The retirement benefits for corrections, detentions and court-employed probation and surveillance officers will change July 1, 2018, due to pension reforms passed in 2017. To read the law, click here.
These reforms do not impact current members and retirees of the Corrections Officer Retirement Plan, better known as CORP.
However, employers and local boards must learn the benefit changes, which, generally speaking, contain similar elements to the PSPRS reforms that went into effect in 2017. CORP Reform is intended to bring added sustainability and employer and taxpayer cost-savings to public pensions in Arizona.
What employers need to know – Payroll and contribution reporting
The most pressing issue for all employers is processing payroll and contributions for current members and Tier 3 members once reforms become effective July 1, 2018.
Most employers with CORP members are already processing payroll and contributions with updated data entry requirements. However, there are corrections-specific employers who may not be prepared for the updated technical requirements.
Click here for the most recent contribution codes and data requirements for processing payroll and contributions.
Member Benefits – Different plans depending on which agency employs members
Employers must be aware that the pending pension reform creates two different benefit structures, one for correction and detention officers and another for certain employees of the Administrative Office of the Courts. Employers can check A.R.S. 38-881 for help determining membership eligibility.
Starting in July 2018, newly hired corrections and detention officers who work in state prisons, county jails, and municipalities will receive retirement benefits through the Public Safety Personnel Defined Contribution Plan. This is a 401(a) plan in which member and employers contribute towards members’ retirement.
This reform closes CORP to new members from corrections and detention positions. The 401(a) tax-deferred retirement plan administered by Nationwide Retirement Services and managed by the PSPRS Defined Contribution Committee provides retirement benefits to all Tier 3 corrections and detentions officers.
It is important to note that CORP will remain open for new hires of Arizona’s Administrative Office of the Courts’ probation and surveillance positions. Those hired into these positions will be given a choice of retirement benefits from the following:
- A pension provided by CORP
- A 401(a) account with member contributions and employer match
- 7 percent default member contribution rate*
- Full matching employer contribution of 5 percent of member’s salary
Below is a video overview of the reforms and a basic summary of the Tier 3 member benefits.
Below is a video that highlights details of the 401(a) retirement plan for Tier 3 members.
There are several other documents intended to help employers, local boards, and existing and prospective members understand the different benefit member tiers for employment in CORP-covered plans or the pending Defined Contribution 401(a) retirement plan.
For a matrix that summarizes the different benefits among each employee tier, click here.
For a brochure for the Administrative Office of the Courts that explains the differences between the CORP pension and the 401(a) Defined Contribution plan, click here.