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Riordan looks to replace pensions with 401(k)s at City Hall

October 12, 2012 |  6:58 am
Former Mayor Richard Riordan

This post has been corrected. See below for details.

Former Los Angeles Mayor Richard Riordan plans to submit language Friday for a May 2013 ballot measure that would eliminate government pensions for newly hired workers at City Hall, replacing them with 401(k)-style retirement benefits.

Riordan's proposal also would freeze the size of pensions for existing employees even when their salaries go up--unless they are promoted to a higher-paying job. The plan is designed to save hundreds of millions of dollars annually by 2017 and would apply to every city worker, including police officers, firefighters and employees of the Department of Water and Power, backers said.  

For more than two years, Riordan has warned that retirement costs are growing so fast that they will eventually prevent the city from paying for parks, libraries and other basic services. He predicted that by 2017, the city's general fund budget would pay for pensions, police and firefighters and nothing else.

"Every voter we've talked to believes we desperately need this," Riordan said.

Backers of the Riordan measure said they would need to collect 247,000 valid signatures to get the proposal on the May ballot, when the top two candidates for mayor are expected to face off. That effort could set the stage for a major battle between the Riordan camp and organized labor.

Julie Butcher, an organizer with the Coalition of L.A. City Unions, said employee groups from every city agency would band together to fight the proposal, by having members standing outside supermarket to persuade voters not to sign the petitions.

"One of L.A.'s richest men is going to ... look his trash man in the eye and say workers in the city won't be able to retire with a little bit of dignity," she said.

Riordan's push comes two weeks after the City Council voted to raise the retirement age for newly hired civilian workers to 65 from 55. That plan, backed by Mayor Antonio Villaraigosa, would cut by two-thirds the amount paid to workers who retire at age 55 after 30 years of city employment. It would not apply to police officers, firefighters or employees of the Department of Water and Power.

City Administrative Officer Miguel Santana said last month that Villaraigosa's plan, which still needs a second vote before it can go into effect, would save $30 million to $70 million over a five-year period.
Alex Rubalcava, who has been advising Riordan on his ballot measure, challenged that estimate, saying it would save nothing during that period.

Rubalcava said Riordan's ballot proposal would require that existing employees contribute more toward their retirement, but with the rate of increase capped at 3% per year. The proposal is also designed to stop double-dipping, where an employee receives a pension from one city job while working another, he said.

Councilmen Bernard C. Parks and Dennis Zine both receive pensions from their time at the Los Angeles Police Department while earning a salary on the council.

[For the Record, 2:36 p.m.: An earlier version of this post said the L.A. City Council recently voted to raise the retirement age for newly hired civilian workers to 67, from 55. The council actually voted to raise the age to 65.]


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Photo: Former Mayor Richard Riordan speaks at his home in Los Angeles in 2011. Credit: Los Angeles Times