DiCiccio: The top 50 city of Phoenix retirees will cost taxpayers up to $183M - Ahwatukee Foothills News: Opinion

DiCiccio: The top 50 city of Phoenix retirees will cost taxpayers up to $183M

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Posted: Tuesday, June 17, 2014 1:40 pm | Updated: 11:15 am, Tue Oct 21, 2014.

While the average citizen struggles to save for retirement, some “public servants” will be making millions from “public service.” Fifty individuals walked away with a cash payout of hundreds of thousands of dollars, got a second retirement plan, and then started making over $100,000 in yearly pensions. What do you get?

In a report generated by data from the city of Phoenix and with the work of actuaries outside of the grasp of politicians and staff, we found the following:

• 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 accrued on city payments to secondary retirement accounts.

• The average cash payout at retirement is over $193,000.

• The average age at retirement is 56, which is well below the national average.

For example, a city of Phoenix librarian retired at the age of 58 and received a pension of over $102,000 a year, a one-time payout of over $286,000 cash (for vacation and sick time, deferred compensation, and interest accrued from city payments to a secondary retirement account) — all courtesy of you, the taxpayer. At the same time, citizens, like yourself, who fund that librarian’s retirement receive an average Social Security benefit of only $15,528 a year — and you aren’t able to collect that benefit until you are at least 62.

This turns the notion of “civil servant” on its head — making the taxpayer the real servant. A career in government was never intended to be, nor should it be, a means of acquiring unjustifiably large pension benefits that dwarf the benefits offered in the private sector.

The system has been gamed for years and everybody gets to take advantage of it. This isn’t reserved for just the top 50.

Here is how it works: It is a function of just three words — Conflict of Interest. City staff, who handle the labor negotiations, create the reports, hire the attorneys, hire the consultants, and report to the politicians, purposefully design and justify a broken system. People hired to protect the taxpayer slowly created a complicated web to benefit themselves at the expense of the taxpayers. Any reform they would likely impose on another becomes a requirement on themselves.

And the politicians? At one time, they could plead ignorance, but no longer. They too are beneficiaries of the same system.

Most companies have long since abandoned the archaic defined benefit plans such as the one offered by the city of Phoenix due to their massive costs.

Phoenix is facing a financial crisis. This year, the city was looking at a $38 million budget hole, and yet it refuses to follow the lead of the business community. By reforming pensions to implement a 401K defined contribution plan as most employers do, the city could trim millions in future pension liabilities, create more predictability in budgeting, and prevent bureaucrats from becoming rich off the backs of the workers they are supposed to serve.

Think about this: Each year, the annual pension payments sent to these 50 individuals totals more than $6 million. For that amount, we could fund the salary and benefits of 45 new police officers — something Phoenix vitally needs as our force is short over 500 officers

Still think we don’t need pension reform?

To get a copy of the report, please email my office at council.district.6@phoenix.gov.

• Phoenix Councilman Sal DiCiccio represents District 6, which includes Ahwatukee Foothills. Reach him at council.district.6@phoenix.gov or (602) 262-7491.

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