San Diego Pension Board Approves Record $563M Annual Payment

City's pension costs continue to rise amid salary increases and investment return uncertainty.

Mar. 13, 2026 at 9:24pm

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The San Diego City Employees Retirement System (SDCERS) board unanimously voted to direct the city to make its largest-ever annual pension payment of $563.2 million this July. The new payment is $30 million higher than last year's $533.2 million and $23 million more than the $540 million the city expected to pay before factoring in higher-than-expected employee raises.

Why it matters

The size of the pension payment matters because it reduces the funds available for vital city services like firefighting, law enforcement, libraries, parks, and infrastructure. The board is considering changes to long-term assumptions, such as investment return expectations and salary growth projections, which could significantly impact the city's future pension costs.

The details

The board discussed projections showing that a stock market downturn could sharply raise the annual pension payment for several years. Actuary Gene Kalwarski said he will propose changes to the pension system's long-term assumptions in September after studying salary trends and investment returns. Revising the assumed 3.25% annual pay raises or the 6.5% investment growth rate could either increase or decrease the city's required payment.

  • The new $563.2 million payment is due in July 2026.
  • The board will consider changes to long-term assumptions in September 2026.

The players

San Diego City Employees Retirement System (SDCERS)

The pension system that manages retirement benefits for San Diego city employees.

Gene Kalwarski

The actuary who advises the SDCERS board and will propose changes to long-term assumptions.

Chris Brewster

A board member who has questioned whether the 6.5% discount rate is too low based on recent investment returns.

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What they’re saying

“Historical returns is the least important factor — the most important is future expectations.”

— Gene Kalwarski, Actuary (sandiegouniontribune.com)

“If our assumed investment returns now are unduly conservative, that essentially means this generation overpays.”

— Chris Brewster, Board Member (sandiegouniontribune.com)

What’s next

The SDCERS board will consider changes to long-term assumptions, including the investment return discount rate, in September 2026.

The takeaway

San Diego's pension costs continue to rise, putting pressure on the city's budget and services. The board is weighing adjustments to assumptions that could significantly impact future pension payments, highlighting the complex financial challenges facing the city.