San Diego Councilman Pushes Pension Fix

San Diego, which has been the poster child for pension abuse in the past, remains plagued by pension scandals.Fortunately, City Councilman Carl DeMaio continues to push for pension reform, as evidenced by his recently unveiled "Roadmap to Recovery," which is designed to balance the city's troubled budget and reform its pension system. DeMaio wants to reform "pensionable pay" by reducing city salaries by 5 percent to 8.5 percent. This, he said, would reduce the city's pension payments by 20 percent. He wants to create a pension opt-out program. The key here is to increase employee contributions for the defined-benefit plan, which will give employees more reason to enter the defined-contribution option. Orange County last year passed a voluntary lower tier retirement plan, but according to its critics it won't save the county money because the only people opting into it are those who have maxed out on their defined-benefit plan. That's true even though OC employees contribute about 8 percent of their pay to the retirement system -- a much higher share than contributed by law enforcement, firefighters and government workers in most of the county's 34 cities. Clearly, cities need a mandatory second tier and much more significant pension reforms, but it's significant that a councilman in a major city is talking about this issue.

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