PSPRS – Municipal Bankruptcies? 425% Increases To Pension Payments?
Pensioners First says –
The Grand Canyon Institute’s recent paper titled “Arizona Pensions: On Track to Financial Sustainability with Retirement Security” is was seriously weakened after the Arizona Supreme Court’s recent ruling on the Arizona Public Safety Personnel Retirement System’s attempt at pension reform and funded status repair.
This paper, originally published on January 27, 2014, has been reposted several times in February to show that everything is O.K. at PSPRS. Unfortunately, there are still many W.R.O.N.G.S. at the public safety pension.
In an update to the Republic’s February 20 article regarding the Supreme Court’s ruling, preliminary financial projections show that –
A unanimous Arizona Supreme Court ruling will restore cost-of-living raises to retired judges and elected officials at an eventual cost of roughly $375 million to the retirement system and taxpayers.
System Administrator Jim Hacking said in a statement that retroactive raises for all PSPRS retirees will cost the trust $40 million immediately. He said an additional $335.6 million will be set aside to fund cost-of-living adjustments going forward.
The system did not provide the ruling’s precise cost to taxpayers, but Hacking said it will force the system to increase what it charges governments for pension benefits.
Governments are assessed at a rate applied to an employee’s wages based on total liabilities.
Rates for some governments could exceed 50 percent of each employee’s wages, and major increases are expected to occur in July 2015, according to the pension system.
The Arizona Republic found last year that lower-than-anticipated investment returns and pension enhancements caused employer trust payments to rise so much that some governments were unable to hire new police officers and firefighters because of the associated pension costs.
Contributions to the trust from employers have increased about 425 percent in the past decade to $451 million annually, according to trust financial statements.
The system manages a $7.2 billion trust that provides retirement benefits for more than 53,000 retirees, beneficiaries and active members.
Finally, the following video notes that many Arizona municipalities (employers of public safety personnel) are extremely concerned about public safety personnel retirement costs hitting municipal budgets (and even causing municipal bankruptcies) –
Pensioners First –
FYI: According to the Arizona Republic’s calculations, these restored benefits costing taxpayers $375 million could have easily been paid for with the $400 million sunk into the Desert Troon Companies over the past four years (authorized by the current Board of Trustees, Administrator Hacking, and Chief Investment Officer Ryan Parham).
Oops – we forgot – that money was already lost (again, according to the Republic).