Changes made to retirement benefits

One change will increase to 7% what future employees contribute. Move will help relieve pension problem in Fountain Valley.

November 17, 2010|By Britney Barnes,

Fountain Valley approved changes to future employees' retirement benefits that will help relieve some of the burden pensions are putting on the city.

The City Council unanimously approved a change Tuesday to newly hired employee benefits that increases the amount the employee will contribute and determines the retirement amount on employees' top three years of highest salaries.

The action will help reduce the overall retirement problem for the city, said Mayor Larry Crandall.

"We're got to get a grip around retirement [benefits], because it's just been out of control," he said.

The council approved amending benefits for miscellaneous employees to give them 2% of their salary for every year they work if they retire at age 60 or older. Current employees' pensions are calculated at 2.5% for every year of service if they retire at 55 or older.


The new employees who fall in this category will also have their benefits amount based on the salary of their three highest years instead of just their highest salary — something that will save the city a lot of money in the long run, Crandall said.

The change also has employees contributing 7% toward their benefits. Existing employees contribute 5%.

Personnel Manager Jean Hirai said many cities are discussing making similar changes to the benefits they offer, but are moving slowly.

"We're really one of the first to go to 2% at 60," Hira said. "I think we're going to be one of the first in the county."

The city probably wouldn't have been able to sustain employee pensions without this step and similar ones the council has taken, Crandall said.

The council is going to continue looking at things that can be changed to save money for the city and the residents, he said.

"We've got to continue to look at ways to continue to reduce expenses to the city," he said.

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