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Administration July 7, 2005
San Diego Retirees Sue Plan Actuary
July 7, 2005 (PLANSPONSOR.com) - The actuary for the
scandal-plagued San Diego City Employee Retirement System
(SDCERS) has been slapped with a participant lawsuit,
alleging that the firm covered up the fact that a proposed
funding plan would lead to a severe plan deficit.
Reported by Fred Schneyer
The three retiree plaintiffs claimed in their California Superior Court lawsuit against Gabriel, Roeder, Smith & Company (GRS) that the firm improperly concealed the effect of the city’s proposed funding plan and was negligent in providing its actuarial services to the plan, according to a BNA report.
In a Web site statement posted in response to earlier similar allegations, the firm asserted that it has been “critical” of the 2002 funding proposal, both publicly and in print and that its advice has been confirmed by two actuaries of national stature. “Actuaries are advisors, and our clients do not have to take our advice, any more than a patient must take the advice of his or her physician…It is regrettable, but not the fault of [the firm] that the City and the Pension Board took the actions that they did,” the firm said in the statement (See SD Actuary Fights Back on Ouster Attempt ).
The company continued: “GRS has always supported financing plans which involve current taxpayers paying for current benefit levels. We do not support financing plans that defer unreasonable funding levels to future generations of taxpayers. This viewpoint has been reflected in our past work with SDCERS, and with all of our clients, and will continue to be reflected in the future.”
In November 2002, Manager’s Proposal II (MPII) was presented to the SDCERS board of trustees and city council. Outside auditors, mayoral candidates, and the city attorney have since said the plan’s approval contributed to a $1.4 billion shortfall in the pension system.
Six present and former members of the SDCERS board have been charged by the district attorney with violating state conflict-of-interest laws in voting to approve MPII, and federal authorities are investigating as well (See San Diego DA Kicks Off Pension Probe ).
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