Bill Text: AZ SB1146 | 2019 | Fifty-fourth Legislature 1st Regular | Engrossed
Bill Title: PSPRS; EORP; CORP; modifications
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2019-04-01 - Chapter 38 [SB1146 Detail]
Download: Arizona-2019-SB1146-Engrossed.html
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Senate Engrossed |
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State of Arizona Senate Fifty-fourth Legislature First Regular Session 2019
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SENATE BILL 1146 |
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AN ACT
Amending sections 38‑810, 38‑816, 38‑820, 38‑823, 38‑844.03, 38‑844.05, 38‑844.06, 38‑844.08, 38‑853.01, 38‑858, 38‑862, 38‑907, 38‑909 and 38‑913, Arizona Revised Statutes; relating to public retirement systems.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 38-810, Arizona Revised Statutes, is amended to read:
38-810. Contributions; appropriations
A. Each member shall contribute to the fund an amount equal to the amount prescribed in subsection G of this section. Contributions of members shall be made by payroll deductions. Every member is deemed to consent to these deductions. Payment of a member's compensation, less these payroll deductions, constitutes a full and complete discharge and satisfaction of all claims and demands by the member relating to remuneration for the member's services rendered during the period covered by the payment, except with respect to the benefits provided under the plan. A member may not, under any circumstance, borrow from, take a loan against or remove contributions from the member's account before the termination of membership in the plan or the receipt of a pension.
B. The board's office shall be credited monthly with monies collected pursuant to section 12‑119.01, subsection B, paragraph 2, section 12‑120.31, subsection D, paragraph 2, section 12‑284.03, subsection A, paragraph 6, section 22‑281, subsection C, paragraph 3 and section 41‑178. The monies credited to the fund pursuant to this subsection shall be deposited in the fund on a monthly basis, and there shall be a complete accounting of the determination of these monies deposited in the fund.
C. Beginning on July 1, 2018, as determined by actuarial valuations performed by the plan's actuary each employer shall make contributions on a level percent of compensation basis for all employees of the employer who are either members under this article, article 3.1 of this chapter or article 2 of this chapter pursuant to section 38‑727, subsection B sufficient under the actuarial valuation to meet both the normal cost plus the actuarially determined amount required to amortize the unfunded accrued liability over a closed period of at least twenty and not more than thirty years that is established by the board taking into account the recommendation of the plan's actuary and the employer's contribution under the elected officials' defined contribution retirement system established pursuant to article 3.1 of this chapter and the employer's contribution under article 2 of this chapter for members who are eligible pursuant to section 38‑727, subsection B. The employer also shall pay the amount required by section 38-797.05 for members under article 2 of this chapter who are eligible pursuant to section 38‑727, subsection B and the amount required by article 3.2 of this chapter for members under article 3.1 of this chapter. The monies deposited in the fund pursuant to subsection B of this section shall be used to supplement the contributions required of all employers under the plan. The employer level percent compensation contribution that is paid pursuant to this subsection, less the amount contributed by the employer pursuant to section 38‑833 and section 38‑737 for members eligible pursuant to section 38‑727, subsection B, shall not be used to pay for an increase in benefits that is otherwise payable to members but shall be used to meet the normal cost plus an amount to amortize the unfunded accrued liability.
D. In any fiscal year, an employer's contribution to the plan in combination with member contributions may not be less than the actuarially determined normal cost for that fiscal year. After the close of any fiscal year, if the plan's actuary determines that the actuarial valuation of the fund contains excess valuation assets and is more than one hundred percent funded, the board shall account for fifty percent of the excess valuation assets in a stabilization reserve account. After the close of any fiscal year, if the plan's actuary determines that the actuarial valuation of the fund has a valuation asset deficiency and an unfunded actuarial accrued liability, the board shall use any valuation assets in the stabilization reserve account, to the extent available, to limit the decline in the fund's funding ratio to not more than two percent.
E. The department of administration and the treasurer of each county and participating city and town shall transfer to the board the contributions provided for in subsections A and C of this section within ten working days after each payroll date. The state, county treasurers and clerks of the superior court shall transfer the monies credited under subsection B of this section to the board on or before the fifteenth day of each calendar month that follows the month in which the court fees were collected. Contributions and monies credited under subsection B of this section and transferred after these dates shall include a penalty equal to ten percent a year, compounded annually, for each day that the contributions or monies credited under subsection B of this section are late. Delinquent payments due under this subsection, together with interest charges as provided in this subsection and court costs, may be recovered by action in a court of competent jurisdiction against the person or persons responsible for the payments or, at the request of the board, may be deducted from any other monies, including excise revenue taxes, payable to a political subdivision by any department or agency of this state. If requested by the board, the state, county treasurers or clerks of the superior court shall transfer the monies credited under subsection B of this section, in an amount determined by the board, directly to the qualified governmental excess benefit arrangement established pursuant to section 38‑803.01.
