Legal challenges continue to pose problems for municipalities seeking to cut their pension obligations in California, according to Fitch Ratings, but a voter initiative could present a bigger challenge to unions and retirees.

Fitch said that a recent legal settlement in San Jose resulted in most pension reforms being restricted to new hires instead of being imposed on existing employees and retirees, after the city reached an agreement with police and firefighter unions.

A measure approved earlier by voters that was kicked down the road last year for an additional year may not have borne much fruit as yet, thanks to agreements to delay or even eliminate certain of its provisions, but Fitch says that a new initiative could fare better and provide a means for local governments to change pension agreements.