San Jose Passes Part of Pension Reform

The procedural vote applies to non-safety employees, moving forward.

Wednesday, Aug 29, 2012  |  Updated 7:13 AM PDT
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SJ Inches Forward on Pension Reform

NBC Bay Area

San Jose Mayor Chuck Reed's pension reform efforts have been under scrutiny since voters passed a reform measure earlier this year.

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The San Jose City Council passed an ordinance Tuesday that will  implement a second tier pension plan for new employees.

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 percent 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 percent of salary for each year worked, with a 65 percent 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.
 

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