Pension payouts grow at an alarming rate

July 16, 2009 7:12:49 PM PDT
A San Francisco Civil Grand Jury says officials have looked the other way as payouts from the city's retirement fund have risen at an alarming rate. Now, there are accusations of something called "pension-spiking" for police and firefighters.

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The grand jury looked at city pension fund payouts over the past 10 years. Its conclusion is that City Hall and the unions "...systematically ignored the alarming increases in pension costs."

"I think it's time now to get some public exposure and get some transparency in the retirement system," says Craig Weber, who was the grand jury chairman.

The report says this year the city will contribute $178 million to the fund. Next year, the city will put in $338 million -- a whopping 190 percent increase -- and it has been climbing like that for more than a decade.

The report says pension spiking is a practice that may be institutionalized in the police and fire departments.

The grand jury says spiking occurs when a firefighter or cop works at a higher paying rank before retirement to get a bigger pension.

The report says that because of spiking and cost of living and other increases in benefits "...55 percent of safety officers who retired between 1998 and 2008 receive a pension that was more than their annual compensation [or salary] at retirement."

"Firefighters find it shocking that they used the term 'spike pensions,'" says firefighters union chief John Hanley. He takes offense at the report. "People are tested. Nobody gets jobs they don't deserve. There's lists where people are promoted off a list."

Police union chief Gary Delagnes says the city's pension fund is one of the healthiest in the country.

"We're 104 percent funded which means that the retirement system can meet every requirement it has for every retired city employee with four percent to spare," says Delagnes.

The grand jury wants a task force to review the retirement system. A police official told ABC7 measures were put in place sometime ago to prevent spiking. The fire department says it will respond to the report later this fall.

An additional note: this is not only a problem in San Francisco. There are more than 5,000 former California public employees collecting $100,000 or more in pension pay. Below is a link to a group that is working on pension reform in California.

Link: California Pension Reform

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