IMPORTANT: These changes only apply to (1) City of San Diego members and (2) Port and Airport members who were hired on or after January 1, 2013.
Member contributions are the mandatory pre-tax deductions on a member’s biweekly paycheck that are deposited into the SDCERS Trust Fund, where they earn interest and ultimately fund each member’s individual pension benefit. Contributions are calculated as a percentage of the member’s pensionable salary on each paycheck. The percentage is determined according to the member’s plan tier and age of entry into SDCERS. Contribution rates are adjusted by SDCERS’ Board, as recommended by SDCERS’ actuary, based on requirements in the City of San Diego Charter and the Public Employees’ Pension Reform Act of 2013.
At its March 12, 2021 meeting, SDCERS’ Board of Administration approved new member contribution rates, which will go into effect on July 1, 2021 for all City of San Diego members and all Port and Airport members hired on or after January 1, 2013. If you fall into one of these membership categories, you can view your new contribution rates by going to “Retirement Plan Summaries” and clicking on your employer and date range corresponding to your initial hire date. Most members will experience slightly increased contribution rates – this is due to changes in certain actuarial assumptions.
According to the most recent annual valuation, mortality assumptions are changing such that people are generally living to an older age. On top of that, future improvements to those mortality assumptions (generational mortality improvements) were considered. For example, a 65-year-old today will have a different mortality estimate than that of a 65-year-old 20 years from now. Both of these new assumptions increase the cost to the system, since the new assumptions indicate that SDCERS will be paying out individual pension benefits over a longer timeframe than original estimates suggested. Therefore, members and their plan sponsors must contribute more while they are working in order to keep the system properly funded, given the added cost due to these new assumptions.
The new contribution rates will be reflected in City of San Diego members’ paychecks for pay period ending July 9, 2021, and Port and Airport members’ paychecks for pay period ending July 1, 2021.