Signature gathering began last week for an initiative to switch new hires of California’s largest city from pensions to a 401(k)-style plan, a change begun in the second largest city, San Diego, after voters approved a similar initiative in June.
Former Los Angeles Mayor Richard Riordan, who has warned the city is sliding toward bankruptcy, is pushing the initiative. He does not think costs will be controlled by the recent approval of lower pensions for most new hires, except police and firefighters.
Many private-sector employers have switched to 401(k) individual investment plans: a fixed annual payment that avoids long-term pension debt. But investment risk is shifted to employees, critics say, and a 401(k) often provides an inadequate retirement.
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