December 20, 2018
December 20, 2018
Public Safety Personnel Retirement System
State of Arizona
Contact: Christian Palmer
Employer contribution rates available online
Funding trends positively while individual rates vary; PSPRS board elects to continue current Tier 3 rates
ARIZONA – Annual actuarial valuation for the fiscal year ending June 30, 2018, is available online for PSPRS, CORP and EORP, along with individual employer valuations for municipalities and agencies across the State of Arizona.
To see the contribution rates, visit the PSPRS actuarial webpage.
The aggregate valuation for PSPRS shows that the fund increased its funding level by 0.5%, to 45.8%. Sister funds CORP and EORP also trended positively for the year, with CORP gaining 4.6% to 54.1% funded status, and EORP gaining 0.6% to 31.3% funded.
Average contribution rates for the fiscal year ending in 2020 will reflect an average increase of 0.37% for employers with members in PSPRS’s Tiers 1 and 2, to an average of 52.47% of payroll. Changes to individual employer rates will vary, some significantly.
The PSPRS Board of Trustees has elected to keep the split 50/50 rates for Tier 3 members and employers the same as last year, but allow the employer-specific legacy cost applied to Tier 3 payroll to change with this valuation.
The average contribution rates for CORP will drop by an average of 1.19% to 27.59%. The average contribution rate for EORP will drop by 0.07% to 61.43%.
Please note that circumstances likely will vary depending on the circumstances of individual employers.
According to the actuarial report, the changes in contribution rates can largely be attributed to several key factors, including the phase-in of slight prior investment losses for all three plans, the change in amortization rates for certain PSPRS employers and the passage of statewide ballot measure Proposition 125, which will replace the Permanent Benefit Increase structure used by CORP and EORP with a fixed Cost of Living Allowance capped at a maximum of 2% annually.
PSPRS Administrator Jared Smout called the stability of contribution rates and the gains in overall funding positive signs. Smout noted that while some individual employers will see results that differ from the mean, the actuarial reports predict that overall contribution will stabilize moving forward.
“While we remain sensitive to the ways in which pension costs continue to pressure state agencies, fire districts and our cities and towns, this year’s valuations and the new contribution rates continue a positive trend for our system and our employers,” said Smout. “The changes to the system made by Propositions 124 and 125 are meaningful and we continue to improve upon our investment strategy at PSPRS to have the fund moving toward prosperity while not taking the sorts of risks than can be cataclysmic in a down market. We are on the right path. Now what we need is time to get to our destination.”