7
The above rates apply to an employee’s
entire salary unless (a) He notifies the Re
tirement Board in writing that he wishes to
reduce his rate of contribution to 5% in
which case his employer’s contribution will
also be reduced, or (b) He notifies the Re
tirement Board in writing that he wished
to contrbiute only on $200 of his monthly
salary.
These rates are not expressed in dol
lars and cents but in a percentage of
salary. Thus a male employee at age 40
is normally required to contribute,
through payroll deduction, 7% of his
base salary before deductions for with
holding tax or any other purposes are
made.
Any employee whose fixed rate is
more than 5% has the privilege of
electing to contribute, at the rate of
5 % of his salary only. This could never
be considered as the proper thing to do,
because if the employee reduces his rate
of contribution, the employer’s match
ing contribution will likewise be re
duced. This means, of course, that the
individual’s retirement income will be
correspondingly reduced.
A t the extreme older ages employees
might be justified in electing to reduce
their contribution to 5% if most of
their retirement income is the result of
prior service and if they have only one
or two years more to serve before being
compelled to retire.
The option to elect to contribute at
the rate of 5 % instead of the fixed rate
is only available to those employees
whose fixed rate is more than 5%.
One whose fixed rate is less than
5 % has no option to contribute on any
other basis than his fixed rate.
Large numbers of younger employees
whose fixed rate is less than 5% have
expressed a desire to increase their con
tribution rate to 5% in order to in
crease the amount of pension they will
receive at retirement age. This, how
ever, is not permitted.
It is extremely important to remem
ber that once an employee has elected
to reduce his contribution rate to
he is never again permitted to change
it. The reduction to 5% may be made
at the inception of the employee’s mem
bership in the system or at any subse
quent date prior to retirement, but once
it has been reduced it may never again
be increased to the fixed rate.
Employees receiving $200 per month
or less of salary are required to con
tribute on all of their salary either at
the fixed rate or, if they have so
elected, at the 5% rate. Employees re
ceiving more than $200 a month are
required to contrbiute on at least $200
per month either at the fixed rate or at
the rate of 5%, and they may elect to
contribute on the basis of all of their
salary either at the fixed rate or at the
rate of 5%.
Those who elect to contribute on all
of their salary are not permitted to use
one contribution rate for their first
$200 of salary and a different contri-'
bution rate for the salary in excess of
$200 a month. For employees receiving
more than $200 a month, the option to
contribute on all of their salary or on
only the first $200 a month is at the
employee’s pleasure and may be changed
at will, except that the option cannot
be changed for periods of less than one
month.
It is impossible to forecast in one
schedule the amount of income each
individual member of the system will
be entitled to receive at retirement age.
Even in an individual case, the estimat
ed pension to be received can only be
approximated because one of the most
important factors in determining the
amount of pension is the amount of
earnings the employee will have before
reaching retirement age.
Generally speaking, employees cov
ered under the Retirement Act will
gradually increase their earnings over
their lifetime of service. As their earn
ings increase, their fixed rate of contri
bution (when applied to their increased
earnings) gradually increases the dol-
(Continued on page 19)