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Councilman Alvarez Pushes ‘Cap and Freeze’ Pension Measure

— Should San Diego cap future employee pensions or get rid of them altogether? Voters may get to choose between those options this June.

An initiative that would eliminate pensions for most new hires and freeze base pay for current employees for five years has already been placed on the ballot. But Councilman David Alvarez wants to send a competing measure to voters that would still freeze pay, but would cap, and not eliminate, pensions. Pensions would be capped at under $100,000.

Alvarez said switching to a 401(k) system would cost nearly $100 million because the city would have to pay someone to manage the system and would have to accelerate its pension payments.

“This is really about giving people a choice,” he said. “Do you think that it’s better to go this way and having to spend almost $100 million to give us this new benefit? Or should we go with the other approach where we know it’s not going to cost us money and we can go forward with real reforms that are actually capped and will limit out liability.”

Alvarez would need five votes on the city council to get the measure on the June ballot. He faces a March 9th deadline. He said he’d have a written plan ready this week.

Councilman Carl DeMaio backs the measure to eliminate pensions. He disputes the plan will cost money. In fact he said it would save about $100 million in the short term. The savings comes from the five-year pay freeze for current city employees. Supporters say the plan will save billions over time.

“It’s quite clear that their measure is not about reform but about preserving the existing pension program for government employees,” DeMaio said. “So I’m very unconcerned about the idea that politicians are going to collude with unions to put their own measure on the ballot.”

San Diego’s annual required pension contribution is scheduled to drop considerably beginning around 2025 even if voters reject any reform measures.

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