PSPRS; CORP; EORP;
retirement benefits
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Committee on Retirement and Government Operations |
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Committee on Appropriations |
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Caucus and COW |
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Third Read |
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As Passed the House |
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HB 2118 increases survivor benefits for the Public Safety Personnel Retirement System (PSPRS), Corrections Officers Retirement Plan (CORP) and the Elected Officials Retirement Plan (EORP), makes the PSPRS Deferred Retirement Option Program (DROP) permanent and modifies disability requirements within DROP and applies a 2% tax equity benefit for PSPRS and EORP members.
Survivor Benefits:
The survivors of members who die in service or after retirement, are eligible for three-fourths of the pension a deceased active member would have been paid for accidental disability retirement or in the case of a retired member, three-fourths of the retired members pension. The law requires two years of marriage for a retired member’s spouse and terminates upon death of the spouse.
An eligible child receives one-eighth of the pension a deceased active member would have been paid for accidental disability retirement or in the case of a retired member, one-eighth of the retired member’s pension. Eligible children must be unmarried, a dependent of the surviving spouse or guardian and either under the age of 18 or a full-time student under the age of 23 or have a disability, which began before the age of 23.
The guardian pension is the same amount as the spouse’s pension. This is payable only during periods no spouse is being paid and there is at least one eligible child.
The surviving spouse of a member who dies after retirement is eligible for three-fourths of the retired member’s pension at the time of death. A surviving spouse of a non-retired member is eligible for 37.5% of the deceased member’s average monthly salary. The law requires two years of marriage at the time of death of the member and terminates upon death of the spouse.
If there is no eligible spouse or if the pension of the surviving spouse is terminated, the surviving unmarried child of a deceased retired or active member is entitled to a pension until age 18, or age 23 if the child is a full-time student. A disabled child is also entitled to a pension if the disability began before age 23. If there are more two or more children, the amount of the pension is an equal share of the surviving spouse’s pension.
The survivor pension is payable to the eligible beneficiary (surviving spouse) of a retired member or an active or inactive member who dies before retirement. The amount of a surviving spouse’s pension is three-fourths of the pension being paid the deceased retired member or three-fourths of the pension, which the member would have received under disability retirement. The amount of a surviving child’s pension is an equal share of the amount of a surviving spouse’s pension.
The law requires the surviving spouse to be married to the retired or active or inactive member for at least two years or, if there is no eligible spouse, then the pension goes to a minor child. A surviving spouse’s pension terminates upon death. A surviving child’s pension terminates upon marriage, adoption or death or at the age of 18, unless the child is a full-time student under the age of 23 or the child is disabled, which began before the age of 23.
Tax Equity Benefit:
In 1989, the U.S. Supreme Court ruled the taxation difference between state and federal retirement systems discriminatory (Davis v. Michigan). As a result, Arizona conformed its systems to the federal tax regulations. Arizona granted a 3 per cent tax equity benefit increase to offset the change in tax liability to those who had retired before 1989, except CORP members who received a 1.5% increase.
Since that time, Arizona has systematically extended tax equity benefit increases. In fact, all PSPRS members who retired before November 1, 2001 have received at least a 2% increase, and other systems have varied.
DROP:
Laws 2000, Chapter 340, established a pilot DROP program for PSPRS members that terminates June 30, 2006. DROP’s are designed to give members an additional option at normal retirement. A member is required to designate a period, a beneficiary, agree to cease to accrue benefits with PSPRS during the period and terminate employment at the end of the period. The benefits credited to the DROP account are paid-out upon termination as a lump sum.
· Increases the pension for a surviving spouse of a PSPRS member killed in the line of duty to 100% of the deceased member’s average monthly salary, rather than 50% of the deceased member’s pension.
· Modifies the monthly benefit for eligible children of deceased members of PSPRS to conform to the survivor increases.
· Increases the pension for a surviving spouse of a CORP member who dies before retirement to 40% of the deceased member’s average monthly salary from 37.5% (which is 80% of disability retirement).
· Increases the pension for a surviving spouse of an EORP member who dies before retirement to 80% of the deceased member’s pension computed under disability retirement from 75%.
· Authorizes retroactively a one-time permanent pension benefit increase for current surviving spouses of non-line of duty death members of PSPRS, CORP, and EORP equal to the increase proposed in statute.
· Grants retroactively a one-time permanent pension benefit increase for current surviving spouses of line of duty death members of PSPRS equal to the increase proposed in statute.
· Applies a 2% tax equity benefit for members of PSPRS and EORP hired before September 15, 1989 and who retires on or after November 1, 2001.
· Eliminates the requirement that disability retirement must occur during the DROP participation period in order to determine disability.
· Specifies that the day after the date a member elects to participate in the DROP, the member ceases to accrue benefits and employer and employee contributions cease in PSPRS, rather than the day of the election.
· Repeals the delayed repealers of DROP.
· Makes technical and conforming changes.