PSPRS; CORP; EORP;
retirement benefits
DPA |
Committee on Retirement and Government Operations |
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W/D |
Committee on Appropriations |
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DPA |
Caucus and COW |
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DPA |
Third Read |
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X |
As Passed the House |
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HB 2118 increases survivor benefits for the Public Safety Personnel Retirement System (PSPRS), and the Corrections Officers Retirement Plan (CORP), makes the PSPRS Deferred Retirement Option Program (DROP) permanent and modifies disability requirements within DROP and applies a 2% tax equity benefit for PSPRS members.
HB 2118 was amended in the Retirement and Government Operations Committee to grant surviving spouses of CORP members killed in the line of duty a pension equal to 100% of the deceased member’s average monthly salary. HB 2118 was withdrawn from the Appropriations Committee. HB 2118 was amended in the Committee of the Whole to replace the current incremental ordinary disability system with an ordinary disability proportional system within PSPRS, removes the EORP provisions from the bill, clarifies the definition of a member in PSPRS and CORP and makes a technical change regarding the definition of a member in CORP as it relates to dispatchers.
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.
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 and CORP 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 PSPRS member, who dies before retirement, to 80% of disability retirement.
· 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).
· Authorizes retroactively a one-time permanent pension benefit increase for current surviving spouses of non-line of duty death members of PSPRS and CORP 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 and CORP equal to the increase proposed in statute.
· Applies a 2% tax equity benefit for members of PSPRS 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 repealer of DROP.
· Replaces the current incremental ordinary disability system with an ordinary disability proportional within PSPRS. This changes the ordinary disability calculation to actual years of credited service, divided by 20.
· Clarifies that dispatcher normal retirement date is 25 years of service.
· Clarifies that PSPRS and CORP plans are designed to have members whose customary employment is at least forty hours a week.
· Makes technical and conforming changes.