SB1239 - 501R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 38-766, Arizona Revised Statutes, is amended to read:

START_STATUTE38-766. Retired members; return to work; suspension of benefits; exceptions; maximum benefit

A. A retired member who is engaged to work by an employer for at least twenty weeks in each fiscal year and at least twenty hours per week resumes active membership in ASRS. ASRS shall suspend payment of the member's retirement benefits until the member either:

1. Terminates employment and files an application for reretirement on a form that is approved by the director.

2. Attains a normal retirement date, no longer meets the requirements for active membership pursuant to this subsection and files an application for reretirement on a form that is approved by the director.

B. A retired member whose retirement benefits have been suspended pursuant to subsection A of this section shall repay ASRS any retirement benefits received by the member from the date ASRS notifies the member in writing that the member's employment resulted in active membership in ASRS pursuant to subsection a of this section, from the date ASRS determines that the member knew or should have known that the member's employment resulted in membership in ASRS pursuant to subsection a of this section or for any other period as determined by ASRS.

B. c. A member who satisfies subsection A, paragraph 1 or 2 of this section is entitled to receive an annuity recomputed to include the additional compensation and credited service. However, the recomputed annuity shall be in the original optional form chosen pursuant to section 38‑760, with the same beneficiary, if applicable, as when the member first retired, unless the member has resumed active membership for at least sixty consecutive months. A member who retired under a provision of law allowing increased benefits if the retirement occurred during a specific period of time and who subsequently becomes an employee under ASRS shall not retain the increased benefits under the prior law when benefits are computed for the member's most recent retirement.

C. d. Notwithstanding subsection A of this section, ASRS shall not suspend the payment of retirement benefits if a retired member begins or returns to employment with an employer in a position that satisfies all of the following:

1. Results in a true change in position, job duties and job title from the position occupied by the member before ASRS retirement.

2. Either:

(a) Requires participation in another state retirement system, plan or program and the retired member makes contributions or waives participation pursuant to section 38-804, subsection A.

(b) Permits a member to elect to participate in another state retirement system, plan or program and the member makes such an election.

3. Does not require membership in the defined benefit plan established by this article.

D. e. A retired member who returns to work pursuant to subsection C d of this section does not accrue credited service, member service as provided in section 15-1628, subsection B, paragraph 4, additional account balances, retirement benefits or long-term disability program benefits pursuant to article 2.1 of this chapter for the period the retired member returns to work. The period the retired member returns to work is not eligible for purchase under section 38‑743 or 38‑744.

E. f. Section 38‑769, subsection L applies when determining the maximum benefit that may be paid to a retired member who resumes active membership and subsequently retires.

G. An employer that engaged the retired member to work pursuant to this section shall pay to ASRS an amount equal to the rate established by the actuary pursuant to section 38-766.02, subsection b for the period starting with the first day the retired member began working after retirement through the earlier of:

1. The date the member terminates employment.

2. The date the employer begins payment for that member pursuant to section 38-766.02.

3. The date the member resumes active membership pursuant to subsection a of this section and the member and employer are required to make contributions pursuant to section 38-736, 38-737 or 38-738. END_STATUTE

Sec. 2. Section 38-766.01, Arizona Revised Statutes, is amended to read:

START_STATUTE38-766.01. Retired members; return to work

A. Notwithstanding section 38‑766, at a retired member's election, a retired member may return to work and still be eligible to receive retirement benefits if all of the following requirements are satisfied:

1. The retired member has attained the member's normal retirement age.

2. The retired member terminated direct employment with an employer at least twelve consecutive months before returning to work.

3. If the retired member returns to work as a teacher, the retired member's employment is not subject to the requirements prescribed in sections 15‑536, 15‑538, 15‑538.01 and 15‑539 through 15‑543.

B. A retired member's election to return to work under this section is irrevocable for the remainder of the retired member's employment for which the retiree made the election.

C. The retired member shall acknowledge this section in writing and file the acknowledgement with the employer within thirty days of returning to work.

