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Friday, July 01, 2005 | A trio of retired city employees has filed a lawsuit against the actuary of the city’s embattled pension system, claiming he allowed the pension board to enter into a funding plan that jeopardized the soundness of the multi-billion dollar system.
The suit, brought against Gabriel, Roeder, Smith & Company and lead pension actuary Rick Roeder, alleges that Roeder failed to properly warn of the consequences of a 2002 funding plan entered into between the city and the San Diego City Employees’ Retirement System.
As of Thursday evening, Roeder hadn’t yet been served with the complaint. However, he called the allegation “totally untrue.”
“I feel like we did a good job,” Roeder said.
The funding plan, known as Manager’s Proposal 2, has drawn increasing attention since its quiet inception three years ago as the pension deficit has expanded to at least $1.37 billion. The deal also stands at the heart of federal and local investigations into city finances and politics.
The city’s annual payments toward the deficit threaten to crowd city budgets for years.
In May, the District Attorney’s Office charged six former and current pension board members with felony conflict-of-interest charges, alleging that the trustees personally benefited from their approval of the plan.
Earlier this month, the outside audit committee putting together investigations into city financial practices recommended that the pension board release Roeder in favor of a new actuary. In a letter, the committee expressed concerns that Roeder’s financial forecasting methods and lack of independence “appear to have contributed to the problems facing” the pension system today.
Plaintiffs’ attorney Michael Conger said Roeder also worked to hide the depth of the pension problem through a 2002 letter to the editor in The San Diego Union-Tribune and in pension system documents.
“He worked overtime to conceal the size of the pension system’s deficit from the public,” said Conger, who has filed a number of lawsuits against the system in recent years.
Roeder has repeatedly said that his warnings were sufficient. He is only an advisor and cannot force the board to make a decision, he said.
Manager’s Proposal 2 allowed the city to forgo a lump-sum payment of tens of millions of dollars into its pension system in exchange for increased benefits for union workers. The pension board, which was dominated at the time by union representatives and city management, approved the deal.
The suit seeks unspecified damages.
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