Pension Reform in Poway

Pension Reform in Poway – Employee Salary Contributions 
Prior to statewide pension reform in January 2013, the city embarked on its own pension reform in 2009 when employees began contributing 3% of salary to their pensions.  The City Council achieved the balance of its pension reform goals in 2011, when employees agreed to pay the full employee share of CalPERS pension costs (7% of salary for non-safety employees and 9% of salary for fire).  City Council members also pay the full 7% employee pension contribution.  This means that city employees are now paying the maximum allowed by CalPERS and contribute over $1 million per year toward their pensions.

Pension Reform in Poway – Second Tier Rate Structure
In addition to employee contributions, another major focus in Poway's pension reform was changing the structure and terms of pensions for new employees.  To do so, the city established a second, less generous retirement plan for employees hired on or after January 1, 2012.  This second-tier plan provides a reduced retirement benefit and requires employees to work 5 years longer before they become eligible for full retirement benefits.

Combined, these actions represent a major collaboration between the City and its employees, bringing immediate budgetary savings as employees now pay the full employee share of their CalPERS pension and additional long-term savings from the second-tier pension structure for new employees.  These pension reform measures are significant achievements.

Statewide Pension Reform – Third Tier Rate Structure
Beyond Poway’s early pension reform efforts, the California legislature adopted statewide pension reform, effective January 2013.  This established a third-tier pension structure for new employees hired on or after January 1, 2013.  Poway has fully implemented these third-tier benefits, which includes pension cost-sharing as well as a further reduced retirement benefit that requires employees to work longer before they become eligible for full retirement benefits.

Pension Benefits Snapshot
The following depicts the change in retirement benefits since the City began implementing pension reform measures:

Category  Pre-2009  2009-2011 2011-2012 Effective
Jan 1, 2012
Effective
Jan 1, 2013 
Safety (Fire)
3% at 50

 
3% at 50
3% employee contribution
3% at 50
7% employee contribution
3% at 55
9% employee contribution
2.7 % at 57
11.5% employee contribution 
Teamsters and Management

2.7% at 55
 
2.7% at 55
3% employee contribution

2.7% at 55
7% employee contribution
2% at 60
7% employee contribution
2% at 62
6.25% employee contribution