F. The employer shall pay the member contributions required of members on account of compensation earned after August 7, 1985. The paid contributions shall be treated as employer contributions for the purpose of determining tax treatment under the United States internal revenue code. The effective date of the employer payment shall not be before the date the retirement plan has received notification from the United States internal revenue service that pursuant to section 414(h) of the United States internal revenue code the member contributions paid will not be included in gross income for income tax purposes until the paid contributions are distributed by refund or pension payments. The employer shall pay the member contributions from monies established and available in the retirement deduction account, which monies would otherwise have been designated as member contributions and paid to the retirement plan. Member contributions paid pursuant to this subsection shall be treated for all other purposes, in the same manner and to the same extent, as member contributions made before August 7, 1985.
G. An elected official who became a member of the plan before July 20, 2011 shall contribute seven percent of the member's gross salary pursuant to subsection A of this section. The amount contributed by a member pursuant to subsection A of this section by an elected official who became a member of the plan on or after July 20, 2011 is:
1. Through June 30, 2011, seven percent of the member's gross salary.
2. For fiscal year 2011‑2012, ten percent of the member's gross salary.
3. 2. For fiscal year 2012‑2013, eleven and one‑half percent of the member's gross salary.
4. 3. For fiscal year 2013‑2014 and each fiscal year thereafter, thirteen percent of the member's gross salary.
H. For fiscal year 2011‑2012 and each fiscal year thereafter, the amount of the member's contribution that exceeds seven percent of the member's compensation shall not be used to reduce the employer's contributions that are calculated pursuant to subsection C of this section.
I. In fiscal years 2013‑2014 through 2042‑2043, the sum of $5,000,000 is appropriated in each fiscal year from the state general fund to the elected officials' retirement plan fund to supplement the normal cost plus an amount to amortize the unfunded accrued liability pursuant to subsection C of this section. Monies appropriated pursuant to this subsection shall not be used to pay for an increase in benefits that is otherwise payable to members and shall only be used as specified in this subsection. Monies appropriated pursuant to this subsection are exempt from the provisions of section 35‑190 relating to lapsing of appropriations.
Sec. 2. Section 38-816, Arizona Revised Statutes, is amended to read:
38-816. Redemption of prior service
A. Any present Except as provided in subsection B of this section, an active elected official who has at least five years of credited service with the plan may elect to redeem up to sixty months of any part of the following prior service or employment by paying into the fund the amounts required under subsection B C of this section if the prior service or employment is not on account with any other retirement system or plan:
1. Prior service in this state as an elected official with an employer now covered by the plan before the effective date of participation if the elected official has received a refund from a prior retirement system or plan on termination of employment before the elected official's application for redemption of prior service.
2. Prior service in this state as an elected official with an employer now covered by the plan before the effective date of participation if the elected official was not covered by a retirement system or plan during the elected official's prior elected official service.
3. Prior service as an elected official of this state or a city, town or county of this state if the elected official was not covered by a retirement system or plan during that service whether or not the city, town or county is an employer now covered by the plan.
4. Prior employment with the United States government, a state of the United States or a political subdivision of a state of the United States.
B. An active elected official who became a member of the plan before January 1, 2012 may redeem any amount of eligible prior service as specified in subsection A of this section without having to have accrued any minimum amount of credited service in the plan.
B. c. Any present An active elected official who elects to redeem any part of the prior service or employment for which the elected official is deemed eligible by the board under this section shall pay into the plan the amounts previously withdrawn by the elected official as a refund of the elected official's accumulated contributions, if any, plus the additional amount, if any, that is computed by the plan's actuary and that is necessary to equal the increase in the actuarial present value of projected benefits resulting from the redemption calculated using the actuarial methods and assumptions that are prescribed by the plan's actuary.
C. D. On approval by the governing body of an incorporated city or town that executes a joinder agreement under section 38‑815, the city or town may pay into the fund all or any part of the amount sufficient to provide retirement benefits for elected officials or former elected officials for the time of service as an elected official of the city or town before the joinder agreement if no retirement benefits were in effect for elected officials during the time of service being redeemed under this section.
