Pension contribution reporting and rates
Arizona employers who offer retirement benefits to police officers, firefighters, corrections officers, elected officials, and members of the judiciary through PSPRS are obligated to make financial contributions to PSPRS-managed retirement plans and towards other benefits, such as the disability program and the health insurance subsidy.
Contributions, which are made by employers and plan members, are crucial to ensure PSPRS-managed plans can meet current and future pension obligations to retirees and members. State law requires that employers report and make timely contributions every pay period.
Learn about contribution rates for PSPRS-managed defined contribution plans.
Below is a table of contents to assist employers in understanding, reporting and making contributions to PSPRS-managed pension plans.
TABLE OF CONTENTS
Pensionable compensation
State law applies certain restrictions to the type of member compensation that an employer must use to calculate both the member and employer pension contributions to PSPRS-managed pensions per pay period.
Generally speaking, salary for services rendered to the employer and paid on a regular payroll basis and used holiday/sick pay are intended compensation for pension calculations, while allowances for cars, phones, and uniforms, along with unused sick/vacation time payouts and one-time awards cannot be considered pensionable compensation.
These restrictions vary depending on whether the participating member is a first responder with PSPRS or a corrections officer with CORP or an elected official or member of the judiciary participating in EORP.
Please consult the table below for guidance on pensionable compensation:
Pensionable Compensation | |||
| Public Safety | Corrections Officer | Elected Officals & Judiciary |
Base Salary | ✔ | ✔ | — |
Gross Salary | — | — | ✔ |
Shift differential pay | ✔ | ✔ | — |
Military differential pay | ✔ | ✔ | — |
Holiday pay | ✔ | ✔ | — |
Overtime pay | ✔ | ✖ | — |
Sick time used | ✔ | ✔ | — |
Vacation time used | ✔ | ✔ | — |
Compensation time used | ✔ | ✔ | — |
Pay earned by third party contracts between public agencies | ✔ | — | — |
Longevity payments, as long as it is paid at least every 6-months | ✔ | — | — |
Lump sum payments of accrued unused vacation time | ✖ | ✖ | ✖ |
Lump sum payments of accrued unused sick time | ✖ | ✖ | ✖ |
Lump sum payments of accrued unused compensatory time | ✖ | ✖ | ✖ |
Uniform allowances, car allowances or other fringe type benefit payments | ✖ | ✖ | ✖ |
(Included)
(Not Included)
— (Not applicable)
Pensionable contribution limits
Federal and state law provide contribution limits for PSPRS-managed pension plan participants. These limits are applied when members reach maximum compensation thresholds that can be used to calculate member and employer pension contributions.
These limits vary according to member retirement plan and tier and are periodically adjusted by the Internal Revenue Service and the PSPRS Board of Trustees. Please note that Tier 1 and 2 limits are based on IRS guidance and applied on a calendar year basis while Tier 3 limits are based on state law applied on a fiscal year basis.
Employers reporting contributions to PSPRS will receive automatic notice when reported member compensation approaches federal or statutory limits. When limits have been reached employers will not be able to submit reporting files without first using the demographic tool in the employer portal to change impacted members’ status to “Compensation Limit Reached.” Similarly, employers will receive automatic notice when it is time to resume member and employer contributions.
Please consult the table below for guidance on pensionable compensation limits:
| Tier 1 and 2 | Tier 3* |
Public Safety | $345,000 (IRS limit per fiscal year) | $140,952 (A.R.S. §38-843.04 per calendar year) |
Corrections | $345,000 (IRS limit per fiscal year) | $72,947 (A.R.S. §38-895.01 per calendar year) |
Elected Officials & Judiciary | $345,000 (IRS limit per calendar year) | |
*Tier 3 limits are adjusted every three years based on the average change in a specific wage index and monitored, based on pay period ending dates that fall within that calendar year.
