U-T: DeMaio Inflated Claim Of Pension Savings

Campaign Is Correcting Calculation After U-T Campaign Watch Found Flaws

As he campaigns for San Diego mayor, City Councilman Carl DeMaio has overestimated — by nearly double — the lifetime value of the public pension he turned down for his council tenure.

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In debates and a Republican mailer, DeMaio says he “gave up a pension worth $800,000.” The actual value of his rejected council pension would have been about $428,000, or 46 percent less, according to an analysis by U-T Campaign Watch.

The DeMaio campaign acknowledged the mistake when a reporter questioned the accuracy of the mailer and said it would use the correct figure in future campaign literature.

DeMaio, a Republican, is running for mayor on a fiscal-reform platform that calls for eliminating pensions for most new city hires. He’s often praised for having an encyclopedic knowledge of city issues, especially when it comes to employee pay and benefits.

His pension estimate, however, overlooked two significant limitations the city has imposed on council pensions.

DeMaio’s campaign said it calculated his retirement benefit based on a single four-year term on the council and his $75,386 annual salary. He projected collecting a $10,500-a-year pension at age 38 because certain elected officials can take pensions at much younger ages than regular city workers.

The problem is, elected officials can only take an early pension if they have worked for the city for at least eight years, according to the municipal code. After serving one term, then, DeMaio would not have been eligible for a pension until age 55.

As a result, DeMaio’s figure included 17 years of pension collections and cost-of-living increases that he is ineligible to receive. He estimated collecting $811,000 in benefits by age 84, when in actuality he would have only received $428,000 by that age, according to the U-T review.

Even if DeMaio had somehow collected a pension before age 55, he miscalculated how that would be calculated, too.

The city has another rule related to early pensions for elected officials. For every year before age 55, the pension is reduced by 2 percent for those payouts. In DeMaio’s hypothetical case, the $10,500 annual benefit would be reduced by 34 percent. In other words, DeMaio should have begun his pension calculation with an annual payout of about $7,000.

City and pension officials confirmed that the U-T was correct in identifying the mistakes made by DeMaio.

“You understand it correctly. ... Serving only one term of four years, council member DeMaio could not begin drawing a benefit until age 55,” said Mark Hovey, chief executive of the city’s pension system.

Ryan Clumpner, DeMaio’s campaign manager, thanked Campaign Watch Thursday for bringing the error to his attention.

“We are correcting campaign materials,” he wrote. “That said, at the time Carl DeMaio rejected the pension, it was reasonable to assume that the value he turned down was in fact $800,000 since most council members serve a full two terms.”

In truth, DeMaio could eventually save the city even more by not taking a city pension. If DeMaio was in the pension system and served four years on council and then eight years as mayor, he would be eligible for lifetime pension payouts of an estimated $1.5 million by age 77.

It should come as no surprise that DeMaio has chosen to remind voters that he opted out of the pension system on his first day in office. He helped craft Proposition B on the June 5 ballot that would replace guaranteed pensions with 401(k)-style plans for all new city hires except police officers. Future elected officials would be ineligible for pensions under the initiative as well.

DeMaio has also repeatedly highlighted the six-figure pensions received by the city’s upper management employees, most notably when he waged a successful battle against a citywide sales-tax hike in 2010.

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