Many of the state workers drawing the biggest pensions from the Arizona’s fund aren’t household names.
Instead, within the top 25 recipients of state pensions are university faculty members, health care officials and even local airport officials.
Each of the top earners have been working in their respected field for more then a decade and have received payments that annually accumulate to more than what the average American receives just from their base salary. Not to mention some of these that are passed retirement age, aren’t retired and are receiving their salary and a pension payment.
According to the Arizona State Retirement System, the top earner for monthly pension payment is Mary Anderson-Rowland, associate professor in the Department of Industrial Engineering at Arizona State University.
She has worked for ASU since 1966 as a lecturer in mathematics, later serving as an assistant professor of engineering from 1974 to 1979.
Anderson-Rowland, according to the Arizona State Pension, is set to receive $35,371.18 every month. Which is around $424,454 a year in pension payout.
Betsey Bayless is one of the more recognizable names. A long-time Arizona political figure, Bayless works with the president, CEO and the independently elected five-member board of directors who represent the Maricopa County Special Health Care District.
Prior to this she ran in 2002 for the Republican nomination for governor, but came in a distant second to Matt Salmon.
In 2005, Bayless was hired as CEO for the Maricopa Integrated Health System. Bayless has been credited with restoring the MIHS to financial viability and expansion of hospital facilities. Following her retirement from the position in 2013, Bayless became president emeritus for the MIHS.
Bayless receives a monthly pension amount of $21,406.45, which accumulates to $256,877 a year.
Bonnie Allin, former CEO of the Tucson Airport Authority who held this position for 17 years, led the airport authority starting in 2002 until 2019 when she stepped down.
Allin’s pension rate is $17,022.65 a month, which annually is $204,271.
Compared with these figures, the state’s average pension rate of roughly $1,758 a month, or $21,096 a year, pales in comparison.
Understanding what a pension is
According to experts the term pension has many meanings but generally is talked about in a “defined benefit” pension plan. This kind of plan has a formula that tells a worker that when they reach retirement age, their benefit will equal a monthly amount that will be paid for the remainder of that person’s life.
Many businesses offer these plans. They’re most common in government organizations and large corporate entities.
The Arizona State Retirement System, created in 1953, is a state agency providing retirement, long-term disability and other benefits to employees of the state, counties, municipalities, universities, community colleges, school districts, and other political entities.
“The ASRS Defined Benefit Plan provides for a life-long pension benefit upon retirement for qualified participants. The benefit is based on a set formula, not the amount of contributions made by the individual. The benefits are funded by equal employee and employer contributions, and earnings on the total fund, professionally managed and invested by the ASRS,” said David Cannella, public affairs officer for ASRS.
He also stated a pension plan is different then a 401(K) with the main difference being the ASRS plan is funded by employee and employer contributions and investment earnings, and the benefit is based on a set formula of years of service, ending salary (averaged) and a graded multiplier that increases with years of service. Once the benefit is set, it is set for the lifetime of the retiree.
An example would be if you worked 30 years with a 2.3% pension rate and made $50,000 a year, this would receive a pension of $34,500 a year. You can also divide the yearly amount by 12 to find a monthly rate. The average ASRS benefit is $1,758 a month, or $21,096 a year, according to Cannella.
Who receives a pension
Any government employee, outside police and fire department workers who have their own pension fund, are eligible for the state pension, Cannella said.
“Public employees of ASRS employers include participating schools districts, charter schools, universities, community college districts, counties and municipalities, state of Arizona employees and qualified special districts,” Cannella said.
According to Cannella there are approximately 214,000 active members and 172,800 retired members in the Arizona government retirement system.
How it works
Cannella said a pension fund is a pool of money used to pay benefits to retirees. The assets in the retirement fund are typically invested in a portfolio of stocks, bonds and other assets. Retirement funds are managed by trustees responsible for ensuring enough assets to pay all the benefits promised to retirees.
“The current contribution rate is 12.17% of pay and covers the pension plan and health supplement benefit (12.03% and the mandatory long-term disability plan of 0.14%,” Cannella stated.
According to Cannella both the employee and employer for the pension payments to the retiree, determined by a formula based on earnings and years of service. Contribution rates as a percent of pay are actuarially determined and adjusted annually to ensure the plan remains fiscally sound and able to meet current and future obligations.
There are two portions to the ASRS contribution rate, the retirement pension and health insurance benefit, and the long term disability income plan.
Service Credit
The ASRS credits service based on reported contributions from ASRS-covered employers. As workers accrue more service, they qualify for a higher multiplier of your final average monthly compensation, which increases your benefit.
The longer you work and accrue service credit, the closer your retirement benefit is to your final monthly salary. Multiplying your years of service by the appropriate multiplier will provide you with the percentage of your average monthly compensation that will be paid as a monthly retirement benefit.
For example, someone who for every five years of work, the multiplier increases by 0.05%, with a starting pension rate of 2.1%. So if one works 30 years they will receive a multiplier of 2.30%. This means that their final yearly pension rate is multiplied by the pension rate based on years of service and then
Pension earners are paid via investment earnings on roughly $50 billion the state has invested to ensure those in the system get their benefits, Cannella said.
“The ASRS funded status is currently 72.7%. Contributions collected cover funds needed to pay future benefits, as well as the unfunded liability. That puts the plan on a trajectory to fully funded status over time, meaning the plan is stable and sustainable. The ASRS pension plan is not in crisis.” Cannella said.
Funding for the state pension is done by using the calculating the rate each year based on actuarial methodologies to keep the fund whole.
Cannella explained that the funding for the state pension rate is calculated each year based on actuarial methodologies to keep the fund whole. In addition, the interest earned on the fund makes up the majority of the total fund available to fund current and future benefits.
The long-term funding and sustainability comes from investment earnings on the ASRS total fund,
Norman Stein, senior policy adviser and acting legal director for Pension Rights Center, a national nonprofit, nonpartisan consumer organization from Washington D.C., which protects and promotes the retirement security of workers, retirees and their families, stated pension payouts typically occur at retirement age and payments are made to employees usually monthly. Their are different kinds of pension payments, such as single-life annuity, joint and survivor annuity, or lump sum payments.
These types of pensions typically pay benefits for the lifetime of the retiree. However, payments may continue to be made to the spouse of a deceased retiree or in the lump some payout.
Pensions are generally taxable as income in retirement. However, the tax treatment of pensions depends on the type of pension and other factors.
Not all pensions are equal, according to Stein. Some pension plans are in good financial shape, others less so.
“Private-sector plans are guaranteed by a federally chartered corporation, the Pension Benefit Guaranty Corp., which will pay benefits up to a guarantee limit if the pension plan lacks the assets to pay the plan’s promised benefits.” Stein Said.
Stein said unlike 401(k) plans that are subject to market fluctuations, there few pension plans where the payment amount could be affected by the economy, but they are unusual and a few plans adjust benefits to compensate for inflation, this is rare.
Frank Espinoza is a recent graduate of Northern Arizona University from the beginning of 2022. He prides himself on covering topics that give a spotlight to individuals or groups who give back to the community. He has covered local sports, community events, and important issues that impact the state. In his spare time, he loves to watch Street League Skateboarding and hang out at Cowtown Skateboards in Goodyear.
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