A revised Phoenix city pension plan that officials said could save $600 million over 25 years was approved overwhelmingly by voters in last week's special election.
Proposition 201, which equalize annual contributions to the Phoenix Employee Retirement System by the city and employees, passed with 79% approval. Proposition 202, which authorizes more aggressive investments by the municipal retirement system, was favored by 77%. The changes will affect new employees hired after July 1 but not current workers. The municipal system does not include police, firefighters, or EMTs, which are covered by state plans.
Mayor Greg Stanton said Phoenix can allocate the savings from the new plan to provide vital city services.
"It was time to reform our pension system and we got it done," Stanton said. "Pension reform will save our city $600 million and create a 50/50 partnership for the city and its employees."
Councilman Sal DiCiccio, who supported replacing current benefits with a 401(k)-type plan, said the passage was a victory for the public employee unions.
"Real reform will only happen when the voters take this into their own hands through an initiative," he said.
The current system is funded by a contribution of 5% of annual salary by the employee and 20% by the city. The new plan calls for a 50-50 match beginning in fiscal 2014, with each paying in about 14% of salary.
Phoenix will contribute $110 million to the city pension system in fiscal 2013, up from $28 million in fiscal 2000. The municipal pension plan has an unfunded liability of $1.1 billion.