Judges Seek Exemption from Arizona Pension Reform

March 21, 2013 (PLANSPONSOR.com) – Two Arizona judges asked the state senate to exempt judges from pension reform that would leave them with less-generous retirement benefits.

The Republic reports Arizona Supreme Court Chief Justice Rebecca White Berch and Maricopa County Superior Court Presiding Judge Norm Davis urged the Arizona Senate Finance Committee to exempt judges from a bill that would create a 401(k)-style retirement plan for future Arizona elected officials. The legislation, House Bill 2608, seeks to close an Arizona public pension system known as the Elected Officials’ Retirement Plan (EORP).

According to the news report, the EORP was found to be “significantly underfunded and costly to taxpayers” with recent public funds paid into it totaling $21.7 million, while contributions totaled only $6.8 million. The committee is conducting an in-depth study of Arizona pension reform, which is the result of a state senate decision in May 2012 not to immediately close out the EORP (see “Az. Senate Rejects DC Plan for State Officials”).

The judges asked the committee to let future judges have the option to be in the Arizona State Retirement System (ASRS) that, while not as generous as the EORP, would provide lifetime pension benefits to public employees when they retire. Higher court fees were cited as a way to help subsidize the cost of allowing judges to be in the ASRS. 

The legislation would have new elected officials contribute 8% of their pay into their retirement funds. The employer would contribute an amount equal to 5% of the official’s pay to the retirement fund. That fund would grow or shrink based on market investments, similar to private-sector 401(k) plans. 

Elected officials have been required to pay more for their pensions following changes made in 2011, and they will be paying 13% of their salary toward retirement starting July 1, compared with 7% in 2011, the news report said. Employers’ payments range as high as 36.44%. 

The bill, which could be amended as it heads to the full state senate, would not affect those already retired or those already elected. If passed, it would take effect January 1, 2014.