Reblogged from this morning's Sunday San Diego over at the FlashReport....

If you've ever wondered why the City of San Diego is in a world of hurt, Libertarian Godfather Richard Rider helped with some further understanding this past week and comes to his already-known conclusion that "the city’s pension problem is NOT the underfunding.  The problem is the overcompensating."  You won't believe what you read (excerpted):

Is It Possible – 300% of Highest Salary Paid as Pensions to San Diego City Employees?

San Diego – Recently the San Diego Union Tribune ran a superb editorial on the city of San Diego’s DROP program for public safety employees.  The editorial did the math, and found that a city policeman or firefighter who stays on for 5 years in the DROP program retires at age 55 with a ridiculously high combined pension equal to 133% of their highest pay (not counting overtime, which does not count in pension calculations).

But it got me to thinking – what about the OTHER city employees in DROP?  About 400 of the 900+ city DROP employees are public safety professionals, but there are also over 500 other city employees in DROP.  The results of my calculations are simply mind boggling.

City general employees in DROP get THREE pensions – four if you count an extra SPSP option available while in the DROP program.  They get their regular pension, their SPSP account, plus the DROP account.

BOTTOM LINE:  A 35 year San Diego city DROP general employee retiring at age 60 with a $75,000 salary, who fully participates in the city’s SPSP program and makes only 8% average on their SPSP mutual funds, will receive combined annual pension payouts of almost $170,000 – which is about 226% of their highest pay.  If their SPSP plan earns the same as the city’s pension fund has earned over the last 20 years (10.7%), the employee’s pension is about $275,000 – about 367% of their highest salary!

But that’s not all.  The employee earning only 8% on their SPSP plan leaves some money for their beneficiaries – about $1,345,000.  The employee who earns the city pension fund's average 10.7% return on their SPSP plan leaves their lucky beneficiaries $2,089,000!!

It’s time to recognize that the city’s pension problem is NOT the underfunding.  The problem is the overcompensating.  It is fundamentally unfair to tax city residents for public employee benefits that are many times higher than private sector workers will receive.