Yesterday December 21, 2010 the PSPRS Board of Trustees approved forwarding to the legislature some very disturbing changes to YOUR retirement. Not only will these changes affect new employees (people who have not been hired), the PSPRS Board of Trustees will seek changes to the law that will affect ALL members of the system including retirees. Here is a summary of the proposed changes:
Increasing the employee contribution rate 4% over the next four years. This equals a 4% PAY CUT.
- Change pension calculations from a “high three” to a “high five.” This will REDUCE YOUR PENSION. Instead of the highest 36 months, it will be calculated on the highest 60 months.
- Reducing DROP interest to as low as 2%. This will REDUCE your DROP money.
- Forcing DROP participates to contribute during the DROP period (11.65%) REDUCING the benefit.
- Restricting funds into the COLA (cost of living adjustment) type of fund. This means that in a couple of years there will be no more money for cost of living increases for retirees for possibility the next 20 – 30 YEARS. This means your pension will stay the same while inflation continues to INCREASE.
- NEW HIRES: Will have to work 25 years and be at least 52.5 years old to begin collecting retirement benefits.
The Board of Trustees led by chair Brian Tobin (a firefighter) approved sending these changes to the legislature by a vote of 5 – 2 with one of the no votes coming from the Arizona Police Association appointee. Ironically, these changes do not affect Fire in the same way they do us. Firefighters stay on average 5 years longer than police officers. This gives them a larger pension with a higher multiplier so the “High Five” calculation does not cut into their pension as much as ours.Firefighters are also more likely to stay the entire five years in DROP while police officers only stay 2.5 years on average. Also, there is a special tax through the fire insurance fund that helps offset the amount paid into their pension.Fire tried to push through a seven year DROP last year that would of benefitted firefighters while at the same time hurt the overall fund.
Now more than ever it is time for us to be UNITED against these attacks to OUR pension. Many people spoke at the meeting about how it is most likely illegal to change benefits for current employees and retirees. The board ignored Police, Judges, and Attorneys objections and passed Fire’s agenda, knowing that it will be aggressively challenged in court and cost millions of dollars to defend. Thankfully, PLEA is extremely active in the political arena and will stop at nothing to prevent the legislature from enacting these proposed changes. We will work with the legislature to develop a plan that is legal and is fair to new hires. If not, PLEA will be the first ones in line to challenge this in court. As PLEA members, we ALL need to be involved; YOUR retirement continues to be an important and crucial priority for the PLEA board to protect.
Chief Contract Negotiator / Elected Pension Board Member