San Diego’s retirement system fell well short of its annual investment goal, according to preliminary figures, potentially adding significant pressure to the next year’s budget.

The San Diego City Employees’ Retirement System earned 0.3 percent on its investments last year, initial data released this week said. The system assumes it will return 7.5 percent on its investments each year.

The investment returns are one of three sources the city uses to pay its pension bills. When returns don’t come in, it needs to come up with the money itself.

While the investment figures aren’t final, city Chief Operating Officer Jay Goldstone said the city’s pension payment will increase.

This is bad news for the city budget and all the promises that mayoral candidates are making about new initiatives.

Current Mayor Jerry Sanders is estimating budget surpluses for the next five years. But Sanders’ figures don’t take into account the city’s full infrastructure deficit, which candidates Bob Filner and Carl DeMaio have said they will address, or the initial costs to implement the Proposition B pension initiative. A larger than expected annual pension payment also will keep financial issues at the forefront of the decision making for Sanders’ successor.

Many factors go into calculating the city’s annual payment, but investment returns are a key driver. The amount owed typically isn’t finalized until January.

For context, last year’s the retirement system earned 24 percent on its investments — the best since 1987 — and the pension payment dropped from a projected $256.6 million to $231.3 million.

Liam Dillon is a news reporter for Voice of San Diego. He covers San Diego City Hall, the 2012 mayor’s race and big building projects. What should he write about next?

Please contact him directly at or 619.550.5663.

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Liam Dillon

Liam Dillon was formerly a senior reporter and assistant editor for Voice of San Diego. He led VOSD’s investigations and wrote about how regular people...

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