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.