PSPRS Fire Valuation Report ending June 2024
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ARIZONA PUBLIC SAFETY PERSONNEL
RETIREMENT SYSTEM
WICKENBURG FIRE DEPT. (217)
ACTUARIAL VALUATION
AS OF JUNE 30, 2024
CONTRIBUTIONS APPLICABLE TO THE
PLAN/FISCAL YEAR ENDING JUNE 30, 2026
VIA E-MAIL
13420 Parker Commons Boulevard, Suite 104 Fort Myers, FL 33912 ꞏ (239) 433-5500 ꞏ Fax (239) 481-0634 ꞏ www.foster-foster.com
November 2024
Board of Trustees
Arizona Public Safety Personnel Retirement System
Phoenix, AZ
Re:
Actuarial Valuation Report as of June 30, 2024 for Wickenburg Fire Dept. (217)
Dear Members of the Board:
We are pleased to present to the Board this report of the annual actuarial valuation of the Arizona Public Safety
Personnel Retirement System (PSPRS). The valuation was performed to determine whether the assets and
contributions are sufficient to provide the prescribed benefits and to develop the appropriate funding
requirements for the applicable plan year.
This report was prepared at the request of the Board and is intended for use by PSPRS and those designated or
approved by the Board. It documents the valuation of the consolidated plan and provides summary information
for PSPRS participating employers. This report may be provided to parties other than PSPRS only in its entirety
and only with the permission of the Board. Foster & Foster is not responsible for the unauthorized use of this
report.
The valuation has been conducted in accordance with generally accepted actuarial principles and practices,
including the applicable Actuarial Standards of Practice as issued by the Actuarial Standards Board, and reflects
laws and regulations issued to date pursuant to the provisions of Title 38, Chapter 5, Article 4 of the Arizona
Revised Statutes, as well as applicable federal laws and regulations. In our opinion, the assumptions used in
this valuation, as adopted by the Board of Trustees, represent reasonable expectations of anticipated plan
experience. Future actuarial measurements may differ significantly from the current measurements presented
in this report for a variety of reasons including changes in applicable laws, changes in plan provisions, changes
in assumptions, or plan experience differing from expectations. Due to the limited scope of the valuation, we
did not perform an analysis of the potential range of such future measurements.
The computed contribution rates shown in the “Contribution Results” section should be considered minimum
contribution rates that comply with the Board’s funding policy and Arizona Statutes. Users of this report should
be aware that contributions made at that rate do not guarantee benefit security. Given the importance of benefit
security to any retirement system, we suggest that contributions to the System in excess of those presented in
this report be considered.
The funding percentages and unfunded accrued liability as measured based on the actuarial value of assets will
differ from similar measures based on the market value of assets. These measures, as provided, are appropriate
for determining the adequacy of future contributions, but may not be appropriate for the purpose of settling a
portion or all of the Plan’s liabilities.
Board of Trustees
Arizona Public Safety Personnel Retirement System | Page 2
13420 Parker Commons Boulevard, Suite 104 Fort Myers, FL 33912 ꞏ (239) 433-5500 ꞏ Fax (239) 481-0634 ꞏ www.foster-foster.com
In conducting the valuation, we have relied on personnel, plan design, and asset information supplied by PSPRS
through June 30, 2024 and the actuarial assumptions and methods described in the Actuarial Assumptions
section of this report. While we cannot verify the accuracy of all this information, the supplied information
was reviewed for consistency and reasonableness. As a result of this review, we have no reason to doubt the
substantial accuracy of the information and believe that it has produced appropriate results. This information,
along with any adjustments or modifications, is summarized in various sections of this report.
This valuation assumes the continuing ability of the participating employers to make the contributions necessary
to fund this plan. A determination regarding whether or not the participating employers are actually able to do
so is outside our scope of expertise. Consequently, we did not perform such an analysis.
In performing the analysis, we used third-party software to model (calculate) the underlying liabilities and costs.
These results are reviewed in the aggregate and for individual sample lives. The output from the software is
either used directly or input into internally developed models to generate the costs. All internally developed
models are reviewed as part of the process. As a result of this review, we believe that the models have produced
reasonable results. We do not believe there are any material inconsistencies among assumptions or unreasonable
output produced due to the aggregation of assumptions.
The undersigned are familiar with the immediate and long-term aspects of pension valuations and meet the
Qualification Standards of the American Academy of Actuaries necessary to render the actuarial opinions
contained herein. All sections of this report are considered an integral part of the actuarial opinions.
To our knowledge, no associate of Foster & Foster, Inc. working on valuations of the program has any direct
financial interest or indirect material interest in the Arizona Public Safety Personnel Retirement System, nor
does anyone at Foster & Foster, Inc. act as a member of the Board of Trustees of the Arizona Public Safety
Personnel Retirement System. Thus, there is no relationship existing that might affect our capacity to prepare
and certify this actuarial report.
If there are any questions, concerns, or comments about any of the items contained in this report, please contact
us at 239-433-5500.
Respectfully Submitted,
Foster & Foster, Inc.
By:
________________________________
Bradley R. Heinrichs, FSA, EA, MAAA
By:
________________________________
Paul M. Baugher, FSA, EA, MAAA
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
TABLE OF CONTENTS
I. Summary of Report.…………………………………………………………………………….………. 1
II. Contribution Results……………………………………………………………………………………..4
III. Liability Support………………………………………………………………......................................10
IV. Asset Support…………………………………………………………………...................................... 14
V. Member Statistics…………………………………………………………………………….………... 19
VI. Actuarial Assumptions and Methods………………………………………………………………….. 22
VII. Discussion of Risk………………………………………………………………................................. 29
VIII. Summary of Plan………………………………………………………….....................……………. 34
IX. Actuarial Funding Policy……………………………………………………………….……………. 40
X. Glossary………………………………………………………………………….……………………. 44
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
1
I. SUMMARY OF REPORT
The regular annual actuarial valuation of the Arizona Public Safety Personnel Retirement System for the
Wickenburg Fire Dept., performed as of June 30, 2024, has been completed and the results are presented in this
Report. The purpose of this valuation is to:
Compute the liabilities associated with benefits likely to be paid on behalf of current retired and active
members. This information is contained in the section entitled “Liability Support.”
Compare accumulated assets with the liabilities to assess the funded condition. This information is
contained in the section entitled “Liability Support.”
Compute the employers’ recommended contribution rates for the Fiscal Year beginning July 1, 2025. This
information is contained in the section entitled “Contribution Results.”