D. E. A member electing to redeem service pursuant to this section may pay for service being redeemed in the form of a lump sum payment to the plan, a trustee-to-trustee transfer or a direct rollover of an eligible distribution from a plan described in section 402(c)(8)(B)(iii), (iv), (v) or (vi) of the internal revenue code or a rollover of an eligible distribution from an individual retirement account or annuity described in section 408(a) or (b) of the internal revenue code.
Sec. 3. Section 38-820, Arizona Revised Statutes, is amended to read:
38-820. Credit for military service
A. Except as provided in subsection B of this section, a member of the plan who has at least five years of credited service with the plan may receive credited service for periods of active military service performed before employment with the member's current employer if:
1. The member was honorably separated from the military service.
2. The period of military service for which the member receives credited service does not exceed sixty months.
3. The period of military service for which the member receives credited service is not on account with any other retirement system, except as provided by 10 United States Code section 12736 or except if the member is not yet eligible for a military retirement benefit.
4. The member pays the cost to purchase the prior active military service. The cost is the amount necessary to equal the increase in the actuarial present value of projected benefits resulting from the additional credited service.
5. The amount of benefits purchased pursuant to this subsection is subject to limits established by section 415 of the internal revenue code.
B. An elected official who became a member of the plan before January 1, 2012 may receive credited service for eligible prior active military service as specified in subsection A of this section without having to have accrued any minimum amount of credited service with the plan.
B. C. An active member of the plan who volunteers or is ordered to perform military service may receive credited service for not more than sixty months of military service as provided by the uniformed services employment and reemployment rights act of 1994 (38 United States Code part III, chapter 43). The member's employer shall make employer contributions and the member shall make the member contributions pursuant to subsection C D of this section if the member meets the following requirements:
1. Was an active member of the plan on the day before the member began military service.
2. Entered into and served in the armed forces of the United States or is a member of the national guard.
3. Complies with the notice and return to work provisions of 38 United States Code section 4312.
C. D. Contributions made pursuant to subsection B C of this section shall be for the period of time beginning on the date the member began military service and ending on the later of one of the following dates:
1. The date the member is separated from military service.
2. The date the member is released from service related service‑related hospitalization or two years after initiation of service related service‑related hospitalization, whichever date is earlier.
3. The date the member dies as a result of or during military service.
D. E. Notwithstanding any other law, on payment of the contributions made pursuant to subsection B C of this section, the member shall be credited with service for retirement purposes for the period of military service of not more than sixty months. The member shall submit a copy of the military discharge certificate (DD-256A) and a copy of the military service record (DD-214) or its equivalent with the member's application when applying for credited service corresponding to the period of military service.
E. F. The employer and the member shall make contributions pursuant to subsection B C of this section as follows:
1. Contributions shall be based on the compensation that the member would have received but for the period that the member was ordered into active military service.
2. If the employer cannot reasonably determine the member's rate of compensation for the period that the member was ordered into military service, contributions shall be based on the member's average rate of compensation during the twelve-month period immediately preceding the period of military service.
3. If a member has been employed less than twelve months before being ordered into military service, contributions shall be based on the member's compensation being earned immediately preceding the period of military service.
4. The member has up to three times the length of military service, not to exceed sixty months, to make the member contributions. Once the member has made the member contributions or on receipt of the member's death certificate, the employer shall make the employer contributions in a lump sum. Death benefits shall be calculated as prescribed by law.
5. If the member's employer pays military differential wage pay to members serving in the military, contributions shall be paid to the plan pursuant to section 38‑810 for any military differential wage pay paid to the member while performing military service.
F. G. In computing the length of total credited service of a member for the purpose of determining retirement benefits or eligibility, the period of military service, as prescribed by this section, shall be included.
G. H. If a member performs military service due to a presidential call‑up, not to exceed forty‑eight months, the employer shall make the employer and member contributions computed pursuant to subsection E F of this section on the member's return and in compliance with subsection B C of this section.
H. I. In addition to, but not in duplication of, subsection B C of this section, beginning December 12, 1994 contributions, benefits and credited service provided pursuant to this section shall be provided pursuant to section 414(u) of the internal revenue code, and this section shall be interpreted in a manner consistent with that internal revenue code section.
I. J. For plan years beginning after December 31, 2008, a member who does not currently perform services for an employer by reason of qualified military service as defined in section 414(u)(5) of the internal revenue code is not considered having a severance from employment during that qualified military service. Any payments by the employer to the member during the qualified military service shall be considered compensation to the extent those payments do not exceed the amounts the member would have received if the member had continued to perform services for the employer rather than entering qualified military service.
