Jan-Feb-Mar 2013 - sdcera

SAN DIEGO COUNTY EMPLOYEES RETIREMENT ASSOCIATION
Strength. Service. Commitment.
2013
January • February • March
PEPRA spotlight: Welcome Tier C members
In January, SDCERA welcomed its first new members into Tier C, which was created
by the California Public Employees’ Pension Reform Act (PEPRA) in September 2012.
PEPRA defines new benefit formulas for new permanent employees of the County and other
participating employers entering SDCERA membership in 2013 for the first time.
So who is a Tier C member?
A member first hired into a permanent position on or after
December 1, 2012, who:
• has never been a member of another
California public retirement system;
• establishes reciprocity for a period of reciprocal
service with another California public retirement
system that began on or after January 1, 2013; or
• does not establish reciprocity.
Additionally, retired or refunded SDCERA members who return
to active membership with a different SDCERA‐covered employer
(e.g., former court employees returning to work with the County)
after a break of more than six months are classified as Tier C.
SDCERA provides a valuable lifetime retirement benefit to all
eligible members when it comes time for retirement. Learn more
through the informative publications, benefit and contribution
calculators, and up-to-date news and information available online
at www.sdcera.org.
Supplemental Benefit Allowance to be reduced in 2013 Page 3
Annual financial report inside
Arm yourself with captivating pension trivia for your upcoming cocktail party: read the
Popular Annual Financial Report (PAFR) included with this issue of News. Learn even
more by downloading the complete Comprehensive Annual Financial Report (CAFR)
from the Investments section of the SDCERA website at www.sdcera.org.

Does SDCERA have your legal address?
An updated address helps ensure correct
tax withholding
Your address is one of the most important pieces of
information you can share with SDCERA. Keeping
it updated allows SDCERA to correctly withhold
required taxes.
You’re able to provide both a mailing address and
legal address. What’s the difference? Your mailing
address is where you receive mail. Your legal address
is the street address of your physical residence.
The IRS requires SDCERA to have a legal (physical)
address on file for every member. If retired members
or beneficiaries have only provided a P.O. Box
as their address, SDCERA is legally required to
withhold their taxes at the “married plus three”
rate—that is, the rate of withholding for a person
who is married and has three dependents. A legal
U.S. address on the Change of Address form and a
valid tax election form (available at www.sdcera.org)
are all SDCERA needs to clear up P.O. Box‐related
tax issues. SDCERA does not withhold taxes for
states other than California.
Retired members to
receive 1099-R forms
SDCERA mails IRS Form
1099-R to all retired
members at the end of
January. This form reports
the total amount of income
paid to you from SDCERA
during the preceding
calendar year. You will
need this form to complete
your federal and state tax
returns. Be sure to check
your mailbox for this
important document.
You can change your
tax withholding at any
time. A Tax Election for
Monthly Retirement form
will be mailed to you with
your February earnings
statement. This form is also
available at www.sdcera.org
under Forms & Publications
or by contacting the
Call Center.
Retired SDCERA members or beneficiaries who
are U.S. citizens without a U.S. address on file
must send SDCERA a completed IRS Form W-9.
Other rules apply to SDCERA members who are
non‐U.S. citizens residing outside the United States.
U.S. citizens residing outside the U.S. receive the
standard IRS Form 1099-R for tax reporting and
may not opt out of tax withholding. (See sidebar.)
Contact SDCERA to request a form, confirm your
withholding amounts or request more information
about retiring outside of California.
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SAN DIEGO COUNTY EMPLOYEES RETIREMENT ASSOCIATION

Supplemental Benefit Allowance to reduce in 2013
The Supplemental Benefit Allowance (SBA) is a nonvested benefit paid
to eligible Tier A members who retire with 10 or more years of SDCERA
service credit. Tier A members who are receiving a retirement based on a
disability may also be eligible. The SBA is funded by excess earnings and
existing reserves.
The Board of Retirement has established a two-step reduction of the SBA
in order to more efficiently distribute available funds for a longer period of
time. The first reduction occurred in January 2011, lowering the maximum
SBA amount to $350. The second reduction, lowering the maximum to
$175, is currently projected to occur sometime this summer. This projection
could change based on the rate of retirements in the first half of the year.
