House of
Representatives
HB 2141
ASRS; benefits; normal retirement
Sponsors: Representatives McClure, Crandall
HB 2141 changes normal retirement status from 80 points to 85 points, and changes the average monthly compensation calculation. Also limits the return of contributions to member contributions plus interest only.
History
An ASRS member’s normal retirement benefit is presently calculated by:
Total credited Service X Graded Multiplier X Average Monthly Compensation
This average monthly compensation, for a member who was hired after January 1, 1984, is the member’s highest salary during a period of 36 consecutive months within the last 120 months of credited service.
A normal retirement date currently occurs under the earliest of the following circumstances: a) at age 65; b) at age 62 with 10 or more years of credited service; or c) at any combination of years of credited service and age, totaling 80 points.
Current statute also states that a member who elects to receive a return of contribution may also be entitled to receive a portion of the employer’s contribution depending on length of service. A member who has 5 to 5.9 years of credited service, currently receives 25 percent of employer contributions. This percentage increases until a member reaches 10 or more years of credited service when that member receives 100 percent of the employer’s contribution.
The Arizona Constitution contains a prohibition against diminishing established benefits of members; therefore each provision that limits existing benefits is effective July 1, 2008.
Provisions
· Extends normal retirement to the Rule of 85, rather than the Rule of 80 (age plus years of service). This provision is effective for members who join the ASRS on or after July 1, 2008.
· Modifies the average monthly compensation used in computing a retiring member’s retirement benefit from the average of the highest 36 months in the last 120 months to the average of the highest 60 months in the last 120 months. This provision is effective for members who join the ASRS on or after July 1, 2008.
· Restricts members who join the system on or after July 1, 2008 and elect to receive a return of their own contribution, from receiving any benefit other than their own contribution.
· Clarifies that a member of ASRS is subject to the laws in effect at the time of the member’s most recent reemployment for active and inactive members or the most recent hire date for members who have reinstated forfeited service.
· Allows ASRS to recover errors in computation of benefit by reducing any benefit that is payable to an active, inactive, disabled or retired member, survivor, contingent annuitant, beneficiary or alternate payee.
· Appropriates $1.3 million from the ASRS administration account in FY 2007-2008 to ASRS for administrative implementation. Exempts the appropriation from lapsing.
· Contains technical and conforming changes.
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Forty-eighth Legislature
First Regular Session 2 January 17, 2007
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