City leaders to talk pension ‘spiking’

On Tuesday, Phoenix leaders will consider reforms meant to curtail the practice of pension “spiking,” which is generally seen as the artificial inflation of a city employee’s income toward the end of his or her career for the purpose of boosting his or her retirement benefit. An analysis by The Arizona

Republic has found that letting employees count unused sick leave, vacation time, cellphone allowances and other benefits in their pension calculations increases the cost to the city’s retirement system by as much as $12 million per year.

If that figure is multiplied

over 16 years, the average life expectancy of a Phoenix retiree, the cost to the underfunded pension could reach as high as $192 million.

The Republic’s calculation looked at employee-pension amounts based strictly on last year’s base salary, then compared that figure with how much those pensions were when all forms of pension-boosting compensation were included in the calculation. Items

The Republic considered as spiking mechanisms included overtime or premium pay for working a night shift or for speaking a foreign language.

City officials rejected that analysis last week, arguing that overtime and premium pay are part of an employees’ base wages and not a perk that should be considered pension spiking. Officials said they believed The Republic’s analysis therefore overstated how much pension spiking costs the city annually.

But some City Council members said the figures highlight the unfair burden to taxpayers and the need for serious reforms.