Pension contribution reporting
Employers must submit payroll reporting files detailing pension plan contributions to PSPRS through the employer payroll portal. The portal’s employer demographics manual page is also used by employers to notify PSPRS of member demographic updates, including new member hires, terminations, periods of leave and returns to service. Please consult the following documents for submitting contribution and demographic information. For more information on contribution reporting please contact our Active Members Department
- Submitting Fixed Width Contribution Files
- Submitting Excel Contribution Files
- Contribution Invoice and Payment Process
- Creating Contribution Files
- Contribution Code Matrix
To view invoices that are generated when contribution files are submitted, employers must register to use Wells Fargo’s E-Bill Express. Employers can contact PSPRS at [email protected] for assistance. Employers can use E-Bill Express to pay by ACH . Employers are encouraged to remit contribution payments using electronic funds transfer, although employers may make payments by check mailed to:
PSPRS/CORP/EORP
3010 E. Camelback Rd., Suite 200
Phoenix, AZ 85016-4416
By statute, contribution payments are to be made no later than 10 working days after the end of each employers’ payroll dates. Failure to remit payments on a timely basis will result in interest charges as provided by state law. Contributions withheld from member paychecks are done on a pre-tax basis.
For more information on contribution reporting please contact our Active Members Department.
PSPRS-managed defined contribution plan reporting
Please see the defined contribution plan reporting and rates page for more information on reporting and making employer and member contributions to the Public Safety Personnel Defined Contribution Retirement Plan (PSPDCRP) and the Elected Officials Defined Contribution Retirement System (EODCRS).
Contribution Rates – Employers and Members
Employer contribution rates for the PSPRS and CORP are specific to each particular employer while EORP is a pooled plan with a universal employer contribution rate. State law requires that all three plans set employer rates through actuarial calculations conducted at the end of every fiscal year.
Employer contribution rates, which are expressed on a percentage of member salaries, include amounts to provide disability coverage for members while separate rates exist to deliver health insurance subsidies to plan members in retirement, according to state law.
Member contribution rates vary according to retirement plan – PSPRS, CORP and EORP – and by benefit tiers based on member hiring dates. The public safety plan has fixed member contribution rates for Tiers 1 and 2, and variable rates for Tier 3 members. EORP, closed to new members in 2014, has a static member contribution rate while the corrections plan features variable rates for all member tiers who receive pension benefits.
Employers can locate their employer and member pension contribution rates, including those for health insurance subsidies and the alternate contribution rate for return-to-work retirees (see section below), in their annual employer valuations.
- PSPRS and CORP: Download Individual Employer Actuarial Valuations with Contribution Rates and How to locate PSPRS and CORP employer contribution rates guide.
- EORP: Download EORP Consolidated Actuarial Valuation and How to location EORP employer contribution rates guide and visit our Elected Officials Plans webpage for more information.
- Understanding PSPRS Pension Financing (video): Inside employer funded status and contribution rates.
For a convenient list of all applicable PSPRS-managed plan aggregate employer and member contribution rates please see the following required reporting documents:
Fiscal Year | Reporting Documents |
FY 2024-2025 | |
Historical Reporting Documents on Pension Contribution Rates | |
NOTE: Employers may prepay their contributions to take advantage of having assets invested all year, or they may make extra payments to pay down their unfunded liabilities. If interested, please contact [email protected].
Alternate Contribution Rate (ACR)
Employers are required to pay an Alternate Contribution Rate (ACR) when they employ a PSPRS, CORP or EORP retiree. The ACR is only applied for retirees returning to work and exists to reduce potential actuarial impact caused by hiring a retiree in a position that would otherwise be occupied with a contributing member.
The ACR is individually set for each participating employer group and determined each year during the system’s annual actuarial valuation. The ACR is calculated by combining the amortized unfunded liability contribution rates for both the cost of pension and health insurance, with a minimum rate of 8 percent in PSPRS and 6 percent in CORP. Employers can access this information from the Contribution Requirement section in their annual Individual Actuarial Valuation Report. For the EORP ACR, see EODCRS.
Employers report ACR data and payments using their normal payroll reporting processes to the system. This would include uploading data through the Employer Payroll Portal. Employers who submit late ACR payments are subject to interest.