San Diego to pay into troubled pension fund
Posted on: Friday, 17 March 2006, 19:47 CST
By Marty Graham
SAN DIEGO (Reuters) - San Diego will make a required $162 million payment to its troubled city employees' pension fund and will look for ways to provide it with additional funding, Mayor Jerry Sanders said on Friday.
His vow came immediately after the pension fund released preliminary estimates for how much San Diego must pay into the retirement system, which handles benefits for 19,000 members.
"We see this number as a floor," Sanders told reporters at a press conference. "We now know what the bottom is and we can work our way up from there."
San Diego's pension fund crisis, discovered in February 2004, has shaken the city's government.
San Diego and its pension fund face a deficit estimated to be as high as $2 billion, caused by agreements in 1996 and 2002 to increase benefits while allowing the city to pay less into the fund than the retirement system needed.
The U.S. Securities and Exchange Commission is investigating the city's failure to disclose the deficit to bond investors; five former pension fund officials have been indicted for concealing information; and six former city employees face state conflict-of-interest charges. Those charged have all pleaded not guilty.
Amid the fund's troubles, San Diego's previous mayor resigned months after Time magazine named him one of worst big U.S. city mayors, and Wall Street reduced the city's credit rating to notches above junk status.
Actuaries said on Friday the pension fund's deficit is about $1.39 billion and the fund is about 68 percent funded. Most stable pension funds are at least 80 percent funded.
City officials said the $162 million due to the fund is less than feared, with some estimates running as high as $300 million.
"The number we got today was not staggering," said City Council President Scott Peters. "It was manageable."
City officials are considering a number of options in additional to increase city payments to the fund. They include securitizing tobacco settlement funds and selling pension bonds when the city is able to reenter the bond market.
(Reporting by Marty Graham in San Diego)
Source: REUTERS
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