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ARIZONA STATE SENATE
Fifty-Fifth Legislature, First Regular Session
ASRS; employer payments; ineligible contributions
Purpose
Clarifies requirements for the Arizona State Retirement System (ASRS) relating to the payment of ineligible contributions.
Background
If an employer pays contributions on behalf of any person who is not eligible by statute or rule for ASRS membership or pays contributions on compensation that is not eligible by statute or rule for ASRS contributions and either ASRS or a court determines that ASRS is legally obligated to provide a person with any benefit or credit based on such contributions, the employer must pay ASRS any resulting unfunded liability. Credited service ceases to accrue as of the date that ASRS or a court first determines that ASRS is legally obligated to provide any benefit or credit to the person.
For a person who is not eligible by statute or rule for ASRS membership, unfunded liability is the amount that the present value of the person's benefit or credit exceeds the amount in the person's ASRS account calculated as of the date that ASRS or a court first determines that ASRS is legally obligated to provide any benefit or credit to the person (A.R.S. § 38-748) .
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Clarifies that an employer must pay ASRS any unfunded liability if the employer pays ineligible contributions to ASRS and ASRS or a court determines that ASRS must, rather than is legally obligated to, provide a person a benefit or credit based on those ineligible contributions.
2. Clarifies that credited service ceases to accrue as of the date that ASRS or a court first determines that ASRS must, rather than is legally obligated to, provide any benefit or credit to the person.
3. Clarifies the definition of unfunded liability for a person who is not eligible by statute or rule for ASRS membership as the amount of a person's benefit or credit that exceeds the amount in the person's ASRS account as of the date that ASRS or a court first determines that ASRS must, rather than is legally obligated to, provide a benefit to the person.
4. Becomes effective on the general effective date.
Prepared by Senate Research
January 15, 2021
MG/gs