2002, an annuity contract described in Section 403(b) of the Internal Revenue Code;

  6. Effective January 1, 2002, a plan eligible under Section 457(b) of the Internal Revenue Code that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or a political subdivision of a state that agrees to separately account for amounts transferred into that plan from the retirement plan; or

  7. Effective January 1, 2008, a Roth IRA described in Section 408A of the Internal Revenue Code.

• F. For purposes of this section, "distributee" means an employee or former employee. It also includes the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Internal Revenue Code. Effective July 1, 2010, a distributee further includes a nonspouse beneficiary who is a designated beneficiary as defined by Section 401(a)(9)(E) of the Internal Revenue Code. However, a nonspouse beneficiary may only make a direct rollover to an individual retirement account or individual retirement annuity established for the purpose of receiving the distribution, and the account or annuity shall be treated as an "inherited" individual retirement account or annuity.

• G. If on or after March 28, 2005, the member is to receive a distribution of an eligible rollover distribution, with a present value greater than one thousand dollars, and if a member does not elect to have such distribution paid directly to an eligible retirement plan specified by member in a direct rollover or to receive the distribution directly, then the system shall pay the distribution in a direct rollover to an individual retirement plan designated by the board

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in accordance with Section 401(a)(31)(B) of the Internal Revenue Code and IRS Notice 2005-5.

(Ords. 24814, 28885.)

• A. Except as provided in subsection B., prior to the adoption of any ordinance amending the Federated City Employees Retirement System, a copy of the proposed ordinance shall be provided to the board for the board's review and recommendation.

  1. The board may, but is not required to, submit a report or recommendation on the proposed amendment to the city council.

  2. If the board declines or fails to submit a report or recommendation on a proposed amendment within sixty days of receipt of the proposed ordinance by the secretary to the board, the city council may proceed to adopt or not adopt the ordinance without first receiving a report or recommendation from the board.

  3. Nothing in paragraph 2. shall be deemed to preclude the board from thereafter submitting a report or recommendation to the city council.

• B. In any case where the city council finds that there is a need to adopt an ordinance amending the system within a time period which would not allow for a sixty-day review period, the council may act on the ordinance without first submitting it to the board, and the following procedures shall apply:

  1. At the time the council passes the ordinance for publication of title or, in the case of an urgency ordinance, at the time the council adopts the ordinance, the council shall refer the ordinance to the board for study and consideration.

  2. Following its study, the board may submit to the council a recommendation that the council take one or more of the following actions:

     • a. Repeal the ordinance.

     • b. Readopt the provisions of the ordinance with such amendments, additions or changes, if any, as the board may wish to recommend.

     • c. Make such other changes or provisions as the board may recommend.

  3. Upon receipt of the board's recommendation, the council may implement or disapprove the recommendation.

• (Ords. 24921, 24979.)

• A. If a member of this plan becomes eligible to purchase permissive service credit in this plan and elects to make such purchase through a lump sum deposit, the plan will accept a direct trustee-to-trustee transfer of funds from an eligible deferred compensation plan as defined in Section 457(b) of the Internal Revenue Code if such transfer is:

  1. For the purchase of permissive service credit as defined in Section 415(n)(3)(A) of the Internal Revenue Code; or

  2. A redeposit of withdrawn contributions pursuant to Section 3.28.790.

• B. If required by the provisions of the Internal Revenue Code or the regulations promulgated under the Internal Revenue Code, the plan will account separately for funds received through a direct trustee-to-trustee transfer from an eligible deferred compensation plan.

• (Ord. 26830.)

Part 3

RETIREMENT FUND

Sections:

• 3.28.300 Establishment - Name - Composition.

• 3.28.310 Retirement board administration and investment authority.

• 3.28.320 Custodian of retirement fund - Payments.

• 3.28.330 Deposit of funds.

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• 3.28.340 Disposition of earnings. 3.28.350 Investment of funds - Conditions and limitations.

• 3.28.355 Investment of funds - Delegation of authority.

• 3.28.360 Security loan agreements.

• 3.28.365 Investments - Real estate.

• B. At no time prior to the satisfaction of all liabilities with respect to members of this plan and their beneficiaries shall any part of the corpus or income of the retirement fund be used for, or diverted to, purposes other than for the exclusive benefit of the members and their beneficiaries.

(Prior code § 2904.1100; Ords. 25092, 27838.)

• 3.28.370 Redeposit of unclaimed payments.

• 3.28.375 Investment counseling - Restrictions.

• 3.28.380 Separate medical benefits account. 3.28.381 Contributions to fund retiree healthcare benefits.

• 3.28.385 Contribution rates for medical and dental benefits.

• 3.28.300 Establishment - Name - Composition.

• A. In order to continue in force and make effectual pensions and retirements already existing or that may be granted in the future in favor of members of the retirement plan heretofore established pursuant to the provisions of Chapter 3.24 of this Code, and in order to carry out the provisions of this chapter, the retirement fund heretofore continued in existence by the provisions of Chapter 3.24 and specifically by the provisions of Section 3.24.300 of the San José Municipal Code, is hereby continued in existence and is hereby made a combined common fund for the component of the retirement system established by this chapter and for the component of the retirement system established by Chapter 3.24, and for the components of any and all other retirement systems with which it has heretofore been combined. All income and other moneys which are required pursuant to the provisions of this chapter to be paid to this retirement system or into the retirement fund shall be paid into and held in said fund; and all benefits or allowances payable to any member or person under this retirement system shall be paid from said fund. Said fund is known as and shall continue to be known as the "San José Federated City Employees Retirement Fund."

The board has the exclusive control of the administration and investment of the retirement fund.

(Prior code § 2904.1101; Ord. 25092.)

• A. Except as provided in subsection B., the city director of finance is the custodian of the retirement fund, subject to the exclusive control of the board as to administration and investment. All payments from the fund shall be made in the manner required for the disbursement of other public funds, but only upon authorization of the board.

• B. The board may enter into contractual arrangements with California banks or with national banking associations to provide master custody services with respect to the assets of the retirement fund. Such contracts shall be entered into in the name of the board of administration for the federated city employees retirement system.

(Prior code § 2904.1102; Ord. 25092.)

The board shall deposit, to the credit of the retirement fund, all amounts received by it under this chapter in the city treasury or in such custodial accounts as are established with the custodian bank. (Prior code § 2904.1104; Ord. 25092)

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• A. Definitions. For the purpose of this Section 3.28.340, the terms listed herein shall have the following meanings:

  1. "Income account" means the account established in the general reserve pursuant to Subsection B. below.

  2. "Interest crediting rate" means the interest rate determined by the board for crediting the employee contribution reserve.

• B. Retirement fund reserves. There shall be established in the retirement fund the following reserves:

  1. The employee contribution reserve.

     • a. The board shall credit to the employee contribution reserve all contributions made by members of the retirement system and all interest payable pursuant to Subsection C. below.

     • b. Moneys in the employee contribution reserve shall be available for the payment of benefits and for the return of contributions pursuant to Section 3.28.780.

  2. The general reserve.

     • a. The board shall establish an income account and shall credit the income account with all rents, interest, dividends, realized gains and losses, unrealized gains and losses, and all other income other than employer contributions, received during the fiscal year. The board shall pay from the income account all expenses and administrative costs as they are incurred.

     • b. The board shall credit to the general reserve all contributions made by the city, all interest payable pursuant to Subsection C. below, and that portion of the excess earnings determined pursuant to Subsection D. below.

     • c. Moneys in the general reserve shall be available for the payment of benefits and for the payment of the expenses and administrative costs of the retirement system.

  3. Such other reserves as the board may determine from time to time.

• C. Credit to contributions and reserves. All interest credited pursuant to this Subsection C. shall be deducted from the income account.

  1. Interest shall be credited to the employee contribution reserve on a semi-annual basis, or more frequently if authorized by the board, at the interest crediting rate.

  2. Interest shall be credited to the general reserve as follows:

     • a. Interest at the actuarially assumed annual rate of return adopted by the board pursuant to Section 3.28.200 or at the actual rate of return earned by the retirement fund during the applicable fiscal year, whichever is lower; plus

     • b. Interest calculated as the difference between (i) the interest that would have been credited to the employee contribution reserve had the employee contribution reserve been credited at the actuarially assumed annual rate of return adopted by the board pursuant to Section 3.28.200 or at the actual rate of return earned by the retirement fund during the applicable fiscal year, whichever is lower, and (ii) the interest actually credited to the employee contribution reserve pursuant to Subsection C.1. above; provided, however, that there shall be no offset to the general reserve in any case where this difference is a negative number.

• D. Excess earnings.

  1. Within ninety days from and after receipt of audit reports for each fiscal year, the

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board shall determine the balance remaining in the income account after crediting of interest as provided in Subsection C. above, and after payment of administrative costs and expenses of the retirement system for the applicable fiscal year.

2. If the balance remaining in the income account is greater than zero, the board shall, by written resolution, declare that balance to be the excess earnings for the applicable fiscal year, shall transfer the excess earnings to the general reserve. If the balance remaining in the income account is less than or equal to zero, the board by written resolution shall declare that there are no excess earnings and shall adjust the general reserve to reflect any negative balance in the income account so that the balance in the income account is zero as of the beginning of each fiscal year.

(Prior code § 2904.1103; Ords. 20596, 22263, 22486, 23087, 25092, 27436, 29174.)

The board shall invest and reinvest the moneys in the retirement fund in accordance with the following standards:

• A. The assets of the retirement plan are trust funds and shall be held for the exclusive purposes of providing benefits to members of the plan and their beneficiaries and defraying reasonable expenses of administering the plan. The assets of the retirement plan must not revert, and no contributions shall be permitted to be returned to the employers, except as permitted by Revenue Ruling 91-4.

• B. The board shall discharge its duties with respect to the plan solely in the interest of, and for the exclusive purposes of providing benefits to, members of the plan and their beneficiaries, maintaining the actuarial soundness of the plan in a man-

ner consistent with Article XVI, Section 17 of the California Constitution (the "1992 California Pension Protection Act"), and defraying reasonable expenses of administering the plan. The board's duty to the members and their beneficiaries shall take precedence over any other duty.

• C. The board shall discharge its duties with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of like character and with like aims.

• D. The board shall diversify the investments of the plan so as to minimize the risk of loss and to maximize the rate of return, unless under the circumstances, it is clearly prudent not to do so.

• E. The retirement plan may participate under Section 401(a)(24) of the Internal Revenue Code in a qualified group trust that meets the requirements of Section 401(a) of the Internal Revenue Code in accordance with Revenue Ruling 81-100, as amended by Revenue Ruling 2004-67.

• (Ords. 25092, 28885, 29174.)

Without limiting the authority of the board itself to invest and reinvest the moneys of the retirement fund as provided in Section 3.28.350, the board may adopt an investment resolution or resolutions containing detailed guidelines, consistent with Section 3.28.350. While the resolution or resolutions are in effect, investments consistent with such guidelines may be made by an officer of the board, an officer or employee of the city, or a qualified investment advisor who has entered into a contractual arrangement pursuant to Section 3.28.375, provided that such officer, employee or advisor has been delegated such authority by the board and such officer, employee or advisor has

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been designated by name in the investment resolution or resolutions. Any transactions made pursuant to the foregoing provisions of this section shall be reported monthly to the board by the person or persons to whom the board has delegated such authority.

(Ord. 25092.)

• A. The retirement board may enter into contractual arrangements with broker-dealers and with banks for such broker-dealers or banks to provide security lending services pursuant to security loan agreements on such conditions, consistent with this section, as the board may determine.

• B. For the purposes of this section, "security loan agreement" and "marketable securities" shall be defined as follows:

  1. "Security loan agreement" means a written contract whereby a legal owner, the lender, agrees to lend specific marketable corporate or government securities for a period not to exceed one year. The lender retains the right to collect from the borrower all dividends, interest, premiums, rights, and any other distributions to which the lender would otherwise have been entitled. The lender waives the right to vote the securities during the term of the loan.

  2. "Marketable securities" means securities that are freely traded on recognized exchanges or market places.

• C. Any contractual arrangements entered into pursuant to this section shall require all of the following:

  1. The lender may terminate the security loan agreement upon not more than five business days' notice as agreed and the borrower may terminate the security loan agreement upon not less than two business days' notice as agreed.

  2. The borrower shall provide collateral to the lender in a form approved by the

board, and in an amount equal to at least one hundred two percent of the market value of the loaned securities as agreed.

3. Daily monitoring of the market value of the loaned securities.

4. Payment by the borrower of additional collateral on a daily basis, or at such times as the value of the loaned securities increases, to agreed-upon ratios, but in no event shall the amount of the collateral be less than the market value of the loaned securities.

5. Maintenance of detailed records of all security loans.

6. Development of controls and reports to monitor the conduct of the transactions.

7. Publication of the net results of the security loan transactions separate from the results of other investment activities.

(Ords. 24690, 25092.)

• A. The board may:

  1. Acquire, hold for investment or sell commercial, industrial and residential real estate, and real estate related debt instruments in the following forms: in its own name or in common ownership with the police and fire department retirement plan or through a title holding corporation or trust satisfying the requirements of Internal Revenue Code Section 501(c)(25);

  2. Lease real property owned by the board for any lawful purpose and for terms which may extend beyond the duration of this retirement system;

  3. Create restrictions and easements affecting the real property owned by the board; and

  4. Exercise all other rights, privileges and powers which an owner of real property would have, unless otherwise prohibited by the terms of this retirement plan or by other applicable law.

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• B. The board shall take title as follows:

  1. Title to all commercial, industrial and residential real estate and all real estate related debt instruments acquired by the board on behalf of this retirement system shall be taken and held in one of the following forms: directly by the board of administration in the name of board of administration as trustee for the federated city employees retirement fund, or through a title holding corporation or trust satisfying the requirements of Internal Revenue Code Section 501(c)(25).

  2. Title to all commercial, industrial and residential real estate and all real estate related debt instruments acquired by the board on behalf of this retirement plan to be held in common ownership with the police and fire department retirement plan shall be taken and held in the following name: board of administration as trustee for the federated city employees retirement fund, as to an undivided specified percent interest, and the board of administration, as trustee for the police and fire department retirement fund, as to an undivided specified percent interest, together as tenants in common. The percent interests to be specified in the title shall be determined by the boards of administration.

• C. For the purposes of this Section 3.28.365, a title holding corporation or trust satisfying the requirements of Internal Revenue Code Section 501(c)(25) may be such a corporation or trust established by the board.

• (Ords. 25092, 25994.)

Notwithstanding any provision in this chapter or any other ordinance to the contrary, whenever any check drawn against the retirement fund in payment of accumulated contributions or for any benefit remains unclaimed or the claimant cannot be found, the amount of such check shall be rede-

posited in the retirement fund and held for the claimant without further accumulation of interest, and such redeposit shall not operate to reinstate the membership of the claimant in this system. If such proceeds, whether heretofore or hereafter redeposited, are not claimed within four years after the date of redeposit, they shall revert to and become a part of the accumulated contributions of the city, held in the retirement fund to meet the liabilities of the city on account of current services. The board may at any time after reversion of proceeds to the city, and upon receipt of proper information satisfactory to it, return such proceeds so held for the city to the credit of the claimant, to be administered in the manner provided under this system.

(Prior code § 2904.1106; Ord. 25092.)

• A. The board may enter into contractual arrangements with any person or persons or association or associations, who meet the requirements of subsection B. or C., to provide counsel to the board with respect to the board's policies of investing and reinvesting of moneys in the retirement fund. Such contracts shall be entered into in the name of the board of administration for the federated city employees retirement system.

• B. Any person or association who provides services to the board with regard to financial securities:

  1. Shall be a person or association whose principal business consists of investment counseling services; and

  2. Shall be registered as an investment adviser under such laws as may require such registration.

• C. With respect to real estate advisors, the board shall enter into contractual arrangements only with persons or associations whose principal officers are engaged in the business of advising and evaluating commercial, industrial or residential real estate investments, mortgage banking or property management, and which are

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duly licensed to perform real estate advisor services in the jurisdiction where the real property is located.

(Prior code § 2904.1107; Ords. 21606, 25092, 25641.)

• A. There is hereby established as of July 1, 1995, the medical benefits account as a separate account within the retirement fund. The medical benefits account shall be maintained in compliance with Internal Revenue Code Section 401(h) and the regulations promulgated thereunder. Monies in the medical benefits account may be commingled with other monies in the retirement fund solely for the purposes of investment.

• B. All contributions made to the retirement fund to provide for the payment of benefits for sickness, accident, hospitalization, dental or medical expenses of persons receiving monthly allowances under the provisions of this Plan, and all earnings and interest attributable to such contributions to the retirement fund, shall be placed in the medical benefits account. All contributions to the medical benefits account shall be reasonable and ascertainable. At the time the City makes a contribution to the medical benefits account, the City shall designate in writing that such contribution is solely for the medical benefits account.

• C. Contributions to provide for the payment of benefits for sickness, accident, hospitalization, dental or medical expenses of persons receiving monthly allowances under the provisions of this Plan, and earnings and interest attributable to such contributions may be made to the medical benefits account or to the trust established by Chapter 3.52.

• D. All funds in the medical benefits account shall be used only for the payment of benefits and expenses allowed under Internal Revenue Code Section 401(h) and the regulations promulgated thereunder. The medical benefits account shall be used to provide medical and dental benefits in accordance with Parts 16

and 17 of this Chapter. Prior to the satisfaction of all liabilities under this Plan to provide such benefits, no funds in the medical benefits account shall be used for, or diverted to, any other purpose.

• E. All benefits provided through the medical benefits account, plus any life insurance protection provided under the Plan, shall be subordinate to the retirement and survivors' benefits provided by the Plan. Accordingly, at all times after the date on which the medical benefits account is established, the aggregate of the City's contributions to the medical benefits account shall not exceed twenty-five percent (25%) of its total aggregate contributions to the Plan (other than contributions to fund prior service). For the purpose of this limitation, City contributions include any contributions which are "picked-up" pursuant to Internal Revenue Code Section 414(h).

• F. Upon the satisfaction of all liabilities under this Plan to provide the benefits described in this Section, any amount remaining in the medical benefits account shall be paid to the City.

• G. In the event that a member's interest in the medical benefits account is forfeited prior to the termination of the Plan, an amount equal to the forfeiture shall be applied as soon as practicable to reduce the City contributions, if any, to the medical benefits account.

• H. Except as otherwise provided under Section 3.28.381, City and member contributions to the medical benefits account shall be made on the same periodic basis as City and member contributions are made to the retirement fund. City contributions and member contributions to the medical benefits account may be paid on different payment schedules as may be determined by the Board.

(Ords. 27838, 28332, 28885, 28914, 29904.)

• A. Effective on the date determined by the City once the VEBA is established, contributions

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• to fund the healthcare benefits for qualified members and qualified survivors who are eligible for benefits to be provided under the terms of Parts 16 and 17 of this Plan who do not make the one-time irrevocable election described in subsection 3.28.381.D. will be seven and one-half percent (7.5%) of compensation as defined under Section 3.28.030.05 for members and such percentage of covered compensation for City contributions as determined by the actuary to be necessary to fund the amount of the annual required contribution each year; provided, however, that if the City's portion of the required contribution is determined to be fourteen percent (14.0%) of covered compensation or greater for a year, the City may in its discretion choose to only contribute a maximum of fourteen percent (14.0%) of covered compensation for such year.

• B. Except as otherwise provided in Part 16 and Part 17 of this Plan, members, other than Tier 2 members, rehired after September 27, 2013, shall not be eligible for retiree healthcare benefits provided under Part 16 or Part 17 of this Plan. Effective on the date determined by the City once the VEBA is established, such members shall be provided retiree healthcare benefits in accordance with provisions of Chapter 3.58 and member's contribution rate to fund such benefits shall be determined under Chapter 3.58.

• C. Except as otherwise provided in this Section 3.28.381, Tier 2 members shall not be eligible for the retiree healthcare benefits provided under Parts 16 and 17 of this Plan. Effective on the date determined by the City once the VEBA is established, Tier 2 members shall be provided retiree healthcare benefits in accordance with provisions of Chapter 3.58 and member's contribution rate to fund such benefits shall be determined under Chapter 3.58.

  1. Notwithstanding the first paragraph of subsection 3.28.381.C., Tier 2 members represented by the Operating Engineers, Local 3 and the Association of Building,

Mechanical and Electrical Inspectors who were hired or rehired on or after September 30, 2012 but before September 27, 2013 are eligible for retiree health benefits under Part 16 and Part 17 of this Plan and shall make retiree healthcare contributions in accordance with Section 3.28.381.A.