When a date is set for the reduction, SDCERA will notify Tier A members.
If you are unsure whether you receive the SBA, refer to your monthly
statement. Members sometimes confuse the SBA (“SBA Taxable” on your
earnings statement) with the health insurance allowance (“Medical Allowance
Non-taxable” on your earnings statement), a nonvested benefit provided to
Tier I and Tier II members to help offset health insurance premiums. These
two benefits are unrelated.
New insurance cards mailed in January
Retired members and their dependents who enrolled
in an SDCERA-sponsored health plan for the first time
in November should receive insurance identification
cards by mid-January. If you have not yet received
your identification card, contact your plan carrier
(e.g., Kaiser, Delta Dental). Contact information for
carriers can be found online at www.sdcera.org or in
SDCERA’s 2013 Health Insurance Plans booklet.
2013 JANUARY • FEBRUARY • MARCH
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Considering retirement?
Four essentials for you to know
1
The SDCERA retirement calculator is invaluable
Have your Annual Member Statement handy and fire up the Retirement Benefit
Calculator at www.sdcera.org. See how your age, service credit and final average
compensation will affect your benefit.
Age factor is determined by your age at retirement. Service credit is a measure
of time you have been an SDCERA member. Your final average compensation
is based on either your highest one year of earnings (Tier I and Tier A) or your
highest three years of earnings (Tier B and Tier C).
Changing any of these factors may affect your benefit. Plug a few scenarios into
the Retirement Benefit Calculator to discover the best retirement date for you.
We want to hear from you
Retirement seminars are offered throughout the year, providing an overview
of retirement benefit options and health insurance information. (See sidebar.)
2
Once you pick your retirement date, SDCERA wants to hear from you.
Contact the Call Center at 619.515.6800 about 60 days before your estimated
retirement date to request an application.
3
Inflation? Meet the COLA
The annual cost-of-living adjustment (COLA) is based on the Consumer Price
Index (CPI) for San Diego, provided by the Bureau of Labor Statistics each
February. All retired members are eligible for the COLA: up to a 3% increase for
Tier I, Tier II and Tier A members and up to a 2% increase for Tier B and Tier C
members. Because the maximum allowable COLA is 2% or 3%, depending on
your tier, any increase in the CPI beyond that maximum is placed in a COLA
bank. This amount can be applied in a future year, when the CPI change is less
than the maximum.
Members retiring on or before March 31 are eligible for a COLA (if any) that
year. Some members wait for the SDCERA COLA announcement before setting a
retirement date. The Board of Retirement approves the COLA in early March.
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SAN DIEGO COUNTY EMPLOYEES RETIREMENT ASSOCIATION

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You might miss working
If you work anywhere other than the
County (or participating employer)
after retirement, your SDCERA
benefits are not affected. But if you
return to work with the County (or
participating employer), keep the
following in mind:
• You must wait 180 calendar
days (90 days for public safety
officers) after retirement to
return to work.
• Work no more than 960
hours per fiscal year. If you
take a permanent position
with the County (at least
20 hours weekly), your
retirement benefit payments
stop and you re-enter active
SDCERA membership.
Find more information in the
Working after Retirement fact sheet,
available at www.sdcera.org.
New Year’s resolution:
Learn more about my
retirement benefits
SDCERA offers half‐day retirement
and estate‐planning seminars
throughout the year. Visit
www.sdcera.org and click on
“Seminars” for upcoming dates.
Mid-career seminar
• For members five to 20
years from retirement
• Offered monthly, some
on Saturdays
Late-career seminar
• For members within one
year of retiring
• Offered monthly
Estate-planning seminar
• For active, deferred and
retired members
• Offered three times yearly
2013 JANUARY • FEBRUARY • MARCH
5

New Board of Retirement member David B. Moore
brings experience, objectivity
David B. Moore attended an SDCERA Board of Retirement meeting as a visitor in
early 2012 and was immediately impressed. “From the first minute, it was obvious that
the Board members are extremely knowledgeable,” he says. “I’m very impressed with
their level of experience and engagement.”
