Under the measure, the pension fund contribution rate will increase from 7.5% to 9% for newly hired public safety workers, according to the San Francisco Examiner. Other workers will continue to pay a 7.5% contribution.
In years when San Francisco’s contribution to the retirement fund is less than expected due to strong returns on investments, the city would put the difference into a special health care trust fund used to pay for retired health workers’ benefit costs.
The measure also requires retirement benefits calculations to be based on the average monthly salary of an employee’s last two years of service, instead of just the last year as currently.
The measure could generate an estimated savings for the city between $300 million and $500 million, “depending on future wage and benefit rates for employees and other factors,” the City Controller’s Office said, according to the news report.
The city will pay about $300 million in retirement benefits for city employees during this fiscal year and the amount is expected to increase to about $800 million by 2014, the news report said. The city has a $4 billion future cost for retiree health benefits.