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Uploaded: Wednesday, August 29, 2012, 9:48 AM
Updated: Friday, August 31, 2012, 6:36 AM
Like Pleasanton, San Jose imposes two-tier pension plan for new employees
While Pleasanton's affects only firefighters, San Jose's action is more broad-sweeping
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The San Jose City Council passed an ordinance Tuesday that will implement a second tier pension plan for new employees.
Although similar in terms of a new two-tier formula to the contract ratified Tuesday by the Pleasanton City Council with the union representing firefighters in the Livermore-Pleasanton Fire Department, San Jose's is much more stringent.
Scheduled for the consent calendar after being approved on a first reading earlier this month, the ordinance represents one part of the Measure B pension reforms passed by 70% of voters in June.
City spokesman David Vossbrink said it is difficult to estimate just how much money will be saved by the new ordinance, since it depends on how many new employees are hired and when.
"It doesn't do a thing for the pension costs that we've already accrued, those are big numbers that will continue to grow because there are thousands of people in the system," Vossbrink said.
Rather, Vossbrink said, the new plan will provide long-term savings.
The ordinance deals with a new pension plan that will apply to all future San Jose non-safety employees, who will have an annual accrual rate
that could not exceed 2.0% of salary for each year worked, with a 65% maximum retirement payout. Under the ordinance, new city employees will also be eligible for retirement at age 65, compared to 62 for current employees.
The vote comes amidst a flurry of response to the June passage of the Measure B pension reform, which was championed by Mayor Chuck Reed.
Immediately after voters approved Measure B in June, union representatives filed state lawsuits on behalf of police, firefighters and non-safety city employees contesting the legality of the pension reforms. The result of the lawsuits is still pending.
The passage of Tuesday's ordinance also comes on the same day that public pension reform made headlines statewide, as Gov. Jerry Brown outlined
a plan for state pension reform that would include caps on benefits, increasing the retirement age, making employees pay at least 50 percent of their pension costs, and stopping what it calls "abusive practices."
Reed expressed support for the governor's proposed pension reforms.
"The pension reform agreement is a significant accomplishment for the governor that will have a positive impact," Reed said— Bay City News Service Are you receiving Express, our free daily e-mail edition? See a sample and sign-up for Express.
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Posted by Kent Bryermarh, a resident of the Country Fair neighborhood, on Aug 29, 2012 at 2:45 pm Essentially what San Jose did was to take their pension plan (for new hires) back to where it was 12 years ago, before all the pension boosting madness took place in city after city in California.
Before the crazy era was induced by new laws, passed in Sacramento, all public employees had very good pensions. The they went crazy and mindless city councils handed over the keys to the city treasury.
Unfortunately, they made all those huge pension increases retroactive so that all the years prior to the boost got jacked up, even though no money had been put aside to cover it.
So, the retroactive feature worked in ONLY one direction, covering all the prior years. However now that the system is in trouble the changes don't affect those same workers who got all those free retroactive boosts.
Simply put it is really, no, REALLY unfair.
They should have had only the recent years at the unsustainable boosted rate. The years before and after that period should be at the sustainable rate.
They are walking away with $300,000 to over a million extra dollars over their expected lifetime of retirement.
Like huge golden parachutes for nearly all the workers with full careers.
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Posted by Anonymous, a resident of the Another Pleasanton neighborhood neighborhood, on Aug 29, 2012 at 2:50 pm Pleasanton did not impose, they negotiated with cooperative employee groups.
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Posted by Pensions were never the problem, a resident of the Another Pleasanton neighborhood neighborhood, on Aug 31, 2012 at 5:22 pm
The problem is that government employers got a free ride when times were good.
When interest rates were very high, pension funds were invested so well that governments and employees were allowed to reduce or stop paying toward employee's pensions, because of the interest or return on the investments.
They did so well that CalPERS and other Retirement funds did not have to or charge the employers or the employees for years, and was worried that the State of Ca would "borrow" their money.
But when interest rates came down, pension funds just burned away their funds, and did not promptly ask employers to pay, or to pay enough. Eventually that caught up to them, and employers not only have to pay, they need to make up for some of the prior years of the free ride.
Yes, the employers need to pay more.
If you ask the employees to pay more, it really just costs more in the long run because that money comes out of their salaries, which the employer pays, and is taxed, too,
Employees did not cause the recession, and cutting the pensions that they are entitled to, based on years of service, will not solve today's problems.
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Posted by GX, a resident of the Another Pleasanton neighborhood neighborhood, on Aug 31, 2012 at 5:30 pm The previous post is so factually incorrect that it is not worth the time to respond.
Please educate yourself on this important topic so you don't get fooled by posts like the previous one.
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