House of Representatives

SB 1117

ASRS; omnibus

Sponsors: Senator Cirillo

DP	Committee on Retirement & Government Operations
DP	Caucus and COW
X	As Transmitted to the Governor

SB 1117 makes numerous statutory revisions and additions to update and clarify the Arizona State Retirement System’s (ASRS) statute.

History

ASRS has over 300,000 active, inactive and retired members serving more than 400 employer groups, including the state, counties, municipalities, school districts and charter schools, special taxing districts, community colleges and universities. The average age for active members is 43.4 years, and the average retiree age is 70.6 years. Retirees’ average years of service is 18.2 years, and the average years of service for active members is 8.3 years.

Normal retirement status may be obtained at age 65 or age 62 with 10 years of credited service or any combination of age and credited service totaling 80 points. Early retirement status may be obtained at age 50 with 5 years of credited service. ASRS provides long term disability benefits, death benefits and health insurance benefits as well as retirement benefits to ASRS participants and their beneficiaries.

Provisions

Definitions

· Changes the definition of active member by removing the option of a member receiving credited service under the long-term disability program.

· Includes any person who is a former active member of ASRS and who has not withdrawn contributions pursuant to 38-740 (return of contributions) under member.

· Defines and excludes any leased employee in the definition of member.

Referenda and Certification

· Allows the governor to issue a referendum at the request of retirement systems and requires the governor to issue a referendum at the request of the governing body of any political subdivision that has established a retirement system for the purpose of determining whether service in positions covered by the retirement system should be included or excluded from Social Security coverage.

· States that the referendum shall be conducted in accordance with the requirements in section 218 (d) (3) of the Social Security Act.

· Requires a notice of referendum to be given to employees that contains a statement informing the employees of the rights that will accrue to them and their dependents and survivors and the liabilities to which they will be subject if their services are included in an agreement in this section concerning Social Security for public officers and employees.

· Requires the governor to certify to the Commissioner of Social Security that all conditions under the Social Security Act have been met, upon receipt of such evidence.

· Makes conforming changes.

Investment of Monies

· Includes mortgage backed securities and agency debentures issued by federal agencies among securities in which ASRS may invest no more than five per cent of its assets.

Administration Account

· Expands the expenditures to be paid from the ASRS administration account to include rent, actuarial consulting fees and retiree payroll.

Eligibility Options

· Excludes members eligible for and participating in the EORP, PSPRS or CORP from mandatory participation in ASRS.

Political Subdivision Plans

· Removes the requirements that an employer formally terminates any existing retirement program administered by the Board and formally agree that no retirement program may thereafter be established on behalf of that group.

· Removes the provision that the Board must transfer all assets under an existing retirement program to ASRS no later than 60 days after the effective date of the supplemental retirement plan.

Adjustment and Refund

· Separates the definitions of annual additions and limitation year into different paragraphs and prescribes annual additions to be determined as provided in 38-747, subsection m (purchase of credited service).

Reinstatement and Service Credit Purchase

· Allows ASRS members who receive long-term disability benefits and who forfeited credited service on termination of employment to redeposit the contributions received at the time of separation from service with interest. If less than the required amount is redeposited, ASRS will proportionately reduce the reinstated service credits.

· Allows members receiving long-term disability benefits that were previously employed by the United States government, any state or political subdivision of a state to receive credited service for this prior employment if the member pays a prescribed amount into ASRS.

· Allows members who receive long-term disability benefits and are granted a leave of absence to elect to purchase credited service for not more than one year of the leave by paying specified amounts.

· Allows members receiving long-term disability benefits to purchase credited service in ASRS for active military service under certain conditions, and removes the condition that the period of service for which the participant received credited services is not on account with any other retirement system.

· Makes clarifying changes to comply with federal rules as well as removes language defining annual additions as prescribed in the 26 Code of Federal Regulations.

Optional Forms of Retirement Benefits

· Allows retired members to rescind the election of a period certain and life annuity, thereafter receiving a straight life annuity, including postretirement increases. The member may again elect a period certain and life annuity subject to the same provisions previously elected by the member.

Survivor Benefits

· Replaces language stating who receives a deceased member’s benefits, if the member has no valid beneficiary designation, with a prioritized list of who ASRS shall pay the member’s benefits.

Group Health Accident Coverage

· Specifies that eligible retired and disabled members are those members receiving retirement benefits or long-term disability benefits and who elect not to obtain health and accident insurance through their employer, rather than are not eligible.

· Permits the dependents of a long-term disability recipient who dies during the 12-month period to continue coverage through the end of the period. Requires the covered dependents to pay the full premium cost of the coverage selected, and the dependents are not eligible for the health insurance premium subsidy.

Retired and Disabled Members: Premium Benefit

· Expands the available options for employer provided health insurance coverage eligible for the premium insurance premium subsidy.

Employer and Member Contribution

· Changes the Board’s interest charges on a delinquent payment to an annual rate equal to the interest rate assumption approved by the Board for actuarial equivalency.

LTD program benefits

· Clarifies that if a member is considered totally disabled, the member’s compensation or gain is an amount equal to 2/3 of the member’s monthly compensation.

Miscellaneous

· Makes technical changes to the language regarding appointees/designees of the annuity and deferred compensation governing committee.

· Makes technical and conforming changes.

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· 45th Legislature

· First Regular Session 3 April 16, 2001

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