PENSION SPIKING LAWSUIT HIGHLIGHTS GROSS ABUSES OF AMERICAN TAXPAYERS

Posted on January 23, 2014 | Type: Press Release
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Contact: Charles Siler

602-633-8960

 

FOR IMMEDIATE RELEASE:

PENSION SPIKING LAWSUIT HIGHLIGHTS GROSS ABUSES OF AMERICAN TAXPAYERS

PUBLIC EMPLOYEES RETIRING AS MILLIONAIRES, WHILE HARDWORKING AMERICANS FOOT THE BILL

 

As public employee unions strike deals with public officials to raid money from public coffers to pad their own pockets in retirement, a lawsuit over illegal pension spiking practices in Phoenix provides an up-close look at a national epidemic of pension abuses.

“The public pension crisis in this country runs far deeper than just matters of payments and fund solvency,” said Goldwater Institute attorney Jonathan Riches, who is leading a lawsuit against pension spiking aimed at a local police union and public officials in Phoenix, Ariz. “The goodwill of American taxpayers to public employees is being squeezed and abused in every imaginable way, especially through illegal pension spiking.”

The practice of pension spiking, where benefits such as sick leave, vacation time, vehicle allowances, bonuses and other benefits are cashed in to inflate a salary for retirement calculations, is illegal in many states, yet it continues to occur on a regular basis. In Phoenix, where pension spiking is sought after by police and firefighters, the illegal practice has allowed a handful of those workers to retire as millionaires, while others have increased their retirement benefits by hundreds of thousands of dollars. In part because of these spiking abuses, Phoenix’s public-safety retirement cost has exploded, jumping from just $7.2 million in 2003 to nearly $130 million in 2014.

Phoenix is not alone—pension spiking goes on all over the country. Here are five additional examples that embody the pension spiking crisis:

 

  • A former Phoenix assistant fire chief walked away with $795,093 in cash, and an annual pension of $130,406 after cashing in vacation time for $14,528,  deferred compensation benefits for $43,152, and sick leave worth $110,877, in 2006.
  • In Contra Costa County, Calif., a sanitary district general manager spiked his pension by 22 percent, adding an additional $50,000 a year to his pension payouts when he cashed in his sick leave upon retirement. He even counted his “cafeteria plan” into his pension equation. He also retired mid-year so he could include to cash payments for unused vacation time in two different years, and he timed his retirement to end one day before the system boosted his pension with an automatic cost-of-living adjustment. He now earns $270,240 a year in pension pay.
  • An Allegheny County, Penn., report found a jail employee inflated his income in his last two years with overtime pay from $56,000 a year to $140,000, entitling him to a $92,000 pension, almost double his all-time career high salary.
  • In Orinda, Calif., a former fire chief retired in 2009 with a salary of $185,000 is earning a $241,000 pension. The same district went on to rehire him as a consultant for $176,000.
  • A Highland Park, Ill., executive director received $270,999 in bonuses during his final working year bringing his total pay to $435,203. The boost hiked his pension from a projected $110,000 to $166,332.

 

The Goldwater Institute is in court Friday, on behalf of concerned taxpayers against city officials, the local police union and a pension fund, arguing that the practice violates state law.

        “Taxpayers simply cannot sustain this abusive and illegal practice,” said Riches. “We must put an end to pension spiking now, before it puts an end to responsible government.”

 

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 To schedule an interview with Jon Riches, please contact Charles Siler with the Goldwater Institute at (602) 633-8960 or csiler@goldwaterinstitute.org. The Goldwater Institute has an in-house VideoLink studio for rapid cable hook-up if needed.

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