San Jose’s Measure B seems to take a tougher stand on current employees. To stay in their existing plan, they would have to contribute significantly more. New hires would pay 50% of pension costs, compared to roughly one-quarter paid by current employees.
The measure also raised the age of retirement for new hires in the city’s defined benefit plan to 60 for public safety employees and 65 for all others. In addition, it caps the actuarial rate at 2% of a worker’s salary annually, with a 65% maximum benefit. Benefits would also be based on the highest average salary over a three-year period.
Current workers in San Jose have the first choice of contributing 4% more of their salary to help pay off the pension plan’s unfunded liabilities starting in June 2013. Those contributions could jump another 4% per year until they cover half of the unfunded liability cost or reach a cap of 16%.
Employees who don’t want to face those higher contributions could opt out of the existing pension. They would keep the benefits earned to date, but going forward would switch to a new plan with benefits that grow at a lower rate and higher retirement ages. As with new employees, benefits would also be based on the highest average salary over a three-year period, rather than the highest single year.