After San Diego Moves from DB Plan to DC Plan, State Requires San Diego Workers Receive Social Security Coverage
On September 30, 2012, Governor Brown signed into law AB 1248, which requires the City of San Diego to provide Social Security coverage for all city employees who are not covered under a defined benefit retirement plan. In 1981, city employees agreed to let the City of San Diego opt-out of providing social security coverage in exchange for a defined benefit retirement plan. However, in June of this year, voters in San Diego significantly cut retirement benefits for city employees when they passed a ballot measure, Proposition B, that required all new hires, with the exception of police officers, to move to 401(k)-like defined contribution plans. The measure also created a six-year freeze on pay levels used to set pension benefits.
Assemblyman Ben Hueso (D-San Diego), the author of the legislation, stated that “[v]olatility in the stock market raises concerns about the security of defined contribution retirement systems. This volatility becomes an even larger concern for workers who would not be covered under the federal Social Security system. Allowing local governments to offer a 401(k) only retirement system will leave workers without a financial safety net and will shift the burden to the state in the long-run.”
By Ezekiel D. Carder