by Anthony Randazzo
June 30, 2014
The City of Phoenix Employee Retirement System faces a $1.5 billion unfunded liability, and is operating with unrealistic actuarial assumptions that underestimate future taxpayer costs. Further, the 2013 reform initiative requires future employees to contribute unsustainably high percentages of their salaries to retirement savings, making retention very difficult. There are, however, options for reform. Changing pensionable pay calculation and final average salary would reduce the system’s debt immediately and lower normal cost relative to current projections. Ending dual enrollment in retirement plans would also save taxpayers money, albeit through a different channel of the budget than normal cost for pension funding. This savings would be substantial; taxpayer costs over the next 25 years would be at least $394 million less than currently projected, and roughly $1.6 billion less than was projected in 2012.