• D. On or soon after the date determined by the City once the VEBA is established, members described in subsection 3.28.381.A, subsection 3.28.381.B., or subsection 3.28.381.C.1. who are eligible for benefits under Part 16 and/or Part 17 shall be provided a one-time irrevocable election to instead be covered under Chapter 3.58, in accordance with the process described in Chapter 3.58. Coverage under Chapter 3.58 for such members becomes effective upon IRS approval of the transfer of prior member contributions made under Parts 16 and 17 to the funding vehicle established under Chapter 3.58. On a date determined by the City after coverage under Chapter 3.57 becomes effective, such member's Chapter 3.58 account shall receive a credit for all prior contributions made by the member under Parts 16 and 17 of this Plan and such member's retiree health benefits and contribution rate shall be determined under Chapter 3.58.

• E. Notwithstanding anything else in this Plan to the contrary, unrepresented Tier 2 members in Unit 99, Unit 81 and Unit 82 shall not be eligible for retiree healthcare benefits under Part 16 and Part 17 of this Plan nor retiree healthcare benefits under Chapter 3.58. Unrepresented members of Unit 99, Unit 81 and Unit 82 who are not Tier 2 members as defined by Section 3.28.030.28 that are rehired after September 27, 2013 are also ineligible for retiree health benefits under Part 16 and Part 17 of this Plan and the retiree health benefits under Chapter 3.58 and shall not make contributions under either program. For members who previously made contributions under Part 16 and 17, the City shall transfer any amount

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equal to the member's prior contributions (without accrued interest) to the funding vehicle used to provide the benefits under Chapter 3.58 for such member's future use.

• F. The City Manager shall have the discretion to terminate the existing Tier 2 retiree medical benefits plan. In that event, Tier 2 members shall not be provided benefits or make contributions under Parts 16 and 17 of this Plan.

• (Ords. 29904, 30017, 30044.)

Contribution rates to fund the benefits for sickness, accident, hospitalization, dental or medical expenses shall be established by the board as determined by the board's actuary and shall be borne by the city and the members of the plan as follows:

• A. Contributions for dental benefits shall be made by the city and the members in the ratio of eight-to-three.

• B. Contributions for medical and dental insurance premiums costs attributable to the early retirement incentive programs described in Parts 18, 19, and 20 of this chapter shall be borne by the city.

• C. Contributions for other medical benefits shall be made by the city and the members in the ratio of one-to-one.

• (Ord. 28914.)

Part 4

MEMBERSHIP

Sections:

• 3.28.400 Continuation of members of the Chapter 3.24 retirement system holding city offices on June 30th and July 1, 1975.

• 3.28.410 Reinstatement from Chapter 3.24 service retirement and reentry into federated city service.

• 3.28.420 Reinstatement from or reentry after Chapter 3.24 disability retirement.

• 3.28.430 Reentry in city service, before retirement, by persons who retained membership in Chapter 3.24 retirement system pursuant to Section 3.24.510 or other provisions of Chapter 3.24 system.

• 3.28.440 Persons employed on June 30, 1975, as part-time, employees who are not members of the Chapter 3.24 retirement system.

• 3.28.450 Other persons who become city officers or employees on or after July 1, 1975 but before September 30, 2012.

• 3.28.455 Other persons who become city officers or employees on or after September 30, 2012.

• 3.28.460 Exclusions and exceptions - Mayor and members of city council.

• 3.28.470 Exclusions and exceptions - Members of boards and commissions.

• 3.28.490 Exclusions and exceptions - Persons temporarily employed pursuant to Section 1101(a)(4) of City Charter.

• 3.28.500 Exclusions and exceptions - Persons employed in event of emergency pursuant to Section 1101(a)(5) of City Charter.

• 3.28.510 Exclusions and exceptions - Persons employed pursuant to Section 1109 of City Charter.

• 3.28.520 Exclusions and exceptions - Volunteer workers.

• 3.28.530 Exclusions and exceptions - Emergency appointments in time of war or national emergency.

• 3.28.540 Exclusions and exceptions - Relief or antipoverty programs.

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• 3.28.545 Exclusions and exceptions - Police recruits, firefighter recruits.

• 3.28.550 Exclusions and exceptions - Members of other retirement or pension systems.

• 3.28.560 Exclusions and exceptions - Part-time employees.

• 3.28.570 Termination of membership.

• 3.28.580 Election by persons who became members pursuant to Sections 3.28.400 through 3.28.430, inclusive, to allow accumulated contributions to remain in fund.

• 3.28.590 Election by members other than those specified in Section 3.28.580 to allow accumulated contributions to remain in fund.

• 3.28.400 Continuation of members of the Chapter 3.24 retirement system holding city offices on June 30th and July 1, 1975.

Each person who on June 30, 1975, was an officer or employee of the city holding an office or position entitling him or her to membership in this retirement plan pursuant to the provisions of Chapter 3.24 and who, in addition, was a member of the retirement plan on that date, shall become and be subject to the provisions of this Chapter 3.28 upon its becoming effective if he or she continues to hold that office or position to and through July 1, 1975, and, in addition, continues to be a member of the Chapter 3.24 retirement system until the effective date of this chapter. Upon becoming subject to the provisions of this chapter, each such person ceases to be a subject to the provisions of Chapter 3.24 and he or she, and all other persons or estates that might have any rights under Chapter 3.24 because of the person's coverage under Chapter 3.24, cease to have any rights under Chapter 3.24 but shall thereafter be governed by and have only such rights as are provided by this Chapter 3.28 system. (Prior code § 2904.1150; Ord. 27838.)

• A. A person who has been retired from service under the provisions of Chapter 3.24, at an age less than the age for compulsory retirement applicable to him or her, may be reinstated from retirement to Federated City Service by the Retirement Board in accordance with the provisions of this Chapter, and, upon such reinstatement or thereafter, such person may be reemployed by the City in a position in the Federated City Service in accordance with the laws governing such employment in the same manner as a person who had not been so retired.

• B. The Retirement Board shall not reinstate any such person from service retirement unless:

  1. The person proposed to be reinstated has filed with the Board a written application requesting such reinstatement;

  2. At least one (1) year has or will have expired between the effective date of said person's last retirement and the date of reinstatement; and

  3. The Board has found and determined that said person's age on the effective date of his or her reinstatement is at least six (6) months less than age seventy (70).

• C. When a person is reinstated from service retirement and reenters Federated City Service pursuant to this Section, his or her service retirement allowance shall be canceled as of the effective date of the reinstatement, and, subject to the exceptions and exclusions hereinafter set forth in Sections 3.28.460 through 3.28.550 inclusive of this Part, he or she shall become and be a member of this retirement plan as of the effective date of his or her new employment in the Federated City Service. Upon becoming a member of this Plan, any such person who formerly was retired for service under the provisions of Chapter 3.24 ceases to be governed by the provisions of Chapter 3.24, and he or she and all other persons or

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estates that might have any rights under Chapter 3.24 because of the person's coverage under Chapter 3.24 cease to have any rights under Chapter 3.24 but shall thereafter be governed by and have only such rights as are provided for in this Chapter.

• D. Any such person who is reinstated and reenters Federated City Service and meets the definition of Tier 2 member under Section 3.28.030.28 at the time of reentry or reinstatement, shall become a Tier 2 member.

• (Prior code § 2904.1151; Ords. 27838, 29120, 29904.)

• B. Any person retired for disability under the provisions of Chapter 3.24 whose disability retirement is canceled pursuant to the provisions of Section 3.24.1300 of the San José Municipal Code because of his or her reentry into Federated City Service in a position other than the position held when he or she retired for disability and other than any position in the same classification of positions as the position held when he or she retired for disability.

(Prior code § 2904.1152; Ords. 27838, 29120, 29904.)

If a person retired for disability under the provisions of Chapter 3.24 and the disability retirement allowance is canceled for either of the following reasons, then, subject to the exclusions and exceptions hereinafter set forth in Sections 3.28.460 through 3.28.550 inclusive of this Part, the person shall become and be a member of this Plan upon being reinstated to a position in Federated City Service or upon reentry into Federated City Service. If the person meets the definition of a Tier 2 member under Section 3.28.030.28 at the time he or she is reinstated or re-enters Federated City Service, the person shall become a Tier 2 member. Upon becoming a member of this Plan, any such person who formerly was retired for disability under the provisions of Chapter 3.24 ceases to have any rights thereunder but will thereafter be governed by and have only such rights as are provided for in this Chapter. This provision applies to:

• A. Any person retired for disability under the provisions of Chapter 3.24 whose disability retirement is canceled pursuant to the provisions of Section 3.24.1290 of the San José Municipal Code and who is reinstated, in accordance with the provisions of said Section 3.24.1290 to the City position held by him or her when retired for disability or to a position in the same classification of positions with duties within his or her capacity; or

• 3.28.430 Reentry in city service, before retirement, by persons who retained membership in Chapter 3.24 retirement system pursuant to Section 3.24.510 or other provisions of Chapter 3.24 system.

Subject to the exclusions and exceptions hereinafter set forth in Sections 3.28.460 through 3.28.550, inclusive, of this Part, each person, other than persons covered by the provisions of Sections 3.28.400, 3.28.410 and 3.28.420, who was a member of the Plan as described in Chapter 3.24 and retained such membership upon leaving City service by exercising the option given him or her by Section 3.24.510 or other provisions of Chapter 3.24, shall become and be subject to the provisions of this Chapter pursuant to the provisions of this Section if, on or after July 1, 1975, while he or she is still a member of the Plan as described in Chapter 3.24, but before retirement thereunder for service or disability, he or she again becomes an officer or employee of the City in the Federated City Service. Upon the effective date the person again becomes an officer or employee in the Federated City Service, such person shall cease to be subject to the provisions of Chapter 3.24, and he or she and all other persons or estates that might have any rights under Chapter 3.24 because of such person's coverage under Chapter 3.24, shall cease to have any rights under Chapter 3.24, but shall thereafter be governed by and have only such rights as are pro-

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vided in this Chapter. If such person meets the definition of Tier 2 member in Section 3.28.030.28 at the time he or she again becomes an officer or employee in the Federated City Service, the person shall become a Tier 2 member.

(Prior code § 2904.1153; Ords. 27838, 29120, 29904.)

• A. Subject to the exclusions and exceptions hereinafter set forth in Sections 3.28.460 through 3.28.550 inclusive of this part, each person who on June 30, 1975, was in the employ of the city as a part-time employee, excepting such of them, if any, as may become members of this retirement system under and pursuant to the provisions of Section 3.28.400, shall have and is hereby given an option of becoming subject to the provisions of this Chapter 3.28 if he or she continued to be so employed as a part-time employee of the city to and through July 1, 1975.

• B. Each of said persons, in order to exercise said option, shall file with the secretary of the retirement board a written statement, on a form to be furnished by the Board upon his or her request, declaring that he or she elects to become subject to the provisions of this chapter. Said statement shall be filed on or before, and no later than, the thirty-first day of August, 1975. Upon filing said written statement with the secretary in the manner and within the time specified in this section, such person shall become subject to the provisions of this chapter as of the effective date of this chapter. Contributions which would have been required of the person because of service rendered by him or her from July 1, 1975, to the date the person exercises said option shall be charged to him or her and deducted from his or her paycheck. No such person shall become

subject to the provisions of this chapter unless he or she exercises said option in the manner and within the time specified in this section. (Prior code § 2904.1154; Ord. 27838.)

Subject to the exclusions and exceptions hereinafter set forth in this part, each person, other than those persons specified or mentioned in Sections 3.28.400 through 3.28.440, inclusive, who becomes an officer or employee of the city on or after July 1, 1975 by virtue of an appointment made on or after said date shall become and be a member of this plan as of the effective date of his or her appointment; provided, however, that the foregoing provisions of this section do not apply to persons employed to render part-time service.

(Prior code § 2904.1155; Ords. 27838, 29120.)

Subject to the exclusions and exceptions hereinafter set forth in this Part, each person other than those persons specified or mentioned in Sections 3.28.400 through 3.28.440, inclusive, who becomes an officer or employee of the City and meets the definition of Tier 2 member under Section 3.28.030.28, shall become and be a Tier 2 member of this Plan as of the effective date of his or her appointment, hire or rehire; provided however, that the foregoing provisions of this Section do not apply to persons employed to render part-time service.

(Ords. 29120, 29904.)

Anything elsewhere to the contrary notwithstanding, no person shall become or be a member of this plan because of his or her election or appointment to, or his or her holding the office of,

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mayor or member of the city council or because of any service rendered by him or her while he or she is mayor or a member of the council. (Prior code § 2904.1156; Ord. 27838.)

Anything elsewhere to the contrary notwithstanding, no person shall become or be a member of this plan because of his or election or appointment to, or his or her membership in, any board or commission of the city, or because of his or her election or appointment to or his or her holding of any office in said board or commission, or because of any service rendered as a member or officer of any such board or commission. (Prior code § 2904.1157; Ord. 27838.)

Anything elsewhere to the contrary notwithstanding, no person shall become or be a member of this plan because he or she is temporarily employed pursuant to the provisions of Subparagraph (4) of Subsection (a) of Section 1101 of the Charter of the city to make or conduct any special inquiry, investigation, examination or installation, or to render professional, scientific or technical services of an occasional or exceptional nature, nor because of any service rendered pursuant to such employment. (Prior code § 2904.1159; Ord. 27838.)

Anything elsewhere to the contrary notwithstanding, no person shall become or be a member of this plan because he or she is employed pursuant to Subparagraph (5) of Subsection (a) of Section 1101 of the Charter of the city in the event of an emergency to perform services required because of and during such emergency, nor because of any service rendered pursuant to such employment. (Prior code § 2904.1160; Ord. 27838.)

Anything elsewhere to the contrary notwithstanding, no person shall become or be a member of this plan because he or she is employed or his or her services are contracted for pursuant to the provisions of Section 1109 of the City Charter or pursuant to any transfer, consolidation or contract mentioned in said Section 1109, nor because of any services rendered pursuant to any such employment or contract.

(Prior code § 2904.1161; Ord. 27838.)

Anything elsewhere to the contrary notwithstanding, no person shall become or be a member of this plan because of his or her appointment as or his or her being a volunteer member of any police, fire or civil defense department, force, agency or organization, nor because of any service rendered as such volunteer member.

(Prior code § 2904.1162; Ord. 27838.)

Anything elsewhere to the contrary notwithstanding, no person shall become or be a member of this plan because of any appointment or employment made or entered into pursuant to the provisions of Section 1110 of the Charter of the city, nor because of any service rendered pursuant to any such appointment or employment.

(Prior code § 2904.1163; Ord. 27838.)

Anything elsewhere to the contrary notwithstanding, unless otherwise provided by the city council upon recommendation of the retirement board, no person shall become or be a member of this plan because of his or her employment pursuant to any

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relief or antipoverty program where such employment is provided primarily to give relief or aid to such persons.

(Prior code § 2904.1164; Ord. 27838.)

Anything elsewhere to the contrary notwithstanding, no person shall become or be a member of this plan because of any appointment or employment as a police recruit or firefighter recruit or because of any appointment or employment for which the principal purpose is training such person to become a police officer or firefighter. (Ords. 22677, 22735, 27838.)

• A. Anything elsewhere to the contrary notwithstanding, persons who are members of any police, fire or other retirement or pension system (other than this plan as described in this chapter or in Chapter 3.24, the federal social security system, or any retirement or pension system of the federal government) supported in whole or in part by funds of the United States government, or of any state government, or of this city or any other city or municipal government or corporation, or of any political subdivision, department, district, authority or agency of any such government or corporation, who are receiving or are entitled to any credit in such other system for any service rendered to the city are hereby excluded and excepted from membership in this plan; provided and excepting, however, that nothing contained in this section shall be deemed to prohibit any such person from becoming or being a member of this plan after the person has ceased being a member of the abovementioned police, fire or other system if the person should thereafter qualify for membership in this plan.

• B. For the purpose of this section, the following persons shall not be deemed to be members of any other retirement or pension system:

  1. Persons who merely are receiving pensions or retirement allowances or other payments, from any source whatever, because of or on account of service rendered to an employer other than the City of San José while they were not in the employ or service of the city.

  2. Persons whose membership in another retirement or pension system is in a reciprocal system, as defined in Part 21 of this chapter, and whose service in such other system is included as service in this plan solely for the purpose of meeting the minimum service requirements for qualification for benefits and retirement allowances pursuant to Subsection D. of Section 3.28.2420 of Part 21.

(Prior code § 2904.1165; Ords. 24682, 27838.)

Anything elsewhere to the contrary notwithstanding, no person appointed or employed as a part-time employee shall become or be a member of this plan because of such appointment or employment, or because of any service rendered pursuant to any such appointment or employment, unless he or she became or becomes a member of this plan under and pursuant to the provisions of Section 3.28.400 through 3.28.440, inclusive, or unless, having become a member of this plan under any of the foregoing sections of this part, and while rendering such full-time city service for the city as qualifies him or her to continue as a member of this plan, he or she discontinues such full-time service and, without a break in service, continues to render or does render city part-time service of a kind and nature not excluded or excepted by the provisions of Sections 3.28.460 through 3.28.550, inclusive, of this part.

(Prior code § 2904.1166; Ord. 27838.)

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Except as otherwise provided in Sections 3.28.580 and 3.28.590, a person ceases to be a member of this plan upon the occurrence of any of the following events:

• A. Upon his or her death before retirement for service or disability;

• B. Upon his or her retirement for service or disability;

• C. Upon discontinuance of his or her federated city service because of resignation or discharge, or because of layoff or leave of absence found by the retirement board to have resulted in permanent discontinuance, and in the latter case as of the date of the determination by the board that the discontinuance is permanent.

(Prior code § 2904.1167; Ord. 27838.)

• 3.28.580 Election by persons who became members pursuant to Sections 3.28.400 through 3.28.430, inclusive, to allow accumulated contributions to remain in fund.

• A. The provisions of this Section apply only to persons who became subject to the provisions of this Chapter pursuant to the provisions of Sections 3.28.400 through 3.28.430, inclusive of this Part.

• B. If the Federated City Service of a member described in subsection A. is discontinued by reason of resignation or discharge, or by reason of layoff or leave of absence deemed or found by the Retirement Board to have resulted in permanent discontinuance (and in such case, as of the date of determination by the Board that the discontinuance is permanent), or if such member retires for disability under the provisions of this Chapter but such retirement is followed by a cessation of the disability because of which the member was retired, and his or her disability retirement allowance is canceled, but he or she does not thereupon reenter Federated City Service, then, in either of said events, if the amount of said

member's accumulated normal contributions standing to his or her credit at that time is five hundred dollars ($500.00) or more, the member shall have the right to elect, not later than the ninetieth (90th) day from and after the date upon which notice of such right is mailed to him or her at the latest address on file with the Board:

1. To continue (or in the case of the abovementioned person whose disability retirement allowance was canceled, to renew) his or her membership by allowing all of his or her accumulated prior service contributions and all or part (but in no event less than five hundred dollars ($500.00) of his or her accumulated normal contributions to remain in the retirement fund; provided, however, that anyone who renews membership in the Plan on or after September 30, 2012 by virtue of employment begun on or after said date, shall become a Tier 2 member of this Plan as of the effective date of his or her renewed membership in the Plan; or

2. To terminate or not renew membership, as the case may be, by withdrawing all of his or her accumulated contributions.

• C. Failure to make such election within the abovespecified time shall be deemed to be an irrevocable election to terminate or not renew membership, as the case may be, by withdrawing all of his or her accumulated contributions; provided and excepting, however, that if such member is entitled under this Plan to credit for twenty (20) or more years of Federated City Service, the failure to make such election within said time shall be deemed to be an election to continue or renew, as the case may be, his or her membership by allowing all of his or her accumulated contributions to remain in the retirement fund.

• D. An election to allow all or part of one's accumulated normal contributions to remain in the fund may be revoked at any time by said

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person as to all such normal contributions or as to any part of them in excess of five hundred dollars ($500.00).

