ARIZONA STATE SENATE
Forty-seventh Legislature, Second Regular Session
FACT SHEET FOR H.B. 2340
ASRS; deferred retirement; repeal
Purpose
Repeals the Arizona State Retirement System’s (ASRS) modified Deferred Retirement Option Plan (DROP) program.
Background
Laws 2001, Chapter 380 established the modified DROP program, which allows employers participating in ASRS to offer members who have reached normal retirement age a contract to work between 6 and 36 additional months. During the modified DROP agreement period (Agreement), the member and employer do not make contributions to the ASRS Defined Benefit (DB) Plan, but instead contribute to the ASRS Supplemental Retirement Savings Plan (SRSP). The employer and member negotiate the amount of the contributions going to the SRSP. Long-term disability contributions (currently .50 percent) continue to be made to the ASRS DB Plan. Upon completion of the Agreement, the member receives credit for the time worked and purchases an equivalent amount of service from the ASRS DB Plan. The additional time (up to a potential of six years) is added to the member’s total years of credited service.
According to ASRS, the state contribution for the modified DROP would be $5.1 million annually and employer and employee contribution rates would increase by .3 percent.
Provisions
1. Repeals the ASRS modified DROP program.
2. Becomes effective on the general effective date.
House Action
PIR 1/30/06 DP 8-0-0-1
GRGFA 2/8/06 DP 7-0-0-0
3rd Read 2/20/06 55-0-5-0
Prepared by Senate Research
February 27, 2006
SL/GC/jas