Arizona Firefighters Scared of Losing Generous Benefits

Arizona firefighters are perfectly happy to run into burning buildings, but they run away from pension reform-

  • Unions are scared of defined contribution plans, which place the risk on the retiree to save for retirement
  • Rather, the unions prefer their defined benefit pensions, which place the retirement risk on the taxpayers to guarantee those union pension benefits
  • Unions fought against and beat recent ballot initiatives in Arizona intending to reform pension costs

“If you’re not on the bus, we’ll run over you with the bus.”

“And I’m not kidding.”

– Ohio Governor John Kasich

 

Into the Mind: Bryan Jeffries, president of the Professional Firefighters of Arizona, details his plan to fix our woefully underfunded public-safety pension system.

 The Republic | azcentral.com – February 20, 2015

You’re proposing changes in the state pension fund for public-safety workers. Why?

We have a structural problem created by what’s known as the “excess earnings” instrument. This problem became apparent after the PSPRS (Arizona Public Safety Personnel Retirement System) fund sustained two enormous market losses back to back, after the dot-com bubble burst in the late 1990s and the Great Recession hit in 2007.

MORE: Public-safety pensions in financial trouble

If we don’t fix this issue, taxpayers will face an increasing burden. We absolutely do not want that.

What would your proposal do?

Firefighters and police officers will pay more, work longer and earn less in retirement. The most important facet of our proposal is the elimination of that “excess earnings” instrument, which provides retiree cost of living adjustments.

RELATED: Pensions again putting Phoenix in the red

This mechanism has prevented the PSPRS fund from growing out of its deficit situation even while the stock market has boomed. It is like a restrictor on a motor that will not let the motor accelerate. Our plan would fund retirees’ cost of living adjustments out of the pockets of current working public safety workers, not taxpayers.

Why not a 401(k) type approach? Or a hybrid?

Switching to a 401(k) would require closing the PSPRS plan, in turn causing taxpayers’ costs to skyrocket. An independent analysis of the cost of closing the plan shows the dollars involved would be staggering. Moreover, defined-benefit pension plans are significantly more efficient than 401(k)-style plans.

OUR COVERAGE: Take a look at public pensions

When you have a stable long-term workforce like we do in public safety, switching from a pension system to a 401(k) is like deciding to buy a large family’s bulk groceries at a convenience store versus a Costco — it’s just financially dumb. In addition, virtually every Arizona public safety officer will never draw any Social Security. That means we rely 100 percent on this benefit when we retire.

Will this require a constitutional change?

Yes, we are currently asking the Legislature to refer this proposal to the ballot as a constitutional amendment, which will save taxpayers hundreds of millions of dollars. If for some reason they do not wish to refer this to the ballot, we will then likely go directly to the voters with an initiative.

What’s the net result when someone retires?

Our first responders will work longer — a minimum of 25 years before they are eligible for a pension. And when a public-safety officer retires, this proposal will require them to wait until at least 60 before receiving a cost of living adjustment.

The amount of the cost of living adjustment will be one-half or less what the system has been paying for 29 consecutive years.

So why should police and firefighters support this?

If the structural problem is not addressed, employer contribution rates will continue to spike. That could force agencies to consider service cuts and additional salary cuts, or put off hiring.

The police officers, firefighters and paramedics who serve Arizona citizens every day did not cause this pension problem. However, we will step up and reduce our benefits to fix it.

Pensioners First – blah, blah, blah

 

If the firefighters are thumping their chests regarding pension reform, you can be guaranteed its not the best deal for the taxpayers

 

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