San Diego retirees just got a controversial annual bonus. Here’s why it’s lower this year.

More than 8,800 city of San Diego retirees — a record number — recently got a controversial year-end retirement bonus that gets doled out when the investment portfolio of the city’s pension system has a strong year.

The bonuses, dubbed a “13th check” by some critics, have been doled out every fall since 1984 except in 2003, 2009 and 2012. They come in addition to the retirees’ usual pension checks.

The total paid out this year in bonuses was $7.5 million, another new record. But because more retirees were eligible, the average size of the checks was lower than it has been in at least six years at $703.

The size of each check varies by retiree based on several factors. The largest this year was $1,594 and the smallest $13.

While the bonus is actually included in the monthly check retirees receive in November, some critics call it a 13th check because it is a payout that goes beyond the 12 usual monthly pension payments retirees receive each year.

The bonuses have cost the pension system more than $167 million in total since the 1980s. Critics say the system, which is facing $3.5 billion in unfunded debt, should invest the bonus money to help reduce that debt instead of doling it out to eligible retirees.

The board of the city’s pension system, the San Diego Employees Retirement System, approved the payouts at its most recent meeting in November with no discussion or debate.

The amount each retiree can receive was capped in 2004 after a city pension scandal earned San Diego the nickname Enron-by-the-Sea.

At that time, the pension system also disqualified workers who started after 2005. Workers who started before that couldn’t be disqualified because the bonuses are a vested benefit.

Despite the cap and the 2005 rule, the bonus program’s total payout continues to rise each year. This year’s $7.5 million was an increase over $7.3 million each of the previous two years.

The payout typically rises because it’s based on a formula that compares the pension system’s investment earnings each year to its operating costs.

The pension system had $918.9 million in investment earnings during the fiscal year that ended June 30, compared to $227.6 million in costs. The difference of $691.3 million was large enough to trigger the bonus payments.

Some of the $7.5 million in payouts goes to participants in the city’s deferred retirement option plan, where employees formally retire but keep working for up to five more years.

For those workers, the bonuses were not paid out in November but were instead deposited in their retirement accounts, to be collected once they stop working.

The bonuses were initially conceived as an antidote to rampant inflation in the late 1970s, which was eating into the value of retiree benefits.

Supporters note that city workers don’t receive Social Security benefits, and that the average annual pension benefit to a retiree in the city system is only about $60,000.

The $7.5 million total payout this year includes retirees who worked for the San Diego Unified Port District and the Airport Authority, because the city’s pension system handles their pensions. It also includes payouts to the surviving spouses of deceased retirees.

Even though the pension system’s total payout keeps rising, the average individual bonus payout to retirees now collecting pensions has been declining slightly in recent years as it gets divided among more people.

For retirees now receiving pension payments, the average individual bonus payout dropped from $716 in November 2021, to $713 in November 2022, to $710 in both 2023 and 2024 and to $703 in 2025.

The number of retirees receiving pensions who got payouts has risen from 8,221 in 2021 to 8,470 in 2022 to 8,572 in 2023 to 8,676 in 2024 and to 8,839 this year, according to Susan St. John, the pension system’s associate general counsel.