Contribution Reporting

**Contribution Submission Changes Effective July 1, 2017**

As of July 1, 2017, PSPRS will require new and additional data elements in payroll and contribution files submitted through the Employer portal from employers. These additional requirements are due to recent Arizona pension reforms and changing governmental accounting standards, and apply to all plans.

PSPRS is also requiring employers to provide more detailed information each pay period for members who are on any of the several types of leave without pay. These changes require modifications to payroll system configurations and payroll extract files used to submit payroll and contribution information. A contribution code matrix has been developed to help employers better understand the new contribution codes.

On July 1, 2017, PSPRS is also implementing a web-based ACH electronic payment option at no cost to employers. Every time a payroll/contribution file is received, PSPRS will email a contributions invoice to the employer, who can then log in to a secure website and pay by ACH, electronic check or credit card. 

A webinar was conducted on March 22, 2017 to provide more information about these changes.  The information in the webinar has changed slightly to include a non-payment code for original DROP, includes information about how to submit modified DROP contributions, and provides additional information regarding the submission of defined benefit normal and legacy costs.  The updated slides are located here.

Contribution Reporting

Employers who participate in our Plans are required by law to enroll and report pensionable wages on all eligible employees.  Accurate reporting of member contributions is critical to ensure that your members receive proper credited service, as well as establish appropriate salary information in determining their future pension benefit.  Employer payroll departments are required to calculate and withhold contributions on member’s pensionable wages.  Both employee and employer contributions must be reported utilizing our Employer Payroll Portal.  Employers are encouraged to remit contribution payments utilizing electronic funds transfer; however, the System will accept contribution payments made by check.  For those employers who wish to remit contribution payments by check, they must do so by mailing payments to:

PSPRS/CORP/EORP
P.O. Box 17670
Phoenix, AZ  85011-0670

By law, contribution payments are to be made no later than 10 days after the end of each employer's pay period.  Failure to remit payments on a timely basis will result in assessment of penalties and interest as provided by state statute.  Contributions withheld from member’s paychecks are done on a pre-tax basis.

Employee Contribution Rates based on Plan - PSPRS, CORP or EORP

Contribution rates for employees are established by statute and in order to properly report wages and withhold contributions, employers and local boards need to determine an employee's Membership Tier based on the Plan that the member participates in, PSPRS, CORP or EORP, and the employer will also need to Determine (the employees) Pensionable Wages; see below.

PSPRS Membership Tiers

Tier 1 Members

Tier 2 Members

Tier 3 Members

Hired into a PSPRS position before January 1, 2012

Hired into a PSPRS position on/after January 1, 2012

Hired into a PSPRS position on/after July  1, 2017

 

PSPRS Employee Contribution Rates

Effective July 1, 2016 to June 30, 2017 (Fiscal 2016/17)

Tier 1 Contribution Rate

Tier 2² Contribution Rate

Tier 3³ Contribution Rate

11.65%, but will revert to 7.65% for those members that qualify¹

DB: 11.65%

Hybrid: DB + 3%

DB: 50/50 split with employer
DC: 9%
Hybrid: DB + 3%

¹PSPRS Contribution Rate Changes

Approved in the PSPRS Board of Trustees meeting on March 30, 2017, effective with the first pay period on or after April 1, 2017, the contribution rates will revert to 7.65% for the Tier 1 Members; however, Tier 1 Members with a membership date on or after July 20, 2011 and through December 31, 2011, the employee contribution rate will remain to be calculated based on the Tier 2 Membership since these members became a member after the effective date of the legislation pursuant to SB1609. The excess contributions for Tier 1 Members will be returned to the members that qualify, but at this time, the System is unable to provide an estimated time frame of when and how that will happen. For the latest information, refer to News & Publications.

²Tier 2 Membership Election

One of the significant changes in SB 1428 applies to Tier 2 Members who joined PSPRS between January 1, 2012 and June 30, 2017, who work for employers who do NOT pay into social security.  With this new law, these members will be automatically enrolled in a Defined Contribution (DC) plan of 3% of their salary plus full employer match, in addition to the traditional Defined Benefit (DB) plan, unless the employees elect to “opt-out” of this requirement through the PSPRS Members Only portal by June 30, 2017.

Please note that Tier 2 Members who DO contribute to Social Security may also be impacted by this change and are encouraged to actively register a decision on the Members Only portal since the member/employee could transfer to a non-Social Security employer in the future and, in this case, would become required to pay into the Defined Contribution (DC) benefit, in addition to the traditional Defined Benefit (DB) plan.  To assist the Tier 2 Members in this process, the following items were prepared, which we hope will guide you in the process:

Tier 2 Member Opt-Out Process (summarizes Tier 2 Membership opt-out process)
Webinar: Tier 2 "Opt-Out" Process (conducted January 31, 2017)  (PowerPoint Presentation)
Video:  Tier 2 Automatic Enrollment/Opt-Out

³PSPRS SB1428 - Pension Reform

In 2016, the legislature passed Senate Bill 1428 into law which affects the PSPRS membership (not CORP or EORP) that includes new benefit provisions for existing and new members and, as a result of the intricate changes, the PSPRS Matrix of Plan Provisions was created to outline the differences between the Membership Tiers, eligibility, Member Benefits, options, and other System-related information. You may also view a short, 3-minute video on basic reform measures from SB1428 titled Video: Pension Reform Overview.

