Former Mayor Richard Riordan's plan to dramatically revise the city's three pension systems was developed without an actuarial study that would determine the costs of any new system.
Before any changes can be put in place, the City Charter requires "that all pension changes have an independent actuarial analysis," City Administrative Officer Miguel Santana said. "We did one for the new sworn and civilian tiers."
But because Riordan is attempting to change the pension system through an initiative, the requirements are less stringent, Santana said.
"This (actuarial) requirement does not apply to initiatives sponsored by members of the community," Santana said. "My office will issue an independent analysis should the item qualify for the ballot."
An actuarial study determines both the annual and long-term costs of any pension plan to help ensure its solvency.
In an interview, Riordan said an actuarial study is being conducted now.
"I didn't feel we needed one because we were basing our proposal on existing city studies," Riordan said. "This is just a political charge. Everyone who has studied the pensions agrees it will soon have all the city money going for pensions and no services."
Tyler Izen, president of the Los Angeles Police Protective League, which has already begun campaigning against the proposal, questioned if Riordan was trying to hide the costs.
"I don't know how you can propose something you purport to be cost effective without an actuarial study to back it up," Izen said. "We have seen similar proposals studied in nine other cities, including the city of New York, and all decided the changes were too expensive."
Riordan has proposed increasing the contributions from existing workers to pay for the current system while all new employees would be transferred either to Social Security or a defined-contribution plan, such as a 401(k)-style system.
"We think he knows what the study would show and we think he's just trying to push this to force the city into bankruptcy," Izen said.
Alex Rubalcava, a financial adviser working with Riordan who helped develop the proposal now in circulation, said the committee is in the process of hiring an actuary to review the proposal. They intend to have the report prepared before the election.
"We know this will be effective in saving money," Rubalcava said. "It has been proven in other (public) pension programs to generate savings."
Rubalcava and campaign spokesman John Schwada said the intent of the measure is to reduce city costs and to prevent bankruptcy from happening.
"We want to make sure the existing employees will be able to get their pensions," Schwada said. "And we're trying to reduce the city costs to make sure it can continue to provide services to the public."