• E. Upon electing to terminate or not renew membership by withdrawing all of his or her accumulated contributions, such person immediately:

  1. Ceases to be a member of this Plan (or loses the right to renew his or her membership, as the case may be); and

  2. Loses all rights to any credit for Federated City Service to which he or she was entitled hereunder; and

  3. Except as may be otherwise provided elsewhere in this Plan, loses all other rights or privileges under this Plan excepting the right to the return of his or her said accumulated contributions, which said contributions shall be returned to the person forthwith.

• F. Upon electing to continue or renew membership by allowing all of his or her accumulated prior service contributions and all or part (but not less than five hundred dollars ($500.00)) of his or her accumulated normal contributions to remain in the retirement fund:

  1. The said person continues to be or again becomes a member, and meets the definition of Tier 2 member under Section 3.28.030.28, said person shall become a Tier 2 member; and

  2. The member and his or her survivors shall thereafter have such rights, if any, as are provided elsewhere in this Chapter 3.28 for the member and his or her survivors, except that, unless otherwise provided elsewhere in this Plan, he or she shall lose and shall no longer be entitled to credit for any Federated City Service on account of which such withdrawn contributions had been paid into the retirement fund. In determining the Federated City Service for which a person is no longer entitled to credit upon such partial withdrawal, the withdrawn contribu-

tions shall be deemed to have been paid into the retirement fund on account of the latest Federated City Service rendered by the person to the City, or on account of the person's earliest Federated City Service if so requested by said person at the time he or she withdraws a part of his or her accumulated normal contributions.

• G. A member may at any time, if he or she so elects, voluntarily relinquish such right as the member may have to be credited for Federated City Service for such periods of time as may be designated by him or her, without withdrawing any contributions paid by the member because of such service, provided he or she retains credit for not less than five years of continuous Federated City Service; and in such event, in determining the member's eligibility for or the amount of any benefits to which he or she may subsequently be entitled, the member shall be given no credit for any Federated City Service so relinquished, and any contributions left in the fund which were made because of the service for which the member has relinquished credit shall be treated as income of the retirement fund.

• H. If, on or after March 28, 2005, the member is to receive a distribution of an eligible rollover distribution, with a present value greater than one thousand dollars ($1,000.00), and if a member does not elect to have such distribution paid directly to an eligible retirement plan specified by member in a direct rollover or to receive the distribution directly, then the System shall pay the distribution in a direct rollover to an individual retirement plan designated by the Board in accordance with Section 401(a)(31)(B) of the Internal Revenue Code and IRS Notice 2005-5.

(Prior code § 2904.1168; Ords. 27838, 28885, 29120, 29904.)

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• 3.28.590 Election by members other than those specified in Section 3.28.580 to allow accumulated contributions to remain in fund.

• A. The provisions of this Section apply only to members of this Plan who are entitled to credit for five (5) or more years of Federated City Service rendered after June 30, 1975, and who are not covered by the provisions of Section 3.28.580.

• B. If the Federated City Service of a member described in subsection A. above is discontinued by reason of resignation or discharge or by reason of layoff or leave of absence which is determined by the Retirement Board to have resulted in permanent discontinuance (the effective date of such discontinuance to be the date of said determination by the Board), then such member shall have the right to elect:

  1. To continue membership in this System by allowing all of his or her accumulated contributions to remain in the retirement fund; or

  2. To terminate membership in this System by withdrawing all of his or her accumulated contributions.

• C. If a member described in subsection A. above retires for disability but the disability retirement allowance is canceled because of a cessation of the disability for which the member retired and such member does not thereupon reenter Federated City Service, then such member shall have the right to elect:

  1. To renew membership in this System by allowing all of his or her accumulated contributions to remain in the retirement fund; provided however, that; if said person renews membership and meets the definition of Tier 2 member under Section 3.28.030.28, said person shall become a Tier 2 member; or

2. Not to renew membership in this System by withdrawing all of his or her accumulated contributions.

• D. The election described in subsections B. and C. shall be made not later than the ninetieth (90th) day from and after the date notice of the right to make such election is mailed to the member at the latest address on file with the Board.

  1. In the case of a member entitled to credit for less than twenty (20) years of Federated City Service, failure to make such election within said ninety (90) days shall be deemed to be an irrevocable election to terminate or not renew, whichever is applicable, membership in this System by the withdrawal of all of the member's accumulated contributions.

  2. In the case of a member entitled to credit for twenty (20) or more years of Federated City Service, failure to make such election within said ninety (90) days shall be deemed to be an election to continue or renew, whichever is applicable, membership in this System by allowing all of the member's accumulated contributions to remain in the retirement fund.

• E. Upon electing to terminate or not renew membership in this System pursuant to subsection B., C. or D. above, the person immediately:

  1. Ceases to be a member of this System or loses the right to renew membership in this System, whichever is applicable; and

  2. Unless otherwise provided elsewhere in this Chapter, loses all credit for any Federated City Service to which he or she was entitled under this System; and

  3. Loses all other rights and privileges under this System except the right to the return of his or her accumulated contributions, and such contributions shall be returned to such person forthwith.

• F. Upon electing to continue or renew membership in this System, whichever is applicable, by allowing all of his or her accumulated contributions to remain in the fund, the person:

  1. Continues to be, or again becomes, a member of this System; provided, how-

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ever that said person again becomes a member of this System and meets the definition of Tier 2 member under Section 3.28.030.28, said person shall become a Tier 2 member;

2. Shall continue to be entitled to credit for such Federated City Service as he or she was entitled as of the time the person made such election; and

3. Shall thereafter have such rights, if any, as are provided in this Chapter for such person or such person's survivors.

• G. If, on or after March 28, 2005, the member is to receive a distribution of an eligible rollover distribution, with a present value greater than one thousand dollars ($1,000.00), and if a member does not elect to have such distribution paid directly to an eligible retirement plan specified by member in a direct rollover or to receive the distribution directly, then the System shall pay the distribution in a direct rollover to an individual retirement plan designated by the Board in accordance with Section 401(a)(31)(B) of the Internal Revenue Code and IRS Notice 2005-5.

(Prior code § 2904.1169; Ords. 21371, 23485, 27838, 28885, 29120, 29904.)

Part 5

FEDERATED CITY SERVICE

Sections:

• 3.28.600 Definitions generally.

• 3.28.610 Federated city service defined.

• 3.28.620 Exclusions and exceptions from federated city service.

• 3.28.630 Military service defined - Deemed federated city service when - Conditions.

• 3.28.640 Service credit for absence on or after July 1, 1975, because of service-connected injury or illness.

• 3.28.650 Service under police or fire department plan where functions and duties of former police or fire department position are transferred to federated city service.

• 3.28.660 Service under police and fire department retirement plan where member elects to pay contributions to federated system for such service.

• 3.28.670 Part-time service rendered prior to July 1, 1975.

• 3.28.680 Computation of amount of service.

• 3.28.685 Absence without compensation during city hall closures.

• 3.28.690 Absence without compensation during periods of mandatory reduction in paid working time.

Unless the context otherwise requires, the definitions set forth in this Part 5 govern the construction and interpretation of provisions of this retirement system as set forth in this Chapter 3.28. (Prior code § 2904.1200.)

• A. Subject to other provisions of this retirement system as set forth in this Chapter 3.28, the term "federated city service," as used in this Chapter 3.28, means service for which a member of this system is entitled to credit and for which the member shall receive credit under this system.

• B. Subject to such exclusions and exceptions and to such conditions and limitations as are set forth in this chapter, "federated city service" shall be deemed to include the following service, and none other, as follows:

  1. City service rendered by a member prior to July 1, 1975, and before becoming a member of this system, by a person who became a member of this system pursu-

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ant to Sections 3.28.400 through 3.28.430 where such service meets the following requirements:

• a. With respect to a person who became a member of this system pursuant to Section 3.28.400 or Section 3.28.430, the service rendered prior to July 1, 1975, was service for which the person was entitled to credit under the Chapter 3.24 retirement system as of the time the person became a member of this system.

• b. With respect to a person who became a member of this system pursuant to Section 3.28.410 or Section 3.28.420, the service rendered prior to July 1, 1975, was service for which the person was entitled to credit under the Chapter 3.24 retirement system as of the time the person retired under the Chapter 3.24 system.

2. If a member became entitled to credit for any such service under the Chapter 3.24 retirement system only for the purpose of qualifying for benefits and not for the purpose of determining the amount of benefits to which the member might become entitled, the credit the member shall receive under this system for such service shall be subject to the same limitation.

3. Service rendered by a member on or after July 1, 1975, as an employee of the city, for the city and for compensation, provided such service is rendered by such member both while receiving such compensation and while a member of this system.

4. Military service rendered by a member on or after July 1, 1975, while a member of this system if, and only if, the member is or becomes entitled to credit for such

• service under the provisions of Section 3.28.630, and then only to the extent and for the purpose specified in said section.

• 5. Absence of a member from federated city service on or after July 1, 1975, while a member of this system, because of service-connected injury or illness if, and only if, said member is or becomes entitled to credit for such absence under the provisions of Section 3.28.640, and then only to the extent and for the purpose specified in said section.

6. Service rendered by a member prior to the time he or she becomes a member of this system for which the member was entitled to credit under the provisions of a police and fire department retirement plan of the city if, and only if, said member becomes entitled to credit for such service under the provisions of Section 3.28.650 or Section 3.28.660.

7. Absence of a member from federated city service on or after July 1, 1975, while a member of this system, because of paid holiday or leave of absence with full compensation provided that the member continues to make contributions to the retirement fund during such absence.

8. Additional service credit as provided in Section 3.28.2120 of Part 18, Section 3.28.2220 of Part 19, or Section 3.28.2320 of Part 20 of this chapter.

9. Absence of a member without compensation because of a city hall closure where all of the conditions of Section 3.28.685 are satisfied.

10. Eligible prior service credit purchased by a member in accordance with Sections 3.28.690 and 3.28.691.

(Prior code § 2904.1201; Ords. 22573, 23366, 24107, 24346, 24807, 25732.)

As used in this retirement system, the term "federated city service" shall not be deemed to mean

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or include any of the following service, the latter being hereby excluded and excepted from the definition of "federated city service":

• A. Service rendered as mayor or as a member of the city council;

• B. Service rendered as a member of any city board or commission unless the person rendering such service is otherwise employed by the city in an office or position which qualified him for membership in this system, and he is required by virtue of his said office or position to render such service as a member of a city board or commission;

• C. Except as permitted by Part 22, service rendered while temporarily employed pursuant to the provisions of subparagraph (4) of subsection (a) of Section 1101 of the Charter of the city to make or conduct a special inquiry, investigation, examination or other installation, or to render professional, scientific or technical services of an occasional or exceptional character;

• D. Service rendered while employed pursuant to the provisions of subparagraph (5) of subsection (a) of Section 1101 of the Charter of the city, in the event of an emergency, to perform services required because of and during such emergency;

• E. Service rendered as a volunteer member of any police, fire or civil defense department, or of any police, fire or civil defense force organization;

• F. Service rendered while employed, and service contracted for, pursuant to any transfer, consolidation or contract mentioned or referred to in Section 1109 of the Charter of the city;

• G. Service rendered while employed pursuant to Section 1110 of the Charter of the city;

• H. Except as permitted by Part 22, service rendered while employed pursuant to any relief or antipoverty program where such

employment is primarily for the purpose of giving relief or aid to such employees;

• I. Except as otherwise provided by Section 3.28.670, part-time service rendered by a member prior to July 1, 1975, for which he was not entitled to any credit under the Chapter 3.24 retirement system;

• J. Part-time service rendered on or after July 1, 1975, other than:

  1. Part-time service rendered on or after said date by a part-time employee who becomes a member pursuant to Section 3.28.400 or Section 3.28.440; and

  2. Part-time service rendered on or after said date by any other member if such part-time service follows, without a break in service, the rendition of full-time service by said member; and

  3. Eligible prior service purchased by a member in accordance with Part 22.

• K. Except as may be otherwise provided in Sections 3.28.650 and 3.28.660 of this part or in Part 21, service rendered by a person while he is a member of the police and fire department retirement plan established by the provisions of Chapter 3.32 of the San José municipal code, or the police and fire department retirement plan established by the provisions of Chapter 3.36 of the San José municipal code, or any other retirement or pension plan or system (other than this system, the Chapter 3.24 retirement system, the system established by the provisions of Chapter 3.20 of this Code, the system established by the provisions of Chapter 3.16 of this Code, the federal social security system, or any other federal retirement system) supported in whole or in part by funds of the United States, of any state government, or the city or any other city or municipal government or corpo-

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ration, or of any political subdivision, department, district, authority or agency of any of said governments, if, while a member thereof the person received or was entitled to credit for such service in such system.

• L. Except as provided in Part 22, service performed while a member of the eligible deferred compensation plan established by Chapter 3.50 of this Code.

(Prior code § 2904.1202; Ords. 24682, 25732.)

Subject to the provisions of Section 3.28.1090, "federated city service" shall be deemed to include military service rendered by a member on or after July 1, 1975, while a member of this system, and such member shall be entitled to credit for such service, if and only if he or she is entitled to credit for such service under the following provisions of this section, and then only to the extent and for the purpose or purposes hereinafter provided in this section.

• A. Military service defined. As used in this section, "military service" shall be deemed to mean service rendered on or after July 1, 1975, as a member of the Armed Forces of the United States or of the Merchant Marine of the United States, either during a war including the United States as a belligerent or in any other national emergency, or in time of peace if the person performing such service is drafted for such service by the United States.

• B. Military service because of which city must make member contributions.

  1. If, on or after July 1, 1975 and ending on November 23, 2013, while he or she is a member of this system, and while on leave of absence without compensation to engage in military service, a member of this system renders military service other

than as a member of the Merchant Marine of the United States, and if, in addition, said member returns to federated city service after discharge under conditions other than dishonorable within six months after such discharge or within six months after any period of rehabilitation afforded by the United States government, including a period of rehabilitation for purely educational purposes, the city shall contribute to this system on behalf of such member such amounts of contribution which would have been payable by said member, together with such additional amounts as would have been payable by the city, on the basis of compensation earnable at the commencement of said member's absence plus the annual salary adjustments which he or she would have received if said member had remained in federated city service and had not left for said military service. For purposes of this subsection, said member absent on said military service shall be deemed to have received a rating for the period of such absence entitling him or her to annual salary adjustment. Also, for purposes of this subsection, a member who is granted a leave of absence or placed on a city civil service reemployment list as of the same date he or she was reinstated from military leave, if said date of reinstatement is within the abovementioned six months, shall be considered as having returned to city service within the abovementioned six months if he or she returns to city service at the end of such leave of absence or upon offer of employment from the reem-

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ployment list or if he or she retires under this system for service or disability during such leave.

2. Any military service mentioned in this subsection, because of which the city is required to make all of the contributions above specified in this subsection, shall be deemed to be federated city service for which said member shall be entitled to credit in the same manner as if he or she had not been absent from federated city service during such time.

   3. For the purposes of this Subsection B., "leave of absence without compensation to engage in military service" shall include any leave of absence to engage in qualified military service granted on or after September 1, 1990, during which the member receives compensation from the city pursuant to an action of the city council approving special or supplemental pay or benefits for persons on leave for military duty.

• C. Military service because of which member must make member contributions.

  1. Subject to the provisions of Section 3.28.1090, effective November 24, 2013, a member of this system on leave of absence with compensation to engage in qualified military service, as defined under Internal Revenue Code section 414(u)(5), shall contribute to the system before retirement, at times and in the manner prescribed by the retirement board, amounts equal to the contributions which would have been payable by said member to the system on the basis of his or her compensation earnable at the commencement of the leave of absence if he or she had remained in city service Be-

cause said member is required to contribute, "federated city service" shall be deemed to include such qualified military service and the member shall receive credit for the qualified military service in the same manner as if he or she had not been absent but were still in federated city service.

2. Because the member is required to contribute as aforesaid, the city shall also contribute during the period the member is on leave of absence with compensation to engage in qualified military service.

3. For the purposes of Subsection C., "leave of absence with compensation to engage in qualified military service" shall include any leave of absence to engage in qualified military service granted on or after September 1, 1990, during which the member receives compensation from the city pursuant to an action of the city council approving special or supplemental pay or benefits for persons on leave for military duty. A "leave of absence with compensation to engage in qualified military service" shall only include compensation paid from the city and shall not include compensation paid to member by the state or federal government.

• D. Military service because of which member may make member contributions.

  1. Subject to the provisions of Section 3.28.1090, effective November 24, 2013, a member of this system on leave of absence without compensation to engage in qualified military service, as defined under Internal Revenue Code section 414(u)(5), may receive credit for all or any part of such service if the member con-

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tributes to the system, either during his or her absence on qualified military service or upon his or her return to federated city service, at times and in the manner prescribed by the retirement board, amounts equal to the contributions which would have been payable by said member to the system on the basis of his or her compensation earnable at the commencement of the leave of absence if he or she had remained in city service, provided, however, that payment of such member contributions is completed before retirement and during a period beginning with the date of the member's reemployment and whose duration is three times the period of such member's qualified military service, but not greater than five years, or such other period as may be permitted under Internal Revenue Code section 414(u). To the extent said member does so contribute, "federated city service" shall be deemed to include such qualified military service and the member shall receive credit for the qualified military service in the same manner as if he or she had not been absent but were still in federated city service. To the extent said member does not contribute as aforesaid, such qualified military service shall be credited to said member as federated city service only for the purpose of determining said member's eligibility for benefits under this system and such qualified military service shall not be credited for the purpose of determining the amount of such benefits.

2. To the extent the member elects to contribute as aforesaid and does so

contribute, the city shall also contribute because of such qualified military service to the same extent as it would have contributed if the member had not been absent without compensation on qualified military service.

3. For the purposes of Subsection D., "leave of absence without compensation to engage in qualified military service" means any leave of absence to engage in qualified military service where the member receives no compensation from the city.

• E. Manner in which city may contribute. Any contributions required of the city by the provisions of this section may be made in one sum or in the manner in which other contributions are made. Anything elsewhere in this Chapter 3.28 to the contrary notwithstanding, no contributions made by the city pursuant to the provisions of Subsection B. of this section can ever be withdrawn by or paid to a member or any of the member's survivors or beneficiaries or estate.

• F. Part-time employees. The provisions of this section shall apply to part-time employees only to the extent that they were in this system prior to entry into the qualified military service.

(Prior code § 2904.1203; Ords. 24036, 28885, 29321.)

• A. Time on or after July 1, 1975, during which a member is a member of this System and during which he or she is absent from Federated City Service by reason of injury or illness determined within one (1) year after the end of such absence to have arisen out of and in the course of his or her employment with the City, shall be deemed to be "Federated City Service" for which such member is entitled to credit for

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• the purpose of qualifying for benefits under this System but not for the purpose of determining the amount of such benefits, unless he or she contributes during such absence, or upon his or her return to City service at times and in the manner prescribed by the Board, the same amount of contributions as he or she would have been required to contribute if he or she were not absent because of any said injury or illness. If he or she does contribute as aforesaid, said time shall be deemed "Federated City Service" for which he or she shall be entitled to credit the same as if he or she were not absent from Federated City Service because of such injury or illness. The provisions of this Section do not apply to time during which a person is retired for disability or service. Also, the provisions of this Section do not apply to part-time employees.

• B. Subject to any limits on annual contributions imposed by Section 415 of the Internal Revenue Code of 1986, as amended, a member who elects to make contributions to purchase full service credit for a period of leave of absence pursuant to subsection A. above may pay the contributions:

  1. In one lump sum within sixty (60) days from and after the date the member returns to City service; or

  2. For elections made on or before January 31, 2011, in monthly or biweekly installments by pre-tax payroll deductions, paid over a period of time not to exceed eight (8) years; or

  3. For elections made on or after February 1, 2011, in monthly or biweekly installments by post-tax payroll deductions, paid over a period of time not to exceed eight (8) years; or

  4. In a combination of a lump sum and post-tax installments.

• C. Any member electing to pay the contributions in installments or to make the lump sum payment by payroll deduction shall execute a payroll authorization form authorizing the pay-

ment of the required contributions by payroll deduction. The payroll authorization form shall be filed with the Director of Finance.

• D. The election to purchase credit through posttax payroll deductions, pursuant to subsection B.3. or B.4. above, may be revoked. During the time the post-tax payroll deduction election is in effect, the member may make additional payments to the retirement fund for the purchase of such service credit.

• E. All contributions under subsections B.2. and C. shall be treated as pre-tax salary reductions pursuant to Internal Revenue Code Section 414(h)(2).

