Pensions Remain Unsustainable Despite Council’s Approval

Comparisons of the nation’s crumbling Social Security system and out-of-control pension costs in San Jose were made at Tuesday’s City Council meeting.

The Mercury News reports Mayor Chuck Reed acknowledged that pensions should remain more attractive than Social Security to entice talented employees and could be increased in the future. The meeting also laid the groundwork for a new two-tier pension plan for future hires.

Critics of the city’s pension crisis—San Jose is more than $3 billion short of covering current and former workers—continue to call for major changes to the system, which might be made easier after new rules regarding negotiations were passed. The city manager will now be discussing proposals with employee representatives openly, to assuage the fears of city workers who believe they are being misled about the process.

Councilmember Pierluigi Oliverio has suggested the city eliminate pensions and model its system after most private corporations, which make contributions to Social Security and 401k plans. The idea has yet to get much traction in council, but that could change with time.

San Jose’s grim pension outlook isn’t much different than a report released Wednesday by the Congressional Budget Office, which said Social Security is running a permanent deficit and the national coffers will be emptied by 2037.

City Council Approves Pension Plan for City Employees.

Josh Koehn is a former managing editor for San Jose Inside and Metro Silicon Valley.

4 Comments

  1. San Jose’s retirement funds are comingled with the general funds, just like the federal SS funds are comingled with the general funds so it is impossible to determine where the problems are.  Also the funds are used for other than what they are intended for.

    The state retirement funds CAPERS are separate and cannot be borrowed or spent for anything except retiree payments,  which I believe is a better system.  Maybe San Jose should change to this type.

  2. I think the City should offer a Golden Handshake so that many top step employees will retire early. If an employee is at least 55 years old and within two years of having 15 years of service, they should be bridged two years, to bring them to 15 years, so they can obtain their medical benefits. Add to that, 10 points on their retirement percentage because there would be no incentive to retire early with a 32.5% retirement pay. Bridge them another 10 points to make it 42.5%, which would make it a little more attractive. Many top step employees would retire. The City would have less retirement to pay out at higher rates, being that those employees may have stayed for 20-30 years, if not for the handshake. The City would then be able to hire new employees at lower salaries and benefits. It would be a win-win situation.

    • Great idea. Take out those with the most experience and knowledge of City operations, and importantly have experienced past mistakes of short term Council and City Managers to assist in not repeating. Ooops! No need, many of the best are already leaving this weed patch to the surrounding greener pastures. And the win-win? What percentage of competent people go into government employ primarily due to retirement security? You obviously have no idea. In my professional field, the draw to public work in unfortunately infinitesimal.

  3. Council member? So you’re saying that the public in San Jose sees its government employees, some perhaps with slightly better earnings than they have, and say, no, now not me, not my pay it shouldn’t be better… but those people serving our public are receive way too much?

    For me not seeing that government employee remuneration highlights the inadequacy of their own salaries and benefits will always seem strange to me.

    And the Mercury News comparisons of “the nation’s crumbling Social Security system” that is a myth.

    Social Security is one of the most solvent government program, with a surplus of $3 trillion and solvent for another 30 years. The Mercury News needs to get out the social security statistics and read them.

%d bloggers like this: