S.B. 1268 PSPRS DROP EXTENSION.PDF
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House Engrossed Senate Bill PSPRS; deferred retirement option plan State of Arizona Senate Fifty-fifth Legislature Second Regular Session 2022 CHAPTER 351 SENATE BILL 1268 AN ACT AMENDING SECTIONS 38-844.03 AND 38-844.05, ARIZONA REVISED STATUTES; AMENDING TITLE 38, CHAPTER 5, ARTICLE 4, ARIZONA REVISED STATUTES, BY ADDING SECTION 38-844.10; REPEALING SECTION 38-844.10, ARIZONA REVISED STATUTES; RELATING TO RETIREMENT SYSTEMS. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. 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 FOR NOT MORE THAN SIXTY CONSECUTIVE MONTHS in the deferred retirement option plan. In addition, any member who is subject to section 38-858, subsection C is eligible to participate FOR NOT MORE THAN SIXTY CONSECUTIVE MONTHS 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. 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, WHO IS AT LEAST FIFTY-ONE YEARS OF AGE AND WHO HAS AT LEAST TWENTY- FOUR AND ONE-HALF YEARS OF CREDITED SERVICE IS ELIGIBLE TO PARTICIPATE FOR NOT MORE THAN EIGHTY-FOUR CONSECUTIVE MONTHS IN THE DEFERRED RETIREMENT OPTION PLAN. 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 OR EIGHTY-FOUR CONSECUTIVE MONTHS, AS APPLICABLE PURSUANT TO SUBSECTION A OF THIS SECTION. 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. 2. 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. FOR THE FIRST SIXTY MONTHS, 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. D. BEGINNING ON OR BEFORE JANUARY 1, 2023, AT THE END OF THE FIRST SIXTY-MONTH PERIOD, FOR A MEMBER WHO EXTENDED THE MEMBER'S PERIOD OF PARTICIPATION IN THE DEFERRED RETIREMENT OPTION PLAN PAST SIXTY MONTHS, THE SYSTEM SHALL TRANSFER THE ACCUMULATED BALANCE OF A MEMBER'S DEFERRED RETIREMENT OPTION PLAN PARTICIPATION ACCOUNT TO AN ACCOUNT CREATED FOR THE MEMBER IN A DEFINED CONTRIBUTION PLAN. FOR THE SUBSEQUENT PERIOD OF TIME IN THE DEFERRED RETIREMENT OPTION PLAN, UP TO TWENTY-FOUR MONTHS, ALL DEFERRED RETIREMENT OPTION PLAN BENEFITS THAT ARE ACCRUED AND CREDITED MONTHLY PURSUANT TO SUBSECTION C, PARAGRAPH 1 OF THIS SECTION SHALL BE DEPOSITED IN THE MEMBER'S DEFINED CONTRIBUTION PLAN ACCOUNT. A MEMBER MAY NOT WITHDRAW THE ASSETS OF THE MEMBER'S DEFINED CONTRIBUTION PLAN ACCOUNT UNTIL THE MEMBER TERMINATES EMPLOYMENT. D. E. 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. 3. Title 38, chapter 5, article 4, Arizona Revised Statutes, is amended by adding section 38-844.10, to read: 38-844.10. Deferred retirement option plan; employer; extension approval NOTWITHSTANDING THE AGE AND SERVICE REQUIREMENTS PRESCRIBED IN SECTION 38-844.03, AN EMPLOYER MAY APPROVE, FOR A MEMBER OF THE PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM WHO IS PARTICIPATING IN THE DEFERRED RETIREMENT OPTION PLAN ON THE EFFECTIVE DATE OF THIS SECTION, AN EXTENSION OF THE MEMBER'S PERIOD OF PARTICIPATION FOR UP TO AN ADDITIONAL TWENTY-FOUR MONTHS. Sec. 4. Delayed repeal Section 38-844.10, Arizona Revised Statutes, as added by this act, is repealed from and after December 31, 2027. Sec. 5. Public safety personnel retirement system board of trustees; recommendations On or before December 31, 2022, the public safety personnel retirement system board of trustees shall report to the governor, president of the senate and the speaker of the house of representatives recommendations from stakeholders regarding measures that can improve retention for members of the public safety personnel retirement system who were hired on or after January 1, 2012 and before July 1, 2017 and measures that can improve retention and recruitment for members who were hired on or after July 1, 2017. Sec. 6. Deferred retirement option plan; transfer and deposit requirements; interest Notwithstanding the transfer and deposit requirements in section 38-844.05, subsection D, Arizona Revised Statutes, as added by this act, beginning on the effective date of this act until the system transfers the balance of a member's deferred retirement option plan participation account to an account in a defined contribution plan pursuant to section 38-844.05, subsection D, Arizona Revised Statutes, as added by this act, the member's participation account shall continue to accrue benefits but will receive zero percent interest for that period of time. Sec. 7. 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. APPROVED BY THE GOVERNOR JULY 6, 2022. FILED IN THE OFFICE OF THE SECRETARY OF STATE JULY 6, 2022.