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1/15/2026 <br />8 <br />43 <br />Classic vs. PEPRA Pension Example Comparison <br />Employee #1 is a Classic member and Employee #2 is a PEPRA member – both have served for 25 years and have <br />a final average compensation of $125K <br />Employee #2 will have a lower pension than Employee #1 due to a lower benefit factor, and will also retire at 57 <br />years old instead of 50 years old like the Classic member <br />The City will save money from PEPRA’s lower pension amount and because PEPRA’s pension may be paid out for <br />a shorter amount of time due to retirement occurring 7 years later compared to Classic <br />The difference in pension between Classic and PEPRA is even more apparent at higher compensation levels, as <br />there is a pensionable compensation limit of approximately $175K for PEPRA and $330K for Classic <br />Service <br />Credit <br />Benefit <br />Factor <br />Final <br />Compensation <br />Annual <br />Pension <br />Employee #1 (Classic) <br />25 Years x 3.0% @ 50 x $125,000 =$93,750 <br />Employee #2 (PEPRA) <br />25 Years x 2.7% @ 57 x $125,000 =$84,375 <br />44 <br />Cost of PEPRA vs. No PEPRA <br />PEPRA is projected to lower Normal Cost and UAL costs for the City <br />Source: CalPERS Pension Outlook Tool. Assumes no PEPRA implementation <br />in orange bar projections. <br />$0 <br />$2 <br />$4 <br />$6 <br />$8 <br />$10 <br />$12 <br />$14 <br />20 <br />2 <br />5 <br />20 <br />2 <br />7 <br />20 <br />2 <br />9 <br />20 <br />3 <br />1 <br />20 <br />3 <br />3 <br />20 <br />3 <br />5 <br />20 <br />3 <br />7 <br />20 <br />3 <br />9 <br />20 <br />4 <br />1 <br />20 <br />4 <br />3 <br />20 <br />4 <br />5 <br />20 <br />4 <br />7 <br />20 <br />4 <br />9 <br />20 <br />5 <br />1 <br />20 <br />5 <br />3 <br />Mi <br />l <br />l <br />i <br />o <br />n <br />s <br />Projected Normal Cost <br />No PEPRA PEPRA <br />$0 <br />$20 <br />$40 <br />$60 <br />$80 <br />$100 <br />$120 <br />$140 <br />$160 <br />$180 <br />20 <br />2 <br />5 <br />20 <br />2 <br />7 <br />20 <br />2 <br />9 <br />20 <br />3 <br />1 <br />20 <br />3 <br />3 <br />20 <br />3 <br />5 <br />20 <br />3 <br />7 <br />20 <br />3 <br />9 <br />20 <br />4 <br />1 <br />20 <br />4 <br />3 <br />20 <br />4 <br />5 <br />Mi <br />l <br />l <br />i <br />o <br />n <br />s <br />Projected UAL Balance <br />No PEPRA PEPRA <br />45 <br />Additional Discretionary Payment (“ADP”) <br />What is it? City makes ADP directly to CalPERS and CalPERS eliminates <br />payments associated with the portion of the UAL paid off, essentially giving <br />the City credit at the discount/interest rate (currently 6.8%) <br />Advantages: <br />Reduced UAL / higher CalPERS funding ratio <br />Reduced future payments <br />Broader, less restrictive CalPERS investment portfolio has potential for higher returns <br />Disadvantages: <br />Requires reserves / surplus to fund <br />Re-investment and market timing risk with ADP funds <br />Less budgetary flexibility and investment control (vs. Section 115 Trust option) <br />46 <br />Section 115 Trust vs. CalPERS ADP Comparison <br />OPTION Section 115 Trust CalPERS ADP <br />Reduced UAL & UAL Payments <br />with CalPERS No Yes <br />Reduced Pension Liability in <br />Financial Report (ACFR) <br />No (Show up as an asset on the <br />City’s financial statements)Yes <br />Control of Investment <br />Strategy Yes No <br />Funds Managed By Trust Administrator CalPERS <br />Flexibility in Uses Yes No <br />Enhanced Budgetary <br />Flexibility Yes No <br />Savings Varies; Depends on when City <br />utilizes funds to pay liabilities <br />Immediate; Length of time <br />varies based on which <br />amortization component is paid <br />off <br />43 44 <br />45 46 <br />Docusign Envelope ID: BB80A86F-2853-4F40-B02D-18F5B9DD615F