Moore’s appointment to the Board of Retirement in November 2012 added to that
collective knowledge and experience. He has more than 15 years of professional
experience in the finance industry and has served on the boards of directors for several
organizations. “I view serving on the Board of Retirement as not just a worthy public
service mission, but also as an opportunity to engage in an activity I enjoy while giving something meaningful
back to the county I call home,” he says.
San Diego hasn’t always been home. Originally from New Orleans, Moore attended college and graduate
schools in Virginia and Washington, D.C. He made his way to Southern California after working two years for
a Chicago-based investment banking and investor services company. After five years with a private equity and
merchant banking firm in Rancho Santa Fe, Moore launched his own investment partnership in San Diego.
So much experience in the investment industry has helped him develop a farsighted perspective. “The Board is
already ahead in the area of long-term planning. We’re already doing unconventional things—and that’s good!” he
says. “I hope to encourage the Board to think even longer term, to plan even further out than we currently are.”
Moore says he approaches his service on the SDCERA Board of Retirement with a focus on objectivity. “All
the decisions we make need to be in the best interests of our members, and we also have a responsibility to the
taxpayers,” he notes. “Our job is to balance the concerns of both groups.”
Published for members of the
San Diego County Employees
Retirement Association
Member comments and suggestions
should be directed to SDCERA’s
Communications Department.
Email:
communications@sdcera.org
Call:
619.515.6800
888.4.SDCERA
Send written inquiries to:
SDCERA
2275 Rio Bonito Way, Suite 200
San Diego, CA 92108-1685
Visit:
www.sdcera.org
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Follow us on Twitter:
www.twitter.com/sdcera
Chief Executive Officer
Brian P. White
Board of Retirement
David A. Myers
Chairman
Martin Cherry
Marc Doss
Dianne Jacob
Dan McAllister
David B. Moore
E.F. “Skip” Murphy
Douglas Rose
Dick Vortmann
James W. Feeley
(alternate retired)
Timothy Hancock
(alternate Safety)
Retirement Board Meetings
First and third Thursday of each month at the
SDCERA Board Room, 2nd floor, 8:30 a.m.
Visit www.sdcera.org to view meeting calendars,
agendas, minutes and streaming video of Board of
Retirement meetings.
2013 Electronic Deposit Retirement Payment Dates
January 31; February 28; March 29; April 30;
May 31; June 28; July 31; August 30; September 30;
October 31; November 29; December 31
SDCERA makes every effort to meet the retirement
payment schedule; however, please verify with your
financial institution that each deposit has been
made to your account.
Observed Holidays (office closed)
January 21; February 18; April 1; May 27; July 4;
September 2; November 11, 28, 29; December 25
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SAN DIEGO COUNTY EMPLOYEES RETIREMENT ASSOCIATION

SDCERA selects Salient Partners
as portfolio strategist
SDCERA has signed a new contract with
portfolio strategist Salient Partners after a
six-month selection process. Salient Partners,
whose original three-year contract expired
in December 2012, was chosen for their
understanding of SDCERA’s investment
strategy, their experience in reducing
investment risk, and their track record of
strong investment returns. SDCERA’s new
five-year contract with the 121‐person firm
started January 1, 2013.
The portfolio strategist’s strong leadership
contributes to the stability of the SDCERA
fund. “Salient Partners is a talented group,”
says SDCERA Chief Executive Officer Brian
White. “Our fund’s portfolio, currently
managed by Salient Partners, has held up
well during a difficult economy by reducing
risk and producing strong returns.” The new
contract includes the service of 63 investment
professionals and support staff at Salient—a
significant increase in the staff and resources
managing SDCERA’s investments.
During the first 36 months of Salient
Partners’ original contract, SDCERA
reported an 11.4% return, outperforming
its 8% assumed rate of return. Between
July 1, 2009, and June 30, 2012, SDCERA’s
portfolio, under the guidance of Salient
Partners, outperformed 96% of its peers,
with investment returns of 14% during an
extremely challenging economy.
