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Tier 1 and 2 Corrections and Tier 2 Public Safety Excess Contribution Refunds


PSPRS is working with many – but not all – employers to process excess contribution refunds to some members and retirees in Tier 1 and 2 corrections, Tier 2 public safety and Tier 1* public safety who pay Tier 2 contribution rates.

These excess contribution refunds will be provided to those who work or have worked for 142 employers affected by a PSPRS Board of Trustees decision to set Tier 1 and 2 corrections and Tier 2 public safety member contribution rates at an individual employer level in accordance with state law.

State law takes individual employer funding levels into account and creates a range for Tier 1 and 2 corrections and Tier 2 public safety member contribution rates. The board’s action replaced system-wide and uniform member contribution rates for the impacted tiers, effective July 1, 2022.

Reduced Tier 1 and 2 corrections and Tier 2 public safety member contribution rates for those working for qualified employers were applied as of July 1, 2022. These changes are also being retroactively applied to qualified employers for previous years, which necessitates the excess contribution refunds for members who work for or have worked for impacted employers.

Please be advised that not all members of affected tiers who work, or worked, for impacted employers will qualify for a refund. Members must have worked for impacted employers during years in which their employer’s funded status was sufficient to require lower member contribution rates.

Please note that the years in which applicable member contribution rates may have changed vary according to corrections and public safety plans. Tier 1 and 2 corrections member contribution rate statutes changed July 1, 2011, for corrections members and July 1, 2015, for Tier 2 public safety members. Any members who retired prior to these dates did not pay excess contributions and are ineligible for refunds.

Impacted Member Tier Groups

Tier 1 corrections members hired prior to Jan. 1, 2012
Tier 2 corrections members hired between Jan. 1, 2012, to June 30, 2018
Tier 2 public safety members hired between Jan. 1, 2012, to June 30, 2017
*Public safety members hired between July 20, 2011, and Dec. 31, 2011, are eligible to receive Tier 1 benefits but make contributions under Tier 2 statutes due to court decisions.

Impacted Employers

View list of impacted employers

Is there a way to tell if I will receive an excess contribution refund?

Members and retirees must fit all three criteria to qualify for a refund of excess contributions:

  1. They must have worked for an impacted employer.
  2. They must be Tier 1 or 2 corrections members, Tier 2 public safety members or Tier 1 public safety members who pay Tier 2 contribution rates.
  3. Finally, their employer must have had a funding status that was sufficient to warrant lower contribution rates during their time of employment. 

Can I check to see how much my refund will be?

Yes, active members can check their Members Only portal account to view their excess contribution amount and applicable interest, which is set at 5.75 percent. Refund and interest totals are located under the “Account Information” section within the Members Only portal.  Members who worked for multiple impacted employers must use the “Choose Your Employer” drop-down function to view amounts owed from each employer.

Retirees will need to call PSPRS at (602) 255-5575 to confirm if they are due a refund and the amount. Please note that PSPRS receives thousands of calls each month and is anticipating heavy call volume. Callers are encouraged to use the PSPRS call center automatic call-back feature for convenience.  

Refunds and interest are subject to applicable state and federal taxes.

What factors influence the excess contribution refund and interest amount?

Refund amounts are dependent upon individual members’ pension contributions while working for an impacted employer. Refunds are also dependent upon the member contribution rate retroactively applied to employers and how much that rate differs from the system-wide rates that were previously applied. The refund amounts and interest, in most cases, are modest.

How and when will impacted members be paid?

PSPRS is prohibited from issuing refunds of pre-tax contributions to members and retirees. As a result, refunds will be provided to members by their employer, and/or in some cases former employers. Impacted employers will receive contribution credits from PSPRS to offset this expense.

PSPRS is currently working with employers to process refund and interest payments. The timing and method of payment will vary depending on employer. PSPRS has requested that impacted employers process all payments by September 30. However, some employers may require a longer period of time to account for large numbers of impacted members and retirees or other factors. 

Will taxes be taken out of payments?

Yes, the refunding of member contributions to impacted members and retirees requires that the funds be taxed. Former employers will be contacting impacted members/retirees to request a W-4 tax withholding form to ensure proper withholding. Refunded contribution amounts will be subject to state and federal taxes that are applied by employers and stated on W-2 tax forms. Accrued interest will not be taxed immediately but impacted members and retirees will receive 1099 tax form to report the interest income.

Are former public safety and corrections members eligible for refunds?

It depends. Former plan members who quit or terminated and refunded their plan contributions have already received all applicable contributions made to the system and as a result are not eligible for additional payments.

Inactive members who meet the eligibility criteria and have not refunded their contributions are eligible for refunds.

Are retired public safety and corrections members eligible for refunds?

Yes, there are retired members who will receive refunds and interest. Most are Tier 1 corrections members hired prior to January 1, 2012, who have retired. Corrections and public safety retirees who retired on disability may also be impacted.

Will member and retiree contact information be shared with employers?

Yes. In most cases, impacted employers should have valid contact information for current members. PSPRS will work with employers that request contact information for retirees and transferred members.