Los Angeles Unveils Retirement Benefit Proposals

March 25, 2011 (PLANSPONSOR.com) - Los Angeles officials have unveiled a tentative labor agreement that would increase health care and pension contributions for thousands of municipal workers and put an end to some furloughs caused by the city's budget crisis.

The Los Angeles Times reports that under the plan, affected employees — who now pay nothing for retirement health care coverage — would begin contributing 2% of their incomes for such coverage April 1. That percentage would double, to 4%, by July 1, the beginning of the new fiscal year. 

By paying more, workers will retain retiree health care benefits for spouses or domestic partners — a benefit that the city had threatened to eliminate, the Times said.  

Overall, total retirement contributions would rise by July 1 to 11% of salaries — almost doubling the current level of 6%.  

The changes would affect both newly hired employees and about 19,000 existing workers represented by the coalition, whose membership includes janitors, clerks, sanitation workers and other municipal staffers.   

Miguel Santana, the city’s administrative officer and chief budget planner, said it bars only furloughs of the 19,000 workers covered by the pact, roughly half of the municipal payroll. Not affected are police officers, firefighters, and sundry managers and other municipal employees.  

The three-year deal would save the fiscally strapped city more than $400 million, end furloughs for covered employees and avert more than 600 layoffs, officials said, according to the news report.  

Union rank and file must still ratify the pact.