As the economic challenges continue,
Salient Partners’ emphasis on risk
management is expected to help maintain
SDCERA’s fund stability. “The new contract’s
fee structure reflects an increase in the amount
of staff and services provided to SDCERA
by Salient Partners,” said White. “Their
focus will be to generate strong long‐term
investment returns while minimizing risk and
decreasing the overall investment expenses of
SDCERA’s portfolio.”
Answers to
frequently
QA
asked
questions
For more answers,
please contact
the Call Center
at 619.515.6800
to speak with
a representative.
Can I collect my Social Security benefit
and my SDCERA benefit at the same time?
Yes. If you are eligible for an SDCERA
retirement benefit and a Social Security
benefit, collecting one will not keep you
from collecting the other.
However, Safety members, who do not
contribute to Social Security through their
work at the County, may be affected by
Social Security’s “Windfall Elimination
Provision.” Visit www.socialsecurity.gov
to learn more.
This newsletter provides disclosure of certain terms
and conditions of SDCERA membership and benefits
available to members. It is designed to give you this
information as simply and as accurately as possible
as of the date of publication. SDCERA is governed
by the County Employees Retirement Law of 1937
(Government Code Section 31450 et seq.) and by
the California Public Employees’ Pension Reform
Act of 2013 (Government Code Section 7122 et
seq.) as they have been adopted and implemented
by the San Diego County Board of Supervisors
and the SDCERA Board of Retirement. If there is
any inconsistency between this newsletter and
the governing law, the law will govern. Decisions
relating to the plan will be made after reference to
the statutes and any resolutions, regulations and
policies governing administration of SDCERA as
they exist at the same time of the decisions.
2013 JANUARY • FEBRUARY • MARCH
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San Diego County Employees Retirement Association
2275 Rio Bonito Way, Suite 200
San Diego, CA 92108-1685
PRSRT STD
U.S. POSTAGE
PAID
PDM
Investment report
%$ The SDCERA fund’s
focus on diversification is paying off.
Over the three-year period ended
September 30, 2012, SDCERA
outperformed its peers, according
to the Wilshire Trust Universe
Comparison Service (TUCS). The
fund generated an 11.4% annualized
rate of return over that period,
outpacing its benchmark return of
10.2%, the median fund return of
9.5%, and the fund’s 8.0% assumed
rate of return.
In the third quarter of 2012,
the European debt crisis, the
approaching fiscal cliff and central
bank stimulus signified a world‐wide
syndrome of unsustainable debt.
In mid‐September, the Federal
Reserve offered evidence that it was
going to try to inflate its way out
of debt by increasing the supply of
money in circulation for the third
time since 2008, with the purpose
of stimulating lending and
encouraging economic growth.
Despite the volatile environment,
SDCERA’s approach to
diversification produced promising
returns. For the quarter ended
September 30, 2012, SDCERA’s
portfolio generated a positive
4.8% return. Each of the three
major components of the overall
portfolio contributed positive
returns to the fund as a whole.
Returns for quarter ended September 30, 2012 (gross of fees)
Total assets under management: $9,127,564,595.
SDCERA Returns Quarter 1–Year 3–Year 5–Year
Growth oriented 1
Growth oriented benchmark
Stable value 2
Stable value benchmark
Inflation sensitive 3
Inflation sensitive benchmark
Total fund
Total fund benchmark
5.7%
5.7%
2.5%
1.5%
3.8%
5.2%
4.8%
4.6%
20.4%
21.3%
7.2%
5.0%
12.9%
15.0%
17.3%
15.9%
1
Global, Emerging Market, Private Equities, and High Yield Bonds
8.8%
9.0%
8.7%
6.7%
10.7%
11.0%
11.4%
10.2%
0.5%
0.0%
8.3%
6.9%
2.6%
4.3%
2.7%
3.4%
2
Emerging Market Debt (Local), Global Macro CTAs, Relative Value, and U.S. Treasuries
3
Real Estate, Natural Resources and Other Real Assets, and Treasury Inflation Protected Securities
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SAN DIEGO COUNTY EMPLOYEES RETIREMENT ASSOCIATION