San Diego Mayor Jerry Sanders and the city’s three non-public safety unions have come to an agreement on pension reform that will keep the issue off the November ballot.
The agreement is yet another iteration of a proposal Sanders has been pushing for months, with a couple important differences from a compromise proposal he reached with City Council President Scott Peters last month.
The unions seem to be agreeing to less lucrative pension formulas and the elimination of a supplemental savings program that was run outside the pension system in exchange for an earlier retirement age.
Under the newest compromise, employees hired after July 1, 2009 will still be able to retire at 55, albeit with a significantly smaller pension than current employees. The Sanders/Peters compromise had increased the minimum retirement age to 60.
Also, the compromise eliminates the Supplemental Pension Savings Program, a 401(k)-like “defined contribution” plan, for new employees. Instead, the defined contribution portion of an employee’s retirement savings will be administered under the same umbrella as his or her standard, or “defined benefit,” pension.
This is important because it allows Sanders and mayors after him to, over time, move pension dollars from the defined benefit plan to the less-costly defined contribution plan.
Finally, the newest compromise proposal cuts the city’s mandatory contribution to the defined contribution plan from 1.25 percent to 1 percent of an employee’s salary. The other .25 percent will be paid into a retiree medical trust so health costs will eventually be paid via a separate revenue source.
Sanders and the unions have a press conference scheduled for 1 p.m. today. I’ll have more when I get back.