Arizona firefighters fight for retirement security
Given they depend on the nation’s worst-funded pension systems for their retirement security, Illinois’ government workers may want to take a look at how a group of Arizona firefighters are responding to pension-fund problems of their own. Arizona’s firefighters fear that out-of-control pension costs could bankrupt cities in Arizona, resulting in cuts to pensions like...
Given they depend on the nation’s worst-funded pension systems for their retirement security, Illinois’ government workers may want to take a look at how a group of Arizona firefighters are responding to pension-fund problems of their own.
Arizona’s firefighters fear that out-of-control pension costs could bankrupt cities in Arizona, resulting in cuts to pensions like those seen in Central Falls, R.I., Pritchard, Ala. and Detroit, Mich.
These firefighters are taking matters into their own hands. According to The New York Times:
“Bryan Jeffries, the chief of Arizona’s firefighters’ association, has been arguing to anyone who will listen that his members – and the state’s police officers, too – should volunteer to cut their own pension benefits.
“Mr. Jeffries, a fourth-generation Arizonan who has been a firefighter and a city councilor, says that emergency workers have a special obligation to protect the public not only from physical peril, but also from financial ruin. Cutting pensions for firefighters and police officers would help save their woefully underfunded retirement plan and bail out towns and cities that are struggling to keep up with their mandated contributions, he says.
“… Mr. Jeffries said his members worried that ‘something dramatic is going to happen, and they’ll wake up and they’ll have nothing.’”
Arizona firefighters are right to be concerned. The funding level of their retirement system has dropped more than 30 percent in the past 10 years.
But despite Jeffries’ efforts to proactively bring on reforms, critics of his plan don’t think it goes far enough. Jeffries, who proposes higher retirement ages and decreased cost-of-living adjustments, stops short of calling for 401(k)-style plans. Only those plans can provide cities with budget certainty and give workers full control over their retirement.
Many states have already implemented 401(k)-style plans for some of their workers. Michigan was early to modernize, implementing 401(k)-style plans for new workers more than 15 years ago. Alaska also converted its new workers in 2006. Even Democrat-controlled Rhode Island converted its existing workers in 2011 to a hybrid plan that includes 401(k)-style plans.
And since the Great Recession, six additional states have added defined-contribution plans, the most recent being Oklahoma.
States across the country are recognizing the need for real reform. Without those reforms, the risk of pension cuts is real.