Arizona referendum repeals benefit hike for public safety plan participants
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Arizona voters overwhelmingly passed a referendum to modify pension benefits for existing participants in the $8 billion Arizona Public Safety Personnel Retirement System, Phoenix.
The measure, which passed with 70% approval on Tuesday, will repeal the permanent benefit increase for members of the first two tiers of the new three-tier system and will create a new cost-of-living-adjustment formula.
The permanent benefit increase mechanism required half of any annual investment return earnings above 9% to be transferred to a reserve account from which a COLA would then be administered.
A bill to create three tiers of participants, the third of which is for employees hired on or after July 1, 2017, was signed into law by Arizona Gov. Douglas A. Ducey on Feb. 16, less than a week after it passed the state Legislature. The law itself sufficed in creating a new COLA formula for tier three members but called for a referendum to modify benefits for current members.
The law came as a result of an Arizona Supreme Court ruling that found previous pension reform efforts violated an article in the Arizona Constitution that says benefits could not be diminished.
The Supreme Court ruling had restored the permanent benefit increase mechanism.
Meaghan Kilroy writes for Pensions & Investments, a sister publication of Business Insurance.
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