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OCTA changes pension plan

Posted on April 23, 2013

Employees of the Orange County Transportation Authority (OCTA) will pay their full share of pension costs under a plan approved by the agency’s board of directors.

OCTA has been paying an average of 8% for each administrative employee’s share of their pension costs. OCTA’s 1,100 union-represented coach operators, maintenance workers, facilities technicians and parts clerks already contributed 100% of the employee share.

OCTA’s administrative employees serve at-will and are not members of a union. There are no automatic step increases, promotions or cost of living adjustments and OCTA does not pay for employee medical care after retirement.

Beginning Jan. 1, 2014, administrative employees will contribute an average of 2% of their salaries to their pensions. That contribution will increase each year until employees are paying 100% of their employee share by Jan. 1, 2017.

The plan will result in an $8.2 million savings to taxpayers over the three-year period. During the next 20 years, employees paying their own pension shares are expected to result in a savings of $85 million.
OCTA employees belong to the Orange County Employees Retirement System and the overwhelming majority – 96% – have a retirement formula of 1.67% at the age of 57.5. This is one of the lowest pension formulas in the state.

“This agency operates entirely with a business mindset,” said CEO Darrell Johnson. “Each one of our decisions is guided by public policy that continuously asks the basic question, ‘Does this make financial sense for our future?’”

OCTA has a merit-based pay-for-performance model much like the private sector where employees only receive raises if they achieve clearly defined goals and objectives. In response to the Great Recession, from mid-2009 through 2012 OCTA administrative employees received no merit-based pay raises.

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