San Jose, a city that continues to struggle with its pension costs, has a council that is leading from the front. On Tuesday, the city council voted unanimously to begin a process that would cut their pensions, a move similar to what they’ve asked of their employee bargaining units.
Now, CalPERS will calculate what it would actually cost for the council members to remove themselves from the massive pension system. That deficit, estimated by Councilman Pete Constant, could be as high as $400,000 and would be immediately due. However, the immediate budget impact would be offset by long term savings. According to Constant, the cost of the Council pensions will continue to rise. And due to the short-term nature of council member tenure (limited to just two, four-year terms) generous pension plans don’t make sense.
It’s estimated that under the current structure, each council member will earn a $13,000 pension for life for their eight years with the city.
From the San Jose Mercury News:
San Jose city leaders took initial steps Tuesday toward ending their own state-run pension plan as they continue seeking workforce retirement concessions.
The council voted unanimously to notify the California Public Employees’ Retirement System of the city’s intent to terminate the council member pension plan. CalPERS requires that step before it will calculate the cost of ending the benefit plan, which would include paying off shortfalls in the fund. The move doesn’t commit the council to ending its pension plan, which would require a two-thirds vote of the council.
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