Retirement
Employees of the City are currently covered under the California Public Employees' Retirement System (CalPERS). While the City does not participate in the Social Security System, federal mandate requires new employees to contribute 1.45% of wages to Medicare insurance coverage.
Employees Hired On or Before July 8, 2011
Employees hired and members of CalPERS on or prior to July 8, 2011, participate in the 2.7% at 55 formula, one-year final compensation, and 1959 survivor benefit. Employees are required to contribute the full 8% member contribution, plus an additional 1.5% towards the employer rate.
Employees Hired Between July 9, 2011 and December 31, 2012
Employees hired and members of CalPERS between July 9, 2012 and December 31, 2012, participate in the 2% at 60 formula, three-year final compensation, and 1959 survivor benefit. Employees are required to contribute the full 7% member contribution, plus an additional 1.5% towards the employer rate.
Employees Hired On or After January 1, 2013
Employees hired and members of CalPERS on or after January 1, 2013, participate in the 2% at 62 formula, three-year final compensation, and 1959 survivor benefit. The employee pays the full member contribution, which is variable. The contribution rate for new members is 50% of the normal cost rate which is subject to change. As of July 1, 2025, the member contribution is 7.50%. Employees also contribute 1.5% towards the employer rate for a total contribution of 9%. Beginning July 1, 2026, the member contribution will increase to 8.25%, plus an additional 1.5% towards the employer rate for a total employee contribution of 9.75%.
Employer's Contribution Rate
As of July 1, 2025, the employer's normal cost contribution rate is 9.87%, which reflects the employee pick-up of 1.5% of the employer rate. Beginning July 1, 2026, the employer’s normal cost contribution rate will be 9.87%.
Information About Social Security
Earnings from City employment are not covered under Social Security. Therefore, employees do not make any contributions towards the Social Security system.
Retiree Benefits
For Employees Hired on or Before December 1, 2006
The City's Retiree Insurances Program (RIP) is a defined benefit program that was established in July 2000 and closed to new employees January 2007. This program provides a fixed monthly allowance to eligible retirees to use towards the cost of medical, dental, and vision premiums for themselves and an eligible spouse or domestic partner.
To be eligible, an employee must retire simultaneously from the City and CalPERS, have served at least 12 continuous years of service with the City of Mission Viejo and be enrolled in the benefit program at least one full calendar year prior to their retirement date. The fixed monthly allowance is determined by the average full-time equivalency (FTE) the employee served during a designated 12-year service period of employment with the City of Mission Viejo and whether the employee has an eligible spouse or domestic partner enrolled in the medical plan. The fixed monthly allowance ranges from $412.50 to $912.00. Please see Administrative Regulation 510 for further details.
Employees Hired On or After December 2, 2006
The City offers a defined contribution retiree health savings (“RHS”) which allows employees a method to save for retiree health expenses through a tax advantaged savings vehicle. Mandatory employee and employer contributions begin after one year of consecutive employment with the City. To be eligible for the full benefits of the RHS Plan, an employee must reach at least age 55 with a minimum of 15 years of service with the City of Mission Viejo at time of retirement.
The Plan requires mandatory contributions from both the employee and the City. Contributions to the Plan will commence for an employee beginning with the first pay period that occurs after the eligible employee's completion of one year of service with the City. Eligible employees will be required to contribute 1.5% of their salary. Deductions will be pre-tax and will be taken from each paycheck.
Starting the same date, the City contribution will be $100 per month ($50 per pay period for 24 pay periods) for full-time employees, $75 per month ($37.50 per pay period for 24 pay periods) for full-time equivalents of .750 to .999, and $50 per month ($25 per pay period for 24 pay periods) for full-time equivalents of .500 to .749, after the completion of the waiting period.