Skip to main content

LATEST UPDATES: Tracking COVID-19 | Transfer Of Power | Racial Justice

Do Pension Systems Still Work?

San Diego voters will decide in June if they want to eliminate city pensions for most new hires. Backers of the proposal say pensions don’t work in today’s society. But one pension expert who says that’s not exactly the case.

Special Feature KPBS Election Coverage

— The pension system in San Diego has taken a lot of criticism for its generosity and the huge sums of money it siphons from the city. Critics also say pensions are becoming unsustainable as people live longer after retirement. But Stanford Public Policy Professor Joe Nation said there’s nothing inherently wrong with pensions. Rather, he said the people who manage the funds usually underestimate the required contributions and overestimate the projected returns

"I think what happened is that managers and decision makers at pensions systems around California, and around the country actually, said, you know what, what happened in the late 1990s, the stock market boom, is the new norm. And it’s not the new norm," he said.

San Diego infamously got into trouble when city leaders kept increasing benefits and deliberately underfunded the pension. Nation said many funds around the state were providing generous benefits, which eventually made them unsustainable.

"It’s just impossible to fund any retirement system for an individual or group, anyone, in which you may someone more in retirement than you pay them when they are working for you," he said.

Nation said he believes a hybrid retirement system combining pensions, a 401 (k) and Social Security would be the best option for most governments. He said totally eliminating pensions may dissuade talented people from applying for government jobs.

Those who support eliminating San Diego pensions say switching to a 401(k) program will prevent benefits from getting out of control again. Opponents of the plan say the city has already implemented pension reforms that need to be given time to work. And they point out San Diego is not enrolled in Social Security.

Election 2020 news coverage


San Diego News Now podcast branding

San Diego news; when you want it, where you want it. Get local stories on politics, education, health, environment, the border and more. New episodes are ready weekday mornings. Hosted by Anica Colbert and produced by KPBS, San Diego and the Imperial County's NPR and PBS station.

  • Need help keeping up with the news that matters most? Get the day's top news — ranging from local to international — straight to your inbox each weekday morning.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Curious San Diego banner

Want more KPBS news?
Find us on Twitter and Facebook, or sign up for our newsletters.

To view PDF documents, Download Acrobat Reader.