After months of talk, someone officially proposed an alternative to a high-profile pension reform initiative that will face city voters in June.
City Councilman David Alvarez’s plan does just about everything the pension initiative does except it doesn’t give new employees 401(k) plans. Instead, Alvarez preserved pensions and replaced the 401(k) portion of the measure with a $99,999 pension cap for new employees.
The switch allows Alvarez to make a significant claim about his measure’s benefits: It will save more money. Changing to a 401(k) system for most new hires will cost the city $94 million in the first six years, the city retirement system estimated last spring. To address those costs, backers of the initiative proposed a five-year salary freeze on city employees. Supporters say the measure will save more than $1 billion over the next three decades.