SAN DIEGO – City Attorney Michael Aguirre said Monday he intends to sue the retirement board to reverse a program under which San Diego municipal employees were allowed to buy discounted pension service credits.

Employees who opted for the benefit could buy up to five years of credit toward their retirement without actually working for them.

“The cost of the service credits were very substantially underpriced,” Aguirre said at an afternoon news conference.

In his 12th “interim report” on the San Diego's finances, Aguirre said the benefit was crafted illegally and should be rescinded, with refunds issued to city employees who have bought into the program.

The lawsuit, which Aguirre said will be filed in the next two weeks, will ask a judge to require the SDCERS board either to reverse the benefit or mandate full funding for the cost of service credits.

The city attorney said the “better way to go” would be to unwind the transactions in order to “substantially reduce” a $1.4 billion deficit in the city's pension system.

Aguirre estimated that city employees have collectively purchased about 12,000 years of pension service credits, worth more than $100 million.

The city attorney once again urged city employees and elected officials to voluntarily relinquish their pension service credits.

A lawsuit is pending by Aguirre challenging the legality of agreements reached in 1996 and 2002 that granted enhanced pension benefits in exchange for reduced contributions by the city into the retirement system.