Newport to consider overhaul of firefighter pensions

Newport Beach firefighters could start contributing significantly more to their pension costs, officials said Friday.

The City Council on Tuesday will consider a plan that would gradually move firefighters toward paying the full portion of their contributions to a state retirement fund. A second, lower retirement tier would go into effect for new hires that would eventually prove less costly for the city.

FOR THE RECORD:
An earlier version incorrectly reported the meeting would be held Monday.

After more than six months of negotiations the city’s management and the Newport Beach Firefighters Assn. employees came to the tentative agreement about three weeks ago, City Manager Dave Kiff said.

The plan would save at least $325,000 a year in the short term, but the structural changes could save millions in the long run, he said.

“We were able to sit down and identify what issues needed to be resolved to keep the city viable and keep us competitive,” said Brian McDonough, NBFA president.

The deal is part of the association’s new contract with the city, which retroactively takes effect Jan. 1 and goes until June 30, 2014.

Under the new plan, firefighters will pick up their 9% payroll contribution to the California Public Employees Retirement System, or CalPERS, which the city had previously been paying and counting toward their final salary at retirement.

Firefighters have been paying 3.5% toward their retirement, but were able to have it not count against their salary.

Now they will, McDonough said, and next year the payments will increase to 7%.

In January 2014, it will climb to the full 9% contribution.

New firefighters are also being hired under a 2% at 50 plan, meaning they accumulate about 2% a year toward their retirement with an expected retirement date of 50 years old. Current firefighters are under a 3% at 50 plan, the most expensive available that allows them to retire with 90% of their annual salary.

The new plan would allow the same max retirement, but it would take longer to reach, according to the CalPERS website.

“I think this is a good example of where the folks in the Fire Department, the fire association, were willing to come to the table for the long-term benefit of the city,” Kiff said. “It will help to bend the cost-curve down.”

The contributions are higher than what Costa Mesa firefighters pay, and could be the highest in the county. The move is part of a growing trend among public employees in California who are starting to pay toward their retirements. After years of booming CalPERS performance, the fund took a nose dive during the recession, passing obligations onto cities.

In exchange for the changes, firefighters will receive increased contributions to their medical plan, an increased cost-of-living adjustment and incentives to receive more training.

joseph.serna@latimes.com

Twitter: @JosephSerna