At an AEI event on Tuesday, Carl DeMaio, former member of the San Diego City Council, kicked off the new phase of his career aimed at bringing national attention to the problem of poor pension funding. DeMaio believes the "pension tsunami" is becoming increasingly problematic, but has yet to gain sufficient public awareness.
DeMaio laid out the challenges that most state and local governments face, including common abuses such as spiking, double dipping, and accounting gimmicks. He provided the outrageous example of the current system allowing a librarian to retire with a six-figure annual pension. Under DeMaio's leadership, San Diego enacted the Pension Reform Initiative, which transferred the city's employees to a privatized 401(k) retirement plan and addressed many of these issues.
In this vein, he proposed measures that Congress could take to fix pension systems nationwide, such as requirements for financial disclosure and elimination of conflict of interest on pension boards. Overall, DeMaio believes reform is a step-by-step process since "politicians don't see the light until they feel the heat."
Across America, state and local governments are wrestling with the rising costs of public employee pensions, which have cut into funding for police, fire, education, and other public services. The most ambitious public pension reforms have occurred in San Diego.
The Comprehensive Pension Reform Initiative, passed in June 2012, shifted newly hired San Diego city employees into 401(k)-type pensions that are benchmarked against private-sector plans, while reforming abuses such as “pension spiking” and ensuring that public employees pay an equal share of the costs of their pensions. Total savings from the initiative will reach $1 to $2 billion over the next 20 years.
This event will feature a presentation from Carl DeMaio, who — as a member of the San Diego City Council — championed the pension initiative and now seeks to apply its lessons nationwide.
If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.