1. Key Valuation Results
The funded status as of June 30, 2024 and the employer contribution amounts applicable to the plan/fiscal
year ending June 30, 2026 are as follows:
Tier 1 & Tier 2 Members
Tier 3 Members *
Pension
Health
Total
Pension
Health
Total
Employer Contribution Rate
16.10%
0.30%
16.40%
8.41%
0.11%
8.52%
Funded Status
91.9%
108.6%
92.2%
107.9%
216.2%
109.5%
2. Comparison of Key Results to Prior Year
The chart below compares the results from this valuation with the results of the prior year’s valuation (as
of June 30, 2023):
Contribution Rate
Tier 1 & Tier 2 Members
Tier 3 Members *
Valuation Date
Pension
Health
Total
Pension
Health
Total
June 30, 2023
15.32%
0.37%
15.69%
8.63%
0.12%
8.75%
June 30, 2024
16.10%
0.30%
16.40%
8.41%
0.11%
8.52%
Funded Status
Tier 1 & Tier 2 Members
Tier 3 Members
Valuation Date
Pension
Health
Total
Pension
Health
Total
June 30, 2023
90.0%
110.7%
90.4%
107.3%
212.5%
108.9%
June 30, 2024
91.9%
108.6%
92.2%
107.9%
216.2%
109.5%
* The Tier 3 rates shown are the calculated rates as of the valuation date and do not reflect any Legacy costs that the employer
must also contribute.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
2
3. Reasons for Change
Changes in the results from the prior year’s valuation can be illustrated in the following tables along with
high-level explanations for the entire System below:
Contribution Rate
Tier 1 & Tier 2
Tier 3 Members
Pension
Health
Pension
Health
Contribution Rate Last Valuation
15.32%
0.37%
8.63%
0.12%
Asset Experience
0.02%
0.00%
(0.08%)
0.00%
Payroll Base
(2.22%)
0.00%
0.00%
0.00%
Liability Experience
2.48%
0.00%
(0.03%)
0.00%
Additional Contribution
(2.95%)
0.00%
0.00%
0.00%
Assumption/Method Change
0.00%
0.00%
0.00%
0.00%
Other
3.45%
(0.07%)
(0.11%)
(0.01%)
Contribution Rate This Valuation
16.10%
0.30%
8.41%
0.11%
Funded Status
Tier 1 & Tier 2
Tier 3 Members
Pension
Health
Pension
Health
Funded Status Last Valuation
90.0%
110.7%
107.3%
212.5%
Asset Experience
(0.1%)
0.0%
1.1%
2.5%
Liability Experience
(7.8%)
(0.6%)
0.5%
4.6%
Additional Contribution
8.4%
0.0%
0.0%
0.0%
Assumption/Method Change
0.0%
0.0%
0.0%
0.0%
Other
1.4%
(1.5%)
(1.0%)
(3.4%)
Funded Status This Valuation
91.9%
108.6%
107.9%
216.2%
Assets Experience – Asset gains and losses (relative to the assumed earnings rate) are smoothed over seven
years for Tiers 1 and 2 and over five years for Tier 3. The return on the market value of assets for the year
ending June 30, 2024 was 10.2% for Tiers 1 and 2 and 11.8% for Tier 3. On a smoothed, actuarial value
of assets basis, the average return was 7.1% for Tiers 1 and 2 and 8.2% for Tier 3. The return nearly met
the 2023 assumed earnings rate for Tiers 1 and 2 of 7.2% and exceeded the 2023 assumed earnings rate for
Tier 3 of 7.0%.
Payroll Base – Under the current amortization policy for Tiers 1 and 2, the contribution rate is developed
as a level percentage of payroll. Payroll for this purpose includes members of this plan and the defined
contribution plan’s members that would have been in this plan. To the extent that actual payroll is
lower/greater than last year’s projected payroll, the contribution rate will increase/decrease as a result.
Liability Experience – Experience overall was unfavorable, driven by salary increases that were higher
than expected.
Additional Contribution – Monies contributed in excess of the required contribution rate in order to pay
down the unfunded liability.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
3
Assumption / Method Change – The Board continued the decrease in the payroll growth assumption from
2.00% to 1.50%.
Other – This is the combination of all other factors that could impact liabilities year-over-year, with the
primary sources being changes in benefits for continuing inactives. Note that Tier 3 experience will
stabilize as the group matures.
4. Looking Ahead
The volatility in annual returns, which have produced both gains and losses in recent years, was dampened
by the asset smoothing reflected in the actuarial value of assets. The gain realized this year will, in the
absence of other losses, put downward pressure on the contribution rate next year.
If the June 30, 2024 pension valuation results were based on the market value of assets instead of the
actuarial value of assets, the pension funded percentage for Tiers 1 and 2 would be 92.8% (instead of 91.9%)
and the pension employer contribution requirement would be 15.79% of payroll (instead of 16.10%).
5. Conclusion
The funded status for Tiers 1 and 2 will continue to improve if assumptions are met and contributions at
least equal to the rates determined for each employer are made to the fund. The recent adoption of a layered
amortization approach along with a plan to systematically lower the payroll growth assumption was an
excellent step to improve funding and ensure the Plan is on a viable path.
The funded status for Tier 3 will stabilize as the population continues to grow, as contributions appear
sufficient to keep the liabilities fully funded.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
4
II. CONTRIBUTION RESULTS
Contribution Requirements
Development of Employer Contributions - Tiers 1 & 2 Members
Valuation Date
June 30, 2024
June 30, 2023
Applicable to Fiscal Year Ending
2026
2025
Rate
Dollar
Rate
Dollar
Pension
Normal Cost
Total Normal Cost
20.96%
$ 216,609
17.96%
$ 137,346
Employee Cost
(7.65%)
(79,058)
(7.65%)
(58,502)
Employer (Net) Normal Cost
13.31%
137,551
10.31%
78,844
Amortization of Unfunded Liability
2.79%
28,833
5.01%
38,313
Total Employer Cost (Pension)
16.10%
166,384
15.32%
117,157
Health
Normal Cost
0.30%
3,100
0.37%
2,830
Amortization of Unfunded Liability
0.00%
0
0.00%
0
Total Employer Cost (Health)
0.30%
3,100
0.37%
2,830
Total Employer Cost (Pension + Health)
16.40%
169,484
15.69%
119,987
Alternate Contribution Rate (ACR) *
8.00%
8.00%
Underlying Payroll (as of valuation date)
1,018,168
749,736
* The Alternate Contribution Rate is the sum of the positive amortization rates for Tiers 1 & 2 Pension and Health (subject to an 8%
minimum) and is charged when retirees return to active status.
The results above are based on the current amortization schedule approved by the Board of Trustees for your
individual plan (see "Actuarial Assumptions and Methods").
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
5
Development of Employer Contributions – Tier 3 Members
Valuation Date
June 30, 2024
June 30, 2023
Applicable to Fiscal Year Ending
2026
2025
Defined Benefit (DB) Retirement Plan
Rate
Dollar
Rate
Dollar
Pension
Total Normal Cost
16.82%
$ 182,991
17.25%
$ 71,965
Amortization of Unfunded Liability
0.00%
0
0.00%
0
Total Pension Cost
16.82%
182,991
17.25%
71,965
Health
Total Normal Cost
0.22%
2,393
0.23%
960
Amortization of Unfunded Liability
0.00%
0
0.00%
0
Total Health Cost
0.22%
2,393
0.23%
960
Total
Total Calculated Tier 3 Required EE/ER Individual Cost
8.52%
92,693
8.75%
36,463
Funding Policy Tier 3 Required EE/ER Individual Cost 1
8.69%
94,542
8.89%
37,088
ER Legacy Cost of Tiers 1 & 2 Amort of Unfunded
Liabilities 2
2.79%
30,353
5.01%
20,901
Total Funding Policy Tier 3 Required
ER Defined Benefit Cost
11.48%
124,895
13.90%
57,990
Underlying Payroll (as of valuation date)
1,071,857
409,011
1 The “Funding Policy” cost was adopted in 2023 and first reflected in the June 30, 2023 valuation. This cost is a 3-year rolling average of
the actual calculated costs. The total cost is split equally between employer and employee, in compliance with state statutes. Note that
pension and health monies are split differently for the two parties based on IRS requirements. More information on this breakout is included
in the “Historical Summary of Rates”.
