Sec. 11-243. - Method of funding.

The system shall be financed in accordance with an annual determination to be made of the actuarial service requirements for the several annuities and benefits prescribed in this section for the members and their beneficiaries for services rendered and to be rendered. In addition to interest income and other income accruing to the system, these requirements shall be financed by contributions by the members and the city, as follows: (1)

Beginning as of the effective date, each member shall contribute, as his share of the cost of the several annuities and benefits prescribed in this article, seven percent of salary earned and accruing after such date. These contributions shall be made in the form of a deduction from salary notwithstanding that the salary paid in cash to such member shall be reduced thereby below the minimum prescribed by law. Each member shall be deemed to consent to such deductions, and payment to a member of salary less deductions shall constitute a full and complete discharge and acquittance of all claims and demands whatsoever for the services rendered by such member during the period covered by the payment, except as to the benefits provided in this article.

(2)

For service rendered after the effective date, the city shall make contributions concurrently with the contributions by the members in an amount which, if paid during the total period of such service and added to the members' contributions for such service, will be sufficient to provide actuarial reserves for the annuities and benefits earned during such service. The rate of contribution by the city for the first fiscal year shall be seven percent of members' salaries, which shall be increased for each fiscal year thereafter ten percent thereof for a period of five fiscal years. At the end of such period, an actuarial survey shall be made and a new rate determined for future years in accordance with the prescribed method of funding.

(3)

To provide for the accrued liability for that part of the annuities and benefits arising from service of members rendered prior to the effective date, the city shall contribute a sum sufficient to amortize the liability over a period of forty years from the effective date, assuming an interest rate of 3½ percent per annum. The rate of contribution by the city for the first fiscal year shall be three percent of members' salaries, which shall be increased for each fiscal year thereafter ten percent thereof for a period of five fiscal years. At the end of such period, an actuarial survey shall be made and a new rate determined for future years to meet the requirements of the system in accordance with the prescribed method of funding.

(4)

The amount of each city contribution provided in this section shall be determined by applying the percentage rates stated to the salaries paid to the members during each payroll period, and the resulting amounts shall be remitted by the city to the system concurrently with the payment of salaries to the members.

(5)

Effective January 1, 1988, pursuant to the provisions of section 414(h)(2) of the United States Internal Revenue Code, the city shall pick up and pay the contributions which would be payable by the members under subsection 11-243(1). The contributions so picked up shall be treated as employer contributions in determining tax treatment under the United States Internal Revenue Code. Member contributions which are picked up pursuant to this subsection shall be treated and identified as member contributions for all purposes of the system except as specifically provided to the contrary in this subsection.

Member contributions made pursuant to this subsection shall be credited to a separate fund within a member's individual account so that the amounts contributed prior to the effective date for the pick up of a member contributions may be distinguished from the amount contributed on or after such date.

(Rev. Ords. 1987, § 11-244)