Report: City Pension Cost Projections Off by Millions

A report that says financial projections made years ago about the San Diego City Employees Retirement System underestimated obligations by hundreds of millions of dollars will be presented to the City Council on Monday.

The "Study of Plan Experience" put together by the consulting firm Cheiron says that demographic assumptions underestimated actual expenses in eight of the last 11 years, with an average shortfall of $21 million.

The reasons were a greater rate of retirements than expected—especially among public safety employees—higher-than-expected salaries, and retirees who lived longer than projected, according to the report.

Cheiron also said SDCERS' investment portfolio fell short of projections in six of the last 11 years, with an average shortfall of $102.2 million. Investments came up $863.2 million short in 2009 alone, skewing the annual average.

Making reasonably accurate economic assumptions is critical for pension systems, which need to project revenue and expenses decades in advance for planning purposes.

SDCERS, with debt estimated by city officials at more than $2 billion because of previous underfunding, is made up of employees of  the city of San Diego, Port of San Diego and San Diego County Regional Airport Authority.

-City News Service