The City of Long Beach and the International Association of Machinists (IAM) announced a hallmark agreement on Wednesday, Jan. 9 to significantly reduce pension costs, enact pension reform and provide future budget relief. The IAM approved the agreement in a vote that concluded Wednesday.
The vote delivers the capstone agreement that completes the City’s three-year effort to reform pensions.
“This has been an arduous process, but we now have reformed public pensions in Long Beach,” Mayor Bob Foster said Wednesday. “Today’s vote means savings of $11.8 million dollars next year and creates a more sustainable system for the future. I thank each of the city employees who voted for these reforms and applaud the IAM leadership for their efforts.”
Ray Rivera, Grand Lodge representative, International Association of Machinists and Aerospace Workers, Western Territory, said he’s very proud of his membership for stepping up to the plate in these difficult economic times. “With a majority of our membership residing in Long Beach, we were pleased to be able to come to an agreement that benefits our members, the city and the community with an estimated savings of more than $125 million through 2023,” he said.
The agreement will result in an ongoing annual savings of approximately $3.8 million in the General Fund and $11.8 million in all funds. Through Fiscal Year 2023, the amendment is projected to save the City an estimated $40.1 million in the General Fund and $125.5 million in all funds, according to the City of Long Beach.
The agreement establishes a new pension tier for IAM employees hired after Jan. 1, 2013, with a benefit formula of 2 percent for each year worked, and eligibility for full retirement at age 62. Retirement compensation would be based on a three-year final average salary. All IAM members would pay their full share of employee retirement costs.
The IAM’s current contract would be extended one year through Sept. 30, 2014, with no additional raises scheduled, and a provision of no further IAM employee layoffs through Sept. 30, 2013.
This agreement will be brought to the City Council in open session shortly, according to a press release issued Wednesday by the City of Long Beach. If formally approved by the City Council, this agreement with the City’s largest labor union would be a significant accomplishment and result in considerable savings for the City, according to the press release.
Source: City of LB