• F. The provisions of this Section shall be applicable to Tier 2 members, provided that the Tier 2 member shall be responsible for paying the entire cost of the service credit purchase.

• (Prior code § 2904.1204; Ords. 28885, 29120, 29904.)

Subject to the following conditions, restrictions, limitations and other provisions, a member of this system, who becomes such on or after July 1, 1975, pursuant to the provisions of Section 3.28.450 or 3.28.455 and who, immediately prior to becoming a member, including a tier 2 member, of this system, was a member of the police and fire department plan established or administered by or pursuant to the provisions of Chapter 3.32 or Chapter 3.36 of the San José Municipal Code shall be entitled to credit under this system for service, if any, for which he was entitled to credit under said police and fire department retirement plan at the time his membership in said police and fire department plan was last terminated, if, and only if all of the following conditions exist and are satisfied.

• A. Such person must have been, immediately prior to becoming a member of this system, a member of the police and fire department plan established or adminis-

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tered by or pursuant to Chapter 3.32 or 3.36 of the San José Municipal Code; and

• B. Such person must have held, immediately prior to becoming a member of this system, a city office or positions in the police or fire department of the city which qualified him for membership in and because of which he was a member of the abovementioned police and fire department retirement plan; and

• C. The office or position held by such person in the police or fire department of the city immediately prior to his becoming a member of this system must have been abolished or discontinued, and the functions and duties thereof, or substantially the same functions and duties, transferred to the federated city service; and

• D. Such person must have been transferred, at the time his office or position in the police or fire department was abolished or discontinued, to a new office or position in the federated city service, to perform substantially the same functions and duties as he performed in his former office or position; and

• E. Such person's abovementioned transfer must have taken place without any break in service rendered by such person, and without such person being required by civil service regulations to take or pass any civil service examination for the office or position to which he was transferred; and

• F. Such person's membership in the abovementioned police and fire department retirement plan must have ceased and terminated as of the time or immediately prior to his said transfer to an office or position, entitling him to membership in this system; and

• G. Such person must not have received or requested a return of any contributions paid or made by him to said police and

fire department retirement plan, and must not have elected to continue making contributions to the police and fire department retirement plan pursuant to the provisions of Section 3.32.010, 3.36.1620 or 3.36.1630, or any other provision of said plan; and

• H. Such person must have filed with the retirement board on or before and no later than the thirtieth day immediately following the date as of which his position in the police or fire department is abolished or discontinued and he is transferred to an office or position entitling him to membership in this system, a written statement, in duplicate, duly signed by him wherein he elects to receive credit under this system for service for which he was entitled to credit under said police and fire department retirement plan at the time his membership therein was last terminated, and where he consents to and authorizes the transfer and payment into the retirement fund established by this chapter, from the retirement fund established under the police and fire department retirement plan, of all moneys contributed by him to the police and fire department retirement fund, together with interest thereon; and

• I. A copy of the statement specified in the immediately preceding Subsection H. shall have been transmitted by the retirement board to the board which is charged with the duty of administering the abovementioned police and fire department retirement plan of which said person was formerly a member; and there shall have been transferred to the retirement fund established under this chapter, from the retirement find established under the last-mentioned police and fire department retirement fund, all moneys contributed by said person to the abovementioned police and fire depart-

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ment retirement plan, together with interest thereon, moneys being so transferred being thereafter deemed to be normal contributions, or prior service contributions where applicable, of said person to this retirement system for the service credited to him under this system. (Prior code § 2904.1205; Ord. 29120.)

Subject to the following conditions, restrictions, limitations and other provisions, a person who becomes a member of this System on or after July 1, 1975, pursuant to the provisions of Section 3.28.450 and who, prior to becoming a member of this System but on or after February 1, 1962, was a member of the Police and Fire Department Retirement Plan established pursuant to Chapter 3.32 or Chapter 3.36 of the San José Municipal Code, shall be entitled to credit under this System for service, if any, for which the person was entitled to credit under said Police and Fire Department Retirement Plan at the time his or her membership therein was last terminated, if all of the following conditions exist and are satisfied:

• A. Such person must have held, prior to becoming a member of this System, a City position in the Police Department or Fire Department of the City which qualified the person for membership in, and because of which the person was a member of the Police and Fire Department Retirement Plan; and

• B. Such person's membership in the Police and Fire Department Retirement Plan must have ceased and terminated prior to his or her becoming a member of this System; and

• C. Such person must not have elected to continue making contributions to the Police and Fire Department Retirement Plan, pursuant to the provisions of Sec-

tion 3.36.1630 nor have retained any rights to benefits from said Plan pursuant to any other provision of said Plan (other than rights as an eligible surviving spouse or surviving child or rights as a former spouse under a domestic relations order of a court of competent jurisdiction); and

• D. Such person must have filed with the Retirement Board a written notice of election regarding Police and Fire service, wherein the person elects to receive credit under this System for service for which he or she was entitled to credit under the Police and Fire Department Retirement Plan pursuant to this Section, and wherein the person agrees to pay into the retirement fund established by this Chapter the amounts specified in subsection E. below. Such notice of election must be filed on or before the later of:

  1. The thirtieth (30th) day immediately following the date on which there is deposited in the United States mail, addressed to the person at his or her address shown in the records of the Retirement Board, a written notice of the person's right to make the election provided in this Section; or

  2. The thirtieth (30th) day following the date as of which the person becomes a member of this System.

• E. In order to receive service credit in this System for service rendered while a member of the Police and Fire Department Retirement Plan, the person must pay into the retirement fund established by this Chapter an amount of money sufficient to make the accumulated contributions standing to the credit of the person's individual account in this System equal to the amount they would be if:

  1. The person had been a member of this System (and of the Chapter

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3.24 System with respect to service rendered prior to July 1, 1975), in the position because of which he or she became a member of this System, during the time he or she was rendering the previous service in the Police Department or Fire Department for which he or she seeks to get credit; and

2. The contributions payable to this System and to the Chapter 3.24 System under such circumstances had been deducted from the person's compensation and paid into the retirement fund pursuant to this System and the Chapter 3.24 System during all of such time.

• F. Subject to any limits on annual contributions imposed by Section 415 of the Internal Revenue Code of 1986, as amended, a person who elects to purchase credit for prior Police and Fire service may pay of the contributions required by subsection E. above:

  1. In one lump sum within sixty (60) days from and after the date the person files the written notice of election to purchase such service credit; or

  2. For elections made on or before January 31, 2011, in installments by pre-tax payroll deduction; paid over a period of time not to exceed eight (8) years; or

  3. For elections made on or after February 1, 2011, in monthly or biweekly installments by post-tax payroll deductions, paid over a period of time not to exceed eight (8) years; or

  4. By transfer of moneys contributed by him or her to the Police and Fire Department Retirement Fund, to-

gether with interest thereon, from the Police and Fire Department Retirement Fund; or

5. By a combination of the above.

• G. Any member electing to pay the contributions by pre-tax payroll deduction shall execute a binding irrevocable payroll authorization form authorizing the payment of the required contributions by payroll deduction. Such irrevocable payroll authorization form shall be filed with the Director of Finance within the time specified in subsection D. above for the filing of the person's election to receive service credit.

  • The election to purchase credit for prior Police and Fire service through pre-tax payroll deductions and the authorization to make payments by pre-tax payroll deductions shall be irrevocable. During the time the irrevocable election is in effect, no direct payments from the member to the retirement fund shall be made by the member or accepted by this System.

• H. The election to purchase credit for prior Police and Fire service through post-tax payroll deductions and the authorization to make payments by post-tax payroll deductions shall be revocable. During the time the revocable election is in effect, the member may make additional direct payments to the retirement fund.

• I. A copy of the notice of election specified in subsection D. above shall be transmitted by the Retirement Board to the board which is charged with the duty of administering the Police and Fire Department Retirement Plan of which said person was formerly a member.

• J. All contributions under subsections F.2. and G. shall be treated as pre-tax salary reductions pursuant to Internal Revenue Code Section 414(h)(2).

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• K. If a person elects to purchase credit for prior Police and Fire service and make the contributions specified in this Section, and subsequently does pay all such moneys as provided in this Section, the person shall be credited under this System for the prior Police and Fire service.

• L. If a member elects to redeposit and pay said moneys but fails to complete the redeposit, then:

  1. If the failure to complete the redeposit is because of death of the person while in Federated City Service and before retirement, the person shall be credited with the amount of service which is determined by the Board to be attributable to the amount of accumulated contributions redeposited as of the date of the person's death.

  2. If the failure to redeposit is for any reason other than the death of the person prior to retirement, any contributions made pursuant to the election shall be credited to the person's accumulated normal contributions account, but the person shall receive no credit for any prior Police and Fire service.

(Prior code § 2904.1206; Ords. 26006, 28885, 29120, 29904.)

• A. For the purpose of qualifying for benefits payable under this system, other than and excepting the forty percent minimum allowance provided for in the subsection A. of Section 3.28.1480, but not for the purpose of determining the amount of any benefit to which one may become entitled after he qualifies for such benefit, a member who becomes such pursuant to the provisions of Section 3.28.440 shall be given credit for all part-time service, other than service of a kind specifically ex-

  • cluded by the foregoing provisions of this part, rendered by him for the city prior to July 1, 1975. For such limited purpose only, such service shall be deemed to be federated city service rendered on and after July 1, 1975. A part-time employee who becomes a member pursuant to Section 3.28.400 also shall have the right to treat such service as having been rendered on and after July 1, 1975, for the above-specified limited purpose only.

• B. Notwithstanding subsection A. of this Section 3.28.670, a member who satisfies the eligibility requirements of Section 3.28.2510, may purchase credit for part-time service rendered prior to July 1, 1975, as provided in Part 22 of this chapter. If the member elects to purchase credit for such part-time service and completes the required payments of contributions and interest, the limitations of subsection A. above shall not apply and such service shall be deemed to be federated city service for all purposes under this chapter.

(Prior code § 2904.1208; Ord. 25732.)

• A. Except as otherwise provided with respect to absence on military service and as otherwise provided in Section 3.28.685 and 3.28.690, time during which a member is absent from federated city service without compensation shall not be allowed in computing federated city service.

• B. The retirement board shall credit a member with one year of federated city service for one thousand seven hundred thirty-nine or more hours of federated city service rendered by the member in any calendar year. For tier 2 members, the retirement board shall credit a member with one year of federated city service for two thousand eighty or more hours of federated city service rendered by the member in any calendar year. Credit for more than one year of such service shall not be allowed for service rendered in any calendar year.

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• C. If a member renders less than one thousand seven hundred thirty-nine hours of federated city service in a calendar year, as in the case of part-time service, the member shall be given credit for that proportion of one year which the hours of federated city service rendered by the member in such year bear to one thousand seven hundred thirty-nine hours. For tier 2 members, if a member renders less than two thousand eighty hours of federated city service in a calendar year, as in the case of parttime service, the member shall be given credit for that portion of one year which the hours of federated city service rendered by the member in such year bear to two thousand eighty hours of regular time worked (including paid leave and military leave, but not overtime).

• D. Notwithstanding Subsections B. and C. above, the retirement board shall credit a member with one year of federated service credit for each two thousand eighty or more hours of eligible prior service purchased by a member pursuant to Part 22. A member shall be given credit for any purchased eligible prior service that is less than two thousand eighty hours in the same proportion of one year which the hours of purchased eligible prior service bears to two thousand eighty hours.

(Prior code § 2904.1207; Ords. 24807, 25732, 28603, 29120.)

Time during which a member was absent without compensation because of a city hall closure shall constitute "federated city service" in any case where all of the following requirements are satisfied:

• A. The absence without compensation occurred during any of the following periods of time in which city hall was not open for public business because of a city council-approved closure:

  1. December 24, 1992, through January 3, 1993, inclusive;

     2. December 23, 1993, through January 2, 1994, inclusive;

     3. December 23, 1994, through January 2, 1995, inclusive.

  • B. The member was on leave of absence without compensation because of the city hall closure and not for any other reason.

  • C. With respect to any member who rendered fewer than one thousand seven hundred thirty-nine hours of federated city service in the calendar year in which the city hall closure commenced, the city has paid into the retirement fund the contributions that would have been made to the fund by both the city and the member if the member had not been absent without compensation during the closure period or periods plus interest to the date the contributions are made calculated at the regular rate credited to contributions pursuant to Section 3.28.340.B.

• D. The city shall contribute to the retirement fund such amounts as are actuarially determined to be necessary to provide funding for all additional costs incurred by this retirement system because of the additional service credit provided to members by this section.

• (Ord. 24807.)

• A. Time during which a member was absent without compensation because the member is subject to a mandatory reduction in paid working time shall constitute "federated city service" in any case where all of the following requirements are satisfied:

  1. The member was on leave of absence without compensation because of the mandatory reduction in paid working time and not for any other reason.

  2. With respect to any member other than a tier 2 member who rendered fewer than

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one thousand seven hundred thirty-nine hours of federated city service in the calendar year in which the mandatory reduction in paid working time is in effect, the city and member have paid into the retirement fund the contributions that would have been made to the fund by both the city and the member if the member had not been absent without compensation during the mandatory reduction in paid working time. For tier 2 members who rendered fewer than two thousand eighty hours of federated city service in the calendar year in which the mandatory reduction in paid working time is in effect, the city and member have paid into the retirement fund the contributions that would have been made to the fund by both the city and the member if the member had not been absent without compensation during the mandatory reduction in paid working time.

• B. The city and the member shall make their respective contributions to the retirement fund as if the member had not been absent without compensation during the mandatory reduction in paid working time.

• (Ords. 28603, 29120.)

Part 6

MEMBER CONTRIBUTIONS

Sections:

• 3.28.700 Normal rate of contribution - Described - Amount.

• 3.28.710 Normal rate of contribution - Determination.

• 3.28.720 Normal Rate of Contribution - Initial Rate.

• 3.28.725 Ceasing member contributions at thirty years of service.

• 3.28.730 Prior service rate of contribution - Described - Amount.

• 3.28.740 Prior service rate of contribution - Determination.

• 3.28.750 Prior service rate of contribution - Initial rate.

• 3.28.755 Additional employee contributions.

• 3.28.760 Payroll deductions and other collections.

• 3.28.765 City pickup of member contributions.

• 3.28.770 Contributions - Individual account requirements.

• 3.28.780 Return of contributions.

• 3.28.785 Transfer of accumulated contributions.

• 3.28.790 Redeposit of withdrawn contributions.

• 3.28.800 Accumulated contributions upon reinstatement and return to federated city service following service or disability retirement under the Chapter 3.24 system.

• 3.28.810 Accumulated contributions upon reinstatement and return to federated city service following service or disability retirement under Chapter 3.28 system.

• 3.28.820 Satisfaction of liability for reclassification as tier 1.

Except as may be otherwise provided elsewhere in this Chapter 3.28, all members of this System must make monthly (or biweekly, if compensation is paid biweekly by the City) normal contributions to this System. The normal contribution required of a member for each month (or for each two (2) weeks, if compensation is paid biweekly by the City) shall be a percentage of compensation earned (or of "compensation earnable" when so required by other provisions of this Chapter 3.28) by him or her in such period. Said percentage is hereinafter referred to as members' "normal

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rate of contribution." Non-Tier 2 members and Tier 2 members may have a different rate of contribution. Except as otherwise provided in Section 3.28.710 or another provision of this Chapter 3.28, all non-Tier 2 members will have the same normal rate of contribution. The normal rate of contribution may be different among Tier 2 members, but shall be the same percentage for all Tier 2 members of the same bargaining unit unless otherwise provided under Section 3.28.710 or another provision of this Chapter 3.28. Notwithstanding any other provisions of this Section 3.28.700, the normal contributions of a member subject to Section 3.28.725 shall be paid by the City, as described in that Section 3.28.725.

(Prior code § 2904.1250; Ords. 29120, 29904, 30785.)

• A. For non-Tier 2 members: Except as provided under Section 3.28.200.A.1 and 3.28.200.A.2., the normal rate of contribution required of members shall be such that, based on interest and mortality tables and other relevant actuarial data, the total amount of normal contributions which will be required of members under the provisions of this Chapter will be sufficient to pay, when due, three-elevenths ([3] /11) of the amount of all pensions, allowances and other benefits which are and will become payable under this System on account or because of current service rendered on or after July 1, 1975; provided and excepting, however, that if and when, from time to time, the members' normal rate of contribution is hereafter amended or changed, the new rate shall not include any amount designed to thereafter recover from members or return to members the difference between the amount of normal contributions theretofore actually required to be paid by members and any greater or lesser amount which, because of amendments hereafter made to this System or as a result of experience under this System, said members should have theretofore been re-

quired to pay in order to make their normal contributions equal three-elevenths ([3] /11) of the abovementioned pensions, allowances and other benefits which are or will become payable on account or because of current service rendered on or after July 1, 1975, and before the effective date of the new rate. Notwithstanding the foregoing, members subject to this subsection A shall be responsible for any additional contributions described in Section 3.28.200, to the extent applicable to such member.

• B. For Tier 2 members: Except as provided under 3.28.200.B, the normal rate of contribution required of Tier 2 members shall be such that, based on interest and mortality tables and other relevant actuarial data, the total amount of normal contributions which will be required of members under the provisions of this Chapter will be sufficient to pay, when due, half of the amount of all pensions, allowances and other benefits which are and will become payable under this System on account or because of service rendered by Tier 2 members, including any amount designed to recover from members the difference between the amount of normal contributions theretofore actually required to be paid by members and any greater amount which, because of amendments hereafter made to this System or as a result of experience under this System, said members should have theretofore been required to pay in order to make their normal contributions half of the cost of the abovementioned pensions, allowances and other benefits which are or will become payable to such Tier 2 members on or after September 30, 2012.

• C. There shall be no offset to normal cost contribution rates in the event Plan funding exceeds one hundred percent (100%). Both the City and employees shall always make the full annual required Plan contributions as calculated by the Retirement Board actuaries which will

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be in compliance with applicable laws and will ensure the qualified status under the Internal Revenue Code.

(Prior code § 2904.1251; Ords. 29120, 29904, 30017.)

• A. Until amended, revised or changed by the retirement board in accordance with other provisions of this Chapter 3.28, the members' normal rate of contribution on or after July 1, 1975, shall be four and seventy-nine hundredths percent of earned compensation, or of "compensation earnable" when so required by other provisions of this chapter.

• B. Notwithstanding any other provisions of this Chapter 3.28, the members' normal rate of contribution for tier 2 members on or after September 30, 2012, shall be that percentage of "compensation earnable" as defined for tier 2 member in Section 3.28.030.06, determined to be required in order to make their normal contributions half of the cost to provide pensions, allowances and other benefits which are or will become payable to tier 2 members on or after September 30, 2012, including any amount designed to recover from members the difference between the amount of normal contributions theretofore actually required to be paid by members and any greater amount which, because of amendments hereafter made to this system or as a result of experience under this system, said members should have theretofore been required to pay in order to make their normal contributions half of the abovementioned pensions, allowances and other benefits which are or will become payable to such tier 2 members on or after September 30, 2012.

• C. The normal rate of contribution set forth in this section is based on interest and mortality tables and other actuarial data in possession of the city on the date of enactment of this

section, and is subject to change from time to time by the retirement board pursuant to other provisions of this chapter.

(Prior code § 2904.1252; Ord. 29120.)

• A. Notwithstanding any other provisions of this Chapter 3.28, upon attainment of at least thirty (30) years of service credit by an eligible member that is not a Tier 2 member in this System, normal contributions described in Section 3.28.700 shall not be deducted from the member's monthly or bi-weekly compensation. Eligible members are those employees who are in positions assigned to an unrepresented employee unit or a represented bargaining unit that has agreed to the provisions in this Section 3.28.725 and has been approved by the City Council.

• B. Members shall continue to make all other member contributions that would otherwise be required under this Chapter 3.28 without regard to this provision.

• C. The City shall continue make all contributions that would otherwise be required under this Chapter 3.28 without regard to this provision. The City shall also make the normal contributions described in Section 3.28.700 that would have been deducted from an eligible member's monthly or bi-weekly compensation but for subsection A. of this Section 3.28.725, at the same time and in the same manner as the City makes other normal contributions described in Section 3.28.850 or Section 3.28.940 in the event the City has elected a lump sum payment of the City's contributions to the retirement fund.

(Ords. 30633, 30785.)

