Pensions are going back on the ballot in Phoenix, the third time 4 years.
Phoenix has pension problems. The city employees pension system is seriously underfunded. It all comes down to math and politics. Numbers don’t lie but politicians do. To avoid owning up to the pension problem the city council is sending another short term fix to the voters.
Phoenix voters were asked in 2012 to approve a pension reform package. The 2012 package resulted in new hires paying half of the required pension contribution. A good idea, but because the pension fund is seriously underfunded the annual required contribution is higher than it has been in past years. This resulted in new hires being required to contribute 15% of their pay to the pension fund (it’s expected to go up even more,) this is on top of social security withholding and other paycheck deductions.
In 2014 petitions were collected for a ballot initiative to require new employees be enrolled in a 401k style defined contribution system. The city council opposed the measure and wrote a deceptive ballot title. Police and fire fighters who would not have been impacted by the measure campaigned against it. Measure 487 was defeated last November.
Now the city council is proposing another pension reform ballot question. The new proposal will cap pensionable income for new employees at $125,000 per year, and cap employee contributions to the pension system at 11%. This is not going to fix the problem. Unfortunately for taxpayers, politicians are more interested in kicking the can down the road than providing a sustainable retirement option to city employees.