Pension plans offered to new city employees would be restructured under new proposal

By: North County Times wire services | Tuesday, March 4, 2008 9:24 PM PST ∞

SAN DIEGO - Pension plans offered to new city employees would be restructured under a proposal that could save San Diego $25 million annually, Mayor Jerry Sanders said today.

New hires after Dec. 31 -- except for police and firefighters -- would no longer be eligible to collect pensions that exceed their annual salaries and would have to work longer to collect their annual benefit.

"Put quite simply, our existing retirement system is not sustainable over the long term," Sanders said.

"The existing pension plan is not fair to taxpayers who have had to bear the burden of the benefits it provides and pay for an unfunded liability that has grown because of neglect," he said.

Underfunding has saddled the city's retirement system with a deficit of at least $1 billion.

The city hires about 300 people per year.

"Overall, I think this plan successfully limits the taxpayers future liability and reduces costs," Sanders said.

He said firefighters and police officers would be excluded from the new plan to avoid a "recruitment disadvantage."

The mayor's staff has presented the proposal to three labor unions now in contract talks with the city. Sanders conceded that the unions would not want to give up any benefits.

"Any union would be crazy to want to change anything there is right now," Sanders said. "There is absolutely no reason for them to."

"However, if we want to sustain the city and have money to provide infrastructure into the future, also pay raises, we have got to limit our pension liability and I think this is a very fair system for new city employees," he said. "It doesn't affect current city employees."

If the unions reject the mayor's proposal, the new pension system could be imposed by the City Council.

City Attorney Michael Aguirre commended Sanders for acknowledging that the current plan is unsustainable, but dismissed his proposal as politics.

"This proposal doesn't do a single thing to help the structural deficit," Aguirre said. "Even on a going forward basis it exempts the most expensive part of the equation, which is public safety."

Aguirre has been largely rebuffed by the courts in his attempt to eliminate pension benefits he alleges were granted without sufficient funding.

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