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Pension Reform

It is not news to most San Diegans that City officials decided in 1996, and again in 2002, to increase pension benefits for City employees while at the same time underfunding the City's pension system. This is an issue that has been widely reported on over the past 15 years.

Since the whistle was blown on San Diego's pension problem in 2003, the City has enacted numerous changes to the pension system to prevent inflated pensions in the future. Our legal challenges to inflated pensions continue, even though in the past courts have largely rejected our attempts to roll-back pensions that are deemed "vested benefits" (PDF) granted by previous City officials.

Councilmember Lightner agrees that work remains to be done to reform our pension system, and she is committed to reform.

Since Councilmember Lightner took office, the City has completed the following pension reforms:

  • A new pension plan which went into effect for most City employees in FY2009. This will save $500,000 in pension costs in FY2011, with long term annual savings estimated to be $17 million in 2030 and $28 million in 2040.
  • Elimination of the employee pension pickup for the pensions of elected and non-unionized City employees.
  • A reduction in DROP interest rate saved $1.4 million in this year's ARC pension payment.
  • A Citywide salary freeze saved $8.6 million in this year's ARC pension payment.

There are other pension reforms that are in progress and continue to move forward, including the DROP neutrality study. However, it should be noted that many of these reforms could be subject to lengthy delays due to the need for IRS approval, meet and confer requirements, and the likelihood of litigation. The City is currently in litigation over pension issues which could take years to resolve.