OC Gets OK for Hybrid Pension Program

October 14, 2009 (PLANSPONSOR.com) - A bill signed into law by California Governor Arnold Schwarzenegger creates a two-tier pension for Orange County employees that officials say could save the county tens of millions of dollars in retirement costs.

An Orange County Register news story said the bill allows employees to stay in a defined benefit program at a reduced benefit or participate in a hybrid arrangement that also includes a 401(a) portion with a 2% county matching contribution.

According to the newspaper, the plan was crafted by the Orange County Employees’ Association (OCEA), the county’s largest union, and county officials during months of discussions about the county’s $3.1-billion pension funding shortfall.

“This is clearly a groundbreaking pension reform legislation that I believe can serve as a model for the rest of the state of California,” said State Senator Lou Correa, who sponsored Senate Bill 752, according to the news account. “It’s good for the workers, and it’s really good for the taxpayers.”

In addition, union workers and county executives will begin developing a committee in November charged with finding more efficient ways to run the county. Any savings identified will be passed on to employees in the hybrid program as a higher county match.

“Someone had to be first to take a leadership role to address this problem before the public addresses it for us,” said OCEA’s general manager Nick Berardino, according to the Register. “We believe that it needed to be done through the collective bargaining process and felt that if we weren’t proactive, then … it would be forced down our throats.”