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ARIZONA STATE SENATE
Fifty-Fourth Legislature, First Regular Session
PSPRS; EORP; CORP; modifications
Purpose
Provides modifications to the Elected Officials' Retirement Plan (EORP), Corrections Officer Retirement Plan (CORP) and Public Safety Personnel Retirement System (PSPRS).
Background
PSPRS is a governmental retirement plan for Arizona full-time certified peace officers and full-time firefighters qualified under 401(a) of the Internal Revenue Code. The plans that PSPRS manages are:
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SYSTEM |
ELIGIBLE MEMBERS |
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PSPRS |
Law enforcement and firefighters |
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Public Safety Personnel Defined Contribution Retirement Plan |
Law enforcement, firefighters and correctional officers hired after July 1, 2018 |
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EORP |
Elected officials and judges elected prior to January 1, 2014 |
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Elected Officials' Defined Contribution Retirement Plan |
Elected officials and judges elected after January 2, 2014, that did not already have a retirement account still active in EORP or the Arizona State Retirement System |
|
CORP |
Correctional, probation and surveillance officers of the offices of the courts |
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
EORP (Retroactive to July 20, 2011)
1. Requires an elected official who became a member of EORP before July 20, 2011, to contribute seven percent of the member's gross salary by payroll deduction.
2. Allows an elected official who became a member of EORP before January 1, 2012, to redeem any amount of eligible prior service without having to have accrued any minimum amount of credited service in EORP.
3. Allows an elected official who became a member of EORP before January 1, 2012, to receive credited service for eligible prior active military service without having to have accrued any minimum amount of credited service with EORP.
PSPRS (Retroactive to July 20, 2011)
4. Requires that all Deferred Retirement Option Plan (DROP) participation accounts shall be credited with an amount, credited monthly, that represents interest on the amount credited at a rate equal to the assumed rate of return determined by the PSPRS Board of Directors (PSPRS Board). Previously, participants who had less than 20 years of credited service on or after January 1, 2012, were credited at a rate equal to the actuarially smoothed rate, but not to exceed the assumed rate of return.
5. Removes the requirement that DROP participants with fewer than 20 years of service on January 1, 2012, make employee contributions to EORP.
6. Allows an active member who became a member of PSPRS before January 1, 2012, to redeem any amount of eligible prior service or eligible prior active military service without having to have accrued any minimum amount of credited service.
CORP (Retroactive to July 20, 2011)
7. Allows a CORP member who became a member before January 1, 2012, to redeem eligible prior service or eligible prior military service without having to have accrued any minimum amount of credited service.
Discount Rate for Service Purchases (Retroactive to July 1, 2017)
8. Sets the discount rate for EORP members at an amount equal to the assumed rate of return that is prescribed by the PSPRS Board, rather than the lesser of the assumed rate of return that is prescribed by the PSPRS Board or an amount equal to the yield on a 10-year treasury note as of March 1 that is published by the Federal Reserve Board plus two percent.
9. Sets the discount rate for PSPRS members at the assumed rate of return that is prescribed by the PSPRS Board for members enrolled before July 1, 2017.
10. Sets the discount rate for CORP members at the assumed rate of return that is prescribed by the PSPRS Board for members enrolled before July 1, 2017.
Miscellaneous
11. Allows the PSPRS Board of Trustees, on or before June 30, 2019, to choose to require interest to be paid on monies returned to members of a retirement plan or system, for the period of time between the transaction under the applicable section until a date to be determined by the PSPRS Board, but not later than the effective date of this act.
12. Becomes effective on signature of the Governor, if the emergency clause is enacted, with retroactive provisions as noted.
Prepared by Senate Research
January 28, 2019
CS/gs