J. K. For deaths occurring from and after December 31, 2006, in the case of a member who dies while performing qualified military service as defined in section 414(u)(5) of the internal revenue code, the survivors of the member are entitled to any benefits, other than benefit accruals relating to the period of qualified military service, provided under the plan as though the member resumed and then terminated employment on account of death.
Sec. 4. Section 38-823, Arizona Revised Statutes, is amended to read:
38-823. Discount rate; service purchase; transfer of service credits
A. Beginning July 1, 2017, the discount rate specified in subsection B of this section applies to service purchases or transfers of service credits to the plan pursuant to the following sections:
1. Section 38‑816, subsection B C.
2. Section 38‑820, subsection A or B.
3. Section 38‑821.
4. Sections 38‑921, 38‑922, 38‑923 and 38‑924.
B. The discount rate is an amount equal to the lesser of the assumed rate of return that is prescribed by the board or an amount equal to the yield on a ten‑year treasury note as of March 1 that is published by the federal reserve board plus two percent. The discount rate is effective beginning in the next fiscal year, and the board shall recalculate the rate each year.
Sec. 5. Section 38-844.03, Arizona Revised Statutes, is amended to read:
38-844.03. Eligibility; participation
A. Any member who is eligible for a normal pension pursuant to section 38‑844, subsection A, who becomes a member of the system before January 1, 2012 and who has at least twenty years of credited service is eligible to participate in the deferred retirement option plan. In addition, any member who is subject to section 38‑858, subsection B c is eligible to participate in the deferred retirement option plan retroactive to the member's twentieth year of credited service or on the day before the member began military service, whichever is later, if the member makes the election pursuant to this section on or before resuming employment with the member's employer.
B. A member who elects to participate in the deferred retirement option plan shall voluntarily and irrevocably:
1. Designate a period of participation that is not more than sixty consecutive months.
2. Beginning on the date the member elects to participate in the deferred retirement option plan, cease to accrue benefits under any other provision of this article. The member's effective date of participation is the first day of the month following the date the member elects to participate.
3. Have deferred retirement option plan benefits credited to a deferred retirement option plan participation account pursuant to section 38‑844.05.
4. Receive benefits from the system on termination of employment at the same time and in the same manner as otherwise prescribed in this article.
5. Agree to terminate employment on completion of the deferred retirement option plan participation period designated by the member on the appropriate deferred retirement option plan participation form.
C. If a member fails to terminate employment on completion of the designated deferred retirement option plan participation period:
1. The member is not entitled to the interest accumulation on the deferred retirement option plan participation account.
2. The deferred retirement option plan participation account shall not be credited with the monthly amount prescribed in section 38‑844.05, subsection C, paragraph 1 and that amount shall not be paid directly to the member.
3. The payment prescribed in section 38‑844.08, subsection A, paragraph 1 shall not be paid until the member terminates employment and is payable at the same time as the pension amount is paid on retirement.
4. The member does not acquire any further credited service in the system.
Sec. 6. Section 38-844.05, Arizona Revised Statutes, is amended to read:
38-844.05. Deferred retirement option benefits and participation accounts
A. A deferred retirement option plan participation account is an account established within the system on behalf of each deferred retirement option plan participant. All benefits accrued pursuant to this article shall be accounted for in the deferred retirement option plan participation account. A deferred retirement option plan participant does not have a claim on the assets of the system with respect to the member's deferred retirement option plan participation account and assets shall not be set aside for any deferred retirement option plan participant that are separate from all other system assets.
B. All amounts credited to a member's deferred retirement option plan participation account are fully vested.
C. A member's deferred retirement option plan participation account shall be credited with the following:
1. An amount, credited monthly, that is computed in the same manner as a normal retirement benefit using the factors of credited service and average monthly benefit compensation in effect on the date of deferred retirement option plan participation.
2. An amount, credited monthly, that represents interest on the amount credited pursuant to paragraph 1 of this subsection at a rate equal to the assumed rate of return determined by the board, except that for a member who has less than twenty years of credited service on January 1, 2012 and who elects to participate in the deferred retirement option plan on or after January 1, 2012, the amount credited monthly is the amount that represents interest at a rate equal to the average annual return of the system over the period of years established by the board for use in the calculation of the actuarial value of assets for the previous year, but not to exceed the system's assumed investment rate of return but at least two percent.
3. If applicable, employee contributions made pursuant to section 38‑844.06, subsection B.
D. The participant is not entitled to receive any amount prescribed by section 38‑856.05 or 38‑857 during the deferred retirement option plan participation period.