CORP Membership Tiers       

Tier 1 Members

Tier 2 Members

Hired into a PSPRS position before January 1, 2012

Hired into a PSPRS position on/after January 1, 2012

 

CORP Employee Contribution Rates

Effective July 1, 2016 to June 30, 2017 (Fiscal 2016/17)

Tier 1 and Tier 2 Contribution Rate

CORP Non-Dispatcher

CORP Dispatcher

8.41%

7.96%

Note:  The recent Pension Reform (SB1428) and other system-related changes do not affect the active membership in CORP.  The CORP membership continued to pay the contribution rates stated above pursuant to statute. 

EORP Membership Tiers         

Tier 1 Members

Tier 2 Members

New DC Plan (EODCRS)

Hired into an EORP position before January 1, 2012

Hired into an EORP position on/after January 1, 2012

Newly appointed or elected officials on/after January  1, 2014

 

EORP Employee Contribution Rates

Effective July 1, 2016 to June 30, 2017 (Fiscal 2016/17)

Tier 1 Contribution Rate

Tier 2 Contribution Rate

New DC Plan (EODCRS)

13.0%, but will revert to 7.0%

13.0%

See EODCRS

⁴EORP Contribution Rate Changes

Approved in the PSPRS Board of Trustees meeting on March 30, 2017, effective with the first pay period on or after April 1, 2017, the contribution rates will revert to 7.0% for the Tier 1 Members; however, Tier 1 Members with a membership date on or after July 20, 2011 and through December 31, 2011, the employee contribution rate will remain based on the Tier  2 Membership since these members became a member after the effective date of the legislation pursuant to SB1609. The excess contributions will be returned to the Tier 1 Members that qualify, but at this time, the System is unable to provide an estimated time frame of when and how that will happen. For the latest information, refer to News & Publications.

Employer Contribution Rates

Contribution rates for employers are actuarially determined each fiscal year, which begins each July 1st. To view the funding levels and future contribution rates for each of the Plans, see the Actuarial Valuations page. For existing employer contribution rates, select the Plan:

Determining Pensionable Wages

In order to properly report wages and withhold contributions, employers need to understand what is considered compensation.

Compensation for PSPRS Members

What is included as pensionable compensation

What is NOT included as pensionable compensation

  • Base salary
  • Shift differential pay
  • Military differential pay
  • Holiday pay
  • Overtime pay
  • Sick time used
  • Vacation time used
  • Compensation time used
  • Pay earned by third party contracts between public agencies
  • Longevity payments, as long as it is paid at least every 6-months
  • Lump sum payments of accrued unused vacation time
  • Lump sum payments of accrued unused sick time
  • Lump sum payments of accrued unused compensatory time
  • Uniform allowances, car allowances or other fringe type benefit payments

 

Compensation for CORP Members

What is included as pensionable compensation

What is NOT included as pensionable compensation

  • Base salary
  • Shift differential pay
  • Military differential pay
  • Holiday pay
  • Sick time used
  • Vacation time used
  • Compensation time used
  • Lump sum payments of accrued unused vacation time
  • Lump sum payments of accrued unused sick time
  • Lump sum payments of accrued unused compensatory time
  • Uniform allowances, car allowances or other fringe type benefit payments

Compensation for EORP Members

What is included as pensionable compensation

What is NOT included as pensionable compensation

  • Gross Salary
  • Lump sum payments of accrued unused vacation time
  • Lump sum payments of accrued unused sick time
  • Lump sum payments of accrued unused compensatory time
  • Uniform allowances, car allowances or other fringe type benefit payments

Alternate Contribution Rate (ACR)

Legislation passed in 2011 which requires employers to pay an Alternate Contribution Rate (ACR) when they employ a PSPRS, CORP or EORP retiree.  This rate is strictly charged to the employer as a way to lessen any potential actuarial impact caused by hiring a retiree in a position that would normally be filled with a contributing employee.

The ACR is individually set for each participating employer group and determined each year during the System’s annual actuarial valuation. The ACR is the result of combining the amortized unfunded liabilities for both the cost of pension and health.  Employers can access this information from the Contribution Requirement section in their annual Individual Actuarial Valuation Report.

Employers must report ACR data and payments utilizing their normal payroll reporting processes to the System.  This would include uploading data through the Employer Payroll Portal.  Employers who submit late ACR payments are subject to interest being charged against those payments.

For more information on contribution reporting and payment remittance, please contact our Active Members Department.