Jerod Harris/Getty Images for BGR
Mayor Antonio Villaraigosa supports a plan to reduce pension benefits for future city employees.
The union that represents City of Los Angeles employees is threatening to sue the city if it adopts a proposal to reduce retirement benefits for new civilian workers.
The change in pension benefits could save the city as much as $4.3 billion over a 30-year period, according to a report released Tuesday.
The plan reflects months of negotiations behind closed doors. Highlights include:
- The retirement age would increased from 55 to 65
- Retirement benefits would be based on 75 percent of an employee’s final compensation, instead of 100 percent
- Cost of living adjustments would be capped
- Healthcare benefits for dependents would be eliminated
City Administrative Officer Miguel Santana believes the benefits for new hires are not subject to bargaining with the unions. However, the president of SEIU Local 721 called the report “an end run around collective bargaining.”
“The proposed ordinance is unsound and unlawful,” said Bob Schoonover. “If the city refuses to negotiate about the proposed changes to city worker pensions, we’ll take whatever action necessary to enforce our rights, even if it means going to court."
Mayor Antonio Villaraigosa and City Council President Herb Wesson are scheduled to discuss the pension plan Wednesday morning at City Hall.
“The path we're on is not sustainable and I will not forsake our future to pay for our past,” Villaraigosa said in a statement. "Some will say this plan goes too far, others will say it doesn't go far enough. But I believe this is the right plan for Los Angeles because it works to find a middle ground, balancing the needs of city workers and city taxpayers."
Under the proposed retirement plan, a custodian who earns $39,000 at the time of his retirement at age 65 would receive a pension of $23,615. That's down from the $25,504 he would receive under the current tier. The annual benefit for a deputy city attorney who retires with a salary of $130,000 would decline from $84,000 to $77,974.
The new tier of benefits could be in place by July 1, 2013. The retirement package must be approved by the Los Angeles City Council.