Sec. 7. Section 38-844.06, Arizona Revised Statutes, is amended to read:
38-844.06. Additional deferred retirement option plan provisions
A. Except as provided by subsection B of this section, Beginning on the day after the date the member elects to participate in the deferred retirement option plan, employee and employer contributions pursuant to section 38‑843 cease with respect to that member.
B. A member who has less than twenty years of credited service on January 1, 2012 and who elects to participate in the deferred retirement option plan on or after January 1, 2012, shall make employee contributions to the system in the amount equal to the employee contributions calculated pursuant to section 38‑843.
C. B. A member who elects to participate in the deferred retirement option plan and who develops a disability during the period of deferred retirement option plan participation is eligible to apply for disability retirement benefits. If the application for disability retirement benefits is approved by the local board:
1. The disability retirement benefits shall be computed using the factors of credited service and average monthly benefit compensation in effect the day before the effective date of the member's deferred retirement option plan participation.
2. All amounts in the member's deferred retirement option plan participation account shall be distributed pursuant to section 38‑844.08.
D. c. If a member dies during the period of the member's deferred retirement option plan participation, the designated beneficiary of the member is entitled to receive all amounts in the member's deferred retirement option plan participation account.
Sec. 8. Section 38-844.08, Arizona Revised Statutes, is amended to read:
38-844.08. Payment of deferred retirement option plan benefits
A. On the simultaneous termination of deferred retirement option plan participation and employment, a member is entitled to receive all of the following:
1. The monthly retirement allowance in the amount determined pursuant to section 38‑845 that was credited monthly to the member's deferred retirement option plan participation account at the date of termination of deferred retirement option plan participation.
2. All amounts credited to the member's deferred retirement option plan participation account on the effective date of termination of deferred retirement option plan participation.
3. Interest on the amount credited pursuant to section 38‑844.05, subsection C, paragraph 3 at a rate equal to two percent but only if the average annual return of the system over the period of years established by the board for use in the calculation of the actuarial value of assets is at least two percent for the previous fiscal year.
B. The form of payment shall be a lump sum distribution that is directly deposited in an account created for the member in the public safety personnel defined contribution retirement plan established by article 4.1 of this chapter. On deposit of the lump sum payment, the member shall immediately be able to either withdraw all or any portion of the lump sum deposit or directly transfer all or any portion of the lump sum deposit to an eligible retirement plan as required by section 401(a)(31) of the internal revenue code.
Sec. 9. Section 38-853.01, Arizona Revised Statutes, is amended to read:
38-853.01. Redemption of prior service; calculation
A. Each present Except as provided in subsection B of this section, an active member of the system who has at least five years of service with the system may elect to redeem up to sixty months of any part of the following prior service or employment by paying into the system any amounts required under subsection B C of this section if the prior service or employment is not on account with any other retirement system:
1. Prior service in this state as an employee with an employer now covered by the system or prior service with an agency of the United States government, a state of the United States or a political subdivision of this state or of a state of the United States as a full‑time paid firefighter, full‑time paid certified peace officer or full‑time paid corrections officer engaged in law enforcement duties.
2. Subject to any limitations prescribed by federal law, prior employment as an employee of a corporation that contracted with an employer now covered by the system to provide firefighting services on behalf of that employer as a full‑time paid firefighter or that provided firefighting services for a political subdivision of this state.
B. An active member who became a member of the system before January 1, 2012 may redeem any amount of eligible prior service as specified in subsection A of this section without having to have accrued any minimum amount of credited service.
B. C. Any present An active member who elects to redeem any part of the prior service or employment for which the employee is deemed eligible by the board under this section shall pay into the system the amounts previously withdrawn by the member, if any, as a refund of the member's accumulated contributions plus accumulated interest as determined by the board and the additional amount, if any, computed by the system's actuary that is necessary to equal the increase in the actuarial present value of projected benefits resulting from the redemption calculated using the actuarial methods and assumptions prescribed by the system's actuary.
C. D. A member electing to redeem service pursuant to this section may pay for service being redeemed in the form of a lump sum payment to the system, a trustee-to-trustee transfer or a direct rollover of an eligible distribution from a plan described in section 402(c)(8)(B)(iii), (iv), (v) or (vi) of the internal revenue code or a rollover of an eligible distribution from an individual retirement account or annuity described in section 408(a) or (b) of the internal revenue code.