2 Pursuant to ARS § 38-843(B), the amortization of positive unfunded liabilities for Tiers 1 & 2 shall be applied to all Tier 3 payroll on a
level percent basis. However, while it is statutorily required to present the rates in this manner, these are the minimums where alternate
methods for paying down that unfunded liability is at the discretion of each employer. Further, to understand the effects of reform in relation
to Tier 3, compare the total rate of Tier 3 before application of those legacy costs.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
6
Development of Employer Contributions – Tier 3 Members
Valuation Date
June 30, 2024
June 30, 2023
Applicable to Fiscal Year Ending
2026
2025
Defined Contribution (DC) Retirement Plan
Rate
Dollar
Rate
Dollar
Tier 2 & 3 DB / Non-Social Security
Employee Cost
3.00%
3.00%
Employer Cost 1
3.00%
3.00%
Tier 3 DC Only
Employee Cost
9.00%
$ 0
9.00%
$ 0
Employee Health Subsidy Program Cost
0.20%
0
0.23%
0
Employee Disability Program Cost
1.54%
0
1.50%
0
Total Employee Cost
10.74%
0
10.73%
0
Employer Cost
9.00%
0
9.00%
0
Employer Health Subsidy Program Cost
0.20%
0
0.23%
0
Employer Disability Program Cost
1.54%
0
1.50%
0
Total Employer Cost (before Legacy)
10.74%
0
10.73%
0
ER Legacy Cost of Tiers 1 & 2 Amort of Unfunded
Liabilities 2
2.79%
0
5.01%
0
Total Employer Cost
13.53%
0
15.74%
0
Underlying Payroll (as of valuation date)
0
0
1 Employer rate is 4% for Tier 2 members for a period of time depending on the individual's membership date.
2 Pursuant to ARS § 38-843(B), the amortization of positive unfunded liabilities for Tiers 1 & 2 shall be applied to all Tier 3 payroll on
a level percent basis. However, while it is statutorily required to present the rates in this manner, these are the minimums where
alternate methods for paying down that unfunded liability is at the discretion of each employer. Further, to understand the effects of
reform in relation to Tier 3, compare the total rate of Tier 3 before application of those legacy costs.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
7
Contribution Rate Summary
Tier 1
Tier 2
Tier 3
Membership Date On or After
7/1/1968
1/1/2012
7/1/2017
Participates in Social Security
N/A
Yes
No
Yes
No
N/A
Available Retirement Plan ¹
DB Only
DB Only
Hybrid
DB Only
Hybrid
DC Only
Employee Contribution Rate
PSPRS DB Rate
7.65%
7.65%
7.65%
8.69%
8.69%
PSPRS DC Rate
3.00%
3.00%
9.00%
Employer Health Subsidy Program Cost
0.20%
PSPDCRP Disability Program Rate
1.54%
Total EE Contribution Rate
7.65%
7.65%
10.65%
8.69%
11.69%
10.74%
Employer Contribution Rate
PSPRS DB Normal Cost
13.61%
13.61%
13.61%
8.69%
8.69%
PSPRS DB Tier 1 & 2 Legacy Cost ²
2.79%
2.79%
2.79%
2.79%
2.79%
2.79%
PSPRS DC Rate
3.00%
3.00%
9.00%
Employer Health Subsidy Program Cost
0.20%
PSPDCRP Disability Program Rate
1.54%
Total ER Contribution Rate
16.40%
16.40%
19.40%
11.48%
14.48%
13.53%
Employer Alternate Contribution Rate 3
8.00%
8.00%
8.00%
8.00%
8.00%
8.00%
¹ Employers that pay into Social Security on behalf of their members do not participate in the Hybrid Plan.
² Per statute (ARS § 38-843(B)), any positive unfunded liability for Tiers 1 and 2 is to be applied to all Tier 3 (DB and DC) payrolls
3 The Alternate Contribution Rate is the sum of the positive amortization rates for Tiers 1 & 2 Pension and Health (subject to an 8%
minimum) and is charged when retirees return to active status.
Exhibit summarizes employee and employer contributions based on Statute and the results of June 30, 2024
actuarial valuation. Pension and health components are combined, where applicable.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
8
Impact of Additional Contributions
Additional Contribution (000s)
Impact On
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
Funded Status - June 30, 2024
91.9%
93.4%
95.0%
96.5%
98.0%
99.6%
101.1%
102.7%
104.2%
105.8%
107.3%
FYE 2026 Contribution Rate
16.10%
15.61%
15.12%
14.63%
14.14%
13.66%
13.17%
12.68%
12.19%
11.70%
11.21%
Table shows the hypothetical change in the funded status and contribution rate from the June 30, 2024 actuarial valuation results for Tiers 1 & 2 if
an additional contribution of the amount shown had been made to the Fund on June 30, 2024. This illustration can help estimate the impact of
contributing additional monies to the fund in the future.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
9
Historical Summary of Rates
Pension
Health
Valuation Date
June 30
Fiscal Year Ending
June 30
Normal Cost
Unfunded
Amortization
Total
Normal Cost
Unfunded
Amortization
Total
TIERS 1 & 2
2020
2022
13.30%
6.51%
19.81%
0.51%
(0.11%)
0.40%
(Employer)
2021
2023
13.50%
(0.41%)
13.09%
0.52%
(0.11%)
0.41%
2022
2024
11.48%
1.71%
13.19%
0.49%
0.00%
0.49%
2023
2025
10.31%
5.01%
15.32%
0.37%
0.00%
0.37%
2024
2026
13.31%
2.79%
16.10%
0.30%
0.00%
0.30%
TIER 3 *
2020
2022
9.68%
0.00%
9.68%
0.26%
0.00%
0.26%
(Employer)
2021
2023
9.68%
0.00%
9.68%
0.26%
0.00%
0.26%
2022
2024
9.30%
0.00%
9.30%
0.26%
0.00%
0.26%
2023
2025
8.77%
0.00%
8.77%
0.12%
0.00%
0.12%
2024
2026
8.46%
0.00%
8.46%
0.23%
0.00%
0.23%
TIER 3 *
2020
2022
9.68%
0.00%
9.68%
0.26%
0.00%
0.26%
(Employee)
2021
2023
9.68%
0.00%
9.68%
0.26%
0.00%
0.26%
2022
2024
9.30%
0.00%
9.30%
0.26%
0.00%
0.26%
2023
2025
8.77%
0.00%
8.77%
0.12%
0.00%
0.12%
2024
2026
8.69%
0.00%
8.69%
0.00%
0.00%
0.00%
* Rates shown are Board approved Funding Policy rates. Starting in 2023, these rates are a 3-year rolling average of calculated EE/ER rates. Does not reflect Legacy costs that the
employer must also contribute.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
10
III. LIABILITY SUPPORT
Liabilities and Funded Ratios by Benefit - Tiers 1 & 2
Health liabilities were increased by $2,919 under the lateral transfer methodology. Pension liabilities were not
impacted.
