US - Los Angeles Mayor Antonio Villaraigosa has unveiled proposals that will have newly hired police and firefighters working longer for better pensions and paying for post-retirement health care for the first time.
Villaraigosa said the pension changes will save the city $173m for every 1,000 new hires.
Under the new plan, employees can continue to retire after 20 years of service, but will receive only 40% of their salary, instead of 50%. Subsequent increases will also be staggered at a slower rate.
The employee pension contribution, which was either 8% or 9%, will be 9%.
"The plan is designed to balance cost savings without detracting from recruitment and retention efforts. It requires newly hired police officers and firefighters to work longer in order to qualify for enhanced retirement benefits," said a release from the Mayor's office.
Meanwhile, if the plan is approved, the final compensation will be calculated using the last two years of salary, instead of the final year.
The employee contribution to health care coverage, which some US schemes wrap into the overall pension payment, will increase from zero to 2%.
"I believe strongly that we have a special obligation to our sworn officers and firefighters to provide reasonable healthcare while they serve the City and in retirement. But we simply cannot continue to provide that benefit for free. I'm not doing this because I want to. I am doing it because I have to," said Villaraigosa on his web-log yesterday.
The changes need to be approved by the City Council and voted on before it can take effect.
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