Arizona Proposition 125 Would Change Pension Payouts For Some State Workers

By Claire Caulfield
Published: Tuesday, October 23, 2018 - 8:44am
Updated: Tuesday, October 23, 2018 - 11:36am
Audio icon Download mp3 (1.68 MB)

Compared to other controversial Arizona ballot measures, Proposition 125 hasn't received much attention, but it could save taxpayers $275 million.

If voters pass the measure, it would alter Arizona’s constitution and allow the state to adjust pension payouts to retired elected officials and correctional officers.

The current formula to determine an increase in pension payouts is calculated through investments; if overall returns are above 9 percent, all retirees split the returns. Proposition 125 would give retirees a yearly cost-of-living adjustment, set by the regional consumer price index.

Proponents, and the official ballot language, say the measure would provide greater financial stability in the pension system.

“The unions got together with the legislators and they realized we had a problem that the current permanent benefit increase was not sustainable long-term,” said Will Buividas, a Phoenix police officer and vice-chairman of the Public Safety Personnel Retirement System Board of Trustees.

Buividas’s personal pension was affected after the 2016 election when voters approved Proposition 124, which did for public safety pensions what 125 is trying to do for pensions earned by elected officials and correctional officers.

Although retirees could see smaller increases — Proposition 125 would lower the cap from 4 percent to 2 percent — he said the measure has broad support because it decreases the likelihood that the coffers will run dry.

“It also allows us — the system — to be able to invest the assets and allows us to take smarter risk and get better returns,” he said. “We don’t have to worry about half of the return going to fund the permanent benefit increases.”

The measure on this year’s ballot is based on legislation, passed by the Arizona House and Senate with bipartisan support. However since pensions payouts are enshrined in the state’s constitution, voters have the final say to any changes.

There is no organized opposition to the measure and only one submitted argument against. 

One Source, My Connection!