June 24, 2005
Dear Member:
On May 24, 2005, the Board of Supervisors adopted the Tier I employee retirement contribution rates recommended by the Board of Retirement. The new rates will become effective with the pay period beginning July 4, 2005, for the pay date July 29, 2005, for County employees and the first pay period of July for Special Districts. The new rates call for an average rate increase of about 17.5% for general members and about 4% for safety members, with the actual increase depending on your entry age of membership with FCERA.
This year’s general member average recommended rate increase of 35% was lower than expected due to actuarial gains related to demographic and economic assumptions. However, at the request of an employee labor group to minimize the impact of the recommended rate increase on general members, the Board of Retirement agreed to smooth out general member rates by limiting them to half the increase recommended in the Actuarial Valuation, thereby lowering the average rate increase to about 17.5%. This decision decreased the general member recommended rates increase by 50% and delays implementation of the remaining 17.5% increase until the 2006-07 fiscal year. You may recall that last year’s general member rates increase was limited to 50%, in effect, spreading the 98% recommended increase over the current and upcoming fiscal years; while the recommended average rate increase of 41% for safety members was fully implemented as it was below the 50% increase limit adopted by the Board of Retirement.
Your retirement contributions, which include three cost components: Basic, Cost of Living and Supplemental (for benefits related to the Settlement Agreement), are set by a combination of State Law, Agreements and Court Order. The Settlement Agreement, which granted enhanced retirement benefits in January 2001, plays a critical part in the contribution calculation process as it requires the use of undistributed earnings to fund the costs associated with these benefits, but when there are no undistributed earnings available, both the employer and employee must make contributions to fund the benefits. Thus, investment market returns have a significant impact on your Supplemental contributions. As of the most recent actuarial valuation report date of June 30, 2004 there were no undistributed earnings available to credit towards these contributions.
Please note that while it is not possible for FCERA to predict what the required retirement contributions will be for next fiscal year, we strive to keep increases to a minimum and hope that the required increase, if any, will be lower than the current average increase of 17.5% for general members and 4% for safety members.
Retirement contributions are based on your compensation earnable (base pay plus certain earn codes) and your entry age at membership, which may not be your age when you became a member of FCERA. The age based rate tables that will be effective for the first payday in July 2005 are posted at the FCERA web-site ( for your reference. For those special districts that do not participate in Social Security, the higher rates are applied to all compensation earnable.
Please contact the Retirement Office at 559.457.0681 if you have any questions.
Sincerely,
Roberto L. Peña
Retirement Administrator
1111 H Street, Fresno, CA 93721, Tel 559.457.0681 Fax 559.457.0318