SACRAMENTO (AP) — Gov. Jerry Brown will propose sweeping rollbacks to public employee pension benefits, including raising the retirement age to 67 for new employees who are not public safety workers and requiring state and local employees to pay more toward their retirement and health care, according to a draft proposal of the plan obtained late Wednesday by The Associated Press.
The governor will also propose Thursday a mandatory “hybrid” system in which future retirees would get their retirement from a guaranteed benefit as well as a 401(k)-style plan subject to market whims. For employees with at least 30 years of service, retirement benefits would aim to replace about 75 percent of an employee’s salary through retirement funds and Social Security, according to the draft.
The plan also would end so-called pension “spiking” that lets employees boost their payouts by including overtime and other benefits, and end the practice of buying additional service credits.
“It’s time to fix our pension systems so that they are fair and sustainable over a long time horizon,” Brown said in a prepared statement provided to the AP. “My plan raises the retirement age and bans abusive practices like “spiking” and “air time” while mandating that public employees pay an equal share of pension costs.”
The administration estimates its proposal would save about $900 million annually. Brown’s plan would require approval from the state Legislature, where union-allied Democrats are likely to balk at some of the significant rollbacks, and where Brown failed to win consensus on pensions with Republicans last spring.
Spokeswomen for the two Republican legislative leaders did not immediately respond to messages left late Wednesday.
Brown’s latest plan would also prohibit retroactive pension increases for all employees, and would require new employees to work at least 15 years before they are eligible for any state-funded retiree health care. When retirees become eligible for Medicare, the state would pay only the premiums for that federal program, rather than the more generous benefits now available.
The governor also will seek to add two independent, public members to the board of the California Public Employee Retirement System board, a move that would require voter approval.
The administration also wants to require all public employees to contribute at least half the annual cost of funding their pension benefits. Under current systems, some employees do pay that much but others pay little or nothing, leaving the full burden on taxpayers.
The GOP’s previous demands included deeper rollbacks than Brown had proposed, including the mandatory “hybrid” system he is now seeking and a statewide vote on permanent pension reform that would ensure changes made now couldn’t be easily overturned in the future.
The Sacramento Bee reported that Brown wrote a letter to the Pension Committee’s Sen. Gloria Negrete McLeod (D-Chino), and Assemblyman Warren Furutani (D-Gardena) saying, “Given the paramount importance of pensions to both taxpayers and public employees, it is absolutely critical that we carefully examine our current assumptions and practices. We have to do our best to make sure that we have a system that is fair and truly sustainable over the long time horizon that our pension and health systems require.”
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