Notwithstanding any other provisions of this Chapter 3.28, all members of this system must make monthly (or biweekly, if compensation is paid

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biweekly by the city) prior service contributions to this system. The prior service contribution required of a member for each month (or for each two weeks, if compensation is paid biweekly by the city) shall be a percentage of compensation earned, or of "compensation earnable" when so required by other provisions of this chapter, by the member in such period. Such percentage is hereinafter referred to as members' "prior service rate of contribution." Said rate shall be the same for all members; provided, however, to the extent that prior service contributions are applicable to tier 2 members, the amount of prior service contributions required of a tier 2 member for each month (or for each two weeks, if compensation is paid biweekly by the city) shall be a percentage of "compensation earnable" as defined for tier 2 member in Section 3.28.030.06, required in order to make their prior service contributions sufficient to provide for half of the cost to provide pensions, allowances and other benefits which are or will become payable to tier 2 members on or after September 30, 2012, based on such prior service, including any amount designed to recover from members the difference between the amount of prior service contributions theretofore actually required to be paid by tier 2 members and any greater amount which, as a result of experience under this system, said members should have theretofore been required to pay in order to make their prior service contributions provide for half of the cost of the abovementioned pensions, allowances and other benefits which are or will become payable to such tier 2 members on or after September 30, 2012 with respect to any prior service. (Prior code § 2904.1253; Ord. 29120.)

The members' prior service rate of contribution shall be such that, based on interest and mortality tables and other relevant actuarial data, the total amount of prior service contributions which will be required of members will be sufficient to pay, when due, forty-two percent (42%) of the difference between:

• A. The amount of all pensions, allowances and other benefits which are and will

become payable under this System on account of or because of prior service of members; and

• B. The amount of all pensions, allowances and benefits which would be and become payable to members on account of prior service (that is, on account of service rendered prior to July 1, 1975) under the provisions of the Chapter 3.24 Retirement System as it existed on June 30, 1975, if all members of this System were members of said Chapter 3.24 Retirement System instead of being members of this System; provided, however, that if and when, from time to time, the members' prior service rate of contribution is hereafter amended or changed, the new rate shall not include any amount designed to thereafter recover from members or return to members the difference between the amount of members' prior service contributions theretofore actually required to be paid by members and any greater or lesser amount which, because of amendments hereafter made to this System or as a result of experience under this System, said members should have theretofore been required to pay in order to make their prior service contributions equal forty-two percent (42%) of the difference specified above.

• C. Notwithstanding the foregoing, to the extent that prior service contributions are applicable to a Tier 2 member, the amount of prior service contributions required of a Tier 2 member for each month (or for each two (2) weeks, if compensation is paid biweekly by the City) shall be a percentage of "compensation earnable," as defined for Tier 2 members in Section 3.28.030.06, required in order to make their prior service contributions sufficient to provide for half of the cost to provide pensions, allowances and other benefits which are or will become pay-

• T3:170

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able to Tier 2 members on or after September 30, 2012, based on such prior service, including any amount designed to recover from members the difference between the amount of prior service contributions theretofore actually required to be paid by Tier 2 members and any greater amount which, as a result of experience under this System, said members should have theretofore been required to pay in order to make their prior service contributions provide for half of the cost of the abovementioned pensions, allowances and other benefits which are or will become payable to such Tier 2 members on or after September 30, 2012 with respect to any prior service. Notwithstanding the foregoing, the following shall apply to the manner of sharing contributions between the City and members who became Tier 2 members prior to June 16, 2017 but on and after June 16, 2017 are no longer considered Tier 2 members under Section 3.28.030.28 but remain members of the Plan and those members who are Tier 2 members effective on and after June 16, 2017:

1. The costs, including any unfunded actuarial accrued liability, associated with implementing changes to benefits for Tier 2 employees effective as of June 16, 2017 for members who were Tier 2 members prior to June 16, 2017, including the cost associated with returning prior members of this Plan who had become Tier 2 members back to the benefit provisions applicable to nonTier 2 members, will be amortized as a separate liability over twenty (20) years or other period determined by the Board and will be reflected as soon as practicable in contribution rates to be shared equally among the City and the former Tier

2 members who will return to nonTier 2 status and equally among those Tier 2 members whose Tier 2 benefits will be increased as of June 16, 2017, and such increased rates shall not be subject to the incremental increases in amounts associated with unfunded actuarial accrued liability described in Section 3.28.740.C.2.

2. Other than as provided in Section 3.28.200.A., in determining member contribution rates, to the extent an unfunded actuarial accrued liability is determined to exist with respect to the Plan, Tier 2 members will contribute toward the amount of such amortized unfunded actuarial accrued liability by increasing the Tier 2 member contribution rate by one-third of one percent (0.33%) of compensation each year until such time as the cost of the unfunded actuarial accrued liability is being shared equally by the Tier 2 members and the City. Until such time as the Tier 2 members and the City are sharing such cost equally, the City will include in its contribution rate the amount of the amortized unfunded actuarial accrued liability that would otherwise have been paid by the Tier 2 member in such year.

• D. Notwithstanding any other provisions of this Plan to the contrary, in determining the amount of contributions to be made to the Plan as provided in this Section 3.28.740, except as provided in subsection 3.28.740.C, any excess of assets over the actuarial accrued liability shall not be used to reduce the contributions to the Plan.

(Prior code § 2904.1254; Ords. 29120, 29904.)

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Until amended, revised or changed pursuant to the provisions of this Chapter 3.28, the members' prior service rate of contribution, on or after July 1, 1975, shall be one and fifty-four hundredths percent of earned compensation, or of "compensation earnable" when so required by other provisions of this Chapter 3.28; or as applicable to tier 2 members, the percentage of "compensation earnable" as defined for tier 2 member in Section 3.28.030.06, required to provide half of the cost of any prior service.

(Prior code § 2904.1255; Ord. 29120.)

• A. Notwithstanding any other provisions of this Part 6, or of Chapter 3.44, members of this System shall make such additional retirement contributions as may be required by resolution adopted by the City Council or by executed agreement with a recognized bargaining unit, or as may be required by Section 3.28.710.

• B. The City and Tier 2 members shall share in all costs of Tier 2 to the Retirement System, including but not limited to administrative expenses, normal cost and unfunded actuarial liability in the manner described in Section 3.28.200. The additional employee contribution for members of Tier 2 of this Retirement System for each month (or for each two (2) weeks, if compensation is paid biweekly by the City) shall represent the member's portion of the shared costs for such period.

• (Ords. 28752, 29120, 29904.)

The retirement board shall furnish the director of finance the rates of contribution for members and the amounts of any other contributions payable by any member or members. The director of finance shall apply such rates of contribution to the earned compensation (or "compensation earnable" where applicable) of each member, and de-

duct from such compensation the contributions so determined and payable by each member. All other contributions authorized to be made or required of members shall be paid by such members to the director of finance. The director of finance shall furnish to the retirement board, upon its request therefor, a statement of such contributions so deducted or credited with respect to each member, together with such other information as the board may require. All contributions shall be placed in the retirement fund.

(Prior code § 2904.1256.)

• A. For the purposes of this section, contributions "picked up" by the city means contributions to this system which are designated as employee contributions but are treated as employer contributions for income tax purposes as authorized by Section 414(h)(2) of the Internal Revenue Code (26 U.S.C.A. 414(h)(2)).

• B. Notwithstanding any other provision of law, the city may pick up, for the sole and limited purpose of deferring taxes as authorized by Section 414(h)(2) of the Internal Revenue Code (26 U.S.C.A. 414(h)(2)) and Section 17501 of the California Revenue and Taxation Code, all or a portion of the contributions required to be paid by a member of this system.

• C. Nothing herein shall be construed to mean that any contributions so picked up by the city are to be treated as city contributions for any purpose other than the sole and limited purpose specified herein. Any contributions so picked up by the city shall be paid into the retirement fund and shall be treated in the retirement fund in the same manner as such contributions would be treated if they had not been picked up by the city. The member shall have no right to receive such picked-up contributions directly but instead they must be paid to the retirement fund.

• D. Subject to applicable laws relating to meet and confer requirements, the city shall retain the authority periodically to increase, reduce or

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eliminate the pick up by the city of all or a portion of the contributions required to be paid by a member of this system.

(Ords. 22458, 25732, 26006, 28885.)

• A. Each member's normal contributions, including those made under the Chapter 3.24 system and those made under this system, shall be credited by the director of finance to an individual account kept for such member. Such account shall also show any and all withdrawals or redeposits of normal contributions, if any, made by the member pursuant to the provisions of the Chapter 3.24 retirement system or this system. The total normal contribution so credited to a member, plus interest, if any, on such contributions which has been credited to such account, less all such contributions which have been withdrawn and not redeposited, shall be deemed, unless and except as may be otherwise provided by other provisions of this system, to be the accumulated normal contributions of such member in this system.

• B. Each member's prior service contributions, made on or after July 1, 1975 under the provisions of this system, also shall be credited by the director of finance to an individual account kept for such member. Such account shall also show all withdrawals of prior service contributions, if any, made by such member pursuant to the provisions of this system. The total prior service contributions thus credited to a member, plus interest if any on such contributions which has been credited to such account, less withdrawals, shall be deemed, unless and except as may be otherwise provided by other provisions of this system, to be the accumulated prior service contributions of such member in this system.

• C. Each member's additional contributions made on or after July 1, 2010 under the provisions of this system, also shall be credited by the direc-

  • tor of finance to an individual account kept for such member. Such account shall also show all withdrawals of additional contributions, if any, made by such member pursuant to the provisions of this system. The total additional contributions thus credited to a member, plus interest if any on such contributions which has been credited to such account, less withdrawals, shall be deemed, unless and except as may be otherwise provided by other provisions of this system, to be the accumulated additional contributions of such member in this system.

• D. Payment of salaries and wages, less contributions required of a member, is in full discharge of all claims and demands whatsoever for the services rendered by the members during the periods covered by such payment, except the benefits afforded by the provisions of this chapter.

(Prior code § 2904.1257; Ord. 28752.)

• A. Except as otherwise provided in Sections 3.28.580, 3.28.590, 3.28.785, and 3.28.2420 of this chapter, if the membership herein of a member of this system is terminated for any reason other than death or retirement, the member shall be paid, within six months after the date of such termination, all of his or her accumulated normal contributions, all of his or her accumulated prior service contributions and all of his or her accumulated additional contributions. In any case, under the terms of this plan where a person is entitled to a return of employee contributions, such return of contributions shall include an amount equal to the amount of the employee contributions to the medical benefits account plus interest accrued thereon at the rate of two percent per annum; provided, however, that no such return of contributions shall be paid from the medical benefits account.

• B. Anything elsewhere in this Chapter 3.28 to the contrary notwithstanding, if during a mem-

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ber's employment with the city, the member is required to or elects to become a member of any other retirement system supported in whole or in part by public funds, or is required to or elects to discontinue such federated city service as qualifies him or her for membership in this system and thereafter renders city service other than federated city service, such member shall be considered as having resigned from federated city service and, except as otherwise provided in Sections 3.28.580, 3.28.590, 3.28.785, and 3.28.2420, to have terminated membership in this system, as of the date he or she becomes a member of said other system or ceases to render said federated city service as aforesaid.

• C. Except as provided in Section 3.28.785, upon termination of a member's membership in this system for any reason other than death or retirement, the member, and any and all other persons or estates who might otherwise be entitled to any rights or benefits under this system because of such member's membership, shall thereupon cease to have or be entitled to any rights or benefits under this system.

• D. If on or after March 28, 2005, the member is to receive a distribution of an eligible rollover distribution, with a present value greater than one thousand dollars, and if a member does not elect to have such distribution paid directly to an eligible retirement plan specified by member in a direct rollover or to receive the distribution directly, then the system shall pay the distribution in a direct rollover to an individual retirement plan designated by the board in accordance with Section 401(a)(31)(B) of the Internal Revenue Code and IRS Notice 2005-5.

(Prior code § 2904.1258; Ords. 24682, 27838, 28752, 28885.)

• A. In the event a person's membership in this system is terminated because the person transfers, without a break in service, to a position

that qualifies the person for membership in the police and fire department retirement plan and the person thereby becomes a member of such plan, the person may elect to leave his or her accumulated contributions on deposit in the retirement fund or may elect to have all of his or her accumulated contributions, with accrued interest thereon, transferred to the police and fire department retirement fund in accordance with the provisions of the police and fire department retirement plan.

• B. If a person described in Subsection A. elects to leave his or her accumulated contributions on deposit in this retirement fund, the person shall have no right to a refund of contributions until such person separates from city service. If the person elects to leave accumulated contributions on deposit in this retirement fund, subsequently separates from city service, and does not meet the requirements of Section 3.28.580, Section 3.28.590, or Section 3.28.2420, then within six (6) months of such person's separation from city service, all of his or her accumulated contributions and the interest accrued thereon shall be paid to the person.

• C. If the accumulated contributions and accrued interest of a person described in Subsection A. are transferred to the police and fire department retirement fund, such person's membership in this system shall terminate and thereafter the member, and any and all other persons or estates who might otherwise be entitled to any rights or benefits under this system because of such member's membership, shall thereupon cease to have or be entitled to any rights or benefits under this system.

• (Ord. 27838.)

• A. Except as provided in this Section 3.28.790 and in Section 3.28.2430, no person shall be entitled or permitted to repay or redeposit into the retirement fund or this System any accumulated contributions withdrawn by or

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returned to such person pursuant to the provisions of this Chapter or of Chapter 3.24, nor to reacquire credit for any Federated City Service lost by such person because of the withdrawal or return of such person's accumulated contributions.

• B. Upon any person becoming a member of this System pursuant to Section 3.28.430 or Section 3.28.450 or because of reemployment in a Federated City Service position, the Retirement Board shall cause written notice to be personally delivered or mailed to such member, informing such member of his or her rights under this Section. If mailed, such notice shall be mailed to said member at the latest address as shown in the records of the Human Resources Department of the City.

• C. If the member wishes to have the prior service which was lost by reason of the withdrawal of accumulated contributions recredited to him or her, the person shall file a written notice of election to redeposit with the Secretary to the Board within thirty (30) days from and after the date that written notice of his or her rights under this Section is mailed or delivered to the member. If the person does not file the notice of election to redeposit within such time, the member shall be deemed to have elected not to have such prior service credited to him or her.

• D. The member shall not be entitled to prior service credit under this Section unless the member redeposits and pays into the retirement fund:

  1. All accumulated contributions previously withdrawn by or returned to said member; plus

  2. All additional interest which would have been earned by said member's contributions at the actual rate earned by the retirement fund under the provisions of this Chapter or Chapter 3.24, whichever is applicable, as of the date he or she becomes a member of this System, if said

accumulated contributions had not been withdrawn by or returned to said member; plus

3. Interest on the unpaid balance of all such moneys from the date said member becomes a member of this System to the date all such moneys are fully redeposited and paid into the retirement fund, at the regular rate of interest established by the Board which is in effect at the time said member elects to redeposit the withdrawn or returned accumulated contributions.

• E. Subject to any limits on annual contributions imposed by Section 415 of the Internal Revenue Code of 1986, as amended, any member who elects to redeposit and pay into the retirement fund the moneys specified in subsection D. may redeposit and pay said moneys:

  1. In one (1) lump sum within sixty (60) days from and after the date said member files with the Secretary of the Retirement Board his or her written notice of election to redeposit; or

2. For elections made on or before January 31, 2011, in installments, paid pre-tax over a period of time not to exceed the number of monthly installments or biweekly installments approved by the Board, all payable within the time and in the manner determined by the Board; or

   3. For elections made on or after February 1, 2011, in installments, paid post-tax over a period of time not to exceed the number of monthly installments or biweekly installments approved by the Board, all payable within the time and in the manner determined by the Board; or

   4. A combination of a lump sum and installments.

• F. If the member elects to redeposit and pay the contributions in pre-tax installments or if the member elects to make the lump sum payment by pre-tax payroll deduction, the member shall execute a binding irrevocable payroll authori-

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zation form authorizing the payment of the redeposit by payroll deductions. The payroll authorization form shall be filed with the Director of Finance within thirty (30) days from and after the date that written notice of his or her rights hereunder is delivered or mailed to said member. If the member does not file the payroll authorization form within such time, the member shall be deemed to have elected not to redeposit and pay the contributions by payroll deduction. The election to redeposit accumulated contributions in the retirement fund by pre-tax payroll deduction and the authorization to redeposit by pre-tax payroll deductions shall be irrevocable. During the time the pre-tax irrevocable election is in effect, no direct payments from the member to the retirement fund shall be made by the member or accepted by the System.

• G. The election to purchase credit for prior Police and Fire service through post-tax payroll deductions and the authorization to make payments by post-tax payroll deductions shall be revocable. During the time the revocable election is in effect, the member may make additional direct payments to the retirement fund.

• H. All contributions under subsections E.2. and F. shall be treated as pre-tax salary reductions pursuant to Internal Revenue Code Section 414(h)(2).

• I. If a member elects to redeposit and pay the moneys specified in subsection D. and subsequently does redeposit and pay said moneys as provided in this Section, the member shall be credited under this System for all the service for which he or she lost credit upon the withdrawal or return of his or her accumulated contributions.

• J. If a member elects to redeposit and pay said moneys but fails to complete the redeposit, then:

  1. If the failure to complete the redeposit is because of death while in Federated City Service and before retirement, the member shall be credited with the amount of

service which is determined by the Board to be attributable to the amount of accumulated contributions redeposited as of the date of the member's death.

2. If the failure to redeposit is for any reason other than the death of the person prior to retirement, any amounts redeposited and paid pursuant to such election shall be credited to the member's accumulated normal contributions account but the member shall receive no credit for any service lost by him or her because of the previous withdrawal or return of accumulated contributions.

• K. This Section 3.28.790 and all other redeposit provisions are available to Tier 2 members, except that a Tier 2 member making a redeposit under this Section 3.28.790 shall be responsible for paying the entire cost of the service credit purchase.

(Prior code § 2904.1258b; Ords. 22262, 26006, 28885, 29120, 29904.)

If a person who has been retired for service or disability under the Chapter 3.24 retirement system is reinstated to and returns to federated city service and becomes a member of this system pursuant to the provisions of Section 3.28.410 or 3.28.420, his accumulated contributions in this system, as of the date he becomes a member of this system, shall be deemed to be an amount which is the actuarial equivalent of his annuity, under the Chapter 3.24 retirement system, at that time, as based on a disabled life in the case of a person retiring from disability retirement, but not exceeding the amount of his accumulated contributions at the time of his retirement under the Chapter 3.24 system, and he shall be credited with such amount of accumulated contributions as of said time. However, for the purpose only of qualifying for benefits under this

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system, his accumulated contributions in this system shall never be deemed to be less than five hundred dollars.

(Prior code § 2904.1259.)

If a person who has been retired for service or disability under the provisions of this Chapter 3.28 system is reinstated to and returns to federated city service and again becomes a member of this system pursuant to other provisions of this chapter, his accumulated contributions in this system, as of the date he again becomes a member of this system, shall be deemed to be the amount, if any, by which his accumulated contributions in this system, as of the date he formerly retired under this system, exceeds the total amount of retirement allowances theretofore received by him under this system. However, for the purpose only of qualifying for benefits under this system, his accumulated contributions in this system shall never be deemed to be less than five hundred dollars.

(Prior code § 2904.1260.)

• A. A Reclassified Tier 1 Member (described under Section 3.28.200.A.1) who separates from City service prior to paying the full amount of his or her Reclassified Tier 1 Member Obligation, as described in Section 3.28.200.A.1, is liable for and shall be required to pay any remaining balance within sixty (60) calendar days following the later of his or her date of separation from City service or receipt of the final remaining balance calculation of such member's Reclassified Tier 1 Member Obligation from the Board. Notwithstanding the preceding sentence, any Reclassified Tier 1 Member who does not satisfy his or her Reclassified

Tier 1 Member Obligation shall only be entitled to the reduced plan benefit described in Subsection 3.28.820.E.

• B. The outstanding balance owing and payable by the Reclassified Tier 1 Member shall be determined by the Board's actuary. In the event there is any dispute regarding the obligation of such Reclassified Tier 1 Member or any other issue related to the liability associated with the reclassification of his or her Tier 2 service to Tier 1 service, the Board shall determine the issue based on the relevant information presented to the Board. Any decision made by the Board shall be final and binding.

