San Diego Pension Board Sues For Control Over Pay Raises

The San Diego County Employees Retirement Association (SDCERA) is suing the county for full control over how much it pays its employees. Currently, the salaries of pension fund employees are capped by local government regulations. Reported by the San Diego Union-Tribune:

The seven-page lawsuit asks a judge to award sole discretion for compensation to the Board of Retirement, a nine-member group of current and former county employees and public officials. That duty now rests with the five elected members of the Board of Supervisors.

“The Board of Retirement cannot effectively administer the system and perform its fiduciary duties without this authority,” the complaint states.

Under county regulations, pension-fund employees are subject to a salary ordinance that limits what every position in county government may pay.

The pension fund has in the past publicly complained that salary limitations make it hard to hire and retain top talent. From the San Diego Union-Tribune:

Several times in recent years, the county refused to approve raises or bonuses to pension CEO Brian White, who is at the top of his salary range. White earned just over $250,000 in base pay and $125,000 in benefits last year.

If the pension board prevails in court, trustees would be free to pay their 80 or so employees whatever the retirement board thinks is fair.

[…]

The county salary cap was a problem for trustees when they sought to replace former chief investment officer David Deutsch in 2009.

After months of searching, they offered the position to Lee Partridge, who was then a top investment officer at the Teachers Retirement System of Texas.

Partridge turned down the job, in part due to salary limitations. He was subsequently hired as a consultant earning about $1.4 million a year. Deutsch was paid $209,000 annually.

The SDCERA made headlines this summer for it’s risk-heavy investment strategy, which involves heavy use of leverage and derivatives.