San Diego Considers Proposal to Create Reserve Account for Pension Payments

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The San Diego City Council on Monday is considering a proposal, made by the Mayor’s office, which would establish a $20 million reserve account for use when the city’s pension payments are higher than expected.

From KPBS:

The mayor’s office has proposed establishing a pension payment stabilization reserve account, equal to 8 percent of the average of the last three years of city contributions to the San Diego City Employees Retirement System. That would equate to about $20.8 million.

Several members of the City Council, however, have balked about tying up the money for one use. Councilman Todd Gloria proposes to increase a general fund reserve account instead.

Most of the city’s contribution to the pension system comes from the general fund, which pays for basic services like public safety and libraries.

The amount the city pays into SDCERS in a given year depends on a variety of factors, including the performance of the pension system’s investment portfolio and the discount rate — a determination of expected risk- free future returns.

The SDCERS board recently lowered its discount rate, so the city will have to pay more into the system in the next fiscal year than was originally expected, leaving less money available for city services.

The city’s average pension payment over the last three years has been about $260 million.

 

Photo by 401kcalculator.org

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