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<br />ARTICLE XII <br /> <br />12.0 RETIREMENT <br /> <br />12.1 General. The terms of the existing contract between the City and California Public <br />Employees' Retirement System (CalPERS) governing the City retirement benefits for <br />affected employees are incorporated by reference herein. The City shall continue to make <br />contributions to CalPERS in accordance with its contract with CalPERS for affected <br />employees covered by said contract as amended. <br /> <br />12.2 Deferred Retirement. The City will continue to make payment to CalPERS on behalf of each <br />affected employee, in an amount necessary to pay one hundred percent (I 00%) of his or her <br />individual retirement contribution which is equal to seven percent (7%). Such payments <br />shall be credited to the individual employee's CalPERS account. <br /> <br />Such payments are not increases in base salary and no salary rate range applicable to any of <br />the employees covered by this Agreement shall be changed or deemed to have been changed <br />by reason thereof. As a result, the City will not treat these payments as ordinary income and, <br />thus will not withhold Federal or State income tax from said payments. The City has <br />received an opinion or ruling from the Internal Revenue Service confirming that these <br />payments are deferred compensation, and not ordinary income. In the event that the City <br />receives a ruling from the Internal Revenue Service that such payments are ordinary income <br />of the employees instead of deferred compensation, the City's obligation to make such <br />payments shall discontinue and in place thereof the base salary of each said employee shall <br />forthwith be increased by fourteen (14) salary rate ranges (7%). <br /> <br />For the purpose of reporting an employee's compensation to CaIPERS, the City shall include <br />these payments as if they were a part of the employee's base salary. <br /> <br />12.3 2% At 55 Retirement Benefit. Effective July 1,1997, the City agreed to pay 2.266% of the <br />cost of providing CalPERS 2% at 55 retirement benefit to employees of this unit. Employees <br />agreed to pay one percent (I %) ofthe total cost of3.266% for the 2% at 55 retirement benefit <br />by authorizing a one percent (I %) deduction from their salary (two (2) salary rate ranges) <br />effective July I, 1997. Effective November I, 2001, this one percent (I%) deduction is <br />eliminated. <br /> <br />12.4 Credit for Unused Sick Leave. Effective January I, 2002, or as soon as practicable <br />thereafter, an employee covered by this Agreement, can have unused accumulated sick leave <br />at the time of retirement converted to additional service credit at the rate of 0.004 years of <br />service credit for each day of unused sick leave (i.e., 200 days of sick leave equals .80 <br />additional year's of service credit). The City must report only those days of unused sick <br />leave that were accrued by the employee during the normal course of employment. This <br /> <br />52 <br />