San Diego County Employees Pension Proposal Could Affect Medical Benefits
The San Diego County Employees' Retirement Association is considering establishing new pension guidelines on how to allocate excess earnings, which would eliminate the county's contribution to health care for about 8,000 retirees, the San Diego Union-Tribune reports.
Under the current policy, earnings that exceed an 8.25% rate of return on pension fund investments are allocated toward retirees' health insurance premiums. Retirees who have worked for the county for more than 10 years are eligible for ancillary benefits, including contributions toward health insurance premiums.
The pension fund currently contributes as much as $400 monthly toward health insurance premiums for eligible retirees who do not qualify for Medicare and as much as $300 monthly for eligible Medicare beneficiaries.
The new proposal calls for saving the excess earnings until the system's funded ratio -- a measure of assets versus liabilities -- is at least 85%. The current ratio is 81%, and the funded ratio is expected to reach at least 85% in about five years, at which time county officials propose spending as much as half of the excess earnings on ancillary benefits and shifting the remainder to the county's reserve.
Brian White, the association's CEO, said that existing reserves will cover retirees' health benefits for about five years.
The proposal is intended to reduce the pension system's current $1.2 billion budget deficit (Chacon, San Diego Union-Tribune, 7/19).