SB1136 - 551R - I Ver

 

 

 

REFERENCE TITLE: retirement systems; benefit computation; return-to-work.

 

 

 

 

State of Arizona

Senate

Fifty-fifth Legislature

First Regular Session

2021

 

 

SB 1136

 

Introduced by

Senator Livingston

 

 

AN ACT

 

Amending sections 38-727, 38-808, 38-842, 38-844, 38-849 and 38-890, Arizona Revised Statutes; relating to public retirement systems.

 

 

(TEXT OF BILL BEGINS ON NEXT PAGE)

 


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

Section  1.    Section 38-727, Arizona Revised Statutes, is amended to read:

START_STATUTE38-727.    Eligibility; options

A.    The following provisions apply to all employees hired on or after the effective date:

1.    All employees and officers of this state and all officers and employees of political subdivisions establishing a retirement plan administered by the board pursuant to this article are subject to this article, except that membership is not mandatory:

(a)    On the part of any employee who is eligible and who elects to participate in the optional retirement programs established by the Arizona board of regents pursuant to the authority conferred by section 15   1628 or by a community college district board pursuant to authority conferred by section 15   1451.

(b)    For a state elected official who is subject to term limits, who is elected or appointed before January 1, 2014, who is eligible for participation in ASRS because the state elected official elected not to participate in the elected officials' retirement plan as provided in section 38   804, subsection A and who elects not to participate in ASRS as provided in paragraph 7 of this subsection.

(c)    On the part of any employee or officer who is eligible to participate and who participates in the elected officials' retirement plan pursuant to article 3 of this chapter, the elected officials' defined contribution retirement system pursuant to article 3.1 of this chapter, the public safety personnel retirement system pursuant to article 4 of this chapter or the corrections officer retirement plan pursuant to article 6 of this chapter.

2.    All employees and officers of political subdivisions whose compensation is provided wholly or in part from state monies and who are declared to be state employees and officers by the legislature for retirement purposes are subject, on legislative enactment, to this article and are members of ASRS.

3.    Any member whose service terminates other than by death or withdrawal from membership is deemed to be a member of ASRS until the member's death benefit is paid.

4.    Employees and officers shall not become members of ASRS and, if they are members immediately before becoming employed as provided by this section, shall have their membership status suspended while they are employed by state departments paying the salaries of their officers and employees wholly or in part from monies received from sources other than appropriations from the state general fund for the period or periods payment of the employer contributions is not made by or on behalf of the departments.

5.    Notwithstanding other provisions of this section, a temporary employee of the legislature whose projected term of employment is for not more than six months is ineligible for membership in ASRS.    If the employment continues beyond six successive months, the employee may elect to either:

(a)    Receive credit for service for the first six months of employment and establish membership in ASRS as of the beginning of the current term of employment if, within forty   five days after the first six months of employment, both the employer and the employee contribute to ASRS the amount that would have been required to be contributed to ASRS during the first six months of employment as if the employee had been a member of ASRS during those six months.

(b)    Establish membership in ASRS as of the day following the completion of six months of employment.

6.    A person who is employed in postgraduate training in an approved medical residency training program of an employer or a postdoctoral scholar who is employed by a university under the jurisdiction of the Arizona board of regents is ineligible for membership in ASRS.

7.    A state elected official who is subject to term limits, who is elected or appointed before January 1, 2014 and who is eligible for participation in ASRS because the state elected official elected not to participate in the elected officials' retirement plan as provided in section 38   804, subsection A may elect not to participate in ASRS.    The election not to participate is specific for that term of office.    The state elected official who is subject to term limits shall make the election in writing and file the election with ASRS within thirty days after the elected official's retirement plan mails the notice to the state elected official of the state elected official's eligibility to participate in ASRS.    The election is effective on the first day of the state elected official's eligibility.  If a state elected official who is subject to term limits fails to make an election as provided in this paragraph, the state elected official is deemed to have elected to participate in ASRS.    The election not to participate in ASRS is irrevocable and constitutes a waiver of all benefits provided by ASRS for the state elected official's entire term, except for any benefits accrued by the state elected official in ASRS for periods of participation before being elected to an office subject to term limits or any benefits expressly provided by law.

8.    A person may elect not to participate in ASRS if the person becomes employed by an employer after the person has attained at least sixty   five years of age, is not an active member, inactive member, retired member or receiving benefits pursuant to article 2.1 of this chapter and does not have any credited service or prior service in ASRS.    The employee shall make the election not to participate in writing and file the election with ASRS within thirty days after employment.    The election not to participate is irrevocable for the remainder of the person's employment for which the person made the election and constitutes a waiver of all benefits provided by the Arizona state retirement system.    The period the person works is not eligible for purchase under section 38   743 or 38   744.

9.    The following are ineligible for membership in ASRS:

(a)    A person who performs services in a hospital, home or other institution as an inmate or patient at the hospital, home or other institution.

(b)    A person who performs agricultural labor services, as defined in section 210 of the social security act.

(c)    A person who is a nonresident alien temporarily residing in the United States and who holds an F   1, J   1, M   1 or Q   1 visa when services are performed.

