San Diego's Pension Position

By Ryan Huckabone

Offer new city employees a 401k-style retirement program rather than the pension program currently offered.

Currently, the City of San Diego offers its employees a benefits package which includes a defined-benefit retirement program otherwise known as a pension (Pension: http://www.investorwords.com/1374/defined_benefit_plan.html).

Pension programs vary in type, but the program currently offered to San Diego City employees is one in which the employee and employer both contribute to the retirement fund during the employee's working career. (San Diego City Employees Retirement System: https://www.sdcers.org/Pages/default.aspx ). Once the employee retires, he/she is guaranteed a monthly payment for a specific amount from the City for the rest of his/her life. If their retirement investments do not grow enough to cover the monthly payments until the pensioner's death, the City of San Diego must come up with the difference each month out of its general fund. Rather than utilizing this money for replacing water lines or sewer pipes or for resurfacing cracked streets, the City must honor its commitment to send all of its retired employees a monthly check for the rest of their lives.

The problem with this type of retirement program is that the risk falls entirely on the employer, in this case the City of San Diego.

Of the 10 largest employers in the City of San Diego, 6 are government-funded, 3 are healthcare companies and 1 is a high-tech company, Qualcomm. (Largest Employers in the City of San Diego: http://sourcebook.sddt.com/Source/companies.cfm?BusinessCategory_ID=140 )

Unlike the City, most private sector companies, like Qualcomm, offer their employees a 401K-style retirement savings program.

I propose the City of San Diego set a date, for example the end of fiscal year 2010, at which point it will no longer offer a defined-benefit pension to any new employees and will instead offer the same retirement benefits program as offered by our city's largest private-sector employers. I have saved the link to two such employers for your review. Sharp Healthcare Benefits: http://www.sharp.com/jobs/benefits-working-sharp.cfm

Qualcomm Benefits: http://www.qualcomm.com/careers/pro/us_sd/benefits.html

Because current City employees and retirees have been guaranteed a defined-benefit package, the City must honor those contracts and continue to make those monthly payments. However, by implementing my proposal, the City will then be on a course in which the day will come when the last guaranteed defined-benefit payment will be made by the municipal corporation known as the City of San Diego.