Tuesday, June 10, 2014

Pension Reform -- What do you get?

The Taxpayer Funded Millionaires Next Door:
50 City of Phoenix Pensioners To Cost Taxpayers up to $183 Million

A new report generated by data from the City of Phoenix and with the help of independent actuaries shows that taxpayers are on the hook for up to $183 million in retirement benefits for just the top 50 City of Phoenix. Phoenix City Councilman Sal DiCiccio released a report today showing the true cost of just 50 “public servants.”

While the average citizen of Phoenix struggles to save for retirement, 50 “public servants” will make millions in retirement from “public service.” These employees are walking away with over a hundred thousand in cash, huge annual pensions, and tens of thousands from city contributions to secondary retirement accounts.

For example, a City of Phoenix librarian was able to retire at the age of 58 and receive a pension of over $102,000 a year, a onetime payout of over $286,000 cash (for vacation and sick time, deferred compensation, and interest acrued from city payments to a secondary retirement account) – all courtesy of the Phoenix taxpayers. At the same time, the people who are funding that librarian’s retirement receive an average social security benefit of only $15,528 a year – and they aren’t able to collect that benefit until they are at least 62.

Findings at a glance:
  • The overall cost of the 50 employees is $183 million which includes the spousal benefit, presumes the average life expectancy, and includes cash out payments and interest acrued on city payments to secondary retirement accounts.
  • The average cash out at retirement is over $193,000
  • The average age at retirement is 56 which is well below the national average
“This turns the notion of civil servant on its head – making the taxpayer the real servant,” Councilman DiCiccio said. “It is time for the Mayor and Council to get serious about pension reform. For years, the system has been gamed by insiders profiting from the goodwill of the public.”

DiCiccio cited the conflict of interest that created this problem. “City staff negotiate their own labor agreements, hire the attorneys that defend the agreements, prepare the reports defending those agreements, and consult with the Mayor and Council on those agreements. This would never be permitted in the private sector.” Said DiCiccio.  

To receive a copy of the report, please contact Sal DiCiccio's office at council.district.6@phoenix.gov.