Written by Sebastian Acosta
New estimates of long-term pension debt will cause San Diego’s annual pension payment to increase from $365.6 million per year to $414.9 million, an increase of over $49 million.
Longer life expectancy and higher average pay for city workers, as well as the underperformance of pension system investments this year led to the increased debt. It has been reported that it could have been higher had it not been for the rebound of the stock market last spring.
The city will need $11.2 billion to pay pensions it will owe workers long term. However, the long-term value of assets set aside for those payments is $7.9 billion, according to estimates by Gene Kalwarski, the city’s actuary.
When compared to pension systems across 33 states, San Diego has the most conservative expectation of investment returns, said Kalwarski. The city’s 70.2% debt funding rate also compares favorably among the states.
The annual pension payment is projected to be at $423.1 million in fiscal year 2023, $430 million in year 2024, and 436.4 million in 2025. By 2041, as a result of the higher payments, the city’s pension debt is projected to reach zero.
