A state Supreme Court ruling will require refunds to elected officials and public-safety officers who since 2011 were required to pay more for their pensions, with local governments likely to cover the projected $220 million cost to an already fragile public-pension trust fund.
The divided court upheld a Maricopa County Superior Court ruling that found a 2011 pension-reform law was unconstitutional. Specifically, it overturned provisions in the law that increased employee contributions to their own retirement and curtailed certain benefit increases. The law was intended to improve the financial health of the Public Safety Personnel Retirement System trust fund.
The decision means hundreds of PSPRS members whose employee contributions were increased will receive refunds, while some retirees will receive retroactive benefit increases. Justices also ordered attorneys’ fees paid to the plaintiffs’ counsel, and interest on the repayments.
“While this ruling is unfortunate in terms of the health of the system, we respect the constitutional protections granted by this opinion,” PSPRS Administrator Jared Smout said in a statement.
Precise details of how the refunds and benefits will be implemented are being worked out, PSPRS spokesman Christian Palmer said.
Lawmakers five years ago passed a series of reforms to shore up PSPRS, which has under-performed while providing generous retirement benefits to politicians, police officers and firefighters.