SAN DIEGO -- Mayor Jerry Sanders announced Tuesday that he reached a tentative deal with three city unions for overhauling the pension plan for new hires without having to go to voters.

The City Council had been scheduled to vote Tuesday on approving a November ballot measure.

"One of the immediate benefits of the agreement is it will keep the measure off the ballot in November and avoid threatened costly litigation," Sanders said.

The cost of putting the issue to voters would cost about $300,000, he said. Sanders' plan exempts police and firefighters from changes in their pensions.

Last week, Sanders announced an impasse in negotiations over the pension proposal with the unions and repeated his call to the City Council to put it on the ballot and let voters decide.

The tentative deal announced today would save taxpayers about $23 million by the time it is fully implemented in about 20 years, according to the mayor.

"This compromise helps us achieve the same underlying principles that I always thought were critical," he said.

The 11th-hour deal is a toned-down version of what Sanders had sought and what the unions and council had called for. It creates a hybrid pension plan for newly hired, nonpublic safety employees that combines a conventional retirement system with a 401(k)-type savings component.

Pensions would be based on the highest average pay of employees over three years, rather than his or her highest pay. It also creates a trust for retiree medical costs, caps the amount that can be collected and prohibits workers from retiring before age 55.

Sanders wanted the minimum retirement age to be 60.

"All and all, I think this is a very fair compromise for taxpayers and future city employees," Sanders said.

The mayor was joined outside City Hall by union leaders and members of the City Council to announce the deal.

The agreement now requires ratification by union members and the City Council, something both parties said they expect to happen soon.

Attorney Ann Smith, representing the San Diego Municipal Employees Association, said the union "fully supports" the compromise and will recommend that its members ratify the agreement.

"Finding a solution was simply the product of continued dialogue, trying to listen to one another and block out what is being said publicly or in the media," Smith said.

Joan Raymond, president of the American Federation of State, County and Municipal Employees Local 127, said the union is "pleased" to reach an agreement with the city.

"This agreement continues our ongoing partnership with the city to stabilize our pension fund," Raymond said.

Council President Scott Peters, who helped broker the deal, said the agreement will "respect the role of our city employees in moving our city forward and keep our city competitive and save taxpayers money."

If it's approved, the new pension plan would take effect at the start of the next fiscal year -- July 1, 2009. The City Council is scheduled to vote on the deal next week.