City considers replacing employee pensions with 401(k)-like plans

By Joe Britton
City News Service

Instead of guaranteed pensions, new city employees would be offered more volatile 401(k)-style retirement plans under a ballot measure proposed Friday by San Diego Mayor Jerry Sanders.

The mayor said he and Councilman Kevin Faulconer will begin a signature-gathering effort to get the proposal on the ballot in the next regularly scheduled city election in June 2012.

“As our pension obligations continue to threaten our long-term fiscal stability, it’s clear more must be done,” Sanders said.

“The notion that all public employees should have a richer retirement benefit than the taxpayers they serve, while now also enjoying comparable pay and greater job security, is thoroughly outdated,” he said. “What’s worse, is it is bleeding our resources at a level that is unsustainable.”

The proposed ballot measure would get rid of what are known as defined benefit pensions for new hires, including elected officials, and instead offer them a 401(k)-style plan similar to those in the private sector. Workers would contribute a certain amount to an account and the city would match it.

Many 401(k) contributions are invested in mutual funds or other financial instruments, meaning workers’ retirement funds could rise or fall based on the stock market.

Acknowledging the risk of 401(k) plans, Sanders said his proposal would exempt public safety workers and allow them to keep guaranteed pensions “because I believe we cannot afford to lose top-notch prospective officers and firefighters to other cities.”

The mayor said it was unclear how much the change would reduce San Diego’s $2 billion pension shortfall.

Councilman Carl DeMaio, who recently released his own plan to deal with San Diego’s budget crisis, said the mayor’s proposal was a step in the right direction, but does not go far enough.

“We need to see comprehensive reform of existing pension obligations,” DeMaio said.

DeMaio said Sanders’ plan does nothing to address the “outrageous and unsustainable” pension benefits existing city employees are set to receive when they retire.

Lorena Gonzalez, head of the San Diego Labor Council, blasted the plan.

“Mayor Sanders knows that San Diego city workers don’t receive Social Security because of a decision years ago by the city to stop paying into it,” Gonzalez said. “Now, he wants new hires to only have Wall Street-dependent 401(k)s upon their retirement.”

“What is a retiree to do when the market crashes and seniors lose nearly all value of that 401(k), without the safety net of Social Security?” she asked. “I guess Mayor Sanders would simply let them live on cat food.”

The Labor Council said it delivered a can of cat food to the mayor’s office Friday.

Sanders said his office is “exploring” the Social Security issue.

Sanders’ proposal comes only weeks after San Diego voters overwhelmingly rejected Proposition D, which would have raised the city’s sales tax by a half-cent.

The mayor pledged to move ahead with the 10 fiscal and pension reforms outlined in Proposition D, including implementing the managed competition outsourcing program and selling the Miramar Landfill.

Sanders also outlined steps he plans to take to help close San Diego’s projected $73 million budget shortfall in the coming fiscal year, including further streamlining city government, eliminating free trash collection for homes on private streets, pursuing franchising opportunities at golf courses and airports and eliminating non-critical operations, such as community plan updates.

Related posts:

  1. SD City Council considers cost saving options
  2. Judge rejects SD City Employees’ Retirement System lawsuit
  3. Sanders predicts $179M budget deficit next year
  4. City OKs 200 layoffs, cuts winter lifeguards at Torrey Pines
  5. Mayor proposes pay cuts, higher fees

Short URL:

Posted by Halie Johnson on Nov 19, 2010. Filed under Carmel Valley, News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

Leave a Reply



Bottom Buttons 1

Bottom Buttons 2

Bottom Buttons 3

Bottom Buttons 4

Bottom Buttons 5

Bottom Buttons 6



  • La Jolla Library welcomes new chief Shaun Briley
    For La Jolla Riford Library’s new head librarian, Shaun Briley, books have been a part of his life and career, in some form or another, every step of the way. […]
  • Tangerine trees, marmalade skies for Beatles-inspired Patrons of the Prado gala in Balboa Park, San Diego
    “Lucy in the Sky with Diamonds” was the theme of the Patrons of the Prado gala on July 12, 2014 in Balboa Park, San Diego. Beatles-inspired music came from Wayne Foster Entertainment. Sandy Redman and Jeanne Jones served as event chairs. 2014’s beneficiaries are the Reuben H. Fleet Science Center, San Diego Museum of Art and The Old Globe Theatre. […]
  • La Jolla’s Best Bets for events July 31- Aug. 7
    Museum of Photographic Arts (MOPA) offers a crash course in starting a photography collection 6 p.m. Thursday Aug. 7. at the Ligne Roset Showroom, 7726 Girard Ave. MOPA assistant curator Chantel Paul and director of jdc Fine Art Jennifer DeCarlo will share professional insights. […]




  • It’s no stretch for Rancho Santa Fe yoga instructor to ‘give back’
    As one of North County’s most prolific yoga instructors, Stacy McCarthy doesn’t just teach yoga, she lives the yoga lifestyle. Selfless service, or seva in Sanskrit, is an important concept of yoga — one that the Rancho Santa Fe resident practices daily. “When we give and we give from the heart, there’s nothing more gratifying than that,” McCarthy said. […]
  • Rancho Santa Fe resident’s Gen 7 wines earn top honors
    Rancho Santa Fe resident Tim Bacino’s Gen 7 Wines is on a hot streak, his varietals winning several awards this summer in California wine competitions. […]
  • Torrey Pines High School baseball alum Taylor Murphy excelling in pro ball
    It was during a breakout senior year at Torrey Pines High that Taylor Murphy first popped up on the radar of professional scouts. Shortly after graduation, Murphy was selected by the San Diego Padres in the 40th round of the June 2011 amateur draft. He declined, honoring a commitment to the University of the Pacific. Three years later, Murphy got another sho […]