FOR IMMEDIATE RELEASE: September 19, 2011
CONTACT: Daniel Scarpinato
Calls for moving to 401K, ending double-dipping
PHOENIX – Mayoral Candidate Wes Gullett unveiled a bold set of needed reforms to Phoenix’s public pension system today, including a call to begin transitioning city employees to a 401K-style retirement plan in line with the private sector.
The Gullett plan also eliminates egregious abuses like “double dipping” and so-called “pension spiking.”
Phoenix’s public pension system has become an unsustainable and growing burden on taxpayers. Taxpayers spend nearly $100 million a year to cover the unfunded liability of the employee pension program – a price tag that is growing.
Included in the Gullett plan is the elimination of a deferred compensation plan, commonly known as a second pension, which costs taxpayers $40 million a year – almost enough to cover the cost of repealing the city’s food tax. Gullett has called for the repeal of that tax.
Gullett pledged to make pension reform a top priority if elected, stressing that the reforms are necessary to save taxpayers from ever increasing unfunded liabilities and to ensure city employees have a sound retirement plan.
“Our leaders should be accountable to us – not to special interest groups,” Gullett said. “Our pension system is broken, unsustainable and filled with abuses. In order to protect taxpayers – and to live up to the promises we’ve made – we must have the courage to confront this issue.”
The Gullett plan is two-tiered, protecting the pension of current retirees, while making future changes that limit the unfunded liabilities taxpayers will otherwise have to pay for.
The reforms include:
- Beginning to transition the city from a defined benefit plan to a defined contribution 401K-style plan
- Raising the retirement age by two years
- Increasing employee contributions to be more in line with other cities
- Ending “pension spiking”
- Eliminating “double-dipping”
“None of these initiatives will be easy, but doing nothing is not an option,” Gullett said. “This plan forward will most definitely prompt the same scare-tactics and fear-mongering we always hear from those who would rather see our pension system go bankrupt. But I promise to have the courage as Mayor to fight for these reforms and make sure they happen. Taxpayers can’t afford the alternative.”
The Arizona Republic has reported heavily on the problems with the public pension system. The newspaper reported in an 8-part series last year: “Even as local governments and the state are slashing budgets, Arizonans are propping up public-pension systems that allow civil servants to retire in their 50s, receive annuities that can exceed $100,000 a year, and collect pensions while staying on the same job.”
A copy of the plan is available here.