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San Diego Public Employee Pension System Reform Going to Popular Vote in 2012

The proposal would see traditional pension benefits for all new city hires—excluding police—eliminated in favor of a 401(k)-style retirement plan.

November 9, 2011
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A sweeping reform of San Diego's public employee pension system will be put to a popular vote next year, as supporters have collected enough petition signatures to qualify the legislation for the city's June 2012 ballot.

The proposal, born from an April compromise between Mayor Jerry Sanders and City Councilman Kevin Faulconer, would see traditional pension benefits for all new city hires—excluding police—eliminated in favor of a 401(k)-style retirement plan. Supporters for the reform initiative collected 115,991 valid signatures, according to the San Diego City Clerk's office. City election laws regarding referendum votes require a minimum of 94,346 signatures for ballot qualification.

The law would end what supporters have called "pension spiking"—where pensions can be calculated not only on base salaries, but bonuses, specialty payments and other compensation—by requiring that retirement accounts for new and existing employees accrue solely based on standard salary.

Other changes proposed in the reform initiative include a five-year cap on individual pensionable compensation for city employees, capping pension payouts for police officers at 80% of their highest consecutive 36-month salaries and stripping government employee unions of their veto power on matters relating to pension changes. The proposed law also provides guaranteed death and disability coverage for all public safety employees, including police, firefighters and city lifeguards, and requires the city to post annually online the total pension payout per employee (names will be withheld) denoting their last position held.

Comprehensive Pension Reform for San Diego, an advocacy group pushing the legislation, said the new retirement system could save city taxpayers up to $3 million in the first year, and $2.1 billion in less than 30 years.

With its qualification certified by the city clerk's office on Nov. 9, the initiative passes to the city council for final ballot approval.

Matt Dunning writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

 

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