LOS ANGELES (CBS) — Mayor Antonio Villaraigosa on Wednesday unveiled a pension reform proposal estimated to save the city $1.5 billion over the next 20 years, but union leaders claimed it would leave new civilian hires “struggling to survive upon retirement.”
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Villaraigosa called for raising the minimum retirement age of future civilian employees from 55 to 62, and limiting the total compensation for a retiree at up to 75 percent of salary after 37.5 years of service.
Currently, retirees can receive up to 100 percent of their salary as pension after 46.3 years of service.
Villaraigosa also recommended increasing civilian employees’ pension contributions from 7 percent to 11 percent, 2 percent of which would be used to help pay for retiree healthcare.
Employees currently contribute nothing toward that benefit.
At present, retirees are entitled receive a pension enough to cover themselves and their spouse or domestic partner under the plan currently in place. Villaraigosa’s plan would cover only retirees.
Proposed pension reforms for police officers and firefighters — who are sworn employees — must be approved by voters, but those for civilian employees can be enacted by the City Council through an ordinance. At least 10 votes are necessary to enforce the changes.
Villaraigosa repeatedly contended his plan was “moderate” and “reasonable”, adding that
“economic realities dictate that the city cannot afford to provide these fair benefits for free.”
“While we want to do everything we can to maintain healthcare benefits for all retirees, it would be wholly irresponsible to endanger the financial solvency of the city by doing so,” Villaraigosa said.
City Administrative Officer Miguel Santana estimated that a third of the city’s budget will be spent on pensions by 2015 unless changes are made.
Federal and state law, however, bars city officials from unilaterally reducing the pensions of current employees, both civilian and sworn.
Villaraigosa’s proposal would apply only to future hires.
The Coalition of Los Angeles City Unions, which represents more than 20,000 civilian employees, denounced Villaraigosa’s proposal, saying it “will leave the average rank-and-file city employee — who has no Social Security benefits to rely on — struggling to survive upon retirement,” according to a statement.
They contended that under the proposed plan, future clerk typists who retire at age 60 after 30 years of service would receive a pension of $12,318 a year — less than half what they would have received under the current plan.
They insisted Villaraigosa’s proposal was prompted by “pension envy” on the part of private-sector workers, and “pension fury” over the reported retirement pay of former Bell City Manager Robert Rizzo.
“Rather than focus on real pension reform, politicians across the country are pushing to slash pensions for new hires to poverty levels,” the statement said.
Villaraigosa said he is “not wedded” to his civilian pension reform proposal and was amenable to changing it — if the coalition can come up with an alternative plan that would provide comparable savings.
Victor Gordo, counsel for the coalition, said: “We’re well aware of the mayor’s goal and we believe there are ways to realize savings that protect modest pensions and that address the city’s financial crisis.”
He declined, however, to go into detail about the union proposal.
Villaraigosa’s proposal for civilian pension reform comes a day after the City Council called for a ballot measure that would scale back the retirement pay of police officers and firefighters.
That ballot measure would allow the city’s sworn personnel to earn up to 90 percent of their salary as pension after 33 years of service. It would not cut spousal benefits.
Santana said officials maintained the 90 percent maximum pension for sworn personnel in order to remain competitive with other cities.
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