San Diego’s pension jump could be four times as painful as previously thought, as payment hits record

San Diego is facing a record-high annual pension payment of $563.2 million thanks to larger-than-expected employee pay hikes, the actuary for the city’s pension system revealed Friday.

The new payment, due July 1, will significantly worsen the city’s already bleak budget situation. It will add at least $20 million to a $110 million deficit previously projected for the upcoming fiscal year.

The actuary, Gene Kalwarski, had predicted last winter that the city’s payment would rise by less than $7 million this winter — from $533.2 million up to $540.1 million.

But Kalwarski more than quadrupled his estimate of the jump this week to $30 million.

The sharp hike comes despite a notably strong year for the stock market and the pension system’s investments, which gained $89.2 million in value.

Stock gains typically shrink the city’s annual payment because a crucial part of the city’s long-term payoff plan is significant growth in the value of investments made by the pension system.

But those stock gains were overpowered by large employee raises that kicked in last July and this month. Those raises increased the pension system’s long-term liabilities more than $140 million, Kalwarski said.

The city doling out pay raises larger than Kalwarski expects has become a recurring theme — a...