Arizona’s return-to-work laws let PSPRS retirees go back to work, but with limits to protect pension funds and follow federal rules.
Retirees can work in the private sector or in public jobs not covered by PSPRS plans with no pension impact. In most cases, retirees must wait six months and have a true break in service before returning to a covered job – or their pension payments may be suspended. Pre-arranged agreements to return to work are prohibited under state law.
Retirees do not contribute to PSPRS or earn additional credited service when returning to work. Employers may have to pay an Alternate Contribution Rate (ACR) when hiring retirees.
Please note that Arizona’s return to work laws will change September 26, 2025, due to legislation passed by the Arizona Legislature and signed into law. This page will be updated to reflect those changes, which were detailed in the PSPRS quarterly newsletter.
Returning to work after retirement
- Retirees can return to work for different employers in PSPRS-covered positions after a bona fide separation of service with their previous employer while continuing to collect their pension
- Retirees can return to work for their former employer in a designated position and collect their pension
- Retirees returning to work for their former employer in a PSPRS-covered position will have their pension suspended for the duration of their reemployment
- Retirees who return to work may be required to repay any PSPRS benefits received during their reemployment
PSPRS retirees can return to work within six months of their retirement and continue to receive their pension under the following conditions:
- Returning to work for a public employer in a position not covered by PSPRS
- Retirees hired for a position through an open, competitive hiring process at least 60 days after retirement date
- Becoming a fire inspector or arson investigator
- Becoming an elected official through appointment or election
- Being assigned to voluntary duties.
- Returning to work in a job reassignment (as an accommodation) after retirement and subsequent award of an accidental, ordinary, catastrophic, or temporary disability benefit
- Returning to work for a different public employer (Effective September 26, 2025)
- Retirees hired as school resource officers (Effective September 26, 2025)
- The local board for the retiree’s employer will review according to statutory provisions for disability review and determine eligibility to return to work
- Retirees on disability pension (who are ineligible for normal retirement) will have their disability benefits terminated if they return to work in a covered position
- Retirees previously receiving disability benefits will resume contributing and accruing credited service towards a normal retirement when they return to work
- NOTE: Retirees may have their disability pension terminated through periodic disability review by the local board. For details please check A.R.S. § 38-844(E)
Return to work process for employers and local boards
Employers are required to confirm PSPRS retiree status and retirement effective dates through the employer portal. Employers must verify the new positions and update retiree demographics as needed.
Local boards must review employers’ return-to-work determinations and whether the ACR is applicable within 10 days and notify PSPRS.
Employers must submit the Employer Request for Subsidy (Form ER SUB) for retirees who are covered by an employer’s active medical or dental plan. If approved, PSPRS will send the subsidy to the employer each month.
More information is available on the Hiring Retirees page.