The possible loss of a popular pension plan has prompted 34 Chandler public safety officers to inquire about early retirement since Jan. 1, and nine have already opted to retire, officials said Thursday.
As the Arizona Legislature considers eliminating the program for public safety officers, many Chandler and Tempe police and fire officials are wondering the same thing: Should they retire now before new pension legislation is approved and goes into effect?
“Anybody who has 20 years or more in the department is considering (it),” said Chandler Sgt. Joe Favazzo, a police spokesman. “It is definitely something I am looking at.”
In Chandler, 24 police officers and nine firefighters have looked into retiring, said Stacie Finkelstein, employee services supervisor. That is far more than usual, officials said.
Tempe hasn’t had a large bump in requests from public safety employees yet, but “we have heard that we may see an influx of employees who elect the DROP (deferred retirement option package),” said Jon O’Connor, Tempe’s human resources deputy director.
DROP allows officers with 20 or more years on the force to retire, then work for a maximum of five more years.
Instead of receiving a weekly pension check during that period, the pension dollars are invested and earn interest. The employee continues to receive regular paychecks.
When the employee leaves for good, he or she is awarded a sizeable lump sum of five-years’ worth of pension dollars. In addition, retirees draw pension checks until death. Average DROP annual pension benefits have risen to $44,025.
Arizona legislators are taking aim at pension reform following an investigation by The Arizona Republic. The probe into six public pension plans in Arizona revealed that over the past 10 years, total costs soared 448 percent, to $1.39 billion in 2009.
In 2007, DROP benefits totaled $151.9 million, a 566 percent increase from the previous year, when $22.8 million was paid. Many of the first participants in the program collected payouts in 2007 after participating for the maximum five years.
The public safety pension trust is poorly funded at only 65.8 percent. Union leaders blame faulty stock investments, the federal government’s refusal to bail out pension funds and mismanagement.
Others suggest the large lump sum payments gut the system. When an employee enters DROP, neither he nor the employer contribute any more to the pension fund.
The House bill discussed Thursday in committee would eliminate DROP, among