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The San Diego Regional Chamber of Commerce, speaking on behalf of its members and also “representing over 400,000 chamber members' employees,” has thrown its support behind the Comprehensive Pension Reform Initiative, according to a news release issued yesterday.

“If the initiative qualifies for the ballot and is approved by the voters next year, it will provide significant reform for the City of San Diego, and save taxpayer dollars for important city services. To sustain economic growth, the city must establish policies that recognize the importance of responsible spending,” said Ruben Barrales, the Chamber’s President and CEO.

“This is strong evidence of the support for pension reform from the business community,” added Chamber Chairman Vincent Mudd.

The measure has yet to gather enough signatures to make next year’s ballot, despite deployment of paid petitioners and a “drive-through signature gathering effort” last month supported by Carl DeMaio and Kevin Faulconer.

The initiative's authors say that reforms have the potential to save the city between $1.2 billion and $2.1 billion through the year 2040.

If placed on the ballot and passed, it would deny access to pensions for any new city employee hires except police officers, with others having access instead to 401(k) plans. Base pay used to calculate pension benefits would be frozen for five years, bonuses and other compensation aside from base pay would no longer be considered in determining an employee’s overall compensation for pension purposes, and payments to retirees would be posted on a public website (with names, but not positions, redacted). Unions would also lose the right to reject any future provisions imposed by the city council.

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Comments

SurfPuppy619 Aug. 3, 2011 @ 4:24 p.m.

It is sad it has come to this, but the gov employees took greed one step too far. They are already paid more and have far better fringe benefits, and bullet proof job security.

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Visduh Aug. 3, 2011 @ 6:03 p.m.

I agree fully. Sad, SAd, SAD. For these municipal employees, those 401(k) plans may not even apply. (Legal definition.) But the typical 401(k) plan in the private sector is seldom an adequate retirement vehicle. They are usually too little and too late. For these employees with bullet proof job security, the devil is in the details of the plans. How much do they put in? How much does the City match? What are the investment choices? Then the real wild card: what does the future hold?

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SurfPuppy619 Aug. 3, 2011 @ 10:41 p.m.

How much do they put in? How much does the City match? What are the investment choices? Then the real wild card: what does the future hold?

Good points.

The BEST 401K matches I ever saw in the private sector was 6%, but that was 20+ years ago. Many went to 3% matches, but most today have NO MATCH.

All self funded in the private sector for most employees today.

I think a good match, like 10%-15% would be excellent, and could be afforded by the city. That is far better than anything ever offered in the private sector, but certainly less than a current muni DB plan where you can retire as early as age 50.

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Visduh Aug. 4, 2011 @ 10:36 a.m.

Ten-to-fifteen percent as a match would be most generous. But how many of the employees would think they can afford to put that much in themselves? In the private sector, twenty or more years ago, employers were typically matching the employee contribution at fifty cents on the dollar up to an employee contribution of 6%. What that meant was that the employer was adding a maximum of a paltry 3% of compensation to the employees' savings for retirement. That was a disgrace if there was no DB plan also. If they now add nothing at all, there is some question as to whether the employee should even bother to participate. The income tax rates now are at such historic lows that most wage earners and lower-level salaried folks don't break the 25% federal bracket. Participating in a 401(k) plan may save the employee 25% tax now, but result in him/her paying at a higher rate in retirement. You can no longer assume that you will be in a lower rate bracket in retirement (if you ever could.)

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Dennis Aug. 4, 2011 @ 2:05 p.m.

401's were designed as tax shelters for the rich, not for the average worker. I recall that when they were originally implemented the idea was to put up to 20% of your income into the 401 tax deferred, unfortunately at the time (early eighties I think)I was only making about $10/$12K per year & could not afford to put any money away much less 20%. Anyone today making less than $100K would be hard pressed to put in 10%. Visduh is correct that most retirees will not be in a lower bracket & as a result will have to pay additional taxes on withdrawals, most likely at a tax rate higher than if they had just kept the money at the time it was earned. The 401K was a scam from the start.

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SurfPuppy619 Aug. 4, 2011 @ 3:33 p.m.

Anyone today making less than $100K would be hard pressed to put in 10%.

Are you for real???? please.

The median salary in CA is $31K, less than 10% make over $100K, and I am sure there are many-most- who could put in 10%. They will have to tighten their belt like everyone else does, but 10% is very do-able.

Now for those making $0-$25K you have a valid point, but $100K, please.

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Dennis Aug. 5, 2011 @ 1:21 p.m.

That's a lot of belt tightening. Let's do some math, 31K minus say $6K for taxes leaves $25K net. Rent and utilites at $1K per month leaves $13K. Subtract your $3K to the IRA & you have less than a thousand a month to cover everything else, auto, gas, insurance, food clothing.

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SurfPuppy619 Aug. 6, 2011 @ 2:30 p.m.

That's right Dennis, it is very hard out there for nearly everyone in the real world, the private sector, all the more reason the middle class should NOT be covering or backstopping $100K plus pensions for gov employees, especially at age 50.

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Dennis Aug. 6, 2011 @ 3:41 p.m.

I think you missed my point which was that only higher income employees, public or private can actually benefit from 401K's. The average 31K employee can't afford to save since every penny is needed to keep their head above water. $31K only amounts to $15 per hour, not enough to keep a roof over your head in SD.

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