Pension Promises are Stronger Than the Headlines
If you read the recent San Luis Obispo Tribune or Cal Coast News article about SLOCPT’s “$1 billion debt,” you might’ve felt a jolt of concern, especially if you’re nearing retirement. But as with many things related to pensions and public finance, context matters.
Let’s take a step back and look at what this number really means, and what it doesn’t.
First, Your Pension Is Secure
SLOCPT provides lifetime retirement benefits that are guaranteed by law. These benefits are not optional or discretionary, but they’re a legal obligation of the County. No matter what headline you see, the County must fund and pay the benefits you've earned. Period.
Why the "Debt" Looks So Big
The “$1 billion debt” is actually known as the Unfunded Actuarial Liability (UAL). It’s the difference between the total amount SLOCPT expects to pay out over the lifetimes of all retirees and current employees, and what it has set aside today to meet those future obligations.
This number fluctuates based on assumptions, things like how long retirees live, salary growth, inflation, and investment returns. In the most recent valuation, SLOCPT made a few key changes to those assumptions, including:
Updating salary projections based on real wage growth. This includes strong pay increases negotiated by employee groups.
Adjusting inflation expectations, which impacts cost-of-living adjustments (COLAs) for retirees.
Aligning investment expectations to more realistic market outlooks.
These changes made SLOCPT more conservative and better aligned with future realities, but they also made the UAL look temporarily larger.
So, Is This a Problem?
Not at all. A pension system isn’t like a credit card bill that’s due next month. SLOCPT has a structured, long-term plan to pay down the UAL over the next 20+ years. This is entirely normal for a public pension plan. In fact, it’s expected.
According to our actuary’s latest report, SLOCPT remains on track to be fully funded over time, and contributions from the County (and from employees) are being made consistently. In fiscal year 2024-25, the County’s Actuarially Determined Contribution (ADC) was 54.71% of payroll. This is a strong sign that SLOCPT is taking its funding responsibilities seriously.
Why This Actually Reflects Strength
It may seem counterintuitive, but revisiting and updating assumptions to better match future expectations is a positive step. It shows that SLOCPT is not just delaying home maintenance until the roof leaks. We are managing risks proactively. It also means employees and retirees can feel confident that SLOCPT is planning responsibly and transparently.
As I recently told The Tribune, “This does not mean we’re not going to pay your benefits. It means we’re making sure we can.”
Bottom Line: No One’s Losing Their Pension
It’s important that employees and retirees understand that no matter what the headlines say, your pension is not in jeopardy. It is a promise that is being carefully managed, year after year, with the future in mind.
If you have questions about your pension benefits or how the system works, reach out to SLOCPT Staff. We’re here to ensure that you not only receive your benefits but understand the strength of the system behind them – Cheers!
For questions regarding your pension, please call us at 805-781-5465 or email us at slocpt@co.slo.ca.us. Many of your questions may be answered by logging in to MemberDirect!
Katie Girardi, Executive Director
San Luis Obispo County Pension Trust (SLOCPT)
805-781-5465 SLOCPT.org