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Menlo Park approves changes to city employee pension benefit

by Barbara Wood

Taking the final action needed to put the pension reform initiative approved by voters in November 2011 into action, the Menlo Park City Council on Jan. 10 voted to amend its contract with the California Public Employees Retirement System (CalPERS) to change the retirement age and maximum pension for new city employees.

The contract changes will not affect current city employees.

With almost no discussion, council members unanimously approved the amended contract with CalPERS, which will go into effect in 30 days. The council had previously approved new contracts reflecting the changes with all the unions representing city workers.

The 2010 initiative, known as Measure L, increased the minimum retirement age for new city employees, except for police officers, from 55 to 60.

The measure also called for changing the way the amount of annual pension is figured. Currently, employees are awarded 2.7 percent of their highest year's salary for each year worked. The new terms will give newly hired city workers 2 percent of the average of their highest three year's salary for each year worked.

Police officers' minimum retirement age will be raised from 50 to 55 with 3 percent of the average of their highest three year's salary per year worked.

Under this measure, a new non-police hire who retired at age 60 after working for the city for 30 years would receive 60 percent of that average salary. Current 30-year employees can retire at age 55 and get 81 percent of their highest year's salary.

The city will not see the first savings from the change for several years, according to a report prepared for the council by Glen Kramer, the city's interim personnel director.

Eventually, as employees covered by the more generous pension plan retire and new employees are hired, the changes should save $590,000 per year at current payment rates, Mr. Kramer reported, but only after 25 to 30 years.