June 30, 2024
June 30, 2023
Pension
Actuarial Present Value of Benefits (PVB)
Retirees and Beneficiaries
$ 1,169,575
$ 1,160,923
DROP Members
1,075,837
1,001,331
Vested Members
90,275
83,530
Active Members
5,587,602
4,213,415
Total Actuarial Present Value of Benefits
7,923,289
6,459,199
Actuarial Accrued Liability (AAL)
All Inactive Members
2,335,687
2,245,784
Active Members
4,153,537
3,223,217
Total Actuarial Accrued Liability
6,489,224
5,469,001
Actuarial Value of Assets (AVA)
5,962,670
4,923,045
Unfunded Actuarial Accrued Liability
526,554
545,956
PVB Funded Ratio (AVA / PVB)
75.3%
76.2%
AAL Funded Ratio (AVA / AAL)
91.9%
90.0%
Health
Actuarial Present Value of Benefits (PVB)
Retirees and Beneficiaries
$ 22,930
$ 24,315
DROP Members
17,668
16,445
Active Members
98,102
85,580
Total Present Value of Benefits
138,700
126,340
Actuarial Accrued Liability (AAL)
All Inactive Members
40,598
40,760
Active Members
77,828
66,314
Total Actuarial Accrued Liability
118,426
107,074
Actuarial Value of Assets (AVA)
128,605
118,564
Unfunded Actuarial Accrued Liability
(10,179)
(11,490)
PVB Funded Ratio (AVA / PVB)
92.7%
93.8%
AAL Funded Ratio (AVA / AAL)
108.6%
110.7%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
11
Liabilities and Funded Ratios by Benefit - Tier 3
June 30, 2024
June 30, 2023
Pension
Actuarial Present Value of Benefits (PVB)
Retirees and Beneficiaries
$ 7,268,826
$ 2,783,769
Vested Members
9,523,410
6,565,608
Active Members
710,626,649
558,509,014
Total Actuarial Present Value of Benefits
727,418,885
567,858,391
Actuarial Accrued Liability (AAL)
All Inactive Members
16,792,236
9,349,377
Active Members
148,879,454
101,611,814
Total Actuarial Accrued Liability
165,671,690
110,961,191
Actuarial Value of Assets (AVA)
178,758,433
119,101,476
Unfunded Actuarial Accrued Liability
(13,086,743)
(8,140,285)
PVB Funded Ratio (AVA / PVB)
24.6%
21.0%
AAL Funded Ratio (AVA / AAL)
107.9%
107.3%
Health
Actuarial Present Value of Benefits (PVB)
Retirees and Beneficiaries
$ 34,351
$ 0
Active Members
9,825,773
7,842,159
Total Present Value of Benefits
9,860,124
7,842,159
Actuarial Accrued Liability (AAL)
All Inactive Members
34,351
0
Active Members
2,398,606
1,651,466
Total Actuarial Accrued Liability
2,432,957
1,651,466
Actuarial Value of Assets (AVA)
5,259,235
3,508,666
Unfunded Actuarial Accrued Liability
(2,826,278)
(1,857,200)
PVB Funded Ratio (AVA / PVB)
53.3%
44.7%
AAL Funded Ratio (AVA / AAL)
216.2%
212.5%
The liabilities shown on this page are the liabilities for all Tier 3 members grouped together in the Risk
Sharing group. These liabilities are NOT the liabilities solely for Wickenburg Fire Dept. Tier 3 members.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
12
Derivation of Experience (Gain)/Loss
Tiers 1 & 2
Tier 3
Pension
Health
Pension
Health
(1)
Unfunded Actuarial Accrued Liability as of June 30, 2023
545,956
(11,490)
(8,140,285)
(1,857,200)
(2)
Normal Cost Developed in Last Valuation
78,844
2,830
19,953,819
277,457
(3)
Actual Contributions
692,209
4,790
24,962,037
1,397,879
(4)
Expected Interest On (1), (2), and (3)
20,499
(793)
(32,441)
(163,191)
(5)
Expected Unfunded Actuarial Accrued Liability as of June 30, 2024
(1)+(2)-(3)+(4)
(46,910)
(14,243)
(13,180,944)
(3,140,813)
(6)
Changes to UAAL Due to Assumptions, Methods and Benefits
0
0
0
0
(7)
Change to UAAL Due to Actuarial (Gain)/Loss
573,464
4,064
94,201
314,535
(8)
Unfunded Actuarial Accrued Liability as of June 30, 2024
526,554
(10,179)
(13,086,743)
(2,826,278)
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
13
Amortization of Unfunded Liabilities - Tiers 1 & 2
Date Established
Outstanding Balance
Years Remaining
Amortization Rate
Pension
6/30/2019
0
12
0.00%
6/30/2021
(49,122)
17
(0.23%)
6/30/2022
200,209
13
1.08%
6/30/2023
372,003
14
1.92%
6/30/2024
3,464
15
0.02%
Total
526,554
2.79%
Health
6/30/2019
0
12
0.00%
6/30/2021
(12,690)
17
(0.06%)
6/30/2022
(6,516)
13
(0.04%)
6/30/2023
8,062
14
0.04%
6/30/2024
965
15
0.00%
Total
(10,179)
(0.06%)
Amortization of Unfunded Liabilities - Tier 3
Date Established
Outstanding Balance
Years Remaining
Amortization Rate *
Pension
6/30/2018
94,700
4
0.01%
6/30/2019
(893,556)
5
(0.07%)
6/30/2020
625,762
6
0.04%
6/30/2021
(2,174,987)
7
(0.13%)
6/30/2022
(3,694,845)
8
(0.20%)
6/30/2023
(1,375,088)
9
(0.07%)
6/30/2024
(5,668,729)
10
(0.26%)
Total
(13,086,743)
0.00%
Health
6/30/2018
(2,008)
4
0.00%
6/30/2019
(81,696)
5
(0.01%)
6/30/2020
(158,912)
6
(0.01%)
6/30/2021
(314,248)
7
(0.02%)
6/30/2022
(439,549)
8
(0.02%)
6/30/2023
(697,896)
9
(0.03%)
6/30/2024
(1,131,969)
10
(0.05%)
Total
(2,826,278)
0.00%
* By Statute, negative total amortization rates are not subtracted in Tier 3 rate calculations.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
14
IV. ASSET SUPPORT
Statement of Changes in Fiduciary Net Position for Year Ended June 30, 2024
Market Value Basis
Tiers 1 & 2
Tier 3
Pension
Health
Pension
Health
Additions
Contributions
Member Contributions
$ 109,846,477
$ 0
$ 52,985,716
$ 0
Employer Contributions
1,182,413,215
0
51,738,352
0
Health Insurance Contributions
0
4,616,669
0
2,687,373
Total Contributions
1,292,259,692
4,616,669
104,724,068
2,687,373
Investment Income
Net Increase in Fair Value
1,084,528,765
28,088,330
27,137,658
753,277
Interest and Dividends
270,700,975
7,010,914
6,773,624
188,020
Other Income
151,768,967
3,930,680
3,797,644
105,414
Less Investment Expenses
(25,846,576)
(516,914)
(646,747)
(13,863)
Net Investment Income
1,481,152,131
38,513,010
37,062,179
1,032,848
Non-investment Income
31
0
1
0
Transfers In
169,162
0
0
0
Total Additions
2,773,581,016
43,129,679
141,786,248
3,720,221
Deductions
Distributions to Members
Benefit Payments
1,128,489,555
0
632,764
0
Health Insurance Subsidy
0
18,596,076
0
4,920
Refund of Contributions
12,787,280
0
2,469,875
0
Total Distributions
1,141,276,835
18,596,076
3,102,639
4,920
Administrative Expenses
8,403,062
210,006
210,701
5,632
Transfers Out
392,168
0
0
0
Other
0
0
0
0
Total Deductions
1,150,072,065
18,806,082
3,313,340
10,552
Net Increase / (Decrease)
1,623,508,951
24,323,597
138,472,908
3,709,669
Net Position Held in Trust
Prior Valuation
14,310,242,735
387,517,339
260,225,263
7,335,149
Beginning of the Year Adjustment
0
0
0
0
End of the Year
15,933,751,686
411,840,936
398,698,171
11,044,818
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
15
Development of Pension Actuarial Value of Assets - Tiers 1 & 2
A. Investment Income
