City of Phoenix Pension Reform Initiative, Proposition 401 (November 2014)
|Voting on Local|
|Local Ballot Measures|
|July 25, 2014|
|Original Case study|
|San Jose & San Diego|
A group called Citizens for Pension Reform announced that they are beginning circulation of signature petition in order to put an initiative before voters that would entirely change the pension system for public employees going forward. The initiative would focus on two things:
- first, it would change the city's retirement system from a defined benefit system, in which retirees are guaranteed payments despite investment performance, to a 401(k) style defined contribution plan, in which the city contributes a set amount and the retiree's benefits depend on his or her own contributions and investment performance.
- second, it would take steps to put a stop to pension spiking by implementing limits on the pension benefits available to current employees.
Citizens for Pension Reform must collect 25,480 valid, voter signatures to get their initiative on the 2014 ballot.
The Pew Charitable Trust did a study in 2009 that estimated the Phoenix public employee retirement system had $5.115 billion in liabilities and that $1.399 billion of this fund was not backed by city assets, making the retirement fund only 73% funded. City officials have said the transition would cost taxpayers millions more up front, with savings kicking in years later. But supporters of the initiative dispute those projections.
City officials have said that if this initiative goes on the ballot and is approved, the taxpayers would not see savings for years and that in the short term it will cost them large sums because because the city would have to pay off the $5 billion dollar fund in an expedited time frame and without contributions from future employees, who would be part of the new system.
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