Written by: Just Wondering
Yesterday I came across this piece in the San Diego Business Journal. It points out the pros and cons on bankruptcy. According to SD City Attorney, Jan Goldsmith,
"Pension Contracts Can’t Be Broken... The law covering municipal bankruptcy differs from those covering individual and businesses bankruptcy, and does not permit breaking existing contracts that cover pension benefits to individuals granted in the past."
Case in point, times two... The Orange County bankruptcy, pension payments were not altered. In the closely watched case of the City of Vallejo, the city approved cuts to certain retiree health benefits but didn’t touch pension payments.
While San Diego does not appear to be interested in bankruptcy it is already attacking your benefits with an aggressive offensive attack on two fronts.
First with its newest theory: "Substantially Equal" a term, according to Gene Kalwarski, SDCERS Actuary from Cheiron, it is completely unique in his 30+ years of performing actuarial services to public pension plans.
Under this theory, which has already garnered substantial support, employees may be required to shoulder a substantially equal portion of SDCERS investment losses as well as other costs. Actuarial projections show this could mean a contribution of one (1) to five (5) percent MORE of your paycheck. No one really knows how it works, even Cheiron is baffled.
On the other hand no one is talking about years when SDCERS makes or has made MORE in investment returns than the actuarial assumptions. Just Wondering why?
Is the Sky Falling
The investment returns according to the SDCERS Comprehensive Annual Financial Reports or CAFRs for each fiscal year ending June 30th
2000 = 9.53%
2001 = 14.93%
2002 = -0.45%
2003 = -2.48%
2004 = 20.21%
2005 = 10.80%
2006 = 12.70%
2007 = 16.50%
2008 = -4.66%
2009 =-19.20%
According to the CAFRs over the last ten years SDCERS investment returns are still growing. Even with financial meltdown, worldwide, SDCERS is in the top 2% of public pension funds with its investment returns. In six out of the last ten years, the system OUT PERFORMED, that's right OUT PERFORMED the actuarial assumption of either 8 or 7.75 percent.
So when do start discussing the sharing and the reduction in employee contributions in a "Substantially Equal" way?
Second: For the second year in-a- row, the City, under Mayor Sanders' has proposed freezing cost-of-living increases in retiree health care. He claims it's to help close another budget shortfall. This tactic has little if any affect on you NOW. It certainly under everyone's radar but it is very insidious, in fact so insidious Sanders has reached a new sleazy low.
By the time you realize it will have a huge effect on your future, you won't have a voice OR a seat at the table.
Paid retiree health care is and was a negotiated and promised benefit for all but the newest of City employees. It was promised by then Mayor Pete Wilson and City Manager Ray Blair. It was a quid pro quo for the employees to support the City's desire to exit the federal government's Social Security and Medicare programs. Oh and by the way, it saved the City of San Diego MILLIONS of DOLLARS in matching contributions over the years.
But today, nearly 30 years later, by freezing the "COLA" adjustment for Retiree Health Care, Mayor Sanders is SHIFTING the burden to pay for your retirement health care TO YOU.
If the trend in rising health care costs continues, and there is no indication it won't, the cost of your retiree health care will come close to wiping out your pension during your lifetime. If that isn't something to get your attention I don't know what will.