A1. Actual Investment Income
$ 1,472,749,069
A2. Expected Amount for Immediate Recognition
1,035,670,507
A3. Amount Subject to Amortization
437,078,562
Year Ended June 30
B. Amortization Schedule
2024
2025
2026
2027
2028
2029
2030
2024 Experience (A3 / 7)
62,439,795
62,439,795
62,439,795
62,439,795
62,439,795
62,439,795
62,439,792
2023 Experience
10,197,720
10,197,720
10,197,720
10,197,720
10,197,720
10,197,717
2022 Experience
(204,451,249)
(204,451,249)
(204,451,249)
(204,451,249)
(204,451,249)
2021 Experience
238,978,744
238,978,744
238,978,744
238,978,745
2020 Experience
(68,882,158)
(68,882,158)
(68,882,160)
2019 Experience
(22,859,275)
(22,859,275)
2018 Experience
(6,266,351)
Total Amortization
9,157,226
15,423,577
38,282,850
107,165,011
(131,813,734)
72,637,512
62,439,792
C. Actuarial Value of Assets
Total
Employer
C1. Actuarial Value of Assets, June 30, 2023
14,574,029,063
C2. Non-investment Net Cash Flow
150,759,882
C3. Preliminary Actuarial Value of Assets, June 30, 2024
(A2 + B + C1 + C2)
15,769,616,678
C4. Market Value of Assets, June 30, 2024
15,933,751,686
6,024,731
C5. Final Actuarial Value of Assets, June 30, 2024
(C3 Within 20% Corridor of C4)
15,769,616,678
5,962,670
D. Rates of Return
D1. Market Value Rate of Return
10.2%
D2. Actuarial Value Rate of Return
7.1%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
16
Development of Health Actuarial Value of Assets - Tiers 1 & 2
A. Investment Income
A1. Actual Investment Income
$ 38,303,004
A2. Expected Amount for Immediate Recognition
27,406,736
A3. Amount Subject to Amortization
10,896,268
Year Ended June 30
B. Amortization Schedule
2024
2025
2026
2027
2028
2029
2030
2024 Experience (A3 / 7)
1,556,610
1,556,610
1,556,610
1,556,610
1,556,610
1,556,610
1,556,608
2023 Experience
193,035
193,035
193,035
193,035
193,035
193,036
2022 Experience
(6,416,469)
(6,416,469)
(6,416,469)
(6,416,469)
(6,416,471)
2021 Experience
9,257,478
9,257,478
9,257,478
9,257,481
2020 Experience
(2,898,713)
(2,898,713)
(2,898,716)
2019 Experience
(1,075,569)
(1,075,572)
2018 Experience
(304,656)
Total Amortization
311,716
616,369
1,691,938
4,590,657
(4,666,826)
1,749,646
1,556,608
C. Actuarial Value of Assets
Total
Employer
C1. Actuarial Value of Assets, June 30, 2023
392,563,499
C2. Non-investment Net Cash Flow
(13,979,407)
C3. Preliminary Actuarial Value of Assets, June 30, 2024
(A2 + B + C1 + C2)
406,302,544
C4. Market Value of Assets, June 30, 2024
411,840,936
130,358
C5. Final Actuarial Value of Assets, June 30, 2024
(C3 Within 20% Corridor of C4)
406,302,544
128,605
D. Rates of Return
D1. Market Value Rate of Return
10.1%
D2. Actuarial Value Rate of Return
7.2%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
17
Development of Pension Actuarial Value of Assets - Tiers 3
A. Investment Income
A1. Actual Investment Income
$ 36,851,478
A2. Expected Amount for Immediate Recognition
21,712,363
A3. Amount Subject to Amortization
15,139,115
Year Ended June 30
B. Amortization Schedule
2024
2025
2026
2027
2028
2024 Experience (A3 / 5)
3,027,823
3,027,823
3,027,823
3,027,823
3,027,823
2023 Experience
885,521
885,521
885,521
885,520
2022 Experience
(3,259,379)
(3,259,379)
(3,259,381)
2021 Experience
3,551,936
3,551,938
2020 Experience
(351,294)
Total Amortization
3,854,607
4,205,903
653,963
3,913,343
3,027,823
C. Actuarial Value of Assets
Total
Employer
C1. Actuarial Value of Assets, June 30, 2023
259,708,739
C2. Non-investment Net Cash Flow
101,621,430
C3. Preliminary Actuarial Value of Assets, June 30, 2024
(A2 + B + C1 + C2)
386,897,139
C4. Market Value of Assets, June 30, 2024
398,698,171
184,210,874
C5. Final Actuarial Value of Assets, June 30, 2024
(C3 Within 20% Corridor of C4)
386,897,139
178,758,433
D. Rates of Return
D1. Market Value Rate of Return
11.8%
D2. Actuarial Value Rate of Return
8.2%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
18
Development of Health Actuarial Value of Assets - Tiers 3
A. Investment Income
A1. Actual Investment Income
$ 1,027,216
A2. Expected Amount for Immediate Recognition
605,758
A3. Amount Subject to Amortization
421,458
Year Ended June 30
B. Amortization Schedule
2024
2025
2026
2027
2028
2024 Experience (A3 / 5)
84,292
84,292
84,292
84,292
84,290
2023 Experience
23,872
23,872
23,872
23,870
2022 Experience
(101,792)
(101,792)
(101,790)
2021 Experience
128,963
128,961
2020 Experience
(10,557)
Total Amortization
124,778
135,333
6,374
108,162
84,290
C. Actuarial Value of Assets
Total
Employer
C1. Actuarial Value of Assets, June 30, 2023
7,297,670
C2. Non-investment Net Cash Flow
2,682,453
C3. Preliminary Actuarial Value of Assets, June 30, 2024
(A2 + B + C1 + C2)
10,710,659
C4. Market Value of Assets, June 30, 2024
11,044,818
5,423,316
C5. Final Actuarial Value of Assets, June 30, 2024
(C3 Within 20% Corridor of C4)
10,710,659
5,259,235
D. Rates of Return
D1. Market Value Rate of Return
11.8%
D2. Actuarial Value Rate of Return
8.5%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
19
V. MEMBER STATISTICS
Valuation Data Summary
June 30, 2024
June 30, 2023
Tiers 1 & 2
Tier 3
Tiers 1 & 2
Tier 3
Actives
Number
8
11
8
5
Average Current Age
50.4
30.9
49.4
31.3
Average Age at Employment
35.1
28.8
35.1
28.5
Average Past Service
15.3
2.1
14.3
2.8
Average Annual Salary
$109,266
$74,711
$90,001
$62,473
Actives (transferred)
Number
1
2
0
1
Average Current Age
38.8
32.2
N/A
36.3
Average Age at Employment
21.8
29.1
N/A
32.0
Average Past Service
17.0
3.1
N/A
4.3
Average Annual Salary
$104,248
$90,363
N/A
$68,891
Retirees
Number
2
0
2
0
Average Current Age
58.4
N/A
57.4
N/A
Average Annual Benefit
$38,411
N/A
$37,658
N/A
DROP Retirees
Number
1
N/A
1
N/A
Average Current Age
52.8
N/A
51.8
N/A
Average Annual Benefit
$60,233
N/A
$60,233
N/A
Beneficiaries
Number
0
0
0
0
Average Current Age
N/A
N/A
N/A
N/A
Average Annual Benefit
N/A
N/A
N/A
N/A
Disability Retirees
Number
0
0
0
0
Average Current Age
N/A
N/A
N/A
N/A
Average Annual Benefit
N/A
N/A
N/A
N/A
Inactive / Vested
Number
0
0
0
0
Average Current Age
N/A
N/A
N/A
N/A
Average Accumulated Contributions
N/A
N/A
N/A
N/A
Total Number
12
13
11
6
Former Members (transferred)
2
0
2
0
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
20
Active Counts and Pay Summary - Tiers 1 & 2
Past Service
Age
0-4
5-9
10-14
15-19
20-24
25-29
30+
Total Count
Total Pay
Average Pay
<20
0
0
0
0
0
0
0
0
0
0
20 - 24
0
0
0
0
0
0
0
0
0
0
25 - 29
0
0
0
0
0
0
0
0
0
0
30 - 34
0
0
0
0
0
0
0
0
0
0
