Public Safety Personnel Retirement System benefits for new members
Arizona’s first responders – police officers and firefighters – have relied on retirement benefits from the Public Safety Personnel Retirement System since 1968. PSPRS is a defined benefit, or pension plan, in which monthly retirement payments are determined by member salaries and credited service during employment.
PSPRS membership tiers, pension contribution rates and benefits are determined by member hiring dates. Law changes passed by the Arizona Legislature created a new and third member tier (Tier 3) for PSPRS for first responders hired on or after July 1, 2017.
Public safety members hired on or after July 1, 2018, have the option of contributing towards two types of retirement plans: a traditional pension through PSPRS or a 401(a) defined contribution account known as the Public Safety Personnel Defined Contribution Plan.
Tier 3 members must make this selection within 90 days of their hiring, or they will default to contributing towards receiving pension benefits when they retire after meeting age and credited service requirements.
Many Tier 3 members opting to contribute towards pension benefits will also receive a so-called “hybrid” benefit in which members contribute towards a pension and the 401(a) defined contribution account. This hybrid benefit was created for Tier 3 (and Tier 2) members who do not contribute to Social Security through their employers and will not collect Social Security related to their public service in retirement.
Pension benefits are constitutionally guaranteed in Arizona and adjusted annually for inflation, providing lifetime financial security to plan retirees and surviving spouses. Unlike traditional investment-based retirement plans, PSPRS pension benefits are unaffected by stock market fluctuations or economic conditions that can erode retirement savings and income.
Pensions are funded through financial contributions made by members and employers during the member’s career, as well as investment returns generated by professionals employed by PSPRS.
For additional information, members can review the PSPRS Summary of Plan Provisions.
Public Safety Personnel Defined Contribution Retirement Plan
New PSPRS members may also choose to save for their retirement with the Public Safety Personnel Defined Contribution Plan, which offers 401(a) retirement accounts to members. These accounts, managed by Nationwide Retirement Solutions, are funded through member and employer contributions that are invested and grow over time to provide retirement income.
PSPDCRP participants, including “hybrid” benefit recipients, can allocate contributions to target date funds, mutual funds, index funds and bond funds. The benefit available to plan members upon retirement is determined by both contributions and investment performance of the funds chosen by participants. Defined contribution plans are a proven wealth and retirement security building tool, but participants bear the risk of market volatility and economic conditions.
The PSPDCRP is overseen by the PSPRS Defined Contribution Committee, which consists of PSPRS trustees and members of the public safety, corrections and elected officials retirement plans.
For additional information, participants in the 401(a) plan can visit www.psprsdcplan.com or contact Nationwide Retirement Solutions by calling 1-855-297-8228 or emailing [email protected] for assistance.
Making the choice
New Tier 3 members must review and act on several of their options within 90 days of their hiring date. These decisions, which are irrevocable under most circumstances, must be made through the Members Only portal. PSPRS emails new members access instructions to the portal.
- Retirement plan: New officers can choose to contribute towards a pension through PSPRS or to the PSPDCRP 401(a) plan. Members who do not make a decision will default to contributing towards a pension, or towards the hybrid defined benefit and defined contribution plans, depending on their Social Security status through their employer.
For members who elect to contribute towards a pension through PSPRS and will receive hybrid benefits due to their employer’s Social Security status:
- 401(a) plan member contribution rate: New members can adjust their pre-tax salary contribution to their 401(a) retirement account from the default rate of 3 percent. This amount can be raised to IRS limits but cannot be lowered.
For members who elect to contribute towards the PSPDCRP 401(a) plan:
- 401(a) plan member contribution rate: New members can adjust their pre-tax salary contribution to their 401(a) retirement account from the default rate of 3 percent. This amount can be raised to IRS limits but cannot be lowered.
- Health insurance subsidies: New members can choose to contribute to receive a health insurance subsidy each month after they retire to lower their health and dental insurance costs. The decision to opt-in this subsidy benefit is irrevocable under IRS rules and contributions are non-refundable. Members must meet retirement eligibility requirements to receive the benefit.
All new Tier 3 members begin making pre-tax contributions to their retirement plans on their 91st day of employment. Contributing towards retirement is mandatory and managed by your employer throughout your public service career.
PSPRS has partnered with Public Safety Financial/Galloway to provide free benefit selection and retirement planning consultations to plan members. PSPRS does not endorse any firms for asset management services to plan members.
PSPRS has resources to assist new members in making this important decision.
NEW MEMBER VIDEOS
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Inside PSPRS Tier 3 Benefits - |
PSPRS Tier 3 Defined Benefit Plan |
PSPRS Tier 3 Defined Contribution Plan |
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OTHER RESOURCES |
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PUBLICATIONS |
SEMINARS & COUNSELING |
NATIONWIDE |
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Side-By-Side Comparison of the DB and DC Plans |
PSPRS has contracted with Public Safety Financial/Galloway to provide educational seminars and one-on-one counseling at no cost for new members who want help determining which plan might be the best fit for them. Note: PSPRS has hired Public Safety Financial/Galloway for educational purposes only. |
PSPRS has contracted with Nationwide Retirement Solutions to be the third party administrator for the Defined Contribution plan. For more information about the fund options you would have should you choose to belong to the DC Plan, click on the following links: |
