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Phoenix City Panel Recommends Phase-out of Pension Spiking

Phoenix City Panel Recommends Phase-out of Pension Spiking

(KFYI News) – A special subcommittee of the Phoenix City Council is recommending changes aimed at making it more difficult for city employees to "spike" their pensions.  The practice happens when workers "cash in" the monetary value of unused sick and vacation time as part of their salary in the year before retirement, thus increasing pension payments, which are based on the final three years' salary.

Mayor Greg Stanton appointed the subcommittee over the summer.  It was chaired by vice mayor Bill Gates, and included citizen members.

After meeting for five weeks, the panel unanimously recommended disallowing city workers from including the unused vacation and sick-time payout in pension calculations from this point forward.  However, the change would not be retroactive.

"Anything that's already been earned or accrued by a city employee, we don't want to take away," Stanton told KFYI News.  "I believe that the recommendation balances the interests of protecting the taxpayers of the city of Phoenix, being fair to the employees of the city, and taking into account legal issues" such as existing employee union contracts, some of which specifically discuss the conversion of accrued vacation and sick time into pension payouts.

At subcommittee meetings over the last several weeks, members heard from people on both sides of the issue.  Some told the committee that they chose employment with the city – at a lower salary than they might have gotten in the private sector – specifically because of the ability to convert unused sick and vacation time into higher pension payments after they retire.

Some people predicted the city will incur more overtime costs in the future as employees begin to use more of their sick leave and vacation time if it won't count toward their pension payments.

The issue comes up for a vote before the full city council on Oct. 22, at which time council members may approve the subcommittee's recommendation, reject it, or revise it.

 

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