Del Mar Pension Reform: Q&A with Pension Subcommittee Chair Jim Eckmann

By Jim Eckmann, Chair, Pension Subcommittee of the Finance Committee, City of Del Mar

1. What kind of retirement system does the City provide for its employees?

The City provides a “defined benefit” plan; this means that at retirement age the employee receives a specified percentage of the full-time pay received at the end of his or her career.  The City then contributes each year an amount that hopefully will be sufficient to meet that number.

2. How are the retirement benefits estimated?

Actuaries take into account the age of each employee, salary level, years remaining to retirement age and reduce that number to a present value needed to fund each year.  The City, like dozens of local agencies, is in “retirement pools” managed by the California Public Employees Retirement System, called “CalPERS” and CalPERS does all those calculations.

3. So the idea is to predict benefits several years, or even decades, into the future and fund over time starting when a City employee starts work?


4. Isn’t that difficult, or even risky, to do?

Yes.  The annual contributions are, of course, invested.  So a key variable is what rate of return the annual amounts will earn over time.  Actuaries assume or estimate certain rates of return and if the actual rate of investment return is less than the estimated the retirement funds can fall into “underfunded” quite quickly.

5. Does this type of retirement system exist in the private sector?

The “defined benefit” system has been all but eliminated in the private sector.  A Stanford University research institute says that 7 percent of private employees have “defined benefit” programs as of 2009, down from 62 percent in 1975.

6. What if the calculations are wrong?

Then the retirement funds can be underfunded, and substantially so.  Rarely are they overfunded, though that was true a few years ago when investment returns were much higher.

7. Who checks CalPERS calculations?

There are no monitors or checks.  CalPERS is a separate entity, with a separate governing board of directors.  In 2011 its practices came under scrutiny by The Little Hoover Commission, an nonpartisan state agency and by the Stanford Institute for Economic Policy Research, also nonpartisan.  Their reports were very alarming, not only about the present levels of underfunding but the predicted future funding needs for public employees’ retirements.

8. Is the City’s retirement funding in the hole, or ahead, or right where it should be?

Well, the good news is we have paid each year the contributions calculated by the CalPERS actuaries.  The most recent reports from CalPERS for the fiscal year ended June 30, 2010, states that we are only about 67 percent funded in the three retirement pools of which our employees are members.  In the private sector that would mean a “distressed” condition.

9. How large is the unfunded amount for Del Mar alone?

Only a rough approximation can be made, so the range would be $10 million in the hole right now up to $16 million, depending on the rate of return we assume.

10. Is this unique to Del Mar?

Not at all.  It’s a big issue in San Diego and an election is coming up to change the pension system there.  The 67 percent funding mentioned above is common to CalPERS and to all the pool members of CalPERS.  San Jose laid off about one-fourth of its employees and is still $3 billion underfunded.  And the state employees programs, again depending on the rate of return assumed, is up to $500 billion underfunded, according to the Stanford report.  CalPERS can point to recent higher actual rates of return so the question is “will those high returns last?”

11. What are the next steps?

City staff is working with the Finance Committee and the City Council to investigate options.  Legal issues exist, and the City is party to union agreements which also play into the mix.  The hope is we can find solutions that take into account our employees’ interests as well as the financial health of the City.  There is no quick fix.

Related posts:

  1. Time to look at Del Mar pension reform
  2. Del Mar recognizes rising pension costs, seeks solution
  3. The right pension facts
  4. City of Solana Beach, employees come to terms on wages, pension cuts
  5. Carmel Valley will be helped by pension and retiree healthcare reform, councilman says at workshop

Short URL:

Posted by Staff on May 11, 2012. Filed under Life, Opinion. 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 […]