San Diego Mayor Jerry Sanders and City Council President Scott Peters today announced a compromise on what will likely be a November ballot initiative on pension reform.

Under the compromise plan, new city employees will no longer be able to retire before age 60, and their maximum benefit payout will be reduced by 30 percent. Also, the city’s annual contribution to their pensions will be cut nearly in half.

In total, the new plan would eventually save the city $22.5 million annually, according to administration estimates.

Implementing a less expensive pension plan for new city employees, with the exception of police and firefighters, has been central to Sanders’ platform since his 2005 campaign, and has been the dominant issue in over six months of negotiations between the administration and the city’s three non-public safety unions.

Sanders declared an impasse in negotiations last month, and said he would put the pension issue on the ballot. But he needs City Council approval for a ballot initiative, hence the importance of the agreement with Peters.

“We achieved reduction of costs, reduction of risks and the elimination of perks — mainly the de-incentivizing of early retirement,” said Sanders spokesman Fred Sainz of the agreement with Peters.

The new proposal also requires that a 401(k)-style “defined contribution” plan be part of future city employees’ retirement packages, something Sanders has sought since he first took office.

Peters called it “a significant meeting in the middle” that would keep San Diego competitive in the labor market.

Sanders said he will present the plan to the unions, which include the white-collar Municipal Employees Association, the blue-collar employees union and the Deputy City Attorney’s Association.

However, there is little hope that the two sides will come to terms.

DAVID WASHBURN

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