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Even San Francisco, Flush With Tech Wealth, Has Pension Problems

  • Pension cost to rise more than three times faster than revenue
  • With retirees living longer, pension shortfall has swelled
The skyline of downtown San Francisco.

The skyline of downtown San Francisco.

Photographer: David Paul Morris/Bloomberg

The technology industry has transformed San Francisco with a boom other cities can only envy. But it hasn’t eradicated a problem well known to industrial-era towns: the rising cost of pensions.

The city, where the unemployment rate is just 3.2 percent and the typical home sells for more than $1 million, is facing a budget shortfall that will reach $848 million in five years. Increases in pension payments and other payroll costs are driving the gap, according to a five-year financial plan, despite a measure voters approved in 2011 that aimed to cut employee-retirement bills.