D. An employer of a retired member who returns to work pursuant to this section shall not pay contributions on behalf of the retired member pursuant to section 38‑736, 38‑737 or 38‑797.05.

E. A retired member who returns to work pursuant to this section does not accrue credited service, member service as provided in section 15‑1628, subsection B, paragraph 4, additional account balances, retirement benefits or long‑term disability program benefits pursuant to article 2.1 of this chapter for the period the retired member returns to work. The period the retired member returns to work is not eligible for purchase under section 38‑743 or 38-744. END_STATUTE

Sec. 3. Title 38, chapter 5, article 2, Arizona Revised Statutes, is amended by adding section 38-766.02, to read:

START_STATUTE38-766.02. Retired members; return to work; employer contribution payments; definitions

A. Notwithstanding section 38-766.01, subsection D, beginning July 1, 2014, 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 who is included in agreements providing for their coverage under the federal old age and survivors insurance system. This subsection applies to a retired member who has been retired for more than three hundred sixty-five days if the retired member has reached a normal retirement age or if the retired member retired under section 38-758 and the retired member's retirement benefit has not been suspended pursuant to section 38-766.

B. The ASRS actuary shall determine the alternate contribution rate in an annual valuation performed as of June 30. For the fiscal year beginning on July 1 of the following calendar year, the valuation shall determine the percentage to 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 two per cent in any fiscal year. The alternate contribution rate is equal to the lesser of:

1. The employer contribution rate established by the ASRS actuary pursuant to section 38-737 plus the employer contribution rate established by the ASRS actuary pursuant to section 38-797.06.

2. two times the past service funding requirement rate established by the ASRS actuary pursuant to section 38-737 plus the past service funding requirement rate established by the ASRS actuary pursuant to section 38‑797.06.

D. ASRS shall determine the schedule and method of payment of the alternate contribution rate. Subject to section 38-738, subsection A, all contributions made by the employer and allocated to the fund established by section 38-712 are irrevocable and shall be used as benefits under this article or to pay the expenses of ASRS. Payments made pursuant to this section by employers become delinquent after the due date prescribed in the board's rules and thereafter shall be increased by interest from and after that date until payment is received by ASRS. ASRS shall charge interest on the delinquent payments as prescribed in section 38-711. ASRS may recover delinquent payments due under this section, together with interest charges as provided in this section, by action in a court of competent jurisdiction against an employer liable for payments or, at the request of the director, ASRS may deduct the delinquent payments and interest charges from any other monies, including excise revenue taxes, payable to the employer by any department or agency of this state.

E. An employer of a retired member shall submit any reports, data, paperwork or materials that are requested by ASRS 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, utilization, efficacy or operation of the return to work program.

F. For the purposes of this section:

1. "Contract fee" means the gross amount paid to a retired member as an independent contractor minus an amount, not to exceed ten per cent, for an administrative fee.

2. "Gross salary" means the gross amount paid to a retired member by a leasing company as salary or wages, including amounts that are subject to deferred compensation or tax shelter agreements, for services rendered or that would have been paid to the retired member except for the member's election or a legal requirement that all or part of the gross amount be used for other purposes. END_STATUTE

Sec. 4. Rule making authority

Notwithstanding any other law, the Arizona state retirement system may conduct rule making for the purpose of implementing this act.

Sec. 5. Legislative intent; alternate contribution rate; ASRS employers

The legislature intends by this act to establish an alternate contribution rate in order to mitigate the potential actuarial impact that a retired member who returns to work for an employer may have on the Arizona state retirement system. Through the establishment of the alternate contribution rate the legislature intends to assure employers that the use of leased, contracted or retired employees and services will have a minimal, if any, actuarial impact on the Arizona state retirement system.

Sec. 6. Appropriation; Arizona state retirement system; exemption

A. The sum of $150,000 is appropriated from the Arizona state retirement system administration account in fiscal year 2011-2012 to the Arizona state retirement system for the administrative implementation of this act.

B. The appropriation made in subsection A of this section is exempt from the provisions of section 35-190, Arizona Revised Statutes, relating to lapsing of appropriations.