With the annual cost of employee pensions rising, top management officials at Sacramento City Hall have agreed to pay the entire employee share of their CalPERS retirement contributions.

That agreement – approved by a unanimous City Council vote on Tuesday night – follows a decision by the city's clerk, attorney, treasurer and manager to also pay their employee share.

And it comes two days before the city's Compensation Commission is scheduled to vote on whether to force Mayor Kevin Johnson and the eight members of the City Council to contribute 7 percent of their salaries toward their pensions.

Currently, the city picks up all of the mayor's employee contribution to CalPERS. City Council members pay 4 percent of their salaries, while the city picks up 3 percent.

City Manager John Shirey, who volunteered to make his employee contribution toward CalPERS when he was hired in August, said the agreement with roughly 35 managers finalized Tuesday was necessary if city officials hope to convince rank-and-file workers to pay more toward their retirements.

"We have to take steps to close (a $26 million deficit) and one of the ways we can do that and not cut services and not lay off employees is for our employees to pay their share of retirement," Shirey said. "And that starts at the top. I can't very well ask lower-level employees to do what their managers aren't willing to do."

Councilwoman Bonnie Pannell said the move was "setting a great example," and Councilman Kevin McCarty said "it sets an important tone."

Beginning with the next paycheck, top officials – including the fire and police chiefs, as well as other department heads and their top deputies – will pay between 7 percent and 9.81 percent of their salaries toward their retirements. The city had been picking up that tab.

In return, those same managers will no longer be forced to take monthly furlough days. The agreement will save the city $100,000 a year, according to a staff report.

While the savings represents a relatively small slice of the city's overall contribution to CalPERS, Shirey said this was more than just a symbolic move.

"That's a police officer," Shirey said of the money saved.

The city is paying $51 million out of its general fund this year toward pensions. Five years ago, that number stood at $43 million.

Most rank-and-file workers at City Hall contribute 4 percent of their salaries toward their retirements, with the city picking up 3 percent. Police officers do not pay any of their employee share, and firefighters will begin contributing 6 percent in January 2013.

Mid-level managers and support staff who are part of a new union also pay nothing toward their retirements, although that arrangement is being negotiated. Support staff for the mayor and City Council do not make employee contributions.

Meanwhile, the city's Compensation Commission is scheduled to vote Thursday on whether to force the mayor and council members to contribute 7 percent of their salaries toward their pensions. According to a city staff report, the Compensation Commission is not expected to grant the mayor and council members raises.

© Copyright The Sacramento Bee. All rights reserved.

Call The Bee's Ryan Lillis, (916) 321-1085. Read his City Beat blog at sacbee.com/citybeat

• Read more articles by Ryan Lillis