Retirees in the City of San Diego pension system received annual bonuses totaling $7.3 million in November. This is a new record for the 43-year-old holiday program, which has awarded more than $150 million this year.
Critics say the city’s pension system, which faces more than $3 billion in debt, should invest the bonuses in reducing debt rather than handing them out to eligible retirees.
The amount each retiree could receive was capped in 2004 after the city’s pension scandal earned the city the nickname Enron-by-the-Sea.
The pension scheme also disqualified workers who started working after 2005, but workers who started working before that were not disqualified because the bonus was a vested right.
Despite the cap and the 2005 rule, the program’s total payments continue to increase each year. And if you add up all the payments since 1980, the total is more than $150 million.
That’s because the annual payment amount is based on a formula that compares the pension plan’s operating income with the pension plan’s operating costs each year.
If the difference between these two amounts is large enough, an annual payment will occur. The payment amount will then be determined depending on the size of the difference.
For the year ended June, system investment income was $473.2 million and operating costs were $203.8 million, a difference of $269.4 million.
Bonuses have been paid every year since 1984, except in 2003, 2009 and 2012. Bonuses were initially conceived as an antidote to the rampant inflation of his late 1970s, which was eroding the value of retiree benefits.
The $7.3 million total payout also includes retirees who worked for the San Diego Unified Port District and Airport Authority, because their pensions are handled by the city’s system.
It also includes payments to surviving spouses of late retirees and future bonuses to be paid to participants in the city’s deferred retirement option plan. For her DROP members who continue to work for up to five years after officially retiring, their retirement benefits are deposited into their retirement account and collected after retirement.
Even though the total amount paid has increased over the years, the average amount of individual bonus payments for retirees currently receiving a pension has decreased slightly in recent years as it is distributed among more people.
The average individual payment for retirees currently receiving a pension fell from $716 in November 2021 to $713 in November 2022 and $710 last month.
The maximum amount this year for retirees currently receiving a pension is $1,619, down from $1,763 in 2021 and 2022. The minimum amount has been just over $13 in each of the past three years.
The number of retirees receiving pension benefits rose from 8,221 in 2021 to 8,470 in 2022 to 8,572 this year, according to Susan St. John, deputy general counsel for the pension system. did.
This bonus is included in the monthly checks that retirees receive in November, but some critics have called it a “13th It is called a “cheque”.
The 2004 cap limits bonuses to $30 for each year of service for employees who retire after June 30, 1985. If such an employee worked for the city for her 30 years, she could not receive a bonus of more than $900.
For workers who retire early, the cap is $75 per year of service.
The city’s efforts to impose the cap led to litigation and ultimately a $10 million settlement with affected workers.
For retirees who worked at ports and airports, the dates on which the $30 cap applies are different. Port October 2005, Airport October 2006.
Jessica Taylor, a spokeswoman for the pension system, noted that the average annual pension benefit for the system in the fiscal year that ended in June was about $60,000.