Sec. 10. Section 38-858, Arizona Revised Statutes, is amended to read:
38-858. Credit for military service
A. Except as provided in subsection B of this section, a member of the system who has at least five years of service with the system may receive credited service for periods of active military service performed before employment with the member's current employer if:
1. The member was honorably separated from the military service.
2. The period of military service for which the member receives credited service does not exceed sixty months.
3. The period of military service for which the member receives credited service is not on account with any other retirement system, except as provided by 10 United States Code section 12736 or except if the member is not yet eligible for a military retirement benefit.
4. The member pays the cost to purchase the prior active military service. The cost is the amount necessary to equal the increase in the actuarial present value of projected benefits resulting from the additional credited service.
5. The amount of benefits purchased pursuant to this subsection is subject to limits established by section 415 of the internal revenue code.
B. A member who became a member of the system before January 1, 2012 may receive credited service for eligible prior active military service as specified in subsection A of this section without having to have accrued any minimum amount of credited service in the system.
B. C. An active member of the system who volunteers or is ordered to perform military service may receive credited service for not more than sixty months of military service as provided by the uniformed services employment and reemployment rights act of 1994 (38 United States Code part III, chapter 43). The member's employer shall make employer contributions and the member shall make the member contributions pursuant to subsection C D of this section if the member meets the following requirements:
1. Was an active member of the system on the day before the member began military service.
2. Entered into and served in the armed forces of the United States or is a member of the national guard.
3. Complies with the notice and return to work provisions of 38 United States Code section 4312.
C. D. Contributions made pursuant to subsection B C of this section shall be for the period of time beginning on the date the member began military service and ending on the later of one of the following dates:
1. The date the member is separated from military service.
2. The date the member is released from service related service‑related hospitalization or two years after initiation of service related service‑related hospitalization, whichever date is earlier.
3. The date the member dies as a result of or during military service.
D. E. Notwithstanding any other law, on payment of the contributions made pursuant to subsection B C of this section, the member shall be credited with service for retirement purposes for the period of military service of not more than sixty months. The member shall submit a copy of the military discharge certificate (DD-256A) and a copy of the military service record (DD-214) or its equivalent with the member's application when applying for credited service corresponding to the period of military service.
E. F. The employer and the member shall make contributions pursuant to subsection B C of this section as follows:
1. Contributions shall be based on the compensation that the member would have received but for the period that the member was ordered into active military service.
2. If the employer cannot reasonably determine the member's rate of compensation for the period that the member was ordered into military service, contributions shall be based on the member's average rate of compensation during the twelve-month period immediately preceding the period of military service.
3. If a member has been employed less than twelve months before being ordered into military service, contributions shall be based on the member's compensation being earned immediately preceding the period of military service.
4. The member has up to three times the length of military service, not to exceed sixty months, to make the member contributions. Once the member has made the member contributions or on receipt of the member's death certificate, the employer shall make the employer contributions in a lump sum. Death benefits shall be calculated as prescribed by law.
5. If the member's employer pays military differential wage pay to members serving in the military, contributions shall be paid to the system pursuant to section 38‑843 for any military differential wage pay paid to the member while performing military service.
F. G. In computing the length of total credited service of a member for the purpose of determining retirement benefits or eligibility, the period of military service, as prescribed by this section, shall be included.
G. H. If a member performs military service due to a presidential call‑up, not to exceed forty-eight months, the employer shall make the employer and member contributions computed pursuant to subsection E F of this section on the member's return and in compliance with subsection B C of this section.
H. I. In addition to, but not in duplication of, the provisions of subsection B C of this section, beginning December 12, 1994 contributions, benefits and credited service provided pursuant to this section shall be provided pursuant to section 414(u) of the internal revenue code, and this section shall be interpreted in a manner consistent with that internal revenue code section.
I. J. For plan years beginning after December 31, 2008, a member who does not currently perform services for an employer by reason of qualified military service as defined in section 414(u)(5) of the internal revenue code is not considered having a severance from employment during that qualified military service. Any payments by the employer to the member during the qualified military service shall be considered compensation to the extent those payments do not exceed the amounts the member would have received if the member had continued to perform services for the employer rather than entering qualified military service.
J. K. For deaths occurring from and after December 31, 2006, in the case of a member who dies while performing qualified military service as defined in section 414(u)(5) of the internal revenue code, the survivors of the member are entitled to any benefits, other than benefit accruals relating to the period of qualified military service, provided under the system as though the member resumed and then terminated employment on account of death.
