Retired San Diego city workers get ‘13th check’ year-end bonus, even with pension shortfall at $3 billion

The extra year-end pension bonus for retired San Diego city employees topped $6.8 million this year, beating out last year’s total and setting a new five-year record for the program.

The “13th check,” which goes out in certain years as an additional payment on top of the regular 12 monthly distributions, was sent to more than 9,000 members of the San Diego City Employees’ Retirement System, or SDCERS.

Checks ranged from $17 to $1,760. Jessica Maloney, a spokeswoman for SDCERS, said the checks averaged about $670 each.

The payments are made only when pension fund investments meet certain earnings thresholds compared with agency expenses. Checks have gone out every year since 1984 except for 2003, 2009 and 2012.

This year, Maloney said, the system had realized investment earnings of $689 million with $169 million in budgeted and operating costs. The balance, some $520 million, was large enough to trigger the 13th-check payments.

The amount for individual pensioners is calculated based on years of service and retirement date, with a higher multiplier for those who left the city before certain milestone dates.

Last year, the total distributed was $6.7 million. This year’s total is about 12% higher than it was five years go and 31% higher than the total bonus in 2010.

The 13th-check program launched in 1980, when pension fund investments were doing well and city retirees were struggling through years of inflation. It’s become a source of conflict as the pension fund faces a $2.98-billion long-term shortfall in funds needed to pay the city’s pension obligations — a burden that largely falls on taxpayers.

According to a city pension reform committee in 2004, the 13th check as originally calculated soon resulted in bonuses exceeding some recipients’ benefits for the entire year. City officials later limited how much each person could receive, which resulted in a legal battle and subsequent settlement of nearly $10 million.

The settlement ended the 13th-check program — along with other costly benefits — for workers hired after June 30, 2005, but the total cost of the program has continued to climb as more people hired before that date retire and live longer.

A review of pension data shows that retirees have received $122.1 million in 13th checks since 1984, and the pension system could end up distributing an additional $100 million over the next few decades before the program phases out.

The bonus is considered a vested benefit, which retirees were promised and therefore are legally entitled to receive. The number of people receiving the benefit peaked last year at about 9,800 retirees.

According to Transparent California, which collects government data and publishes it online, the five retirees who received the largest checks worked for the city for 28 years or more. Their yearly pensions do not exceed $55,000, and two of them received less than $30,000 in pension payments in 2018, the most recent year available.

Schroeder writes for the San Diego Union-Tribune.