Big Changes to City Pension Plans

Arcadia city employees will now have to pay the employee portion of the pension plan under the California Public Employee Retirement System (CalPERS). The had previously foot the bill for all employee pension costs.

Major changes are on the way for city employee pension and retirement benefits for all city employees as City Council has entered into new 3-year after 6 months of negotiations.

Council Member Mickey Segal praised the efforts of the unions and city negotiators in reaching agreements.

“What was accomplished was extremely unique and I’m not sure there are very many cities anywhere in Southern California that will accomplish what we were able to get done,” he said. “It’s something you all should be very, very proud of.”

The city used to foot the bill for employee pension costs. Under the new contracts, city employees hired after Aug 3 will pay their full share at nine percent. Also, annual pensions will no longer be calculated using an employee's single highest salary, but his or her average compensation over the three-year period.

Employees hired before Aug 3 will be eased into the new rules; they will pay gradually inreasing amounts into their pension plan for three years, after which they will be required to pay the full share. They will receive raises to compensate for money deducted for pension payments.

In addition to pension changes, health insurance for existing employees who retire after January 1, 2012 will be capped at a fixed dollar amount and new hires will be provided at the minimum contribution level as set by CalPERS annually.

Though it has not been estimated how much the city will save in the long run, it is expected to be a significant amount.