US - San Diego mayor Jerry Sanders has unveiled a proposal for a hybrid pension system for all non-public safety employees hired by the city after 1 July 2009.
The mayor's proposal dramatically reduces costly benefits by basing retirement pay on an average of the last three out of five years of compensation; disincentivising early retirements by lowering the multiplier to make it unattractive to retire early; and mandating equal contributions by employees. Additionally, the mayor's proposal lowers the cap on benefits that employees can receive from the city's defined benefit system from 90% to 75%.
Currently, at age 65 and after a thirty-year career with the city, employees can receive 119% of their pay in retirement. The new plan provides comparable benefits to the plans offered by CalPERS, the state employee retirement system, by lowering city employees' total retirement benefits to 80%, if they fully participate in saving for their retirement.
A statement from the mayor's office said: "If adopted by voters, San Diego would become one of only a handful of government agencies to have curbed its run-away pension costs by implementing a hybrid retirement system that protects taxpayers.
"The mayor's proposal reduces costs and the excessive benefits associated with the current retirement system."
It has been estimated that if the proposal were in place today, and applicable to all non-public safety employees, taxpayers would save $25.1m per year.
Over the first eleven years, taxpayers would save an accumulative $53.6m. The city's expected long term annual costs for general members would be reduced almost in half from 16% of pay to 8.35% of pay.
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