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City leaders unveil plan for city worker pension reform

September 19, 2012 12:00:00 AM PDT
Los Angeles is a step closer to major pension reform. Wednesday, city leaders unveiled a plan that would, among other things, raise the retirement age from 55 to 65.

Los Angeles Mayor Antonio Villaraigosa and city council leaders agree that new employees should pay more for retirement benefits.

"There're going to be a lot of upset people. The fact is we aren't here to be popular. We're here to do what's right," said Villaraigosa.

The proposal only applies to new hires. Without reforms the city's pension and retirement health costs will increase by $154 million in four years.

The proposal raises the retirement age from 55 to 65. The maximum benefit is capped at 75 percent of final pay. Employees pension contributions would increase from 6 to 11 percent. Cost-of-living increases would be limited to 2 percent.

"The city's pension costs have gone down 13 percent in the last year because we took on more of the burden," said Lowell Goodman, a spokesman for the Service Employees International Union (SEIU). "We did pension reform in the city of L.A. last year. Now it is on the mayor and the CAO to manage the city responsibly."

The mayor says residents favor public safety over public pensions. The police and fire departments have already modified their pension programs.

The existing city employee pensions and contributions will remain the same. New employees would face the reforms.

"The path that we're on is simply not sustainable, and I will not forsake our future to pay for our past," said Villaraigosa.

Villaraigosa says the city doesn't have to negotiate because the new hires are not in the union when they are employed. Unions say that's not accurate, and call it an end-run around collective bargaining.

"Nobody's being hired. This isn't going to save any money because nobody's being hired in the city of L.A.," said Goodwin. "There's a hiring freeze right now. They're not hiring anybody. How is this going to save any money if you reduce the benefit for a class of employees that isn't even being hired? They're not even going to be employees."

The pension proposal still has to be approved by the city council, expected next week. And given the support shown so far that should not be a problem.


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