(d)    A person who performs services for a school, college or university in this state at which the person is enrolled as a student, as defined by the employing institution.    The employing institution shall maintain an appeal process for a person who disagrees with the employing institution's determination that the person is a student and not eligible for membership in ASRS.

(e)    A person who performs services under a program designed to relieve the person from unemployment.

B.    The following elected officials are subject to this article if the member's employer is an employer under article 3 of this chapter:

1.    A state elected official who is subject to term limits, who is elected or appointed on or before December 31, 2013 and who is an active, an inactive or a retired member of ASRS or a member of ASRS with a disability because the state elected official had previously elected not to participate in the elected officials' retirement plan as provided in section 38   804, subsection A.

2.    An elected official, as defined in section 38   831, who is an active, an inactive or a retired member of ASRS or a member of ASRS with a disability, if the elected official's employer is a participating employer under this article and the elected official is eligible for ASRS service credit for the elected official's service. END_STATUTE

Sec.  2.    Section 38-808, Arizona Revised Statutes, is amended to read:

START_STATUTE38-808.    Pension payments; computation of amounts; termination

A.    Plan retirement commences on the first day of the month following the date of the member's retirement or death.    Pension payments shall be received on or about the first day of the month next following the member's plan retirement.    The last pension payment shall be made as of the last day of the month in which the death of the retired member or the surviving spouse or minor children occurs.    Pension payments shall not be made in advance.

B.    For a member who becomes a member of the plan before January 1, 2012, the monthly pension shall be equal to one   twelfth of the following amount:

1.    Four per cent percent of the member's average yearly salary multiplied by the member's credited service, not to exceed eighty per cent percent of the member's average yearly salary.    This amount shall be reduced if the member takes early retirement pursuant to section 38   805, subsection C.    The amount of reduction is three   twelfths of one per cent percent for each month the retired member's early retirement age precedes the member's normal retirement age pursuant to section 38   805, subsection A, except that the reduction shall not be more than thirty per cent percent.

2.    A member who meets the requirements for a disability retirement pension shall receive a disability pension equal to four per cent percent of the member's average yearly salary multiplied by twenty years of credited service if the member has ten or more years of credited service, four per cent percent of the member's average yearly salary multiplied by ten years of credited service if the member has five or more years of credited service but fewer than ten years of credited service or four per cent percent of the member's average yearly salary multiplied by five years of credited service if the member has fewer than five years of credited service.

C.    The monthly pension of a member who becomes a member of the plan on or after January 1, 2012 shall be equal to one   twelfth of the following amount:

1.    Three per cent percent of the member's average yearly salary multiplied by the member's credited service, not to exceed seventy   five per cent percent of the member's average yearly salary.

2.    A member who meets the requirements for a disability retirement pension shall receive a disability pension equal to three per cent percent of the member's average yearly salary multiplied by twenty   five years of credited service if the member has ten or more years of credited service, three per cent percent of the member's average yearly salary multiplied by twelve and one   half years of credited service if the member has five or more years of credited service but fewer than ten years of credited service or three per cent percent of the member's average yearly salary multiplied by 6.25 years of credited service if the member has fewer than five years of credited service.

D.    The plan shall make payments pursuant to section 401(a)(9) of the internal revenue code and the regulations that are issued under that section. Notwithstanding any other provision of this plan, beginning January 1, 1987, payment of benefits to a member shall commence no not later than April 1 of the calendar year following the later of:

1.    The calendar year in which the member attains seventy and one   half seventy   two years of age.

2.    The date the member terminates employment.

E.    If all pension payments terminate before an amount equal to the member's accumulated contributions has been paid, the difference between the member's accumulated contributions and the aggregate amount of pension payments shall be paid to the person or persons and in such shares as designated by the retired member in writing and filed with the board.   If the designated person or persons do not survive the retired member, the difference shall be paid to the estate of the retired member. END_STATUTE

Sec.  3.    Section 38-842, Arizona Revised Statutes, is amended to read:

START_STATUTE38-842.    Definitions

In this article, unless the context otherwise requires:

1.    "Accidental disability" means a physical or mental condition that the local board finds totally and permanently prevents an employee from performing a reasonable range of duties within the employee's job classification and that was incurred in the performance of the employee's duty.

2.    "Accumulated contributions" means, for each member, the sum of the amount of the member's aggregate contributions made to the fund and the amount, if any, attributable to the employee's contributions before the member's effective date under another public retirement system, other than the federal social security act, and transferred to the fund minus the benefits paid to or on behalf of the member.

3.    "Actuarial equivalent" means equality in present value of the aggregate amounts expected to be received under two different forms of payment, based on mortality and interest assumptions adopted by the board.

4.    "Alternate payee" means the spouse or former spouse of a participant as designated in a domestic relations order.

5.    "Alternate payee's portion" means benefits that are payable to an alternate payee pursuant to a plan approved domestic relations order.

6.    "Annuitant" means a person who is receiving a benefit pursuant to section 38   846.01.

7.    "Average monthly benefit compensation" means the result obtained by dividing the total compensation paid to an employee during a considered period by the number of months, including fractional months, in which such compensation was received.   For an employee who becomes a member of the system:

(a)    Before Jan