Sec. 11. Section 38-862, Arizona Revised Statutes, is amended to read:
38-862. Discount rate; service purchase; transfer of service credits
A. Beginning July 1, 2017, the discount rate specified in subsection B of this section applies to service purchases or transfers of service credits to the system pursuant to the following sections:
1. Section 38‑849, subsection D.
2. Section 38‑853.01, subsection B C.
3. Section 38‑858, subsection A or B.
4. Sections 38‑921, 38‑922, 38‑923 and 38‑924.
B. for members enrolled in the system:
1. Before July 1, 2017, the discount rate is the assumed rate of return that is prescribed by the board.
2. On or after July 1, 2017, the discount rate is an amount equal to the lesser of the assumed rate of return that is prescribed by the board or an amount equal to the yield on a ten‑year treasury note as of March 1 that is published by the federal reserve board plus two percent. The discount rate is effective beginning in the next fiscal year, and the board shall recalculate the rate each year.
Sec. 12. Section 38-907, Arizona Revised Statutes, is amended to read:
38-907. Credit for military service
A. Except as provided in subsection B of this section, a member of the plan who has at least five years of credited service with the plan may receive credited service for periods of active military service performed before employment with the member's current employer if:
1. The member was honorably separated from the military service.
2. The period of military service for which the member receives credited service does not exceed sixty months.
3. The period of military service for which the member receives credited service is not on account with any other retirement system, except as provided by 10 United States Code section 12736 or except if the member is not yet eligible for a military retirement benefit.
4. The member pays the cost to purchase the prior active military service. The cost is the amount necessary to equal the increase in the actuarial present value of projected benefits resulting from the additional credited service.
5. The amount of benefits purchased pursuant to this subsection is subject to limits established by section 415 of the internal revenue code.
B. A member who became a member before January 1, 2012 may redeem eligible prior military service as specified in subsection A of this section without having to have accrued any minimum amount of credited service.
B. C. An active member of the plan who volunteers or is ordered to perform military service may receive credited service for not more than sixty months of military service as provided by the uniformed services employment and reemployment rights act of 1994 (38 United States Code part III, chapter 43). The member's employer shall make employer contributions and the member shall make the member contributions pursuant to subsection C D of this section if the member meets the following requirements:
1. Was an active member of the plan on the day before the member began military service.
2. Entered into and served in the armed forces of the United States or is a member of the national guard.
3. Complies with the notice and return to work provisions of 38 United States Code section 4312.
C. D. Contributions made pursuant to subsection B C of this section shall be for the period of time beginning on the date the member began military service and ending on the later of one of the following dates:
1. The date the member is separated from military service.
2. The date the member is released from service related service‑related hospitalization or two years after initiation of service related service‑related hospitalization, whichever date is earlier.
3. The date the member dies as a result of or during military service.
D. E. Notwithstanding any other law, on payment of the contributions made pursuant to subsection B C of this section, the member shall be credited with service for retirement purposes for the period of military service of not more than sixty months. The member shall submit a copy of the military discharge certificate (DD-256A) and a copy of the military service record (DD-214) or its equivalent with the member's application when applying for credited service corresponding to the period of military service.
E. F. The employer and the member shall make contributions pursuant to subsection B C of this section as follows:
1. Contributions shall be based on the compensation that the member would have received but for the period that the member was ordered into active military service.
2. If the employer cannot reasonably determine the member's rate of compensation for the period that the member was ordered into military service, contributions shall be based on the member's average rate of compensation during the twelve-month period immediately preceding the period of military service.
3. If a member has been employed less than twelve months before being ordered into military service, contributions shall be based on the member's compensation being earned immediately preceding the period of military service.
4. The member has up to three times the length of military service, not to exceed sixty months, to make the member contributions. Once the member has made the member contributions or on receipt of the member's death certificate, the employer shall make the employer contributions in a lump sum. Death benefits shall be calculated as prescribed by law.
5. If the member's employer pays military differential wage pay to members serving in the military, contributions shall be paid to the plan pursuant to section 38‑891 for any military differential wage pay paid to the member while performing military service.
F. G. In computing the length of total credited service of a member for the purpose of determining retirement benefits or eligibility, the period of military service, as prescribed by this section, shall be included.
G. H. If a member performs military service due to a presidential call‑up, not to exceed forty-eight months, the employer shall make the employer and member contributions computed pursuant to subsection E F of this section on the member's return and in compliance with subsection B C of this section.
H. I. In addition to, but not in duplication of, subsection B C of this section, beginning December 12, 1994 contributions, benefits and credited service provided pursuant to this section shall be provided pursuant to section 414(u) of the internal revenue code, and this section shall be interpreted in a manner consistent with that internal revenue code section.
