Vacation Payout Not Part of Phoenix City Workers’ Pension

Retiring city workers in Phoenix who receive one-time payouts for unused vacation can’t count it toward compensation to increase their pension benefits, the Arizona Supreme Court said Friday.

Phoenix pays pension benefits that depend, in part, on a retiring employee’s highest average annual compensation paid over a multi-year period. The city also pays employees for unused accrued vacation when they retire or otherwise leave their employment.

When city workers retire, they may receive a cash payment for as many as 2.5 years of unused, accrued vacation leave. For many years, the city included these one-time payments in workers’ pension calculations, ...