Benefits February 21, 2014

Arizona Court Bars Pension Cuts for Judges

February 21, 2014 (PLANSPONSOR.com) – The Arizona Supreme Court affirmed a lower court’s ruling that state pension changes called for by a 2011 state law violate the state’s constitution.
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The court upheld a March 2013 decision by the Maricopa County Superior Court (see “Judges Win Partial Victory Against Arizona Pension Reform”) that Arizona lawmakers acted illegally when they passed legislation in 2011 requiring most sitting judges in the state to pay more into their retirement system, the Elected Officials Retirement Plan (EORP). The higher court also rejected the state’s argument that reducing pensioners annual cost-of-living adjustments does not violate the state’s constitution, saying the term “benefits” includes the promise of future benefit increases using a specified formula.

In the case of Hon. Fields v. Elected Officials Retirement Plan, the Arizona Supreme Court wrote that previously established standards, specifically Arizona Revised Statutes Section 38-818, set up “a formula for calculating pension benefit increases for retired members of the EORP. In 2011, the legislature modified that formula. Because that [2011] statute diminishes and impairs the retired members’ benefits, we hold that it violates the Pension Clause of Article 29, Section 1(C) of the Arizona Constitution.” The court points to the language of this section, which says, “Membership in a public retirement system is a contractual relationship…and public retirement system benefits shall not be diminished or impaired.”

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In 2011, the law known as S.B. 1609 prohibited the transfer of any investment earnings that exceeded the 9% rate of the plan’s reserve fund. As a result, says the court, retired plan members received a 2.47%, rather than 4%, increase in mid-2011, and no increases for 2012 and 2013. The Hon. Fields lawsuit was filed in September 2011 by those affected by S.B. 1609. The suit states that these changes to the plan impaired contract obligations, namely that the formula for determining the plan benefits was a contractual agreement made between the state and the retired participants of the plan.

The court also points to the case of Yeazell v. Copins, which says, “An employee [is] entitled to have his retirement benefits calculated based upon the formula existing when he began employment, rather than a less-favorable formula subsequently adopted during his employment.”

While the state and the plan argued that the retired judges “do not have a vested right in the formula because it is contingent on future events,” the court again points to Yeazell, citing, “the right to a pension becomes vested upon acceptance of employment.”

The recent ruling also notes that, “The justices of this court are not members of the class of retired judges who are appellees in this case.”

The full text of the recent court decision can be downloaded here.

Products February 21, 2014

Well Fargo Offers Free Military Finance Seminars

February 21, 2014 (PLANSPONSOR.com) – Banking and investment services provider Wells Fargo says it is expanding its efforts to support military personnel and veterans by offering a series of free online financial education seminars.
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The webinars coincide with the unofficial Military Saves Week, which runs February 24 to March 2 alongside America Saves Week, an annual campaign involving more than 1,000 nonprofit, government and corporate organizations meant to encourage individuals and families to save money and build long-term wealth. Subjects to be covered include home buying, building credit, setting a budget and sticking to savings goals.

Here’s a quick rundown of the webinar schedules and details:

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  • Military Home Buying (February 25, 2 p.m. CST) – Buying a home is one of the most important financial decisions a person can make, says Wells Fargo. During this session, service members and veterans can learn how to buy effectively in today’s market through discussion of the steps in the home buying process, how to identify the true costs associated with buying a home, and the types of financing available. The VA Home Loan Guaranty Program will also be discussed. The session’s access code is Mil1stHOME.  
  • Military Credit (February 26, 2 p.m. CST) – It’s never too early or too late to learn sound money management skills, says Wells Fargo, and one of the most important things everyone needs to know is how to better manage credit. This session will cover how service members and veterans can manage credit cards, the factors that go into a credit score, the benefits and risks of using credit, and various other topics. The session’s access code is MilCREDIT.
  • Military Budget (February 27, 2 p.m. CST) – This session will help military members and veterans learn how to make the most of earnings by saving more, creating a spending plan and being a smart shopper. The session’s access code is MilBUDGET.

For additional information and to register, those interested should visit www.wellsfargo.com/rsvp. Advanced registration is required, and the calls are limited to 200 participants.

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