November 21, 2017
Parker lawsuit interest rate settled by court
PSPRS Chairman: 2011 changes cost system more than $220 million
ARIZONA – Members of PSPRS impacted by the Parker lawsuit are entitled to collect 5.25 percent interest on excess contribution refunds, according to a Maricopa County Superior Court ruling entered November 21.
The decision applies the same rate to pre-judgment and post-judgment interest on contribution refund amounts, as well as any permanent benefit increase (PBI) amounts withheld due to 2011 pension reforms deemed unconstitutional.
“The Hall and Parker litigation serves as a good example of what can happen when pension reforms are not properly vetted,” said PSPRS Board of Trustees Chairman Brian Tobin. “This cost our system more than $220 million while Proposition 124, which was crafted and supported by all stakeholders, is expected to provide about a half a billion dollars in savings.”
The interest period for excess contribution refunds started July 1, 2011, for all PSPRS members and employers. Ending periods will vary according to when each employer refunded excess contributions to impacted members.
Employers must notify PSPRS of the final processing date of contribution refunds related to the Parker lawsuit if they have not done so already. PSPRS needs this information in order to accurately calculate interest owed to members affected by the litigation. Employers can provide this information by emailing email@example.com or by calling 602-255-5575. Members should then be notified by their employer of their individual amount.
These dates are also necessary for employers who wish to claim PSPRS contribution credits for pre-judgment interest totals awarded in light of the Hall and Parker lawsuits.
Post-judgment interest must be separately applied by the employer to any contribution refund amounts not returned by November 21, 2017, which is the date of the official entry of Judge Rosa Mroz’s order that establishes the interest and concludes the lawsuit. As a reminder, employers are not allowed to take credits against post-judgment interest.
“This ends a difficult chapter in PSPRS history,” said PSPRS Administrator Jared Smout. “And it gives the fund the opportunity to build on the positive trajectory of the last fiscal year, when the fund gained more than $1 billion in value.”