The mayor's plan would raise the minimum retirement age from 55 to 62 - a concession to the City Council that protested his original proposal of 65.
Pensions would be capped at 75 percent of workers' average salary for the last three years of employment and cost-of-living adjustments would be reduced from 3 to 2 percent.
And, for the first time, workers would have to contribute 2 percent of their pay to cover health-care costs. The contribution would be even greater if the worker wanted to continue health benefits for a spouse after retirement, something the city provides free to current employees.
The city now pays $300 million annually of its $7.01 billion budget for civilian pensions, an amount expected to grow to $769 million by 2015, officials say. About 400 city employees retire in an average year,
when the city does not have early retirement incentives in place.
"If we continue down this road, we expect our civilian pension costs to be one-third of the general fund budget by then," City Administrative Officer Miguel Santana said.
The proposal would apply only to new hires, not current employees because federal and state law prohibit changes to pension benefits of current workers.
If the proposal is adopted by the City Council - voter approval is not required - Villaraigosa said the city would save $1.5 billion over the next 20 years.
"This is not something that will benefit us immediately, but 10 years from now the people standing in this room will not have to deal with the same problems we are facing now," Villaraigosa said.
Santana said the city's actuary also looked at switching to a defined contribution system, similar to a 401(k), but it was calculated to cost the city even more. The city would lose contributions from new employees that would help pay the benefits of retirees, while the city would also have to make contributions into the Social Security system for workers who aren't in the pension system.
The mayor said he is open to further negotiation on any of the specific points, but they must be financially sustainable.
Victor Gordo of the Coalition of City Unions said he believed there are elements of the proposal which can be accepted, but they want to further review them.
"We believe there is room for negotiation," Gordo said. "We think we can reach the mayor's goal, but have less impact on the real lives of city workers."
Councilman Bernard Parks, who chairs the council's Budget and Finance Committee, said the proposal should not come as a surprise to the unions.
"Basically, this is something we have been talking about for the past year," Parks said. "I think the mayor believes it is time to move ahead."
Parks said he wants the proposal to take effect as soon as possible.
"This is not something that will help us next year, but the sooner we put it in place, the sooner we get benefits from it."
Villaraigosa's proposal picked up support from the Los Angeles Area Chamber of Commerce.
Chamber President Gary Toebben called the mayor's proposal "fair to employees and fair to taxpayers."
"We would like to see a higher retirement age of 65," Toebben said, "because we can see an employee at age 62 drawing $50,000 a year for three years and that's $150,000 the city shouldn't have to pay." | 
