Judge Rules in Support of SDCERS in UAL Substantially Equal Case

Date: Dec 05, 2012


Judge Joseph Zimmerman yesterday ruled in support of the San Diego City Employees’ Retirement System (SDCERS) in the UAL Substantially Equal case, denying the City of San Diego’s Motion for Judgment on the Pleadings on both procedural grounds and on the merits.

The City of San Diego argued that the court should grant judgment in its favor without the need for a trial. In his ruling, Judge Zimmerman noted that the City had failed to address and refute SDCERS’ interpretation of the substantially equal language of the City Charter and the affirmative defenses asserted by SDCERS. Judge Zimmerman also noted that the substantially equal provision of the Charter is ambiguous and that he was not persuaded by this motion that the City’s interpretation should be adopted. 

The "substantially equal" case was filed against SDCERS by the City of San Diego in May, 2010, calling into question Charter section 143, which states that the "City shall contribute annually an amount substantially equal to that required of the employees for normal retirement allowances, as certified by the actuary, but shall not be required to contribute in excess of that amount." The City contends that the substantially equal requirement applies to actuarial and investment gains and losses in addition to the normal cost of normal retirement allowances.

SDCERS, the City's pension administrator, requires annual contributions from the City and its workers in order to pay current and future retiree benefits. The City's annual payment and the contribution rate for employees are set by the pension board each year based on an actuarial valuation. This valuation determines liabilities associated with active employee current year service (“normal cost”), and liabilities associated with variances to actuarial assumptions (“experience gains and losses”). Experience gains and losses include investment gains and losses relative to the assumed rate of return, currently 7.5%. Historically, the City has paid its half of the normal cost and 100% of the experience gains and losses.  

A trial date is currently scheduled for May 14, 2013.  

Click here to read Judge Zimmerman's ruling.

Document Under Categories: Litigation