Management & Labor

Phoenix Votes to Keep 'Spiking' Police Pensions

March 27, 2014

The Phoenix Police Pension Board voted 4-1 Wednesday to let stand three controversial policies that allow public-safety officers to "spike" their retirement benefits at an additional cost to taxpayers.

The vote allows police officers to count uniform allowances as compensation and lets them cash in unused sick and vacation leave at the end of their careers to increase their salaries.

Those practices artificially inflate an employee's ending pay, which is a key factor in determining pension benefits. When ending pay is spiked, annual pension benefits are higher.

The policies have allowed a handful of high-ranking Phoenix public-safety retirees to become millionaires because they have significantly enhanced their annual and lump-sum retirement benefits under a program known as the Deferred Retirement Option Plan, or DROP.

The board was forced to rule on the policies because it is a defendant in a lawsuit in which three Phoenix residents allege the pension-spiking practices are illegal. The board's decision is expected to keep in place similar policies for firefighters, who also are allowed to spike their pensions.

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