35 - 39
0
0
1
1
0
0
0
2
227,924
113,962
40 - 44
0
0
0
1
0
0
0
1
100,329
100,329
45 - 49
0
1
1
1
0
0
0
3
308,761
102,920
50 - 54
0
0
0
0
1
0
0
1
107,968
107,968
55 - 59
0
0
0
0
1
0
0
1
129,971
129,971
60 - 64
0
0
0
1
0
0
0
1
103,426
103,426
65+
0
0
0
0
0
0
0
0
0
0
Total
0
1
2
4
2
0
0
9
978,379
108,709
Active Counts and Pay Summary - Tier 3
Past Service
Age
0-4
5-9
10-14
15-19
20-24
25-29
30+
Total Count
Total Pay
Average Pay
<20
0
0
0
0
0
0
0
0
0
0
20 - 24
1
0
0
0
0
0
0
1
75,057
75,057
25 - 29
7
1
0
0
0
0
0
8
622,736
77,842
30 - 34
2
0
0
0
0
0
0
2
125,436
62,718
35 - 39
0
1
0
0
0
0
0
1
98,450
98,450
40 - 44
0
0
0
0
0
0
0
0
0
0
45 - 49
0
0
0
0
0
0
0
0
0
0
50 - 54
0
1
0
0
0
0
0
1
80,870
80,870
55 - 59
0
0
0
0
0
0
0
0
0
0
60 - 64
0
0
0
0
0
0
0
0
0
0
65+
0
0
0
0
0
0
0
0
0
0
Total
10
3
0
0
0
0
0
13
1,002,549
77,119
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
21
In-Payment Counts and Benefit Summary – All Tiers
Age
Count
Average
Annual
Benefit
< 40
0
0
40 - 44
0
0
45 - 49
0
0
50 - 54
1
36,977
55 - 59
0
0
60 - 64
0
0
65 - 69
1
39,844
70 - 74
0
0
75 - 79
0
0
80 - 84
0
0
85 - 89
0
0
90 - 94
0
0
95 - 99
0
0
100+
0
0
Total
2
38,411
“In-Payment” refers to retired, beneficiary, and disabled members.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
22
VI. ACTUARIAL ASSUMPTIONS AND METHODS
Interest Rate
This is the assumed earnings rate on System assets, compounded
annually, net of investment and administrative expenses.
Tiers 1 & 2:
7.20% per year.
Tier 3:
7.00% per year.
Salary Increases
See table at the end of this section. This is an annual increase for
individual member’s salary. These rates are based on a 2022
experience study using actual plan experience.
Inflation
2.50%.
Tier 3 Compensation Limit
$140,952 for calendar 2024. Assumed increases of 2.00% per year
thereafter.
Cost-of-Living Adjustment
1.85%.
Mortality Rates
These rates are used to project future decrements from the population
due to death.
Active Lives:
PubS-2010 Employee mortality, adjusted by a factor of 1.03 for male
members and 1.08 for female members, with generational
improvements using 85% of the most recent projection scale
(currently Scale MP-2021). 100% of active deaths are assumed to be
in the line of duty.
Inactive Lives:
PubS-2010 Healthy Retiree mortality, adjusted by a factor of 1.03 for
male retirees and 1.11 for female retirees, with generational
improvements using 85% of the most recent projection scale
(currently Scale MP-2021).
Beneficiaries:
PubS-2010 Survivor mortality, adjusted by a factor of 0.98 for male
beneficiaries and adjusted by a factor of 1.06 for female
beneficiaries, with generational improvements using 85% of the most
recent projection scale (currently Scale MP-2021).
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
23
Disabled Lives:
PubS-2010 Disabled mortality, adjusted by a factor of 1.08 for male
disabled members and 1.01 for female disabled members, with
generational improvements using 85% of the most recent projection
scale (currently Scale MP-2021).
The mortality assumptions sufficiently accommodate anticipated
future mortality improvements.
Retirement / DROP Rates
These rates are used to project future decrements from the active
population due to retirement. The rates below are based on a 2022
experience study using actual plan experience.
Tier 1 – reaching age 62 before attaining 20 years of service:
Age-related rates based on age at retirement:
Police - 40% assumed at age 62 and 63, 35% assumed at age 64,
25% assumed at ages 65 and 66, 50% assumed at ages 67 – 69, and
100% assumed at age 70.
Fire - 25% assumed at age 62 and 63, 35% assumed at age 64, 25%
assumed at ages 65 and 66, 50% assumed at ages 67 – 69, and 100%
assumed at age 70.
Tier 1 – reaching age 62 after attaining 20 years of service:
Service-related rates based on service at retirement. See complete
tables at the end of this section.
65% are assumed to enter the DROP program while the remaining
35% are assumed to retire and commence benefits immediately.
DROP periods are assumed to be 5 years in length for future DROP
elections.
Tiers 2 & 3:
Age-related rates based on age at retirement. 50% assumed at age
53, 30% assumed at ages 54 – 59, 60% assumed at ages 60 – 63, and
100% assumed at age 64.
Termination Rate
These rates are used to project future decrements from the active
population due to termination. Complete table of rates based on
service at termination are provided at the end of this section. The
rates apply to members prior to retirement eligibility and are based
on a 2022 experience study using actual plan experience.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
24
Disability Rate
These rates are used to project future decrements from the active
population due to disability. Complete table of rates based on age at
disability are provided at the end of this section. These rates are
based on a 2022 experience study using actual plan experience. 90%
of disablements are assumed to be duty-related.
Marital Status
For active members, 85% of males and 60% of females are assumed to be
married. Actual marital status is used, where applicable, for inactive
members.
Spouse’s Age
Male spouses are assumed to be four years older than female
members and female spouses are assumed to be two years younger
than males members.
Benefit Commencement
Deferred members are assumed to commence benefits as follows:
Tier 1: immediate refund of contributions
Tiers 2 & 3 (less than 15 years service): immediate refund of
contributions
Tier 2 (15+ years service): life annuity payable at age 52.5
Tier 3 (15+ years service): life annuity payable at age 55
Health Care Utilization
For active members, 70% of retirees are expected to utilize retiree
health care. Actual utilization is used for inactive members.
Funding Method
Entry Age Normal Cost Method.
Lateral Transfers
When active members transfer between employers, the new
employer’s liability starts from their new date of hire with no past
service liability (i.e., all liability is accrued through normal cost).
Per PSPRS administrative decision, once the new employer’s
liability is fully funded, the liability will reflect all past service
liability.
Actuarial Asset Method
Method described below. Note that during periods when investment
performance exceeds (falls short) of the assumed rate, the actuarial
value of assets will tend to be less (greater) than the market value of
assets.
