City of San Diego v. San Diego City Employees' Retirement System

Although the San Diego City Employees’ Retirement System (SDCERS) frames this appeal as a broad challenge to its authority to administer retirement system assets, this appeal actually involves a very narrow issue: Did SDCERS have the right to charge the City of San Diego (City) for SDCERS’s underfunding of pension service credits during the time period of August 15, 2003, through November 1, 2003, when the authorizing statute states that the employees purchasing such service credits were and are to pay the full cost of service credits purchased? We conclude, as did the trial court, that this action by SDCERS was contrary to law and thus exceeded its authority to administer the pension system’s assets, and the trial court properly set aside its decision to charge the City for the underfunding.

INTRODUCTION

This action involves the purchase of service credit program, which, as a part of the City’s pension plan for its employees, allows an active employee to purchase up to five additional years of pension service credit to increase his or her lifetime pension annuity. In November 2007 the SDCERS board of administration (board) voted to charge the City for a shortfall in…