CITY PENSION AMONG TOP SYSTEMS

Analysis ranks San Diego with nation’s 175 largest retirement programs

A new analysis shows the city of San Diego’s pension system is in strong financial shape compared to similar systems across the state and the nation.

While the city’s pension debt is nearly $3 billion, most pension systems face similar gaps between their investment assets and longterm projections of what they will owe employees when those employees eventually retire.

The comparative analysis, which was presented to the city’s pension board Friday, shows that San Diego has been in the top half of the nation’s largest 175 pension systems for “funded ratio” every year since 2013.

And the city’s ratio, which just climbed from 70.2 percent to 74.3 percent thanks to the robust stock market, has been in the top quarter of those national pension systems several times in recent years.

The city’s pension system, formally known as the San Diego City Employees Retirement System, also has among the most conservative policies regarding projections of long-term investment returns.

That puts the city in a solid position, because experts say overestimating how well a pension system’s investments will perform is one of the most dangerous moves a pension system can make.

A crucial part of the city’s longterm payoff plan is significant growth in the value of investments made by the city’s pension system. The pension system gets the money to make those investments from city workers, who must contribute toward the cost of their pensions, and from city taxpayers.

The greater the return on those pension system investments, the less money from workers and taxpayers the city needs to spend long term to cover pension payments made to retired employees.

San Diego’s projected rate of long-term investment growth is 6.5 percent, which is at the very low end of the group of 175 pension systems.

Gene Kalwarski, the city’s actuary, said that “only a handful” of pension systems have a lower rate than San Diego in the group of 175, which was compiled by the National Association of State Retirement Administrators and the Center for Retirement Research at Boston College.

San Diego fares even better