Tiers 1 & 2:
Each year the assumed investment income is recognized in full while
the difference between actual and assumed investment income are
smoothed over a 7-year period subject to a 20% corridor around the
market value.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
25
Tier 3:
Each year the assumed investment income is recognized in full while
the difference between actual and assumed investment income are
smoothed over a 5-year period subject to a 20% corridor around the
market value.
Funding Policy Amortization Method
Tiers 1 & 2:
Any positive UAAL (assets less than liabilities) is amortized using a
layered approach beginning with the June 30, 2020 valuation, with
new amounts determined according to a Level Dollar method over a
closed period of 15 years (phased into from current period of at most
30 years). Initial layer from June 30, 2019 valuation continues to be
amortized according to a Level Percentage of Payroll method.
Tier 3:
Any positive UAAL (assets less than liabilities) is amortized
according to a Level Dollar method over a closed period of 10 years.
No amortization is made of any negative UAAL (assets greater than
liabilities).
Payroll Growth
1.50% per year. This is annual increase for total employer payroll.
Changes to Actuarial Assumptions and Methods Since the Prior Valuation
The payroll growth assumption was lowered from 2.00% to 1.50%.
There were no method changes since the prior valuation.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
26
Salary Increase Rates
Age
Maricopa
Police
Pima
Police
Other
Police
Maricopa
Fire
Pima
Fire
Other
Fire
20
15.00%
12.00%
14.00%
15.00%
12.00%
13.00%
21
14.00%
6.00%
12.00%
14.00%
11.00%
12.00%
22
13.00%
6.00%
10.00%
13.00%
10.00%
11.00%
23
12.00%
6.00%
9.00%
12.00%
9.50%
10.00%
24
11.00%
6.00%
8.00%
11.00%
9.00%
9.00%
25
10.00%
6.00%
7.00%
10.00%
8.50%
8.00%
26
9.00%
5.50%
6.50%
9.50%
7.50%
7.50%
27
8.00%
5.50%
6.25%
9.00%
6.50%
7.50%
28
7.50%
5.50%
6.00%
8.50%
5.75%
7.00%
29
7.00%
5.50%
5.80%
8.00%
5.75%
6.50%
30
6.50%
5.25%
5.60%
8.00%
5.50%
6.50%
31
6.00%
5.25%
5.40%
7.50%
5.50%
6.00%
32
5.50%
5.00%
5.20%
7.00%
5.00%
5.50%
33
5.10%
5.00%
5.00%
6.50%
5.00%
5.50%
34
4.90%
5.00%
4.90%
6.50%
5.00%
5.50%
35
4.70%
4.50%
4.80%
6.00%
5.00%
5.50%
36
4.50%
4.50%
4.70%
5.50%
5.00%
5.50%
37
4.30%
4.50%
4.60%
5.25%
4.50%
5.00%
38
4.10%
4.00%
4.50%
5.00%
4.50%
5.00%
39
4.00%
4.00%
4.40%
4.75%
4.50%
5.00%
40
3.90%
4.00%
4.30%
4.75%
4.50%
5.00%
41
3.80%
3.80%
4.20%
4.50%
4.50%
4.50%
42
3.70%
3.60%
4.10%
4.50%
4.00%
4.50%
43
3.60%
3.40%
4.00%
4.50%
4.00%
4.50%
44
3.50%
3.20%
3.90%
4.50%
4.00%
4.00%
45
3.50%
3.00%
3.80%
4.25%
4.00%
4.00%
46
3.50%
3.00%
3.70%
4.25%
3.75%
4.00%
47
3.50%
3.00%
3.60%
4.25%
3.75%
3.75%
48
3.50%
3.00%
3.50%
4.00%
3.75%
3.75%
49
3.50%
3.00%
3.50%
4.00%
3.50%
3.75%
50
3.25%
3.00%
3.50%
3.75%
3.50%
3.75%
51
3.25%
3.00%
3.50%
3.75%
3.50%
3.75%
52
3.25%
2.75%
3.50%
3.75%
3.50%
3.75%
53+
3.25%
2.75%
3.50%
3.75%
3.25%
3.75%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
27
Tier 1 Retirement Rates– reaching age 62 after attaining 20 years of service
Termination Rates
Service
Maricopa
Police
Pima
Police
Other
Police
Maricopa
Fire
Pima
Fire
Other
Fire
0
13.0%
14.0%
13.5%
4.5%
10.0%
10.5%
1
8.0%
9.0%
11.5%
3.5%
6.0%
8.5%
2
6.0%
7.5%
10.5%
2.5%
4.5%
8.0%
3
4.5%
7.0%
9.5%
2.0%
4.0%
8.0%
4
3.6%
6.5%
9.0%
1.5%
4.0%
7.0%
5
3.3%
5.0%
8.0%
1.5%
4.0%
5.0%
6
3.3%
5.0%
7.0%
1.5%
4.0%
5.0%
7
3.3%
4.0%
6.5%
1.5%
3.0%
4.0%
8
2.4%
4.0%
6.5%
1.5%
3.0%
4.0%
9
2.4%
4.0%
6.0%
1.5%
3.0%
3.5%
10
2.4%
4.0%
5.0%
1.0%
2.0%
3.0%
11
1.8%
3.0%
4.0%
1.0%
2.0%
2.5%
12
1.8%
3.0%
4.0%
1.0%
1.5%
2.0%
13
1.3%
2.0%
3.5%
1.0%
1.0%
1.5%
14
1.3%
2.0%
3.0%
0.5%
1.0%
1.4%
15
0.8%
1.5%
2.5%
0.5%
1.0%
1.4%
16
0.8%
1.5%
2.0%
0.5%
0.5%
1.4%
17
0.8%
1.0%
2.0%
0.5%
0.5%
1.4%
18
0.8%
1.0%
1.8%
0.5%
0.5%
1.4%
19
0.8%
1.0%
1.8%
0.5%
0.5%
0.5%
20+
0.5%
1.0%
1.8%
0.4%
0.5%
0.5%
Service
Maricopa
Police
Pima
Police
Other
Police
Maricopa
Fire
Pima
Fire
Other
Fire
20
28%
28%
35%
14%
20%
20%
21
25%
25%
35%
17%
20%
25%
22
15%
16%
22%
7%
13%
15%
23
12%
12%
12%
7%
7%
10%
24
8%
9%
12%
7%
7%
10%
25
30%
22%
25%
17%
22%
30%
26
42%
42%
40%
30%
26%
30%
27
32%
30%
28%
23%
30%
30%
28
32%
30%
28%
30%
30%
30%
29
32%
20%
28%
30%
30%
30%
30
35%
25%
35%
30%
30%
35%
31
35%
33%
30%
40%
30%
35%
32
60%
50%
70%
55%
30%
35%
33
60%
50%
70%
55%
60%
60%
34+
100%
100%
100%
100%
100%
100%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
28
Disability Rates
Age
Maricopa
Police
Pima
Police
Other
Police
Maricopa
Fire
Pima
Fire
Other
Fire
20
0.050%
0.050%
0.120%
0.020%
0.020%
0.020%
21
0.050%
0.050%
0.120%
0.020%
0.020%
0.020%
22
0.050%
0.050%
0.120%
0.020%
0.020%
0.020%
23
0.050%
0.050%
0.120%
0.020%
0.020%
0.020%
24
0.050%
0.050%
0.120%
0.020%
0.020%
0.020%
25
0.050%
0.050%
0.120%
0.020%
0.020%
0.020%
26
0.100%
0.100%
0.160%
0.035%
0.020%
0.020%
27
0.100%
0.100%
0.160%
0.035%
0.020%
0.020%
28
0.100%
0.100%
0.160%
0.035%
0.020%
0.020%
29
0.100%
0.100%
0.160%
0.035%
0.020%
0.020%
30
0.100%
0.100%
0.160%
0.035%
0.020%
0.020%
31
0.230%
0.180%
0.240%
0.090%
0.100%
0.060%
32
0.230%
0.180%
0.240%
0.090%
0.100%
0.060%
33
0.230%
0.180%
0.240%
0.090%
0.100%
0.060%
34
0.230%
0.180%
0.240%
0.090%
0.100%
0.060%
35
0.230%
0.180%
0.240%
0.090%
0.100%
0.060%
36
0.450%
0.350%
0.320%
0.150%
0.150%
0.140%
37
0.450%
0.350%
0.320%
0.150%
0.150%
0.140%
38
0.450%
0.350%
0.320%
0.150%
0.150%
0.140%
39
0.450%
0.350%
0.320%
0.150%
0.150%
0.140%
40
0.450%
0.350%
0.320%
0.150%
0.150%
0.140%
41
0.520%
0.650%
0.550%
0.170%
0.300%
0.250%
42
0.520%
0.650%
0.550%
0.170%
0.300%
0.250%
43
0.520%
0.650%
0.550%
0.170%
0.300%
0.250%
44
0.520%
0.650%
0.550%
0.170%
0.300%
0.250%
45
0.520%
0.650%
0.550%
0.170%
0.300%
0.250%
46
0.650%
0.750%
0.750%
0.300%
0.420%
0.420%
47
0.650%
0.750%
0.750%
0.300%
0.420%
0.420%
48
0.650%
0.750%
0.750%
0.300%
0.420%
0.420%
49
0.650%
0.750%
0.750%
0.300%
0.420%
0.420%
50
0.650%
0.750%
0.750%
0.300%
0.420%
0.420%
51
0.800%
0.800%
0.800%
0.700%
0.750%
0.750%
52
0.800%
0.800%
0.800%
0.700%
0.750%
0.750%
53
0.800%
0.800%
0.800%
0.700%
0.750%
0.750%
54
0.800%
0.800%
0.800%
0.700%
0.750%
0.750%
55
0.800%
0.800%
0.800%
0.700%
0.750%
0.750%
56+
1.000%
0.850%
0.900%
1.100%
0.800%
1.000%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
29
VII. DISCUSSION OF RISK
ASOP No. 51, Assessment and Disclosure of Risk Associated with Measuring Pension Obligations and
Determining Pension Plan Contributions, states that the actuary should identify risks that, in the actuary’s
professional judgment, may reasonably be anticipated to significantly affect the plan’s future financial
condition.
