ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fifth Legislature

Second Regular Session

House: GE DPA 7-6-0-0

HB 2337: deferred retirement optional plan; reinstatement

Sponsor: Representative Payne, LD 21

House Engrossed

Overview

Modifies the period of participation and the credited amount of a Public Safety Personnel Retirement System (PSPRS) Deferred Option Retirement Plan (DROP) member.

History

A PSPRS member is eligible for a normal pension on retirement on or after the normal retirement date of the member. The payment of a normal pension must commence as of the first day of the month following the date of retirement, and the last payment occurs as of the last day of the month in which the death of the retired member occurs (A.R.S. § 38-844).

For employees who become members of PSPRS before January 1, 2012, a deferred retirement option plan is established. Any member who is eligible for a normal pension and who has at least 20 years of credited service is eligible to participate in the DROP. A member who elects to participate in the DROP must voluntarily and irrevocably designate a period of participation that is not more than 60 consecutive months (A.R.S. §§ 38-844.02, 38-844.03).

A DROP member's account is to be credited with a monthly amount that is computed in the same manner as a normal retirement benefit using the factors of credited service and average monthly benefit compensation and an amount credited monthly that represents interest on such credited amount at a rate equal to the assumed rate of return determined by the board of trustees (A.R.S. § 38-844.05).

Provisions

1. Specifies that a DROP participant must designate a period of participation that is:

a) Not more than 84 consecutive months, rather than 60, for a member who became a member of the system before January 1, 2012; or

b) Not more than 60 months for a member who became a member of the system on or after January 1, 2012. (Sec. 2)

1. Requires the account of a DROP member to be credited with an amount monthly that represents interest on the amount credited pursuant to statute:

c) For the first 60 months, at a rate equal to the assumed rate of return determined by the board of trustees for a member who became a member of the system before January 1, 2012. For the remaining 24 months, at a rate equal to the actual rate of return, smoothed over a period of seven years, to be not less than 0% or not more than 9%; or

d) At a rate equal to the actual rate of return for a member who became a member of the system on or after January 1, 2012, smoothed over a period of seven years, to be not less than 0% or not more than 9%. (Sec. 3)

2. Makes conforming changes. (Sec. 1-3)

5. ---------- DOCUMENT FOOTER ---------

6. HB 2337

7. Initials SJ Page 0 House Engrossed

9. ---------- DOCUMENT FOOTER ---------