Your solidarity and persistence forced the City to pay the sixth months of back pay that PEPRA workers were owed, plus 10% interest as part of an unprecedented settlement agreement.
The payment applies to Public Employees’ Pension Reform Act (PEPRA) workers who were employed with the City in 2021.
The settlement restores a fundamental part of our 2021 contract the City violated—3 years ago—that reduced exorbitant pension contribution rates required of newer workers.
Retroactive pay and interest as part of grievances are rare and are a testament to our chapter’s growing worker power.
This experience provides important lessons ahead of our June 2024 contract fight and serves as a nagging reminder that the ruling class wants to loot all our retirements regardless of whether we are enrolled in the PEPRA or classic pension.
As a PEPRA Pension Worker in 2021, How Much Money Can I Expect to Receive?
Back of the envelope PEPRA retro pay math: multiply .03 by your 2021 salary. Divide that by 26 pay periods to get the amount per pay period. Then multiply by 10 (pay periods: Aug–Dec). Then multiply by 1.1 to get the 10% interest.
For example, if you made $100,000 in 2021, you can expect to receive $1,269. Payments should be included in paychecks no later than April 19, 2024.
What Is this PEPRA Mess and How Do We Overcome It?
So-called “pension reform” is a vicious form of class warfare. The Public Employees’ Pension Reform Act is an anti-worker statewide law passed by the California legislature and signed by Governor Jerry Brown. It applies to new employees who joined CalPERS after January 1, 2013.
In reality, there are no “unfunded liabilities”; workers earn their pensions through their labor.
With private sector pensions long phased out, the ruling class has preyed upon California public sector pensions to increase worker precarity, desperation, and output at lower cost. Their friends on Wall Street also want municipal workers to join the ranks of private sector workers with private 401(k) retirement plans so they can collect additional fees.
As part of a scheme to devalue and destroy the pension system, so-called PEPRA pension members are required to contribute at least 50% of the total annual normal cost of their pension benefit! Workers in PEPRA are paying much more for their pensions upfront, and the pension is worth less when you retire. You also have to work longer before you can retire comfortably. The ruling class is not done with raiding pensions. There is already feverish talk of PEPRA II and PEPRA III!
How do we get rid of PEPRA? Good question! We need to build solidarity statewide to get rid of this horrible state law. All workers should be able to retire with dignity and security. Anything is possible through organizing!
Why Were Berkeley PEPRA Workers Paying 8% More than Required by State Law (PEPRA) from 2017–2021?
The short answer is because of anti-pension mania and a lack of worker power.
Enter the 2008 financial crisis, which proved to be an opportune time for the boss and their allies to further divide workers and to begin phasing out the pension system. Thus, PEPRA was born in 2013, and all new workers in the state of California were forced to pay for half of their pensions.
But it didn’t end there. Emboldened by the state and anticipating new legislation that would raid classic pensions, the City jumped at the opportunity to cut classic pensions preemptively. In 2017, the City effectively imposed an 8% additional worker contribution toward classic pensions that the City was previously paying. In exchange, classic workers got salary increases of 5.58%. It was known as “the swap.” It was supposed to be cost neutral to workers, but the math was questionable (the City claimed that a 5.58% salary increase was worth the same as an 8% pension contribution).
Even if its cost-neutral claims were true, the City won a propaganda victory that it used to impress anti-pension zealots: “Hey, look, classics are paying for part of their pension now!”
At the same time in 2017, despite workers’ protest that this swap should only apply to classic workers, the City weaponized the concepts of ‘fairness’ and ‘equity’ to apply the same swap with classic workers to PEPRA workers, thus further devaluing PEPRA pensions in exchange for salary increases. As a result, the City also extracted an additional 8% pension contribution from PEPRA members (on top of the 50% they already paid) in exchange for a 5.58% salary increase.
New workers to the City of Berkeley enrolled in PEPRA were unaware of the 2017 “swap” and found themselves facing a surprise 8% surcharge on every paycheck that was not immediately evident in their offer letters (despite the 5.58% salary increase already baked in). This situation quickly became a recruitment and retention nightmare.
The swap also caused unnecessary division and resentment between workers.
Fortunately, this 8% surcharge has been resolved through the 2021 contract in which the City agreed to “ramp down” the surcharge over three years.
However, the City did not do so in good faith. It dragged its feet for as long as it could, stealing money from its employees.
Workers Operating Under Union Chapter’s New “Democracy and Organizing Principles” Pave Path Toward Strong Settlement
When the 2021 contract was signed, City Management thought they could get away with wage theft.
Despite the plain contract language, the City refused to lower in a timely manner the extra amount PEPRA workers paid toward their pension.
Instead of executing the 3% reduction days after the contract was ratified in July 2021, the City waited until April 17, 2022! In doing so, the City twisted “as soon as administratively possible” to mean nine months later without interest.
Nevertheless, the 2021 Contract Action Team and other members insisted on grieving the issue, taking the City to arbitration to expose its decision to delay the “ramp down” of PEPRA pension contributions with 10% interest. More recently, the general membership also approved plans to organize with Local One to demand that City Council expeditiously settle the grievance favorably.
Ahead of this settlement, workers weathered multiple attempts by the City to shortchange and buy off union members without retroactive pay or interest. This resilience was only possible thanks to new organizing principles adopted by the general membership and enforced by the recently elected 2023 officer team. Those principles include the following:
“Workers as a collective whole must democratically vote on questions of chapter-wide significance.”
When it comes to workers winning, they must be in the driver’s seat. Since 2023, every step of the PEPRA arbitration and settlement process has been transparent, open, and subject to a vote of all workers at our monthly special General Membership meetings.
Empowered workers learn to the extent they participate and participate to the extent they learn.
Settlement Built with Enduring Solidarity Between Workers with Different Pensions
The financial aspect of the settlement only pertains to workers who began their service after 2013 (the date that the state passed its anti-union pension reform legislation known as PEPRA). But the City’s settlement highlights the ongoing solidarity between those members who began their service before 2013 (so-called “classic workers”) and those afterwards (so-called “PEPRA workers”).
After all, the PEPRA ramp down was a centerpiece of our 2021 contract. So-called classic and PEPRA workers came together to eliminate the divisive and untenable additional 8% paid toward their pensions to more favorably align with comparable workers in other jurisdictions.
This solidarity did not come cheaply. Our chapter traded at least 1% extra cost-of-living (COLA) adjustment during a period of high inflation to secure the accelerated PEPRA ramp down. However, the ramp down is a source of inspiration for organizing: it eliminated long-simmering divisions, recruitment, and retention issues, and paved the way for unprecedented engagement, excitement, and solidarity ahead of our upcoming June 2024 contract. Standing together, there is no limit to what we can win.