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REFERENCE TITLE: public retirement systems; plan election |
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State of Arizona Senate Fifty-sixth Legislature First Regular Session 2023
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SB 1173 |
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Introduced by Senator Mesnard
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An Act
amending sections 38-842.01, 38-870.04, 38-881.01, 38-891.01 and 38-938, Arizona Revised Statutes; relating to public retirement systems.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 38-842.01, Arizona Revised Statutes, is amended to read:
38-842.01. Benefit election; eligibility; disability; death; employees hired on or after July 1, 2017
A. An employee who is hired on or after July 1, 2017 and who was not an active, an inactive or a retired member of the system or a member of the system with a disability on June 30, 2017 is eligible to participate in the system or the public safety personnel defined contribution retirement plan established pursuant to article 4.1 of this chapter, depending on the employee's election under this section. The employee's participation in either the system or the public safety personnel defined contribution retirement plan established pursuant to article 4.1 of this chapter begins ninety days after the date the employee is hired. Unless the elections made under this section are made before the ninetieth day after the date of employment, the employee is automatically enrolled in the system for the remainder of the employee's employment with any employer under the system. Any election made under this section is irrevocable and is the employee's election for the remainder of the employee's employment with any employer under the system, regardless of whether the employee's employment is continuous. The employee may make one of the following irrevocable elections:
1. To participate solely in the system.
2. To participate solely in the public safety personnel defined contribution retirement plan established pursuant to article 4.1 of this chapter.
B. An employee who makes an election to participate solely in the system or is automatically enrolled in the system pursuant to subsection A of this section and who is not covered by the federal old age and survivors insurance system is also enrolled in the public safety personnel defined contribution retirement plan established pursuant to article 4.1 of this chapter during any period that the employee is not covered by the federal old age and survivors insurance system through an employer under the system. If such employee is subsequently covered by the federal old age and survivors insurance system, the employee and the employer may not make any contributions on the employee's behalf to the public safety personnel defined contribution retirement plan established pursuant to article 4.1 of this chapter that are described in section 38-867, subsection A, paragraph 1 or subsection B during the period the employee is covered by the federal old age and survivors insurance system. If at any later time the employee is not covered by the federal old age and survivors insurance system through an employer under the system, the employee and the employer shall again be required to contribute on behalf of the employee to the public safety personnel defined contribution retirement plan established pursuant to article 4.1 of this chapter as required by section 38-867, subsection A, paragraph 1 and, if the employee made an irrevocable election to contribute more of the employee's gross pensionable compensation to the public safety personnel defined contribution retirement plan as provided in section 38-867, subsection B, such contributions shall be reestablished for the period the employee is not covered by the federal old age and survivors insurance system.
C. If an employee in the employee's first ninety days of employment is determined to be eligible for an accidental or catastrophic disability pension pursuant to section 38-844, the employee shall be automatically enrolled in the system for the remainder of the employee's employment with any employer under the system commencing on the employee's date of disability and shall receive an accidental or catastrophic disability pension as prescribed in this article.
D. If an employee in the employee's first ninety days of employment is killed in the line of duty or dies from injuries suffered in the line of duty, the employee shall be considered as having been enrolled in the system and the surviving spouse of the deceased employee is eligible for survivor benefits as prescribed in this article.
E. If an employee who is hired on or after July 1, 2017 and who is an active or inactive member of the system or a participant in the public safety personnel defined contribution plan established pursuant to article 4.1 of this chapter is subsequently rehired by the employee's previous employer or another employer under the system, the employee's participation in either the system or the public safety personnel defined contribution plan, for which the employee had elected to participate, begins on the date the employee is rehired or hired by another employer.
Sec. 2. Section 38-870.04, Arizona Revised Statutes, is amended to read:
38-870.04. Employer and participant contributions
A. Beginning July 1, 2017, employers shall contribute the percentage of the gross pensionable compensation of all of the participants under their employment so that the total employer contributions equals the amount that the board determines is necessary to pay one-half of all benefits under and costs of administering the disability program.
B. Beginning July 1, 2017, a participant shall contribute a percentage of the participant's gross pensionable compensation equal to the employer contribution for the participant required pursuant to subsection A of this section.
C. The employer shall pay the participant contributions required of participants on account of gross pensionable compensation earned. All employer and participant contributions shall be paid to the board. The board shall allocate the contributions to the disability program trust fund and shall place the contributions in the disability program's depository.
D. Each employer shall certify on each payroll the amount to be contributed to the disability program and shall remit that amount to the board.
E. The department of administration and the treasurer of each county and participating city and town shall transfer to the board the contributions provided for in subsections A and B of this section within ten working days after each payroll date. Contributions transferred after these dates shall include a penalty equal to ten percent per annum, compounded daily annually, for each day that the contributions are late. Delinquent payments due under this subsection, together with interest charges as provided in this subsection and court costs, may be recovered by action in a court of competent jurisdiction against the person or persons responsible for the payments or, at the request of the board, may be deducted from any other monies, including excise revenue taxes, payable to a political subdivision by any department or agency of this state.
F. If more than the correct amount of contributions required is paid by an employer, proper adjustment shall be made in connection with subsequent payments. The board shall return excess contributions to the employer if the employer requests return of the contributions within one year after the date of overpayment.
