ARIZONA STATE SENATE
Phoenix, Arizona
PSPRS; deferred retirement
option plan
Purpose
Clarifies the eligibility
and participation portion of the six year pilot Deferred Retirement Option Plan
(DROP) for members of the Public Safety Retirement System (PSPRS).
Background
Laws 2000, Chapter 340,
established a six year pilot DROP program for PSPRS members. DROP enables PSPRS members to accumulate a
lump sum payment upon termination of employment. To receive this payment, the participant, in lieu of taking
retirement, places his or her monthly pension payment into a DROP account that
also earns or is credited with a fixed interest rate while the participant
continues working. In exchange, the participant
ceases to accrue credited years of service or benefit increases based on salary
raises during this period of time. Upon
termination of employment, the participant starts receiving monthly pension
payments along with the lump sum payment from the DROP account.
Since DROP was enacted, PSPRS administrators have requested
that the language in the eligibility and participation portion of DROP be
amended to conform with other DROP statutes and PSPRS administrative practices.
Provisions
1. Clarifies that the date a participant chooses to take part in the DROP program is the date the participant will stop accruing other retirement benefits.
2. Specifies that a participant’s first day of participation in DROP is the first day of the month after the person’s DROP election date.
3. Specifies that the monthly retirement benefit will not be credited to a participant’s account if the participant continues to work past the specified DROP participation period.
4. Specifies that a participant’s monthly retirement allowance will not be paid until the DROP participant terminates employment.
5. Specifies that a participant’s monthly retirement allowance will be paid simultaneously when his or her pension is paid upon retirement.
6. Makes a technical change.
7. Provides for a general effective date.
Prepared by Senate Staff
January 11, 2001