I. J. For plan years beginning after December 31, 2008, a member who does not currently perform services for an employer by reason of qualified military service as defined in section 414(u)(5) of the internal revenue code is not considered having a severance from employment during that qualified military service. Any payments by the employer to the member during the qualified military service shall be considered compensation to the extent those payments do not exceed the amounts the member would have received if the member had continued to perform services for the employer rather than entering qualified military service.
J. K. For deaths occurring from and after December 31, 2006 in the case of a member who dies while performing qualified military service as defined in section 414(u)(5) of the internal revenue code, the survivors of the member are entitled to any benefits, other than benefit accruals relating to the period of qualified military service, provided under the plan as though the member resumed and then terminated employment on account of death.
Sec. 13. Section 38-909, Arizona Revised Statutes, is amended to read:
38-909. Redemption of prior service; calculation
A. Each present Except as provided in subsection B of this section, an active member of the plan who has at least five years of credited service with the plan who had previous service in this state as an employee with an employer now covered by the plan or who had previous service with an agency of the United States government, a state of the United States or a political subdivision of this state or a state of the United States as a full‑time paid corrections officer or full‑time paid certified peace officer may elect to redeem up to sixty months of any part of the prior service by paying into the plan any amounts required under subsection B C of this section if the prior service is not on account with any other retirement system.
B. An active member who became a member of the plan before January 1, 2012 may redeem any amount of eligible prior service as specified in subsection A of this section without having to have accrued any minimum amount of credited service.
B. C. Any present An active member who elects to redeem any part of the prior service or employment for which the employee is deemed eligible by the board under this section shall pay into the plan the amounts previously withdrawn by the member, if any, as a refund of the member's accumulated contributions plus accumulated interest as determined by the board and the additional amount, if any, computed by the plan's actuary that is necessary to equal the increase in the actuarial present value of projected benefits resulting from the redemption calculated using the actuarial methods and assumptions prescribed by the plan's actuary.
C. D. A member electing to redeem service pursuant to this section may pay for service being redeemed in the form of a lump sum payment to the plan, a trustee-to-trustee transfer or a direct rollover of an eligible distribution from a plan described in section 402(c)(8)(B)(iii), (iv), (v) or (vi) of the internal revenue code or a rollover of an eligible distribution from an individual retirement account or annuity described in section 408(a) or (b) of the internal revenue code.
Sec. 14. Section 38-913, Arizona Revised Statutes, is amended to read:
38-913. Discount rate; service purchase; transfer of service credits
A. Beginning July 1, 2017, the discount rate specified in subsection B of this section applies to service purchases or transfers of service credits to the plan pursuant to the following sections:
1. Section 38‑907, subsection A or B.
2. Section 38‑909, subsection B C.
3. Sections 38‑921, 38‑922, 38‑923 and 38‑924.
B. For members enrolled in the system:
1. Before July 1, 2017, the discount rate is the assumed rate of return that is prescribed by the board.
2. On or after July 1, 2017, the discount rate is an amount equal to the lesser of the assumed rate of return that is prescribed by the board or an amount equal to the yield on a ten‑year treasury note as of March 1 that is published by the federal reserve board plus two percent. The discount rate is effective beginning in the next fiscal year, and the board shall recalculate the rate each year.
Sec. 15. Board of trustees for the public safety personnel retirement system; interest payments
On or before June 30, 2019, the board of trustees for the public safety personnel retirement system may choose to require interest to be paid on monies returned to members of a retirement plan or system under the jurisdiction of the board consistent with sections 38‑823, 38‑844.05, 38‑844.06, 38‑844.08, 38‑862 and 38‑913, Arizona Revised Statutes, as amended by this act, for the period of time between the transaction under the applicable section until a date to be determined by the board, but not later than the effective date of this act.
Sec. 16. Retroactivity
A. Sections 38‑810, 38‑816, 38‑820, 38‑844.03, 38‑844.05, 38‑844.06, 38‑844.08, 38‑853.01, 38‑858, 38‑907 and 38‑909, Arizona Revised Statutes, as amended by this act, apply retroactively to from and after July 19, 2011.
B. Sections 38‑823, 38‑862 and 38‑913, Arizona Revised Statutes, as amended by this act, apply retroactively to from and after June 30, 2017.
Sec. 17. Emergency
This act is an emergency measure that is necessary to preserve the public peace, health or safety and is operative immediately as provided by law.