G. Participant contributions are not refundable.
Sec. 3. Section 38-881.01, Arizona Revised Statutes, is amended to read:
38-881.01. Employees hired on or after July 1, 2018; defined contribution plan; benefit election; disability
A. Except as provided in subsection B of this section, an employee who is hired on or after July 1, 2018, who is a member as defined in section 38-881, paragraph 27, subdivision (a) and who was not an active, an inactive or a retired member of the plan or a member of the plan with a disability on June 30, 2018 shall participate in the public safety personnel defined contribution retirement plan established pursuant to article 4.1 of this chapter. For an employee who is hired on or after September 1, 2019, the employee's participation in the public safety personnel defined contribution retirement plan established pursuant to article 4.1 of this chapter begins ninety days after the date the employee is hired.
B. An employee who is hired on or after July 1, 2018, who is in a designated position as defined in section 38-881, paragraph 13, subdivision (g) and who was not an active, an inactive or a retired member of the plan or a member of the plan with a disability on June 30, 2018 is eligible to participate in the corrections officer retirement plan or the public safety personnel defined contribution retirement plan established pursuant to article 4.1 of this chapter, depending on the employee's election under this section. During the first sixty days of an employee's employment and before the employee makes a decision regarding the individual's retirement plan, the board shall provide each probation and surveillance officer who is hired on or after July 1, 2018 interactive, objective educational training, counseling and participant-specific plan information about both the corrections officer retirement plan and the public safety personnel defined contribution retirement plan options. The employee's participation in either the plan or the public safety personnel defined contribution retirement plan established pursuant to article 4.1 of this chapter begins ninety days after the date the employee is hired. Unless the elections made under this section are made before the ninetieth day after the date of employment, the employee is automatically enrolled in the plan for the remainder of the employee's employment with any employer under the plan. Any election made under this section is irrevocable and is the employee's election for the remainder of the employee's employment with any employer under the plan, regardless of whether the employee's employment is continuous, unless the employee is subsequently in a position that allows for an election under this section. The employee may make one of the following irrevocable elections:
1. To participate solely in the corrections officer retirement plan.
2. To participate solely in the public safety personnel defined contribution retirement plan established pursuant to article 4.1 of this chapter.
C. If an employee specified in subsection B of this section in the employee's first ninety days of employment is determined to be eligible for an accidental or total and permanent disability pension pursuant to section 38-886, the employee shall be automatically enrolled in the corrections officer retirement plan for the remainder of the employee's employment with any employer under the plan commencing on the employee's date of disability and shall receive an accidental or total and permanent disability pension as prescribed in this article.
D. If an employee specified in subsection B of this section in the employee's first ninety days of employment is killed in the line of duty or dies from injuries suffered in the line of duty, the employee shall be considered as having been enrolled in the corrections officer retirement plan and the surviving spouse of the deceased employee is eligible for survivor benefits as prescribed in this article.
E. Notwithstanding subsection B of this section, if an employee who is hired on or after July 1, 2018 and who is an active or inactive member of the plan or a participant in the public safety personnel defined contribution plan established pursuant to article 4.1 of this chapter is subsequently rehired by the employee's previous employer or another employer under the plan, the employee's participation in either the plan or the public safety personnel defined contribution plan, for which the employee had elected to participate, begins on the date the employee is rehired or hired by another employer. If the employee makes a new election pursuant to subsection B of this section, the employee's participation in the previous plan continues until the date in which the employee makes a different election, not to exceed ninety days after the date of hire for the eligible position.
Sec. 4. Section 38-891.01, Arizona Revised Statutes, is amended to read:
38-891.01. Retired member; return to work; employer contributions
A. An employer shall pay contributions at an alternate contribution rate on behalf of a retired member who returns to work in any capacity in a position ordinarily filled by an employee of the employer in a designated position. This section applies to a retired member who has been retired for more than twelve six consecutive months.
B. The alternate contribution rate shall be equal to that portion of the individual employer's total required contribution that is applied to the amortization of the unfunded actuarial accrued liability for the fiscal year beginning July 1, based on the fund's actuary's calculation of the total required contribution for the preceding fiscal year ended on June 30. The alternate contribution rate shall be applied to the compensation, gross salary or contract fee of a retired member who meets the requirements of this section.
C. The alternate contribution rate shall not be less than six percent in any fiscal year.
D. All contributions made by the employer and allocated to the fund established by section 38-882 are irrevocable and shall be used as benefits under this article or to pay the expenses of the plan. Payments made pursuant to this section by employers become delinquent after the due date prescribed in section 38-891, subsection C, and thereafter shall be increased by interest from and after that date until payment is received by the plan.
E. An employer of a retired member shall submit any reports, data, paperwork or materials that are requested by the board and that are necessary to determine the compensation, gross salary or contract fee associated with a retired member who returns to work or to determine the function, use, efficacy or operation of the return to work program.
Sec. 5. Section 38-938, Arizona Revised Statutes, is amended to read:
38-938. Annual financial statements; audit
A. The board shall cause the annual financial statements of the prefunding plan to be prepared in accordance with the applicable governmental accounting standards and an audit to be conducted of those financial statements by a qualified independent certified accounting firm for each fiscal year in accordance with the applicable governmental auditing standards.