ELECTED OFFICIALS’ RETIREMENT PLAN
2001 ENACTED LEGISLATION

 H.B. 2111 State retirement service credits; transfers Laws 2001, Chapter 123, effective August 9, 2001

This bill allows a person who left their retirement contributions on account with any of the state retirement systems or plans and has terminated employment the option to transfer service credits from another Arizona state retirement system or plan back to the Arizona system or plan of their choice. The transfer must be in a form so as to not cause either retirement system or plan to incur any unfunded accrued liability.

H.B. 2164 Retirees; health insurance subsidies Laws 2001, Chapter 383, retroactively effective to July 1, 2001

Retroactively effective to July 1, 2001, this bill increases the maximum monthly subsidy to each eligible retiree and survivor of the PSPRS, CORP, and EORP. The bill provides for the following increase in subsidy:

S.B. 1100 Supplemental defined contribution plans Laws 2001, Chapter 280, effective August 9, 2001

This bill repeals the defined contribution retirement plan option which requires term-limited state elected officials and exempt state employees to chose either a defined contribution plan (DC plan) or the state’s defined benefit plan (DB plan) at the time of employment. This bill would also repeal the special 5% money purchase plan that only legislative employees are eligible to elect. Both of these plans would be replaced by a supplemental defined contribution plan. Under this supplemental plan, any person who is eligible for one of the four state retirement systems or plans would remain a member of that system or plan but would have the option of contributing further employee monies into a supplemental defined contribution plan. The employee could contribute an amount beginning at one per cent of salary and increase this amount annually in one percent increments as allowed by federal tax laws. Until authorization is received from the Internal Revenue Service, these employee contributions would be on an after-tax basis although any gains in investments would grow tax deferred.  Under this bill, an employer could elect to match all or any portion of the employee's contribution to any retirement or savings plan with this matched money deposited in the supplemental defined contribution plan.  The employers election would only be valid for that employer’s budget cycle. The supplemental defined contribution plan is designed to provide for further retirement savings at the election of the employee.

A DC plan is different from a DB plan in that under a DC plan, contributions are accrued in an individual’s personal account and the person has the responsibility for investing that money. The money on account at the time of retirement under a DC plan is what the person is entitled to as his retirement pension. Under a DB plan, the person does not make investment decisions regarding his contributions but instead is promised a pension based upon his years of service and salary. Under a DB plan, the pension amount is guaranteed, provided that the member meets the retirement eligibility requirements. The major difference between a DC plan and a DB plan is that under a DC plan the investment risk is shifted from the employer to the employee.

S.B. 1107 Retirees; health insurance; subsidies Laws 2001, Chapter 376, retroactively effective to July 1, 2001

Retroactively effective to July, 1 200, in addition to the regular subsidy, this bill would temporarily increase the maximum monthly subsidy to each eligible retiree and survivor of the PSPRS, CORP, and EORP who live in a nonservice area. A nonservice area is defined as an area in this state where either the ASRS, the department of administration, for a former state employee, or the employee's former employer does not offer a health care services organization (HMO) for which the retiree is eligible.  This temporary increase in subsidies for these people would last through June 30, 2003.   

FOR PERSONS LIVING IN A NON SERVICE AREA ONLY:

S.B. 1149 Retirement; PSPRS, EORP; tax equity  Laws 2001, Chapter 282, effective August 9, 2001

This bill provides that any EORP or PSPRS member who was employed before September 15, 1989 and who retired after October 31, 2000 but before November 1, 2001,  would be entitled to receive a tax equity benefit allowance consisting of two per cent of the member’s base benefit retroactive to the date of retirement. The tax equity benefit allowance is intended to offset the state income tax that is imposed upon certain Arizona retirees due to the U.S. Supreme Court decision in Davis v Michigan effective retroactive to September 15, 1989 which caused the Arizona state legislature to amend the state income tax scheme for all retirees. Because of the amended legislation, all Arizona residents who are receiving a pension, after the first $2,500 in pension, are subject to state income tax on that pension. Previously, a retiree of the PSPRS or EORP was not subject to state tax on the pension amount received.

S.B. 1232 EORP; retired members; appointment Laws 2001, Chapter 62 effective August 9, 2001

This bill allows a retired member of the EORP who was appointed to fill the elected official's position from which he originally retired to continue to receive his EORP pension during this period. Previously, in this situation the retired member's pension would have been suspended.  

S.B. 1295 Retirement benefits; defined contribution supplement Laws 2001, Chapter 380, effective August 9, 2001

This bill contains provisions identical to S.B. 1100 which provides for a supplemental defined contributions plan.  See the summary for S.B. 1100.