• C. Subject to any limits on annual contributions imposed by Section 415 of the Internal Revenue Code of 1986, as amended, the Reclassified Tier 1 Member must satisfy the outstanding balance of his or her Reclassified Tier 1 Member Obligation under Section 3.28.200.A.1, as determined by the Board's actuary, through either a transfer or rollover from the employee's Internal Revenue Code Section 457(b) deferred compensation plan account or through a lump-sum after-tax payment.

• D. In order for a Reclassified Tier 1 Member to satisfy his or her outstanding Reclassified Tier 1 Member Obligation, the member must make the payment in the time and manner established by the Board; provided however, the entire outstanding liability must be paid on or before the later of sixty (60) calendar days following the date of separation from City service or receipt of the final remaining balance calculation of such member's Reclassified Tier 1 Member Obligation from the Board. Notwithstanding the preceding sentence, any Reclassified Tier 1 Member who does not satisfy his or her Reclassified Tier 1 Member Obligation shall only be entitled to the reduced plan benefit in Subsection 3.28.820.E.

• E. If a Reclassified Tier 1 Member fails to satisfy or her Reclassified Tier 1 Member Obligation within sixty (60) calendar days from the later

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of his or her date of separation from City service or receipt of the final remaining balance calculation of such member's Reclassified Tier 1 Member Obligation from the Board, the Reclassified Tier 1 Member shall only receive a portion of the Tier 1 benefit provided under this Plan that is the actuarial equivalent (as determined in the sole discretion of the Boards in consultation with their actuaries) of the amount such Reclassified Tier 1 Member paid for under the applicable provisions of this Plan.

(Ords. 30145, 30183.)

Part 7

CITY CONTRIBUTIONS

Sections:

• 3.28.850 Regular current service rate - Described - Amount.

• 3.28.860 Regular current service rate - Determination.

• 3.28.870 Regular current service rate - Initial rate.

• 3.28.880 Current service deficiency rate - Determination.

• 3.28.890 Prior service contributions - Described - Amount.

• 3.28.900 Prior service contributions - Determination.

• 3.28.910 Prior service contributions - Initial rate.

• 3.28.920 City contributions for certain former members of police and fire department retirement plan.

• 3.28.925 Additional costs borne by city.

• 3.28.930 No credit to city upon withdrawal of member's accumulated contributions.

• 3.28.940 Time of payment of city contributions.

• 3.28.950 Administrative costs of system.

Except as otherwise provided by other provisions of this Chapter 3.28, the city must make, after July 1, 1975, monthly (or biweekly if members contribute biweekly) current service contributions to this system. The current service contributions required of the city for each such period shall be a percentage of compensation earned, or of "compensation earnable" when so required by other provisions of this Chapter 3.28, by members in such period. Said percentage shall consist of the sum of two rates, the first being the one which is hereinafter referred to as "city's regular current service rate of contribution," and the second being the one which is hereinafter referred to as "city's current service deficiency rate of contribution." (Prior code § 2904.1300.)

• A. Except as provided in Section 3.28.200, the City's regular current service rate of contribution shall be such that the amount of contributions paid by the City under such rate for each month (or two (2) weeks, if members contribute biweekly) of current service for which the rate is imposed, as compared to the amount of normal contributions required of members for each such period of current service, shall be in the ratio of eight for the City to three for members (8:3).

• B. For Tier 2 members, except as provided in Section 3.28.200.B, the City's regular current rate of contribution shall be such that the amount of contributions paid by the City under such rate for each month (or two (2) weeks, if members contribute biweekly) of current service for which the rate is imposed, as compared to the amount of normal contributions

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required of members for each such period of current service, shall be in the ratio of one for the City to one for the members (1:1).

• C. There shall be no offset to normal cost contribution rates in the event Plan funding exceeds one hundred percent (100%). Both the City and employees shall always make the full annual required Plan contributions as calculated by the Retirement Board actuaries which will be in compliance with applicable laws and will ensure the qualified status under the Internal Revenue Code.

(Prior code § 2904.1301; Ords. 29120, 29904, 30017.)

• A. Until amended, revised or changed by the retirement board in accordance with other provisions of this Chapter 3.28, the city's regular current service rate of contribution, on and after July 1, 1975, shall be twelve and seventyseven hundredths percent of earned compensation, or of "compensation earnable" when so required by other provisions of this Chapter 3.28.

• B. Notwithstanding any other provisions of this Chapter 3.28, the city's normal rate of contribution for tier 2 members on or after September 30, 2012, shall be that percentage of earned compensation, or of "compensation earnable," as defined for tier 2 member in Section 3.28.030.06, determined to be required in order to make the city's normal contributions half of the cost to provide pensions, allowances and other benefits which are or will become payable to tier 2 members on or after September 30, 2012, including any amount designed to recover from the city and the members the difference between the amount of normal contributions theretofore actually required to be paid by members and the city and any greater amount which, because of amendments hereafter made to this system or as a result of experience under this system, said members and the city should have theretofore

been required to pay in order to make the city's normal contributions half of the abovementioned pensions, allowances and other benefits which are or will become payable to such tier 2 members on or after September 30, 2012.

• C. The initial rate established by this section is based on interest and mortality tables and other actuarial data in possession of the city on the date of enactment of the applicable tier and is subject to change from time to time by the retirement board pursuant to other provisions of this Chapter 3.28.

(Prior code § 2904.1303; Ord. 29120.)

• A. The City's current service deficiency rate of contribution shall be such as may hereafter be necessary to make up, over a period of thirty (30) years, any existing deficiency in the amounts of current service contributions theretofore contributed by members and by the City for the payment of the cost of all allowances and other benefits which are or will become payable to members on account of current service rendered before the effective date of the latest deficiency rate, such deficiency being that resulting from amendments hereafter made to this System or as a result of experience under this System. Until the amount accumulated in the retirement fund from contributions of members and the City on account of current service equals the present value of all amounts thereafter payable from the retirement fund on account of current service, the City shall make monthly (or biweekly, if members contribute biweekly) contributions, to make up any deficiency, at the current service deficiency rate established by the Retirement Board. Such rate shall be established and from time to time changed by the Retirement Board, whenever necessary, to accomplish the above-specified objective.

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B. Notwithstanding the foregoing, with respect to Tier 2 members, the City and the Tier 2 members shall share equally in a current service deficiency rate of contribution that shall be such amount as may hereafter be necessary to make up, over the period currently used for amortizing deficiency rates, any existing deficiency under this Retirement System in the amounts of current service contributions theretofore contributed by members and by the City for the payment of the cost of all allowances and other benefits which are or will become payable to Tier 2 members on account of current service rendered before the effective date of the latest deficiency rate, such deficiency being that resulting from amendments hereafter made to this System or as a result of experience under this System. Until the amount accumulated in the retirement fund from contributions of members and the City on account of current service equals the present value of all amounts thereafter payable from the retirement fund on account of current service, the City and Tier 2 members shall make monthly (or biweekly, if members contribute biweekly) contributions, to make up any deficiency, at the current service deficiency rate established by the Retirement Board. Such rate shall be established and from time to time changed by the Retirement Board, whenever necessary, to accomplish the above-specified objective of sharing equally among the City and the Tier 2 members in such costs. Notwithstanding the foregoing, the following shall apply to the manner of sharing contributions between the City and members who became Tier 2 members prior to June 16, 2017 but on and after June 16, 2017 are no longer considered Tier 2 members as defined under Section 3.28.030.28 but remain members of the Plan and those members who are Tier 2 members effective on and after June 16, 2017:

costs. Notwithstanding the foregoing, the following shall apply to the manner of sharing contributions between the City and members who became Tier 2 members prior to June 16, 2017 but on and after June 16, 2017 are no longer considered Tier 2 members as defined under Section 3.28.030.28 but remain members of the Plan and those members who are Tier 2 members effective on and after June 16, 2017:

1. The costs, including any unfunded actuarial accrued liability, associated with implementing changes to benefits for Tier 2

employees effective as of June 16, 2017 for members who were Tier 2 members prior to June 16, 2017, including the cost associated with returning prior members of this Plan who had become Tier 2 members back to the benefit provisions applicable to non-Tier 2 members, will be amortized as a separate liability over twenty (20) years or other period determined by the Board and will be reflected as soon as practicable in contribution rates to be shared equally among the City and the former Tier 2 members who will return to non-Tier 2 status and equally among those Tier 2 members whose Tier 2 benefits will be increased as of June 16, 2017. Such increased rates shall not be subject to the incremental increases in amounts associated with unfunded actuarial accrued liability described in Section 3.28.860.C.2.

2. Other than as provided in Section 3.28.860.C.1., in determining member contribution rates, to the extent an unfunded actuarial accrued liability is determined to exist with respect to the Plan, Tier 2 members will contribute toward the amount of such amortized unfunded actuarial accrued liability by increasing the Tier 2 member contribution rate by one-third of one percent (0.33%) of compensation each year until such time as the cost of the unfunded actuarial accrued liability is being shared equally by the Tier 2 members and the City. Until such time as the Tier 2 members and the City are sharing such cost equally, the City will include in its contribution rate the amount of the amortized unfunded actuarial accrued liability that would otherwise have been paid by the Tier 2 member in such year.

• C. Except as provided in subsection 3.28.860.C., in determining the amount of contributions to be made to the Plan as provided in this Section

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3.28.880, any excess of assets over the actuarial accrued liability shall not be used to reduce the contributions to the Plan.

(Prior code § 2904.1302; Ords. 29120, 29904.)

Except as may be otherwise provided elsewhere in this Chapter 3.28, the city must make monthly (or biweekly, if members contribute biweekly) prior service contributions to this system. The prior service contribution for each such period shall be a percentage of compensation earned, or of "compensation earnable" when so required by other provisions of this Chapter 3.28, in such period. Said percentage is hereinafter referred to as "city's prior service rate of contribution."

(Prior code § 2904.1304.)

The city's prior service rate of contribution shall be such that, based on interest and mortality tables and other relevant actuarial data, the sum of the total amount of city's prior service contributions which will be required of the city under the provisions of this Chapter 3.28, plus the total amount of prior service contributions which will be required of members under the provisions of this chapter, plus the total amount of all prior service contributions made by the city pursuant to the provisions of the Chapter 3.24 retirement system, will be sufficient to pay, when due, all pensions, allowances and other benefits which are or will become payable under this system on account of prior service rendered prior to July 1, 1975. (Prior code § 2904.1305.)

• A. Until amended, revised or changed by the retirement board in accordance with other provisions of this Chapter 3.28, the city's prior service rate of contribution, on and after July 1, 1975, shall be three and sixty-nine hun-

dredths percent of earned compensation, or of "compensation earnable" when so required by other provisions of this chapter; or as applicable to tier 2 members, the percentage required to provide half of the cost of any prior service.

• B. The initial rate established by this section is based on interest and mortality tables and other relevant actuarial data in the possession of the city on the date of enactment of this section and is subject to change from time to time by the retirement board pursuant to other provisions of this chapter.

(Prior code § 2904.1306; Ord. 29120.)

If a member who becomes such after July 1, 1975, becomes entitled to receive credit, pursuant to Section 3.28.650, for service formerly credited to him under a city police and fire department retirement plan specified in said Section 3.28.650, the city shall contribute to the retirement fund an amount equal to the sum of:

• A. An amount which, when added to the amount of accumulated contributions of the member which are transferred from the police and fire department plan into the retirement system pursuant to said Section 3.28.650, will equal the amount of contributions which said member would have been required to pay under the Chapter 3.24 retirement system for service rendered prior to July 1, 1975, and under this system for service rendered on or after July 1, 1975, had he been a member of said systems from the date he became a member of the police and fire department retirement plan to the date he becomes a member of this system;

• B. An amount which, when added to the amount of city contributions which are transferred from the police and fire department retirement plan into this sys-

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tem pursuant to said Section 3.28.650, will be equal to the contributions which the city would have been required to pay under the Chapter 3.24 retirement system for service rendered prior to July 1, 1975, and under this system for service rendered on or after July 1, 1975, had he been a member of said systems, in lieu of being a member of the police and fire department plan, from the date he became a member of the police and fire department retirement plan to the date he becomes a member of this system.

• C. To the extent this section is applicable to tier 2 members, all provisions relating to the equal sharing of costs under this retirement system shall be applicable in determining any city and tier 2 member contributions required.

(Prior code § 2904.1307; Ord. 29120.)

• A. The city shall bear and pay for all additional costs incurred by this retirement system because of the benefits provided by the provisions of Section 3.28.1110.A.3. or Section 3.28.1570.C. to any city officers or employees which would not have been provided absent the adoption of said sections.

• B. The city shall bear and pay for all additional costs incurred by this retirement system because of the medical insurance benefits provided to any person described in Subsections B. or C. of Section 3.28.1950 which would not have been provided absent the adoption of said sections.

• C. The city shall bear and pay for the period of time and under the terms and conditions set forth by the city council, an amount equal to the additional costs incurred by this retirement system for that portion of the unfunded liability as determined by the actuary for the retirement system that the city and new employees hired on or after September 27, 2013, would have otherwise paid as contributions

had those employees been eligible for the retiree healthcare defined benefits provided under Part 16. Nothing herein shall be construed to mean that any contributions paid by the city are to be treated as city contributions for any purpose other than the sole and limited purpose specified herein. Subject to applicable laws relating to meet and confer requirements, the city shall retain the authority periodically to increase, reduce or eliminate the contribution paid by the city as authorized by this section.

(Ords. 22314, 23485, 24347, 29283, 29283.)

If the federated city service of a member is discontinued by reason of resignation or discharge, or by reason of layoff or leave of absence deemed by the board to have resulted in permanent discontinuance (and in the latter case, as of the date of determination by the board that the discontinuance is permanent), or if the disability retirement of a member is followed by cessation of the disability and by cancellation of the disability allowance but such member does not return to federated city service, and such member withdraws all or part of his accumulated normal contributions and interest thereon, and/or all or part of his prior service contributions and interest thereon, then in such event the city shall not receive a refund of its contributions made for such member nor receive a credit for such contributions against other contributions required to be made by the city.

(Prior code § 2904.1308; Ord. 20276.)

• A. Such monthly or biweekly contributions as are required of the city by the provisions of this Part 7 shall be paid by the city within ten (10) days from and after the end of the month or two-week period for which they are made.

• B. In lieu of making the monthly or biweekly contributions specified in this Part 7 for the pay periods commencing with the third pay

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period in fiscal year 2008-09, the city shall have the option to make, on or before August 1, 2008, an advance lump sum payment of the city's contributions to the medical benefits account and the retirement fund. The amount of such advance lump sum payment for fiscal year 2008-09 shall be as determined by the board to be actuarially equivalent to the monthly or biweekly payments that would otherwise have been the city's required contributions to the medical benefits account and the retirement fund for the pay periods commencing with the third pay period in fiscal year 2008-09.

• C. Commencing with fiscal year 2009-10, the city shall have an annual option to select the periodic basis on which city contributions to the medical benefits account and to the retirement fund for that fiscal year will be paid; provided that such payment schedule shall be no less frequent than quarterly. Except as may otherwise be agreed to by the board, the notice of intent to exercise the option, including the periodic basis selected and the payment date(s) (the "notice of intent"), shall be provided by the city manager to the board on or before April 30th of the fiscal year prior to the fiscal year in which city may wish to exercise the option. The amount of the periodic payment(s) contained in city's notice of intent shall be as determined by the board to be actuarially equivalent to the monthly or biweekly payment that would otherwise have been required.

• D. In the event that written notice of intent to exercise the option to select an alternative periodic payment schedule, has not been given by the city manager to the board on or before April 30th, or such other date as may be approved by the board, of each fiscal year, or if subsequent to the giving of such notice and prior to the commencement of the fiscal year, city elects not to exercise the option to select an alternative periodic payment schedule, city's payment of the city's contributions to the med-

ical benefits account and to the retirement fund shall be made monthly or biweekly as otherwise specified in this Part 7.

• E. Such alternative periodic payments as are made by the city pursuant to the provisions of this Part 7 shall be paid by the city within ten (10) days of the payment date(s) specified in city's notice of intent.

• F. No later than the end of the second pay period in the fiscal year immediately following a fiscal year in which city has made a lump sum payment as specified in paragraph B. and C., city shall provide to the board a statement showing the actual amount of the city's payroll for members of the system for the prior fiscal year. The board shall then determine whether the lump sum advance payment(s) and the payment(s) that would otherwise have been required in the absence of the lump sum advance payment(s) are actuarially equivalent. The city shall pay any underpayment by the earlier of ten (10) days following receipt of the board's notice of determination or city's next contribution due date. The city shall receive credit for any overpayment in the form of an offset against the next payment(s) due by the city.

• G. In the event that a city elected lump sum payment is made later than the payment date specified in the city's notice of intent, city's contribution to the medical benefits account and to the retirement fund will be recalculated by the board's actuary, at the city's expense, to reflect the timing difference. The city will pay the difference within ten (10) days of the date that the board's notice of the amount due is received.

• H. Any late payment to be made later than ten (10) days after the payment date specified in the city's notice of intent is subject to approval by the board.

(Prior code § 2904.1310; Ord. 28332.)

• A. All administrative costs of this system, as determined and approved by the board, includ-

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ing staff salaries and indirect labor costs, shall be borne by and paid from the retirement fund. The payment of costs of staff salaries and indirect labor from the retirement fund shall be subject to such limitations on said costs as may be agreed upon by the city and the employee organizations representing members of this system and set forth in the appropriate memoranda of agreement. Costs for staff salaries and indirect labor in excess of said limitations, if any, shall be paid by the city.

• B. All administrative costs related to tier 2 of the system, as determined and approved by the board, shall be reflected in contribution rates as shared equally by the tier 2 members and the city.

(Prior code § 2904.1309; Ords. 20066, 20848, 21165, 21242, 22263, 23433, 29120.)

Notwithstanding any other provision of this Part 7, the city shall be entitled to an offset of a percentage, as is determined appropriate by the actuary for the federated city employees retirement system, of the additional employee retirement contributions that are made under Section 3.28.755 against the retirement contributions that the city would otherwise be required to make under this Part 7.

(Ord. 28752.)

Except as provided in Section 3.28.860.C, the City shall make annual contributions to the Plan. The annual contribution shall equal the City's portion of the full normal cost for such year plus the City's portion of the unfunded actuarial accrued liability rate for the year (which shall be the full amount with respect to members who are not Tier 2 members and one-half (½) of the unfunded actuarial accrued liability rate related to Tier 2 members) as determined by the Board. The amount of the

City's annual contribution shall in no event be less than the City's full portion of the annual normal cost as described in this Section 3.38.960 and determined by the Board and the Plan's actuary. (Ord. 29904.)

Part 8

BENEFITS GENERALLY

Sections:

• 3.28.995 Benefit limitations.

• 3.28.1000 Benefits for portions of years.

• 3.28.1010 Annual allowances payable in installments.

• 3.28.1015 Minimum distribution requirements.

• 3.28.1020 Determining years of service in which member is entitled to credit in determining amount of benefits payable.

• 3.28.1025 Forfeitures.

• 3.28.1030 Assignment of rights and benefits.

• 3.28.1040 Integration of worker's compensation benefits.

• 3.28.1050 Release or relinquishment of rights and benefits - Assignments to city.

• 3.28.1060 Options for certain former employees of city health department and city communications department.

• 3.28.1070 Payment to member's estate of balance of accumulated contributions where benefits paid and payable under other provisions are less than such contributions.

• A. Notwithstanding any other law, except as provided in Subsection A.3 and B. below, for any

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person who becomes a member of this plan on or after January 1, 1996, the annual compensation taken into account under this plan shall be subject to the limitation set forth in Section 401(a)(17) of the Internal Revenue Code of 1986, as amended.

1. Effective with respect to plan years beginning on and after January 1, 1996, and before January 1, 2002, the annual compensation of a plan member which exceeds one hundred fifty thousand dollars (as adjusted for cost-of-living increases under Section 401(a)(17)(B) of the Internal Revenue Code) shall be disregarded for purposes of computing employee contributions to or benefits due from the retirement plan. Effective only for the 1996 plan year, in determining the compensation of an employee eligible for consideration under this provision, the rules of Section 414(g)(6) of the Internal Revenue Code shall apply, except that in applying such rules, the term "family" shall include only the spouse of the member and any lineal descendants of the employee who have not attained age nineteen before the close of the year.

