San Diego Mayor, City Council Compromise on New Hire Pensions

July 29, 2008 ( - The San Diego City Council on Monday affirmed a compromise deal reached between Mayor Jerry Sanders and three municipal unions on a pension plan for new hires.

The San Diego Union Tribune reports that the mayor’s proposal will create a hybrid pension plan for newly hired, non-public safety employees, with a traditional pension-like component and a 401(k)-type component. Pensions will be based on the highest average pay of employees over three years, rather than the worker’s highest pay.

The proposal also creates a trust for retiree medical costs, caps the amount that can be collected, and prohibits workers from retiring before age 55, the newspaper said.

According to Sanders, the deal will save taxpayers about $23 million by the time it is fully implemented in about 20 years. The deal also saves the city money by preventing a November ballot measure threatened earlier by Sanders when his plan was rebuffed (See San Diego City Council Rebuffs Mayor on Pension Reform ).

Ann Smith, attorney for the San Diego Municipal Employees Association, supports the deal but cautioned that it could lead to recruitment and retention problems later. She said it puts San Diego at the bottom when compared to other municipalities’ retirement benefits.