March 1, 2016
Prop 124 Pension Reform Headed to the Ballot
Arizona Governor Doug Ducey has signed legislation implementing reforms of Public Safety Personnel
Retirement System (PSPRS) laws, thereby impacting current and future retirees and active members.
As such, it is very important to understand that these reform measures DO NOT affect those in the
Corrections Officer Retirement Plan (CORP), nor the Elected Officials' Retirement Plan (EORP).
Additionally, the only reform proposal impacting PSPRS retirees, survivors, and active members hired
before July 1, 2017, is a change to the Permanent Benefit Increase (PBI). This change would become
effective upon the voter passage of Prop 124, which will appear on a May 17 special election ballot.
The permanent benefit increase is currently dependent upon the annual investment returns of PSPRS.
Under Prop 124, the PBI would be replaced by an annual, CPI-based cost-of-living-adjustment (COLA)
that is capped at two percent of the retired or surviving members' current benefit.
This reform, conditional on the outcome of the May 17 vote, is intended to help PSPRS meet its existing
obligations to members and to help move PSPRS toward a more sustainable future. Currently, PSPRS
has roughly half of the assets available to cover the pensions of retirees and active members. The
additional PSPRS reforms for new members hired on or after July 1, 2017 are intended to gradually
alleviate the public safety-related financial burdens currently faced by many Arizona local governments.
It is important for members to know that even though the PSPRS Board of Trustees voted in January
to support the concept of a ballot measure replacing the Permanent Benefit Increase with a cost-ofliving
adjustment, PSPRS is not involved or affiliated with any campaign efforts and staff members are
unable to answer campaign-related questions.
Further information and education on the reform changes for those new PSPRS members hired on or
after July 1, 2017, is being developed and will be communicated in a more formal, easy to understand
format over the coming year. Until then, please remember that the only changes effecting the current
PSPRS membership is that which was expressed above.
April 25, 2016 clarification: There is another part to this ballot initiative where those hired between January
1, 2012 and June 30, 2017, that DO NOT contribute to Social Security, are required to contribute 3% to a
defined contribution plan with a 3% employer match. However, the member has the ability to opt out of that
requirement before June 30, 2017.