Oct. 26 (Bloomberg) -- The Los Angeles City Council voted to raise the retirement age for new municipal employees to 65 from 55 and to reduce their pension benefits, a move the city’s budget analyst said would save as much as $4.3 billion over 30 years.
The council’s 10-0 vote also limits pension payments to 75 percent of final salary, according to a summary to council members from City Administrative Officer Miguel Santana.
Los Angeles, under its city charter, was exempt from a bill signed by California Governor Jerry Brown in September that raised the retirement age for non-safety personnel to 67 from 55. Both the city and state will require new employees to pay for half of their retirement benefits. Neither California nor its most populous city is doing away with guaranteed pension benefits in favor of 401(k)-style plans.
Without the changes, employee retirement costs were projected to increase $154 million, or 45 percent, by June 2017, Santana said in his report. That sum is enough to hire 770 police officers or firefighters, repave 440 miles of streets or fill 7.3 million potholes, he said.
Union leaders and city employees spoke against the measures, saying they breach the city’s commitment to its employees.
Mayor Antonio Villaraigosa, who can veto the council’s vote, has expressed support for the pension changes that would take effect July 1.
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