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Local Pension Pressure
UT Reduction in retirees' benefits proposed
New hires into county's pension plan targeted
Pension benefits can be reduced only for new hires.
San Diego County Supervisor Chairwoman Dianne Jacob is leading the push for changes in the benefits structure. Jacob said the current benefits are “not sustainable” in today's economic climate.
“It's gotten out of whack,” Jacob said. “It's gotten out of hand, and it needs to be adjusted. This board is stepping up to . . . move forward with some tough decisions that are going to be very unpopular.”
The benefits Jacob speaks of are the ones she and her fellow supervisors approved in 2002 for all county employees, including themselves. The county can't change those promised benefits for 35,000 current and former employees, but it can for new employees.
“Based on what the board knew in 2002, it was a good decision,” Jacob said. “Based on what we know today, it is not.”
UT Hemorrhaging: Pension debt to hamper San Diego for generations
Mayor Sanders and the City Council are now grappling with how to close a $54 million deficit for the fiscal year that begins on July 1. But they also have an obligation to look beyond the present and address the looming tidal wave of pension debt before it swamps San Diego in insolvency. The urgent need for fundamental pension reforms – not mere tinkering at the margins – has never been greater. Among the actions that must be taken now:
Indefinite pay freeze. One of the quickest ways to slash the pension debt is to hold the line on raises for all city workers, including those in the costly police and fire departments. The pension projections assume salary hikes of 4.5 percent a year. Because retirement benefits are tied to salary levels, a multiyear pay freeze would slash the retirement fund debt by hundreds of millions of dollars.
Suspension of yearly cost-of-living hikes for retirees. Temporarily halting the automatic 2 percent annual boost provided to retirees would also yield significant savings. Once the city has regained its fiscal health, the COLA can be renewed as conditions merit.
Elimination of the Supplemental Pension and Savings Plan. This additional retirement benefit, granted on top of the exceedingly generous regular pension plan, is a costly perk that should be eliminated. Doing so would save taxpayers up to $24 million a year.
Elimination of the employee retirement “pick-up.” The city charter provides that the costs of the pension system should be shared on a 50-50 basis between workers and taxpayers. But under labor contracts negotiated in recent years, the city has agreed to pick up a big chunk of the employees half. Returning to an equitable 50-50 split would save $16 million a year.
Elimination of DROP. Ending this double-dipping retirement perk, which is outrageous under any circumstances, would yield savings of $22.5 million a year.
See Also: Encinitas Pension Boost of 2005