Every year, SDCERS works with its independent actuary, Cheiron, to conduct detailed actuarial valuations for each of its plan sponsors: the City of San Diego, the Port, and the Airport Authority. These valuations play an important role in helping ensure the retirement system remains financially strong and able to pay out pension benefits owed to its members, both now and in the future. The valuations also calculate the Actuarially Determined Contribution for the following fiscal year, which is the amount each plan sponsor must contribute to keep the system funded.

An actuary is a financial professional who uses math, statistics, and economic assumptions to evaluate long-term financial obligations and risks. In a nutshell, the actuary makes an educated guess about how much money will be needed in the future to pay promised benefits, and how much both members and the plan sponsors need to contribute today in order to ensure those benefits can be paid over the long term.

These valuations examine many factors that influence the health of a retirement system. These include member demographics, projected retirement and benefit payments, salary growth assumptions, investment return expectations, and overall funding needs. The process also incorporates periodic Experience Studies, which review how accurate prior assumptions were in reality and recommend adjustments, if necessary, as the goal is to use assumptions that are as correct as possible. SDCERS performs an Experience Study every three years, and the next one will take place this year based on the June 30, 2025 valuation data. We expect the plan actuary, Cheiron, will be presenting its findings to the SDCERS Board of Administration at the September 11, 2026 board meeting.

One of the most important goals of the actuarial valuation process is to help maintain stable and predictable contribution rates for participating employers. Stable contribution rates allow plan sponsors to better plan and manage their annual budgets while continuing to support the retirement security of employees and retirees. Over the past 15 years, the City of San Diego’s employer contribution rates have generally remained within a range of approximately 20% – 25% of the City’s overall payroll costs. Contribution rates for the Port and Airport Authority have also remained stable, with the current employer contribution rates at approximately 32% and 14% of payroll, respectively.

SDCERS’ long-term funding strategy is designed to balance retirement security with responsible financial planning. Annual actuarial valuations provide a disciplined framework that helps the system adapt to changing economic conditions while maintaining a focus on long-term sustainability. As part of this ongoing commitment, SDCERS regularly reviews actuarial assumptions and funding policies to ensure the system continues to meet the needs of its members and plan sponsors for years to come.