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S.D. Pension Fund Could Have Billion Dollar Year


It could be a billion dollar year for the city of San Diego’s retirement fund. Investment returns have topped 20 percent.

— Investment returns for the San Diego pension fund are measured in quarters. At the end of last quarter, which wrapped up in March, the fund had seen a 22.3 percent return. If the rate of return remains that high through the end of June, that means the $5 billion pension fund could finish the year with a rate of return around 20 percent -- a billion dollar gain.

The year isn’t over yet, but retirement system CEO Mark Hovey is cautiously optimistic.

"June last year was a tough month. And, of course, this June of 2011 here there have been, it seems, more down days than up days so far in June. So we’re similarly concerned," he said. "But we’re holding to some pretty good numbers here."

If the investment gains stay on track, Hovey said that could shave up to $15 million off the city's pension obligation in fiscal year 2013. A recent San Diego five year financial projection forecasts the bill will be about $256 million. Most of that money comes from the general fund.

This year’s high investment return is drastically different from 2009 when the fund lost 19 percent. Councilman Todd Gloria said those kinds of fluctuations highlight the importance of evaluating the pension fund long term.

"What we need to do is look at it in the long run, average these years out over time and make sure we come up with a system that’s manageable on the average years," he said.

The gains from this year will be recognized over a number of years.

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