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.
Bully for Riordan. Given the dysfunctional state of Los Angeles politics specifically (and California politics in general) it may take an elder statesman well beyond his electoral sell-by date to midwife such sweeping (and necessary) change. And if he succeeds in getting the nation's second-largest city to adopt a defined-contribution pension model for public-sector workers, the power of that example for the rest of the nation will be difficult to overstate.
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.