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ARIZONA HOUSE OF REPRESENTATIVESFifty-fifth Legislature Second Regular Session |
Senate: FIN DPA 6-3-1-0 | 3rd Read 21-6-3-0
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SB 1268: PSPRS; deferred retirement option plan
Sponsor: Senator Livingston, LD 22
Transmitted to the Governor
Overview
Modifies the participation period and specified amount received for a Public Safety Personnel Retirement (PSPRS) Deferred Retirement Option Plan (DROP) participant.
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 an eligible Public Safety
Personnel Retirement System (PSPRS) member is able to participate in the
Deferred Retirement Option Plan (DROP) for not more than 60 months. (Sec. 1)
2. Stipulates that an eligible member pursuant to statute who becomes a member of PSPRS before January 1, 2012, who is at least 51 years old and who has at least 24 ˝ years of credited service is eligible to participate for not more than 84 consecutive months in DROP. (Sec. 1)
3. Directs a member who elects to participate in DROP to voluntarily and irrevocably designate a period of participation that is not more than 60 consecutive months or 84 consecutive months, as applicable pursuant to statute. (Sec. 1)
4. Maintains that a member's DROP participation account, for the first 60 months, must be credited monthly with an amount pursuant to statute. (Sec. 2)
5. States that beginning on or before January 1, 2023, at the end of the first 60-month period, a member who extended the member's participation period in DROP past 60 months, the system must transfer the accumulated balance of a member's deferred retirement option plan participation account to an account created for the member in a defined contribution plan.
a) Asserts that for the subsequent period of time in DROP, up to 24 months, all deferred retirement option plan benefits that are accrued and credited monthly must be deposited in the member's defined contribution plan account.
b) Prohibits a member from withdrawing the assets of the member's defined contribution plan account until the member terminates employment. (Sec. 2)
6. Allows an employer to approve an extension of the member's participation period for up to an additional 24 months for a member of PSPRS who is participating in DROP and repeals this section on January 1, 2028. (Sec. 3, 4)
7. Directs the board of trustees of PSPRS, by December 31, 2022, to report on recommendations from stakeholders regarding measures that can improve retention for members hired on or after January 1, 2012 and before July 1, 2017 and measures that can improve recruitment and retention for members hired on or after July 1, 2017. (Sec. 5)
8. Specifies that beginning on the effective date of this legislation until the system transfers the balance of a member's DROP participation account to an account in a defined contribution plan, the member's participation account continues to accrue benefits but will receive 0% interest for that time period. (Sec. 6)
9. Contains an emergency clause. (Sec. 7)
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SB 1268
Initials SJ Page 0 Transmitted
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