Brown Shows He's Serious About Pension Reform

SACRAMENTO -- Gov. Jerry Brown today proposed sweeping cuts to public employee pensions, setting off what will likely be a contentious and lengthy round of negotiations with his own allies.

In a 12-point proposal, the Democratic governor went beyond what labor and Democrats had expected, but not quite as far as Republicans and pension reform advocates had sought.

"It's time to fix our pension systems so that they are fair and sustainable over a long time horizon," Brown said at a Capitol news conference.

The changes include:

Boosting the retirement age from 55 to 67 for new employees who are not public-safety workers.

Requiring employees to pay more toward their retirement and health care

Creating a mandatory "hybrid" system in which future retirees would get benefits from a guaranteed benefit as well as a 401(k)-style plan similar to those in the private sector.

Ending pension "spiking" that lets employees boost their payouts by including overtime and other benefits.

Banning the purchase of additional service credits.

The administration estimates its proposals -- which will need approval by the Democratic-controlled Legislature -- would save about $900 million annually.

SOURCE: http://www.mercurynews.com/breaking-news/ci_19200024