Thursday, July 10, 2008 | One very important factor keeps getting overlooked in the discussion concerning reforming the City employees’ retirement plan: SAN DIEGO CITY EMPLOYEES DO NOT RECEIVE SOCIAL SECURITY BENEFITS. I wish more reporters would take note of this because it would be helpful to factor that in when comparing City employee benefits to those being received in the private sector as well as through other public entities.

Under the current system, this lack of Social Security is made up for by a defined contribution approximately equal to the 12.4% Social Security contribution provided by every other employer in San Diego (6.2% from the employer and 6.2% from the employee). Under the proposed reform, this contribution goes away and is replaced with an almost inconsequential 2.5% which is again split equally between employer and employee.

This means that a City employee is almost entirely dependent on the defined benefit portion of the retirement plan. And for workers who will spend their entire career with the City, this is still a good plan. The ones getting shafted are those workers who spend less than ten years working for the City and therefore are not vested. This would include almost every future elected official, their staff and the majority of future employees who like most in this generation tend not to make a career out of any one job. These individuals would have virtually no retirement benefit from the City.

Worse, they would have spent up to nine years of their careers not accumulating any credits toward Social Security. Even if they do eventually accumulate the 40 credits necessary to receive Social Security, their benefit will be significantly less than had they worked anywhere other than the City of San Diego.

Why would anyone give up four or eight years of potential retirement savings to run for office, work for an elected official or even just take a job at the City?

The pension system needs reform. Unfortunately what is being proposed is an overreaction that will cause more problems than it solves.

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