The Costa Mesa City Council approved a reformed pension model for the city's nonpublic safety workers this week that could save the city millions compared in the long run, according to a city staff report.
About 185 workers in the Costa Mesa City Employees Assn. (CMCEA), along with department supervisors, agreed to create a two-tier retirement plan. Current workers remain under the 2.5% at 55 years old formula, and employees hired after March 11 will be on a 2% at 60 plan.
It would take longer for new city workers to max out their retirement benefits, and the new formula creates an incentive for them to work later into their career, city officials said in October when discussing retirement plans.
"We wanted to show our part to go in the right direction," said CMCEA President Helen Nenadal. "As a membership and employees, we recognized that we and the city had to come to a happy medium."
City workers' retirement packages have been under increased scrutiny with this council, which has made it a mission to lower long-term pension costs and reinvest money in capital expenditures.
Statewide, the conversation isn't much different, Nenadal said.
With the recession hitting the California Public Employees' Retirement System (CalPERS) hard — a scenario that's led to billions in investment losses — cities across the state have had to make up the difference to cover their retired workers' benefits. Public employee pension reform has become a priority across the country.
"I see that's the way a lot of cities are talking," Nenadal said. "We didn't want to wait for everybody else. We wanted to be a leader."
Though the change will only take effect next month, Nenadal said workers proposed it in 2010 during the last sit-down with city officials. Those conversations led to a 5% bump in pension contributions by the city's workers last year, and ultimately the current pension change.
City staff at Tuesday's City Council meeting explained that under CalPERS, changes to employee retirement agreements can only happen a few times a year, which is why the reforms happened over two years.
According to Tuesday's city staff report, the city will save up to $500,000 annually when half its employees are under the current package and half are under the new plan.
Costa Mesa's Police and Fire department groups are aware change could be on the horizon.
"We were actually talking about a two-tier in 2010," said Jason Chamness, president of the Costa Mesa Police Assn. " I would say it's on our radar. It's on everybody's radar."
Costa Mesa Firefighter Assn. President Tim Vasin echoed Chamness' remarks.
"Our approach has been whatever the city offers us, we'll research and take it and move forward with discussing it them," he said. "We're always willing to discuss solutions with the city."