SACRAMENTO (CBS / AP) — Moody’s is calling California’s pension reform plan a positive development for the state and local governments.

The ratings agency said Monday that the bill helps the credit outlook for California and local governments, many of which participate in state plans.

Lawmakers approved a pension reform bill last month that significantly reduces retirement benefits for new workers.

Moody’s said cities and counties will save the most because employees will have to start paying half their retirement costs.

The California Public Employees’ Retirement System estimates the fund will save between $42 billion and $55 billion over 30 years. The California State Teachers’ Retirement System pegged its savings at $22.7 billion over 30 years.

Moody’s assigns California an A1 rating, which is the second lowest in the nation ahead of Illinois.

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