2. Effective with respect to plan years beginning on and after January 1, 2002, the annual compensation of a plan member which exceeds two hundred thousand dollars (as adjusted for cost-of-living increases in accordance with Section 401(a)(17)(B) of the Internal Revenue Code) may not be taken into account in determining benefits or employee contributions due for any plan year. "Annual compensation" means compensation during the plan year or such other consecutive twelve-month period over which compensation is otherwise determined under the plan (the determination period). The cost-of-living adjustment in effect for a calendar year applies to annual compensation for the determination period that

begins with or within such calendar year. If the determination period consists of fewer than twelve months, the annual compensation limit is an amount equal to the otherwise applicable annual compensation limit multiplied by a fraction, the numerator of which is the number of months in the short determination period, and the denominator of which is twelve. If the compensation for any prior determination period is taken into account in determining a plan member's contributions or benefits for the current plan year, the compensation for such prior determination period is subject to the applicable annual compensation limit in effect for that prior period.

3. As used in this Subsection A.3., the term "eligible member" means a person who first became a member of the retirement plan prior to January 1, 1996. Pursuant to Section 13212(d)(3)(A) of OBRA '93, and the regulations issued under that Section, eligible members are not subject to the limits of Section 401(a)(17) of the Internal Revenue Code and this section.

• B. In the event Section 401(a)(17) of the Internal Revenue Code is repealed, amended or qualified, by statute or otherwise, to relieve all or any members of this plan described in Subsection A. from the limitation set forth in Section 401(a)(17) of the Internal Revenue Code, then for those members no longer subject to the limitation, the annual compensation taken into account under the plan shall be calculated without such limitation.

(Ords. 25001, 28885.)

• A. Notwithstanding any other law, except as provided in Subsections B. and E. below, the benefits payable to any person who becomes a member of this system on or after January 1, 1990, shall be subject to the limitations set forth in Section 415 of the Internal Revenue

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Code as applied (other than paragraph (b)(2)(G)) without regard to paragraph (b)(2)(F) of said Section 415.

B. Effective January 1, 1990, this paragraph shall apply only to persons who became a member of this system prior to January 1, 1990. For purposes of this paragraph, these members are referred to as "qualified participants." For a qualified participant, the 415(b) limit shall not be less than the accrued benefit of the member under this system determined without regard to any amendment of the plan made after October 14, 1987.

• C. For purposes of the application of Section 415(b) of the Internal Revenue Code, actuarial equivalences shall be based on the applicable interest rate and annuity tables as provided in Subsection E. below.

• D. The limitation year or period shall be the calendar year.

• E. Basic 415(b) limitation.

  1. Before January 1, 1995, a member may not receive an annual benefit that exceeds the limits specified in Section 415(b) of the Internal Revenue Code, subject to the applicable adjustments in that section. On and after January 1, 1995, a member may not receive an annual benefit that exceeds the dollar amount specified in Section 415(b)(1)(A) of the Internal Revenue Code, subject to the applicable adjustments in Section 415(b) of the Internal Revenue Code and subject to any additional limits that may be specified in the retirement plan. In no event shall a member's benefit payable under the plan in any limitation year be greater than the limit applicable at the annuity starting date, as increased in subsequent years pursuant to Section 415(d) of the Internal Revenue Code and the regulations thereunder.

  2. For purposes of Section 415(b) of the Internal Revenue Code, the "annual benefit" means a benefit payable annually in

the form of a straight life annuity (with no ancillary benefits) without regard to the benefit attributable to after-tax employee contributions (except pursuant to Section 415(n) of the Internal Revenue Code) and to rollover contributions (as defined in Section 415(b)(2)(A) of the Internal Revenue Code). The "benefit attributable" shall be determined in accordance with treasury regulations.

• F. Adjustments to Basic 415(b) limitation for form of benefit.

  1. If the benefit under the plan is other than the form specified in Subsection E.2., then the benefit shall be adjusted so that it is the equivalent of the annual benefit, using factors prescribed by treasury regulations.

2. If the form of benefit without regard to the automatic benefit increase feature is not a straight life annuity or a qualified joint and survivor annuity, then the preceding sentence is applied by either reducing the Section 415(b) of the Internal Revenue Code limit applicable at the annuity starting date or adjusting the form of benefit to an actuarially equivalent amount (determined using the assumptions specified in Treasury Regulation Section 1.415(b)-1(c)(2)(ii) that takes into account the additional benefits under the form of benefit as follows:

   • a. For a benefit paid in a form to which Section 417(e)(3) of the Internal Revenue Code does not apply (a monthly benefit), the actuarially equivalent straight life annuity benefit that is the greater of:

     • i. The annual amount of the straight life annuity (if any) payable to the member under the plan commencing at the same annuity starting date as the form of benefit to the member; or

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• ii. The annual amount of the straight life annuity commencing at the same annuity starting date that has the same actuarial present value as the form of benefit payable to the member, computed using a five percent interest assumption (or the applicable statutory interest assumption) and (i) for years prior to January 1, 2008, the applicable mortality tables described in Treasury Regulation Section 1.417(e)-1(d)(2) (Revenue Ruling 2001-62 or any subsequent Revenue Ruling modifying the applicable provisions of Revenue Rulings 2001-62), and (ii) for years after December 31, 2007, the applicable mortality tables described in Section 417(e)(3)(B) of the Internal Revenue Code (Notice 2008-85 or any subsequent Internal Revenue Service guidance implementing Section 417(e)(3)(B) of the Internal Revenue Code); or

• b. For a benefit paid in a form to which Section 417(e)(3) of the Internal Revenue Code applies (such as a lump sum benefit), the actuarially equivalent straight life annuity benefit that is the greatest of:

  • i. The annual amount of the straight life annuity commencing at the annuity starting date that has the same actuarial present value as the particular form of benefit payable, computed using the interest rate and mortality table, or tabular factor, specified in the plan for actuarial equivalence;

  • ii. The annual amount of the straight life annuity commenc-

ing at the annuity starting date that has the same actuarial present value as the particular form of benefit payable, computed using a five and onehalf percent interest assumption (or the applicable statutory interest assumption) and (i) for years prior to January 1, 2008, the applicable mortality table for the distribution under Treasury Regulation Section 1.417(e)-1(d)(2) (the mortality table specified in Revenue Ruling 2001-62 or any subsequent Revenue Ruling modifying the applicable provisions of Revenue Ruling 2001-62), and (ii) for years after December 31, 2007, the applicable mortality tables described in Section 417(e)(3)(B) of the Internal Revenue Code (Notice 2008-85 or any subsequent Internal Revenue Service guidance implementing Section 417(e)(3)(B) of the Internal Revenue Code); or iii. The annual amount of the straight life annuity commencing at the annuity starting date that has the same actuarial present value as the particular form of benefit payable (computed using the applicable interest rate for the distribution under Treasury Regulation Section 1.417(e)-1(d)(3) (the thirty-year Treasury rate (prior to January 1, 2007, using the rate in effect for the month prior to retirement, and on and after January 1, 2007, using the rate the in effect for the first day of the plan year with

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a one-year stabilization period)) and (i) for years prior to January 1, 2008, the applicable mortality rate for the distribution under Treasury Regulation Section 1.417(e)-1(d)(2) (the mortality table specified in Revenue Ruling 2001-62 or any subsequent Revenue Ruling modifying the applicable provisions of Revenue Ruling 2001-62), and (ii) for years after December 31, 2007, the applicable mortality tables described in Section 417(e)(3)(B) of the Internal Revenue Code (Notice 2008-85 or any subsequent Internal Revenue Service guidance implementing Section 417(e)(3)(B) of the Internal Revenue Code), divided by 1.05.

• G. Benefits for which no adjustment of 415(b) limit is required. For purposes of this section, the following benefits shall not be taken into account in adjusting these limits:

  1. Any ancillary benefit which is not directly related to retirement income benefits;

  2. That portion of any joint and survivor annuity that constitutes a qualified joint and survivor annuity;

  3. Any other benefit not required under Section 415(b)(2) of the Internal Revenue Code and treasury regulations thereunder to be taken into account for purposes of the limitation of Section 415(b)(1) of the Internal Revenue Code.

• H. Other adjustments in 415(b) limitation.

  1. In the event the member's retirement benefits become payable before age sixtytwo, the limit prescribed by this section shall be reduced in accordance with treasury regulations pursuant to the provisions of Section 415(b) of the Internal

Revenue Code, so that such limit (as so reduced) equals an annual straight life benefit (when such retirement income benefit begins) which is equivalent to a one hundred sixty thousand dollar (as adjusted) annual benefit beginning at age sixty-two, using assumptions described under the treasury regulations.

2. In the event the member's benefit is based on at least fifteen years of service as a full-time employee of any police or fire department or on fifteen years of military service, the adjustments provided for in Subsection H.1. above shall not apply.

3. The reductions provided for in Subsection H.1. above shall not be applicable to income received from a governmental plan (i) as a result of the recipient becoming disabled by reason of personal injuries or sickness or (ii) by the beneficiaries, survivors, or the estate of an employee as the result of the death of the employee.

• I. Less than ten years of participation adjustment for 415(b) limitations. The maximum retirement benefits payable to any member who has completed less than ten years of participation shall be the amount determined under Subsection E. multiplied by a fraction, the numerator of which is the number of the member's years of participation and the denominator of which is ten. The reduction provided by this subsection cannot reduce the maximum benefit below ten percent. The reduction provided for in this subsection shall not be applicable to pre-retirement disability benefits or pre-retirement death benefits.

• J. Ten thousand dollar limit. Notwithstanding the foregoing, the retirement benefit payable with respect to a member shall be deemed not to exceed the 415 limit if the benefits payable, with respect to such member under this plan and under all other qualified defined benefit pension plans to which the member's employer contributes, do not exceed ten thousand dollars for the applicable limitation year

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and for any prior limitation year and the employer has not any time maintained a qualified defined contribution plan in which the member participated.

• K. Effect of COLA without a lump sum component on 415(b) testing.

  1. Effective on and after January 1, 2008, for purposes of applying the limits under Section 415(b) of the Internal Revenue Code (the "limit") to a member with no lump sum benefit, the following shall apply:

     • a. A member's applicable limit shall be applied to the member's annual benefit in the member's first limitation year without regard to any cost of living adjustments under the provisions of Chapter 3.44;

     • b. To the extent that the member's annual benefit equals or exceeds the limit, the member shall no longer be eligible for cost of living increases until such time as the benefit plus the accumulated increases are less than the limit; and

• c. Thereafter, in any subsequent limitation year, a member's annual benefit, including any cost of living increases under Chapter 3.44, shall be tested under the then applicable benefit limit including any adjustment to the Section 415(b)(1)(A) of the Internal Revenue Code dollar limit under Section 415(d) of the Internal Revenue Code, and the regulations thereunder.

  2. Effect of COLA with a lump sum component on 415(b) testing. On and after January 1, 2008, with respect to a member who receives a portion of the member's annual benefit in a lump sum, a member's applicable limit shall be applied taking into consideration cost of

living increases as required by Section 415(b) of the Internal Revenue Code and applicable treasury regulations.

• L. Section 415(c) limitations on contributions and other additions. After-tax member contributions or other annual additions with respect to a member may not exceed the lesser of forty thousand dollars (as adjusted pursuant to Section 415(d) of the Internal Revenue Code) or one hundred percent of the member's compensation.

  1. Annual additions are defined to mean the sum (for any year) of employer contributions to a defined contribution plan, member contributions, and forfeitures credited to a member's individual account. Member contributions are determined without regard to rollover contributions and to picked-up employee contributions that are paid to a defined benefit plan.

  2. For purposes of applying Section 415(c) of the Internal Revenue Code and for no other purpose, the definition of compensation where applicable shall be compensation actually paid or made available during a limitation year, except as noted below and as permitted by Treasury Regulation Section 1.415(c)-2, or successor regulation; provided, however, that member contributions picked up under Section 414(h) of the Internal Revenue Code shall not be treated as compensation.

  3. Compensation shall be defined as wages within the meaning of Section 3401(a) of the Internal Revenue Code and all other payments of compensation to an employee by an employer for which the employer is required to furnish the employee a written statement under Sections 6041(d), 6051(a)(3) and 6052 of the Internal Revenue Code and shall be determined without regard to any rules under Section 3401(a) of the Internal Revenue Code that limit the remuneration in-

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cluded in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Section 3401(a)(2) of the Internal Revenue Code).

• a. However, for limitation years beginning after December 31, 1997, compensation shall also include amounts that would otherwise be included in compensation but for an election under Section 125(a), 402(e)(3), 402(h)(1)(B), 402(k), or 457(b) of the Internal Revenue Code. For limitation years beginning after December 31, 2000, compensation shall also include any elective amounts that are not includible in the gross income of the member by reason of Section 132(f)(4) of the Internal Revenue Code.

amounts that would otherwise be included in compensation but for an election under Section 125(a), 402(e)(3), 402(h)(1)(B), 402(k), or 457(b) of the Internal Revenue Code. For limitation years beginning after December 31, 2000, compensation shall also include any elective amounts that are not includible in the gross income of the member by reason of Section 132(f)(4) of the Internal Revenue Code.

• b. For limitation years beginning on and after January 1, 2008, compensation for the limitation year shall also include compensation paid by the later of two and one-half months after a member's severance from employment or the end of the limitation year that includes the date of the member's severance from employment if:

  • i. The payment is regular compensation for services during the member's regular working hours, or compensation for services outside the member's regular working hours (such as overtime or shift differential), commissions, bonuses or other similar payments, and, absent a severance from employment, the payments would have been paid to the member while the member continued in employment with the employer; or

• ii. The payment is for unused accrued bona fide sick, vacation or other leave that the member would have been able to use if employment had continued; or

• iii. Payments pursuant to a nonqualified unfunded deferred compensation plan, but only if the payments would have been paid to the member at the same time if the member had continued employment with the employer and only to the extent that the payment is includible in the member's gross income.

Any payments not described in Subparagraph b. above are not considered compensation if paid after severance from employment, even if they are paid within two and one-half months following severance from employment, except for payments to the individual who does not currently perform services for the employer by reason of qualified military service (within the meaning of Section 414(u)(1) of the Internal Revenue Code) to the extent these payments do not exceed the amounts the individual would have received if the individual had continued to perform services for the employer rather than entering qualified military service.

An employee who is in qualified military service (within the meaning of Section 414(u)(1) of the Internal Revenue Code), shall be treated as receiving

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compensation from the employer during such period of qualified military service equal to (i) the compensation the employee would have received during such period if the employee were not in qualified military service, determined based on the rate of pay the employee would have received from the employer but for the absence during the period of qualified military service, or (ii) if the compensation the employee would have received during such period was not reasonably certain, the employee's average compensation from the employer during the twelvemonth period immediately preceding the qualified military service (or, if shorter, the period of employment immediately preceding the qualified military service).

absence during the period of qualified military service, or (ii) if the compensation the employee would have received during such period was not reasonably certain, the employee's average compensation from the employer during the twelvemonth period immediately preceding the qualified military service (or, if shorter, the period of employment immediately preceding the qualified military service).

• c. Back pay, within the meaning of Treasury Regulation Section 1.415(c)-2(g)(8), shall be treated as compensation for the limitation year to which the back pay relates to the extent the back pay represents wages and compensation that would otherwise be included under this definition.

4. If the annual additions for any member for a plan year exceed the limitation under Section 415(c) of the Internal Revenue Code, the excess annual addition shall be corrected as permitted under the employee plans compliance resolution system (or similar IRS correction program).

5. For limitation years beginning on or after January 1, 2008, a member's compen-

sation for purposes of this Subsection L. shall not exceed the annual limit under Section 401(a)(17) of the Internal Revenue Code.

• M. Service purchases under Section 415(n). Effective for permissive service credit contributions made in limitation years beginning after December 31, 1997, if a member makes one or more contributions to purchase permissive service credit under the retirement plan, then the requirements of Section 415(n) of the Internal Revenue Code shall be treated as met only if:

  1. The requirements of Section 415(b) of the Internal Revenue Code are met, determined by treating the accrued benefit derived from all such contributions as an annual benefit for purposes of Section 415(b) of the Internal Revenue Code, or

  2. The requirements of Section 415(c) of the Internal Revenue Code are met, determined by treating all such contributions as annual additions for purposes of Section 415(c) of the Internal Revenue Code.

  3. For purposes of applying this section, the retirement plan shall not fail to meet the reduced limit under Section 415(b)(2)(C) of the Internal Revenue Code solely by reason of this paragraph and shall not fail to meet the percentage limitation under Section 415(c)(1)(B) of the Internal Revenue Code solely by reason of this Section.

  4. For purposes of this section the term "permissive service credit" means service credit:

     • a. Recognized by the retirement plan for purposes of calculating a member's benefit under the retirement plan;

     • b. Which such member has not received under the retirement plan; and

     • c. Which such member may receive only by making a voluntary addi-

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tional contribution, in an amount determined under the retirement plan, which does not exceed the amount necessary to fund the benefit attributable to such service credit.

Effective for permissive service credit contributions made in limitation years beginning after December 31, 1997, such term may include service credit for periods for which there is no performance of service, and, notwithstanding Subparagraph b., may include service credited in order to provide an increased benefit for service credit which a member is receiving under the retirement plan.

5. The retirement plan shall fail to meet the requirements of this section if:

   • a. More than five years of nonqualified service credit are taken into account for purposes of this Subsection M.; or

   • b. Any nonqualified service credit is taken into account under this Subsection M. before the member has at least five years of participation under the retirement plan.

6. For purposes of Paragraph 5., effective for permissive service credit contributions made in limitation years beginning after December 31, 1997, the term "nonqualified service credit" means permissive service credit other than that allowed with respect to:

   • a. Service (including parental, medical, sabbatical, and similar leave) as an employee of the government of the United States, any state or political subdivision thereof, or any agency or instrumentality of any of the foregoing (other than military service or service for credit which

was obtained as a result of a repayment described in Section 415(k)(3) of the Internal Revenue Code); b. Service (including parental, medical, sabbatical, and similar leave) as an employee (other than as an employee described in Subparagraph a. of an education organization described in Section 170(b)(1)(A)(ii) of the Internal Revenue Code which is a public, private, or sectarian school which provides elementary or secondary education (through grade twelve), or a comparable level of education, as determined under the applicable law of the jurisdiction in which the service was performed;

• c. Service as an employee of an association of employees who are described in Subparagraph a.; or

• d. Military service (other than qualified military service under Section 414(u) of the Internal Revenue Code) recognized by the retirement plan.

In the case of service described in Subparagraph a., b., or c., such service shall be nonqualified service if recognition of such service would cause a member to receive a retirement benefit for the same service under more than one plan.

7. In the case of a trustee-to-trustee transfer after December 31, 2001, to which Section 403(b)(13)(A) of the Internal Revenue Code or Section 457(e)(17)(A) of the Internal Revenue Code applies (without regard to whether the transfer is made between plans maintained by the same employer):

   • a. The limitations of Paragraph 5. shall not apply in determining whether the transfer is for the purchase of permissive service credit; and

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  - b. The distribution rules applicable under federal law to the retirement plan shall apply to such amounts and any benefits attributable to such amounts.

8. For an eligible member, the limitation of Section 415(c)(1) of the Internal Revenue Code shall not be applied to reduce the amount of permissive service credit which may be purchased to an amount less than the amount which was allowed to be purchased under the retirement plan as in effect on August 5, 1997. For purposes of this paragraph, an eligible member is an individual who first became a member in the retirement plan before January 1, 1998.

• N. Modification of contributions for 415(c) and 415(n) purposes. Notwithstanding any other provision of law to the contrary, the retirement plan may modify a request by a member to make a contribution to the retirement plan if the amount of the contribution would exceed the limits provided in Section 415 of the Internal Revenue Code by using the following methods:

  1. If the law requires a lump sum payment for the purchase of service credit, the retirement plan may establish a periodic payment plan for the member to avoid a contribution in excess of the limits under Section 415(c) or 415(n) of the Internal Revenue Code.

  2. If payment pursuant to Paragraph 1. shall not avoid a contribution in excess of the limits imposed by Section 415(c) or 415(n) of the Internal Revenue Code, the retirement plan may either reduce the member's contribution to an amount within the limits of those sections or refuse the member's contribution.

• O. Repayments of cashouts. Any repayment of contributions (including interest thereon) to the retirement plan with respect to an amount previously refunded upon a forfeiture of ser-

vice credit under the retirement plan or another governmental plan maintained by the city shall not be taken into account for purposes of Section 415 of the Internal Revenue Code, in accordance with applicable treasury regulations.

