Firefighters in the Livermore-Pleasanton Fire Department whose pension and benefit plans have long been fully paid by both cities will start contributing 6% of their wages toward those plans Saturday with their share rising to 9% next July 1.
The new plan was ratified by the Pleasanton City Council last night at the end of a second public hearing on the new contract signed with Local 1974 of the International Association of Firefighters union, which covers LPFD's unionized employees.
The new contract will eventually cut the costs to the cities by $2.13 million, a savings to be shared equally by Pleasanton and Livermore which operate the LPFD under a joint powers agreement.
Although other parts of the union's pension and retirement program will remain in place, including the option of retiring starting at age 50 with a pension equal to 3% of wages earned for every year of employment as well as full health insurance benefits, the new contract puts in place a two-tier benefit program for firefighters hired after Jan. 1, 2013.
Their pension plan will be substantially less, with health benefits restricted to a retired employee only, not a spouse as currently provided. Also, once the retired employee becomes eligible for Medicare, that individual would go off the CalPERS health benefit program altogether.
Further changes for new hires after Jan. 1 that are being proposed by Gov. Jerry Brown could also reduce the retirement formula to 2.7% of wages at age 57, instead of 3% at age 55 as it is today.
The council voted 5-0 to accept the new contract agreement although Councilman Jerry Thorne said he opposes a two-tier program.
"I just don't like a two tier system," Thorne said. "First, it takes a long time to have an impact."
He said firefighters, like everyone else, are living longer so their CalPERS benefits and retirement costs to the city will continue longer.
"But also, having two tiers (of employment benefits) in the fire department will create situations where there could be moral issues as well as issues among employees."
Outside consultant John Bartel, president and chief actuary of Bartel and Associates, who has reviewed and helped draft union contracts for Pleasanton for years, agreed that the savings from the new contract will take a long time to help reduce the city's pension liabilities, but said it's a start.
He said Gov. Brown's plan which will be presented in detail Friday could help restore fiscal sustainability in all state, county and municipal pension plans where generosity in earlier administrations created the costly pension system in place today.
With the council's action Tuesday night, all city employees, including unionized municipal workers, police and now firefighters are contributing to their pension plans. Since September 2010, the firefighters' union members have been contributing 2% of their pension costs.
Management employees also are contributing, with City Manager Nelson Fialho voluntarily agreeing to pay 8% of his pay toward the CalPERS benefit plan two years ago, and other managers who are not unionized now doing the same.
Council members praised both the firefighters' union for agreeing to the new contract and city staff, including Fialho and Assistant City Manager Julie Yuan-Miu who handled contract negotiations on behalf of both Pleasanton and Livermore.