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for a different schedule of benefits for employees hired after the <br /> effective date of such amendment, are incorporated by reference herein. <br /> The City shall continue to make contributions to P.E.R.S. in accordance <br /> with its contract with P.E.R.S for employees covered by said contract as <br /> amended. <br /> Section 2 - Deferred Retirement. The City shall continue to make <br /> payment to P.E.R.S. on behalf of each employee covered by this Agreement <br /> in accordance with the following schedule: <br /> A. With respect to, "safety-member" employees covered under <br /> the 2% at age 50 Benefit Formula, the City shall pay an amount equal to <br /> seven-ninths (7/9ths) of his or her individual employee retirement <br /> contribution until December 31, 1989. Effective January 1, 1990, the <br /> City will increase the amount of said payment to 9/9ths, or 100%, of each <br /> such employee's individual employee retirement contribution. <br /> B. With respect to, "safety-member" employees covered under <br /> the 2% at age 55 Benefit Formula, and "miscellaneous-member" employees, <br /> covered by this Agreement, the City shall pay an amount equal to 100% of <br /> his or her individual employee retirement contribution. <br /> Such payments shall be credited to the individual employee's <br /> P.E.R.S. account. <br /> Such payments are not increases in base salary and no salary rate <br /> range applicable to any of the employees covered by this Agreement shall <br /> be changed or deemed to have been changed by reason thereof. As a <br /> 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. <br /> The City has received an opinion or ruling from the Internal Revenue <br /> Service confirming that these payments are deferred compensation not <br /> ordinary income. <br /> In the event that the City receives a subsequent ruling from the <br /> Internal Revenue Service that such payments are ordinary income of the <br /> employees instead of deferred compensation, the City's obligation to make <br /> such payments shall discontinue and in place thereof the base salary of <br /> each affected employee shall forthwith be increased by eighteen (18) <br /> salary rate ranges (9.0%) for "safety-member" employees covered under the <br /> 2% at Age 50 benefit formula and fourteen (14) salary rate ranges (7.0%) <br /> for all other affected employees covered by this Agreement. <br /> For the purpose of reporting an employee's compensation to <br /> P.E.R.S. , the City shall include these payments as if they were a part of <br /> the employee's base salary. <br /> Section 3. Elimination of Two-Tier Retirement Benefits Structure <br /> for Safety Members. The City shall amend its contract with P.E.R.S. in <br /> order to provide, effective January 1, 1990, the "2% at Age 50" benefit <br /> formula option currently enjoyed by current safety-members hired prior to <br /> October 1, 1981, to all safety-member personnel covered by this Agreement. <br /> -28- <br />