LOS ANGELES (CBS) — City officials unveiled a proposed pension reform plan for police and fire departments on Monday, one they say will save the city hundreds of millions of dollars, but requires voters to cut back on retirement pay for newly-hired police officers and firefighters.
“This is not a radical position, this is a sustainable one,” Mayor Antonio Villaraigosa said at a news conference in City Hall.
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City Controller Wendy Greuel noted pension payments make up 18 percent of the city’s general fund expenses this fiscal year, and that number is expected to double by 2014.
“Doing nothing is simply not an option,” she said. “As city controller, I don’t want to have to choose between making payments to pension funds and paying the city’s bills for road repair and trash collection.”
Currently, police officers and firefighters who retire at age 50 with 20 years of service are eligible to receive a minimum pension that is equivalent to 50 percent of their average salary during their final year at work.
Under the proposed plan — which Villaraigosa hopes the City Council will put on the March ballot — sworn personnel with 20 years of service would be entitled to a pension equivalent to 40 percent of their average salary over their last two years of employment.
Both plans allow a maximum pension of 90 percent after 33 years of service. However, sworn personnel would reach that milestone at a slower place under the proposed plan.
Currently, a police officer or firefighter can receive a pension of 65 percent after 25 years, and 80 percent after 30 years. Under the proposed plan, sworn personnel would earn a 55 percent pension after 25 years; and 75 percent after 30 years.
“The major components of the plan … are very basic,” said City Administrative Officer Miguel Santana. “We are rewarding employees … to work longer, and we’re penalizing employees who decide to retire at a younger age.
“The expected savings under this plan for the next 10 years is approximately $120 million — it’s a 20 percent reduction of what our pension costs are today,” he added.
The plan would also require sworn personnel to contribute 2 percent of their salary toward their post-retirement healthcare. Currently, they pay nothing.
“I believe strongly that we have a special obligation to our sworn officers and firefighters to provide reasonable healthcare while they served the city and in retirement, but we simply cannot continue to provide that benefit for free,” Villaraigosa said.
Santana said the proposal plan was among 10 that the city submitted to an actuary for review. He said it was designed to reduce the city’s pension costs without detracting from recruitment and retention efforts.
If approved by voters, it would apply to police officers and firefighters hired on and after July 1, 2011, and would be available for existing sworn personnel to opt into if they choose.
A spokesman for the Los Angeles Police Protective League declined to comment until the language of the proposed ballot measure is finalized, but United Firefighters of Los Angeles City President Pat McOsker said the union tentatively supports the plan.
“We’ve worked collaboratively with the mayor’s office and the City Administrative Officer to find something fair in terms of pension for firefighters and police officers, and we’re going to support this, but the devil is always in the details,” McOsker told reporters.
“If nothing changes from what we’ve talked about and worked towards so
far, then we’re going to be supportive,” he said.
Under the Charter, any changes to the Los Angeles Fire and Police
Pension system must be approved by voters.
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