• P. Participation in other qualified plans; aggregation of limits.

  1. The 415(b) limit with respect to any member who at any time has been a member in any other defined benefit plan as defined in Section 414(j) of the Internal Revenue Code maintained by the city shall apply as if the total benefits payable under all such defined benefit plans in which the member has been a member were payable from one plan.

  2. The 415(c) limit with respect to any member who at any time has been a member in any other defined contribution plan as defined in Section 414(i) of the Internal Revenue Code maintained by the city shall apply as if the total annual additions under all such defined contribution plans in which the member has been a member were payable from one plan.

• Q. Reduction of benefits priority. Reduction of benefits and/or contributions to all plans, where required, shall be accomplished by first reducing the member's benefit under any defined benefit plans in which the member participated, such reduction to be made first with respect to the plan in which the member most recently accrued benefits and thereafter in such priority as shall be determined by the plan and the plan administrator of such other plans, and next, by reducing or allocating excess forfeitures for defined contribution plans in which the member participated, such reduction to be made first with respect to the plan in which the member most recently accrued benefits and thereafter in such priority as shall be established by the plan and the plan administrator for such other plans provided, however, that necessary reductions may be made in a differ-

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ent manner and priority pursuant to the agreement of the plan and the plan administrator of all other plans covering such member. (Ords. 23283, 27838, 28885.)

Whenever any person becomes entitled under the provisions of this system to any annual allowance, the annual allowance shall be deemed payable for each calendar year in which he is entitled to such allowance throughout the entire calendar year; provided and excepting, however, that if he is entitled to such allowance for only a portion of a calendar year, he shall be deemed entitled only to such portion of the annual allowance for such calendar year as the number of days during which he was entitled to such allowance in such year bears to the total number of days in such year. (Prior code § 2904.1350.)

Each annual allowance or portion thereof to which any person may become entitled under the provisions of this system during a calendar year shall be payable in equal monthly installments (or in equal biweekly installments if the city should ever elect to pay in biweekly installments); provided and excepting, however, that if the person entitled to any such allowance for any such installment period is entitled to it only for a portion of such installment period, he shall be entitled only to that portion of the allowance for such installment period as the number of days for which he is entitled to an allowance in such period bears to the number of days in such period. (Prior code § 2904.1351.)

• A. Notwithstanding any other provision of this chapter, the distribution of a retirement benefit shall be subject to a good faith interpretation of the minimum distribution rules of Section 401(a)(9) of the Internal Revenue Code and the regulations promulgated thereunder,

as applicable to a governmental plan within the meaning of section 414(d) of the Internal Revenue Code. In compliance with these provisions, payment of a member's retirement allowance shall commence no later than the later of the following:

1. The April 1 following the end of the calendar year in which the member attains age seventy and one-half; or

2. The April 1 following the end of the calendar year in which the member retires.

   • If a member fails to apply for retirement benefits by the later of either of those dates, the board shall begin distribution of the monthly benefit in the form provided under the applicable provision of Section 3.28.1110.

• B. The member's entire interest must be distributed over the member's life or the lives of the member and a designated beneficiary, or over a period not extending beyond the life expectancy of the member, or of the member and a designated beneficiary.

• C. For purposes of this section, the retirement plan pursuant to a qualified domestic relations order, may establish separate benefits for a member and nonmember.

• D. If a member dies after the required distribution of benefits has begun, the remaining portion of the member's interest must be distributed at least as rapidly as under the method of distribution before the member's death.

• E. If a member dies before required distribution of the member's benefits has begun, the member's entire interest must be distributed within five years of his death, unless it is to be distributed in accordance with the following rules:

  1. If the member's surviving spouse is the sole designated beneficiary, the member's remaining interest in the plan is distributed or begins to be distributed by December 31 of the calendar year immediately following the calendar year in which the member died or by December

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31 of the calendar year in which the participant would have attained age seventy and one-half, if later, and if the surviving spouse dies before the distribution to the surviving spouse begins, this section shall be applied as if the surviving spouse were the plan member; or

2. If the member's surviving spouse is not the sole designated beneficiary, the member's remaining interest is to be distributed over the life of the designated beneficiary or over a period not extending beyond the life expectancy of the designated beneficiary; and such distribution begins no later than December 31 of the calendar year immediately following the calendar year of the member's death.

. If the member's surviving spouse is not the sole designated beneficiary, the member's remaining interest is to be distributed over the life of the designated beneficiary or over a period not extending beyond the life expectancy of the designated beneficiary; and such distribution begins no later than December 31 of the calendar year immediately following the calendar year of the member's death.

• F. The amount of an annuity paid to a member's beneficiary may not exceed the maximum determined under the incidental death benefit requirement of Section 401(a)(9)(G) of the Internal Revenue Code, and the minimum distribution incidental benefit rule under Treasury Regulation Section 1.401(a)(9)-6, Q&A-2.

• G. The death and disability benefits provided by the retirement system are limited by the incidental benefit requirement set forth in Section 401(a)(9)(G) of the Internal Revenue Code and Treasury Regulation Section 1.4011(b)(1)(i) or any successor regulation thereto. These incidental death and disability benefits include any lump sum death benefits and any disability benefits. As a result, the total death or disability benefits payable may not exceed twenty-five percent of the cost for all of the members' benefits received from the retirement plan.

• H. Notwithstanding the other provisions of this rule or the provisions of the treasury regulations, benefit options may continue so long as the option satisfies Section 401(a)(9) of the Internal Revenue Code based on a reasonable and good faith interpretation of that section.

• I. Notwithstanding any other provision of this chapter, if a member has elected an optional

settlement under Part 13 of this chapter and the designated beneficiary is not the spouse of the member, the periodic amounts payable to the member and the designated beneficiary shall be adjusted only to the extent necessary to ensure that the minimum distribution requirements of Internal Revenue Code Section 401(a)(9) are satisfied.

(Ords. 27838, 28885.)

Whenever, in determining the amount of an allowance or other benefit payable under this system, consideration must be given to the years of federated city service to which a member is entitled to credit under this system, no consideration shall be given to number of years to which he is entitled to credit under this system for the purpose of qualification for benefits only and not for the purpose of determining the amount of benefits to which a person may become entitled hereunder. (Prior code § 2904.1352.)

• A. In the event of a forfeiture of benefits arising from separation from employment, death, or any other reason, the amount of such forfeiture shall remain in the retirement fund and shall not be applied to increase the benefits any member, former member or beneficiary of the plan would otherwise be entitled to receive prior to the termination of the plan.

• B. The amounts forfeited shall be used to reduce the city's contributions to the plan; provided, however, that the effect of forfeitures may be anticipated in the determination of the liabilities of the plan.

• (Ord. 27838.)

• A. All rights or benefits which any person may have or may become entitled to in or under

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• this system, or in or to any moneys in the system, are not assignable except as specifically provided in this chapter or as specified in Subsection B.

• B. Voluntary deductions which are permitted by rules and regulations approved by the board of administration of the federated city employees retirement system may be made from pension benefits payments where authorized in writing by the benefit payee.

(Prior code § 2904.1353; Ord. 29035.)

• A. No allowances or benefits payable under this system shall be modified because of any worker's compensation benefits which may become payable under the laws of the State of California to any member or to any recipient of any allowance or benefit payable under this system except as provided in subsection B. of this section.

• B. In the event a member is retired for a serviceconnected disability pursuant to Part 10 of this chapter and receives both a service-connected disability retirement allowance and a workers' compensation benefit for temporary disability, permanent disability or vocational rehabilitation temporary disability pursuant to Division 1 or Division 4 of the California Labor Code, then the service-connected disability retirement allowance shall be offset by the sum of all such workers' compensation benefits as follows:

  1. The offset shall apply only to the following persons:

     • a. Those persons whose application for a service-connected disability retirement was filed, by any person authorized in Section 3.28.1230 to file such application, on or after July 13, 1986; and

     • b. Those persons retired on the retirement board's own motion, pursuant to Section 3.28.1220, on or after July 13, 1986.

2. The applicable amount of the workers' compensation benefits shall be converted to a monthly equivalent. The monthly service-connected disability retirement allowance shall be reduced by the workers' compensation benefit monthly equivalent.

3. The offset shall be in effect only during such time as concurrent retirement allowances and workers' compensation benefits are paid. In the case of the payment of a lump sum workers' compensation benefit (excluding payments for medical treatment), the offset shall apply only for such period of time as concurrent payments would have been made had the workers' compensation benefit been paid in installments.

4. In no case shall the offset reduce the service-connected disability retirement allowance to an amount less than the sum of the maximum retired member contributions for medical, dental, life, and accidental death insurance premiums, as determined by the city, plus one dollar. This limitation shall apply regardless of whether the retired member actually contributes toward the payment of such premiums.

5. No offset shall be made for permanent disability benefits paid to any retired member of this system who has received a workers' compensation permanent disability rating of one hundred percent.

6. The offset shall not apply with respect to workers' compensation benefits paid for any injury or illness which did not cause or contribute to the disability for which the service-connected disability retirement was granted.

(Prior code § 2904.1354; Ord. 22245.)

• A. Anything elsewhere in this Chapter 3.28 or in any other part of the San José Municipal Code

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• to the contrary notwithstanding, any right, title or interest which any member of this retirement system, or any other person or persons, may have or may claim to have in or to any retirement or other allowance or in or to any benefit or benefits whatsoever, or in or to any moneys whatsoever, or any other right, title or interest which any person or persons may have or claim to have, under or by virtue of the provisions of this retirement system, whether such right, title or interest is vested, contingent or otherwise, may be released, relinquished and given up by such member or by such other person or persons, or may be assigned to the City of San José or to the retirement system or retirement board by such member or other person or persons; and upon such being done, the right, title or interest which is so released, relinquished, given up or assigned is and shall be deemed extinguished, the same as if such right, title or interest had never existed, and neither the city nor this retirement system or retirement board shall thereafter have any liability whatsoever with respect to the right, title or interest so released, extinguished or given up or assigned.

• B. However, if and to the extent that the city pays or gives any consideration, other than funds of this retirement system, for any abovementioned release, relinquishment, giving up or assignment, the amount or value of the consideration paid or given by the city for said release, relinquishment, giving up or assignment, or the actuarial value of the right, title or interest which is so released, relinquished, given up or assigned as of the date of such release, relinquishment, giving up or assignment, whichever is the lesser amount, shall be credited against and deducted from the amount of current service contributions which the city is required to pay into the retirement fund during the following calendar months until full credit therefor is thus received by the city.

(Prior code § 2904.1355.)

The provisions of this section apply only to former employees of the city health department and former employees of the city communications department who heretofore exercised the options given to them by the provisions of Part 21 or 22 of the Chapter 3.24 retirement system and who thereby became entitled to such rights as are given to them under said Part 21 or 22. Each of said persons who should become a member of this system shall have the right to elect, before or at the time he first applies for any benefits under this system, to become entitled to and to receive in lieu of any and all benefits which he or his survivors or any other person or estate may become entitled to under other sections of this Chapter 3.28, such benefits as he would be entitled to under the Chapter 3.24 retirement system, as it read on June 30, 1975, if he were still a member of the Chapter 3.24 system and service rendered and contributions paid by him while a member of this system were deemed to be service rendered and contributions paid by him under the Chapter 3.24 retirement system. (Prior code § 2904.1356.)

If in the event of the death before retirement of a member the sum of any and all moneys thereupon and thereafter paid or payable under other provisions of this system to any and all of his survivors and/or estate should be less than the amount of accumulated contributions and interest standing to his credit; or if in the event of his death after retirement the sum of any and all moneys theretofore paid or payable under other provisions of this system to such member because of his retirement plus the sum of any and all moneys thereupon and thereafter paid or payable under other provisions of this system to any and all of his survivors

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and/or estate should be less than the amount of accumulated contributions and interest standing to such member's credit, then in either of said events the difference between the total of said sums paid or payable under other provisions of this system and the amount of said accumulated contributions and interest shall be paid to said member's estate. (Prior code § 2904.1357.)

tive effect. All such changes shall be subject to applicable California pension and other laws. Without limitation of any type, the City shall have the right to make any modifications, alterations or amendments necessary or appropriate to maintain the tax qualification of the benefits provided under this Retirement System to Tier 2 members.

(Ords. 28885, 29120, 29904.)

• A. A member shall be one hundred percent (100%) vested in his or her service retirement benefit upon attaining eligibility for a service retirement benefit under the applicable provisions of the Retirement System. Notwithstanding the foregoing, a Tier 2 member shall be vested in his or her service retirement benefit upon completion of five (5) years of service unless a subsequent withdrawal or payment of his or her member contributions occurs or another forfeiture event under the terms of the Plan occurs.

• B. A Plan member shall be one hundred percent (100%) vested in his or her accumulated contributions at all times.

• C. An affected Plan member shall be one hundred percent (100%) vested in his or her accrued benefit, to the extent then funded, in the event the Retirement System is terminated in whole or in part or contributions are completely discontinued.

• D. For purposes of this Section 3.28.1080, "vested" shall mean the nonforfeitable right to the benefit that the member has accrued.

• E. Nothing contained in this Section 3.28.1080 shall be construed or interpreted to limit modification of benefits, to the extent that such modification is otherwise allowed under federal and state law.

• F. Any changes to Tier 2 retirement or postemployment benefits enacted after those adopted on June 16, 2017 that result in benefit increases or decreases shall only be applied prospectively and except for the changes adopted on June 16, 2017 shall not have retroac-

• A. Effective December 12, 1994, notwithstanding any other provision of the retirement system law, contributions, benefits and service credit with respect to qualified military service are governed by Section 414(u) of the Internal Revenue Code and the Uniformed Services Employment and Reemployment Rights Act of 1994.

• B. Effective with respect to deaths occurring on or after January 1, 2007, while a member is performing qualified military service (as defined in 38 U.S.C. 43, to the extent required by Section 401(a)(37) of the Internal Revenue Code, survivors of a member in the retirement plan, are entitled to any additional benefits that the retirement plan would provide if the member had resumed employment and then died (as a non-service connected death) that are contingent on the member's death while employed. In any event, a deceased member's period of qualified military service must be counted for vesting purposes, but such period of service shall not be counted for benefit accrual purposes.

• C. Beginning January 1, 2009, to the extent required Section 414(u)(12) of the Internal Revenue Code, an individual receiving a differential wage payment (as defined under Section 3401(h)(2) of the Internal Revenue Code) from an employer shall be treated as employed by that employer, and the differential wage payment shall be treated as compensation for purposes of applying the limits on annual addi-

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tions under Section 415(c) of the Internal Revenue Code. This provision shall be applied to all similarly situated individuals in a reasonably equivalent manner.

(Ord. 28885.)

No person shall be retired for service under or pursuant to the provisions of this Chapter 3.28 unless he is eligible therefor under and pursuant to the provisions of this chapter.

(Prior code § 2904.1400.)

Part 9

RETIREMENT FOR SERVICE

Sections:

• 3.28.1120 Retirement of former member of Chapter 3.24 system who became a member under Section 3.28.400.

• 3.28.1130 Retirement of former member of Chapter 3.24 system who became a member under Sections 3.28.410, 3.28.420 or 3.28.430.

• member of Chapter 3.24, Part 4 system, at age fifty or more, with fifteen or more years of service.

• 3.28.1150 Election by former member of Chapter 3.24 system to receive service retirement allowance provided by Chapter 3.24 system in lieu of all benefits provided by other sections of this system.

• 3.28.1160 Retired member not to be reemployed in federated city service unless first reinstated or employed pursuant to Section 3.28.1190.

• 3.28.1170 Reinstatement from retirement.

• 3.28.1180 Reemployment of retired member to perform city services other than federated city services.

• 3.28.1190 Limited reemployment of retired

person.

• 3.28.1195 Guaranteed purchasing power non-tier 2 members.

• A. Subject to other provisions of this Chapter 3.28, a member of this System, other than Tier 2 members, shall be retired for service pursuant to this Section, upon his or her written application therefor to the Board of Administration for the Federated City Employees Retirement System, if:

  1. Such member has attained fifty-five (55) or more years of age and is entitled under this System to credit for five (5) or more years of Federated City Service rendered after he or she became and while he or she was a member of this System; or

  2. If such member has not attained fiftyfive (55) or more years of age but is entitled under this System to credit for thirty (30) or more years of Federated City Service of which not less than five (5) years were rendered after he or she became and while he or she was a member of this System; or

  3. If such member has attained fifty-five (55) or more years of age and has rendered not less than two (2) years of Federated City Service under this System and became a member of this System before April 15, 1991, pursuant to a transfer of a communications function from Santa Clara County to the City of San José and without a break in service from county communications to a City communications classification and does not qualify under any other provisions of this Chapter or Chapters 3.20 and 3.24.

• B. Subject to other provisions of this Chapter 3.28, a Tier 2 member of this System shall be retired for service pursuant to this Section,

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upon his or her written application therefor to the Board of Administration for the Federated City Employees Retirement System, if:

1. Such member has attained sixty-two (62) or more years of age and is entitled under this System to credit for five (5) or more years of Federated City Service rendered after he or she became and while he or she was a member of this System; or

2. Such member attained fifty-five (55) or more years of age and is entitled under this System to credit for five (5) or more years of Federated City Service rendered after he or she became and while he or she was a member of this System. However, member's benefit shall be actuarially reduced by a factor of five percent (5%) for each year the Tier 2 member retires before age sixty-two (62), prorated to the closest month. The early retirement reduction factors used are shown below:

• C. Subject to other provisions of this Chapter, a member, other than a Tier 2 member, who is retired for service pursuant to the provisions of this Section shall be entitled to receive, and shall be paid, from the retirement fund from and after the effective date of such member's retirement and during the remainder of his or her lifetime, an annual service retirement allowance equal to two and one-half percent (2.5%) of such member's final compensation times the number of years of Federated City

for service pursuant to the provisions of this Section shall be entitled to receive, and shall be paid, from the retirement fund from and after the effective date of such member's retirement and during the remainder of his or her lifetime, an annual service retirement allowance equal to two and one-half percent (2.5%) of such member's final compensation times the number of years of Federated City

Service for which such member is entitled to credit under the provisions of this System; provided and excepting, however, that said annual allowance shall never exceed a maximum of seventy-five percent (75%) of such member's final compensation.

• D. Subject to the provisions of this Chapter, a Tier 2 member who is retired for service pursuant to the provisions of this Section shall be entitled to receive, and shall be paid, from the retirement fund from and after the effective date of such member's retirement and during the remainder of his or her lifetime, an annual service retirement allowance equal to two percent (2%) of such Tier 2 member's final compensation times the number of years of Federated City Service for which such Tier 2 member is entitled to credit under the provisions of this System; provided and excepting, however, that said annual allowance shall never exceed a maximum of seventy percent (70%) of such Tier 2 member's final compensation. This benefit will be actuarially adjusted for members who retire prior to attainment of age sixty-two (62). If the Tier 2 member has attained age fifty-five (55) but has not yet reached age sixty-two (62), the Tier 2 member's benefit shall be actuarially reduced by a factor five percent (5%) for each year the Tier 2 member retires before age sixty-two (62), prorated to the closest month. The reduced benefit is as stated in 3.28.1110.B.2.

(Prior code § 2904.1401; Ords. 21265, 21371, 22314, 23485, 29120, 29904.)

• A. Subject to other provisions of this Chapter 3.28, a member of this system who is not eligible for service retirement under and pursuant to the provisions of Section 3.28.1110 shall be retired for service pursuant to this section, upon his written application therefor to the retirement board, if he is a former mem-

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ber of the Chapter 3.24 retirement system who became a member of this system pursuant to the provisions of Section 3.28.400 and either:

1. He has attained fifty-five or more years of age and has accumulated contributions in the retirement fund amounting to five hundred dollars or more; or

2. He has not attained fifty-five or more years of age but is entitled under this system to credit for thirty or more years of federated city service and his accumulated contributions in the retirement fund amount to five hundred dollars or more.

• B. Subject to other provisions of this chapter, a member who is retired for service pursuant to this section shall be entitled to receive, and shall be paid from the retirement fund, from and after the effective date of his retirement and during the remainder of his lifetime, an annual service retirement allowance equal to two and one-half percent of his final compensation times the number of years of federated city service for which he is entitled to credit under the provisions of this system; provided and excepting, however, that said annual allowance shall never exceed a maximum of seventy-five percent of his final compensation.

• (Prior code § 2904.1402; Ord. 21265.)