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Ariz. bill dumping judge's pensions to get hearing

Bob Christie, Associated Press

PHOENIX (AP) -- A plan championed by Arizona House Speaker Andy Tobin that would eliminate pensions for new elected officials and judges and replace them with 401(k) style retirement plans is set for its first hearing in the Arizona House Tuesday.

The bill makes good on a promise Tobin and fellow Republican Rep. Phil Lovas made to revamp the Elected Officials Retirement Plan in part because it only has assets to cover about 58 percent of its liabilities and the state must make up the difference. And there were nearly as many retired members drawing benefits last year, 785, as there were active members.

Because of the unfunded liabilities, with the plan having about $356 million in assets and $610 million in liabilities, the state contribution has gone from about 6 percent of salaries in 1999 to 39 percent today, Lovas said. And lawsuits challenging a bill cutting cost of living raises for pensions have put that effort on hold. If that sticks, Lovas said the state contributions are projected to rise to 51 percent by 2027.

"So the system is not getting any better, and we think the prudent thing to do is to shut it down," Lovas said Tuesday. "And what that will do is ensure the solvency of it for members who are currently there, create a fair system similar to what the private sector offers for new members, and we'll save money in the long run.

Superior Court judges have said changing the retirement system could discourage highly qualified lawyers from serving on the bench and representatives are expected to testify at the House Insurance and Retirement Committee hearing.

Lovas doesn't think so.

"I think we'll continue to get qualified people,' he said. "Certainly, they're paid very well, $145,000 a year, you have the status of being a judge, you really don't have any opposition when you run for re-election - we have retention elections."

As for pensions, incoming judges and elected officials have had careers inside or outside government where they've been able to save for retirement, and they'll be able to continue doing that with the new defined contribution system Lovas envisions.

About half those enrolled in the plan are elected officials. Besides judges, including the Supreme Court, appeals court and superior courts, those eligible for the plan include state legislators and elected officials at the state and county level, plus some city elected officials.