SBCO

Related Post: InlandPolitics: S.B. County pension costs continue climb

Sunday, January 4, 2015 – 11:30 a.m.

This Tuesday, the San Bernardino County Board of Supervisors will vote to approve another increase in its annual pension contributions.

Pension reform enacted two years ago has done little to stem the tide of rising defined benefit pension costs. A newer, and lower cost, benefit tier is also increasing in price.

The county pension fund is sporting more than $1.5 billion in unfunded liabilities, and has experienced recent lackluster, or mediocre at best, investment performance. Both situations make the likelihood of future increases high.

In 2015, the Tier 1 employer contribution rate for General Employees will increase from 20.24% to 22.49% of pensionable compensation, an overall increase of 11.12%. The Tier 1 rate for safety Employees will jump from 43.15% to 49.09%, an overall increase of 13.77%.

The new Tier 2 employer contribution rates will also climb.

The Tier 2 rate for General Employees will climb from 18.02% to 19.39% of pensionable compensation, representing a 7.6% total bump up. The Safety Employee rate will increase from 37.02% to 42.25%, representing a 14.13% climb.

The new Tier 2 rates fund a reduced pension formula for new employees.

No doubt the increase in retirement costs will factor into future labor contract negotiations.

The pension fund essentially treading water in its investment portfolio hasn’t helped the situation. Instead of the market resurgence erasing the pension shortfall, county taxpayers will likely have to pick up the tab.