San Diego’s pension system is again paying out a controversial retirement bonus that has cost the system about $160 million since the bonuses were created in the 1980s. Checks averaging just over $700 were sent last month to nearly 8,700 retirees who have enough years of service to qualify. The checks — some as large as $1,594 — come in addition to the retirees’ usual pension checks. The total paid out this year in bonuses was $7.3 million, which ties last year’s record. That includes bonuses awarded 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 last month but were instead deposited in their retirement accounts, to be collected once they stop working. Critics say the city’s pension system, which is facing more than $3.5 billion in debt, should invest the bonus money to help reduce that debt instead of doling it out to eligible retirees. 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 program’s total payout amount continues to rise each year. That’s because the annual payout is based on a formula that compares the pension system’s investment earnings each year to the costs to operate the pension system. The pension system had $592.3 million in realized investment earnings during the fiscal year that ended June 30, which was enough to trigger the bonus payments. Bonuses have been awarded in every year since 1984 except for 2003, 2009 and 2012. They were initially conceived as an antidote to rampant inflation in the late 1970s, which was eating into the value of retiree benefits. Supporters of pensions note that city workers don’t receive Social Security benefits. While annual pensions exceed six figures in unusual cases, the average annual pension benefit to a retiree in the city system is about $60,000. The $7.3 million total payout this year includes retirees who worked for the San Diego Unified Port District and the Airport Authority, because the city’s system handles their pensions. It also includes payouts to deceased retirees’ surviving spouses. 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 payout dropped from $716 in November 2021 to $713 in November 2022 and to $710 in 2023. The average payment remained $710 this year. 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 and to 8,676 this year, according to Susan St. John, the pension system’s associate general counsel. While the bonus is actually included in the monthly check retirees receive in November, some critics have called it a “13th check” because it is a payout that goes beyond the 12 usual monthly pension payments retirees receive each year. The 2004 cap limits bonuses to $30 for every year of service for workers who retired after June 30, 1985. If such an employee had 30 years of city service, they could not get a bonus larger than $900. For workers who retired earlier, the cap is $75 per year of service. The city’s effort to create the cap resulted in litigation and an eventual $10 million settlement with affected workers. For retirees who worked for the port or the airport, the date the $30 cap kicks in is different: October 2005 for the port and October 2006 for the airport.