CalPERS · Pension Modeling

Pension tiers — Classic vs PEPRA, Misc vs Safety

The single largest non-base line in any California public-sector total-comp analysis. Classic-tier safety classifications can carry employer contributions of 60%+ of base salary; PEPRA tiers cut that roughly in half. Modesto's comp comparisons are meaningless without isolating pension layer.

Misc Classic (2.7% @ 55)

35.2%

Employer contribution as % of payroll

Normal cost 11.8%

UAAL 23.4%

Misc PEPRA (2% @ 62)

14.8%

Employer contribution as % of payroll

Normal cost 7.3%

UAAL 7.5%

Safety Classic (3% @ 50)

64.8%

Employer contribution as % of payroll

Normal cost 22.4%

UAAL 42.4%

Safety PEPRA (2.7% @ 57)

28.1%

Employer contribution as % of payroll

Normal cost 13.6%

UAAL 14.5%

Classic vs PEPRA cliff

The PEPRA hire-date cutoff (Jan 1, 2013) creates two parallel pension realities inside every California city's workforce. Classic-tier incumbents (hired before) carry 2.5–3x the employer cost of PEPRA-tier incumbents in the same job. Modesto's comp study must report on tier mix, not just classification, because the City's actual cost trajectory is a function of attrition between tiers.

UAAL is the real story

Normal cost (the cost of benefits earned this year) is roughly stable across cities. The UAAL component — paying down the unfunded actuarial accrued liability — is where Modesto vs comparator divergence shows up. CalPERS valuation reports give the rate; HSG's analysis isolates UAAL drag from current-period comp comparisons so the City sees true peer pay before pension overhead.

Rates illustrative. Production figures pulled from each comparator's most recent CalPERS Annual Valuation Report at engagement award.