Retirement change OK'd by AZ House

2013-03-01T00:00:00Z 2014-07-24T15:00:43Z Retirement change OK'd by AZ HouseHoward Fischer Capitol Media Services Arizona Daily Star
March 01, 2013 12:00 am  • 

PHOENIX - The state House voted Thursday to scrap the generous retirement plan enjoyed by elected officials and judges - but not in a way that would affect any of them.

Current law puts them into a "defined benefit" plan, where the amount of their pension is based on their salary and number of years of service. It permits them to retire after 20 years at 80 percent of their top average wage, a system nearly twice as liberal as the one offered to most other state workers.

But the system is sharply underfunded. So HB 2608 would have anyone who joins the system in the future put into a "defined contribution" plan, similar to what now exists in most businesses, with the state and employees each contributing 5 percent of their income, with the pension amount dependent on how well their investments do. The measure passed on a 35-23 vote.

Rep. David Stevens, R-Sierra Vista, said the change actually will create more financial losses for the state, at least in the short run.

Closing off the Elected Officials Retirement Plan to new enrollees still leaves the financial burden of paying the pensions of those already retired and those current elected officials who will retire, but without any new people being added to the system to make contributions to help pay the $13 billion in liabilities.

Stevens also pointed out a study committee looking at financial problems of all the state pension plans proposed other alternatives he said should be tried first.

House Minority Leader Chad Campbell, D-Phoenix, said converting to the least-generous option could discourage good candidates from running.

The measure now goes to the Senate.

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