Throughout this report, actuarial results are determined under various assumption scenarios. These results are
based on the premise that all future plan experience will align with the plan’s actuarial assumptions; however,
there is no guarantee that actual plan experience will align with the plan’s assumptions. Whenever possible,
the recommended assumptions in this report reflect conservatism to allow for some margin of unfavorable
future plan experience. However, it is still possible that actual plan experience will differ from anticipated
experience in an unfavorable manner that will negatively impact the plan’s funded position.
Below are examples of ways in which plan experience can deviate from assumptions and the potential impact
of that deviation. Typically, this results in an actuarial gain or loss representing the current-year financial
impact on the plan’s unfunded liability of the experience differing from assumptions; this gain or loss is
amortized over a period of time determined by the plan’s amortization method. When assumptions are selected
that adequately reflect plan experience, gains and losses typically offset one another in the long term, resulting
in a relatively low impact on the plan’s contribution requirements associated with plan experience. When
assumptions are too optimistic, losses can accumulate over time and the plan’s amortization payment could
potentially grow to an unmanageable level.
Investment Return: When the rate of return on the Actuarial Value of Assets falls short of the assumption,
this produces a loss representing assumed investment earnings that were not realized. Further, it is
unlikely that the plan will experience a scenario that matches the assumed return in each year as capital
markets can be volatile from year to year. Therefore, contribution amounts can vary in the future.
Salary Increases: When a plan participant experiences a salary increase that was greater than assumed, this
produces a loss representing the cost of an increase in anticipated plan benefits for the participant as
compared to the previous year. The total gain or loss associated with salary increases for the plan is the
sum of salary gains and losses for all active participants.
Payroll Growth: The plan’s payroll growth assumption, if one is used, causes a predictable annual increase
in the plan’s amortization payment in order to produce an amortization payment that remains constant as
a percentage of payroll if all assumptions are realized. If payroll does not increase according to the plan’s
payroll growth assumption, the plan’s amortization payment can increase significantly as a percentage of
payroll even if all assumptions other than the payroll growth assumption are realized.
Demographic Assumptions: Actuarial results take into account various potential events that could happen
to a plan participant, such as retirement, termination, disability, and death. Each of these potential events
is assigned a liability based on the likelihood of the event and the financial consequence of the event for
the plan. Accordingly, actuarial liabilities reflect a blend of financial consequences associated with
various possible outcomes (such as retirement at one of various possible ages). Once the outcome is
known (e.g. the participant retires) the liability is adjusted to reflect the known outcome. This adjustment
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
30
produces a gain or loss depending on whether the outcome was more or less favorable than other outcomes
that could have occurred.
Contribution risk: This risk results from the potential that actual employer contributions may deviate from
actuarially determined contributions, which are determined in accordance with the Board’s funding policy.
The funding policy is intended to result in contribution requirements that if paid when due, will result in
a reasonable expectation that assets will accumulate to be sufficient to pay plan benefits when due.
Contribution deficits, particularly large deficits and those that occur repeatedly, increase future
contribution requirements and put the plan at risk for not being able to pay plan benefits when due.
Impact of Plan Maturity on Risk
For newer pension plans, most of the participants and associated liabilities are related to active members who
have not yet reached retirement age. As pension plans continue in operation and active members reach
retirement ages, liabilities begin to shift from being primarily related to active members to being shared amongst
active and retired members. Plan maturity is a measure of the extent to which this shift has occurred. It is
important to understand that plan maturity can have an impact on risk tolerance and the overall risk
characteristics of the plan. For example, plans with a large amount of retired liability do not have as long of a
time horizon to recover from losses (such as losses on investments due to lower than
expected investment returns) as plans where the majority of the liability is attributable to active members. For
this reason, less tolerance for investment risk may be warranted for highly mature plans with a
substantial inactive liability. Similarly, mature plans paying substantial retirement benefits resulting in a small
positive or net negative cash flow can be more sensitive to near term investment volatility,
particularly if the size of the fund is shrinking, which can result in less assets being available for
investment in the market.
To assist with determining the maturity of the plan, we have provided some relevant metrics in the table
following titled “Plan Maturity Measures and Other Risk Metrics.” For a better understanding of the overall
Plan and the impact of these risks, please refer to the consolidated PSPRS valuation report.
Low Default-Risk Obligation Measure
ASOP No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or Contributions, was
revised as of December 2021 to include a “low-default-risk obligation measure” (LDROM). This liability
measure is consistent with the determination of the actuarial accrued liability shown on pages 8 and 9 in terms
of member data, plan provisions, and assumptions/methods, including the use of the Entry Age Normal Cost
Method, except that the interest rate is tied to low-default-risk fixed income securities. The S&P Municipal
Bond 20 Year High Grade Rate Index (daily rate closest to, but not later than, the measurement date) was
selected to represent a current market rate of low risk but longer-term investments that could be included in a
low-risk asset portfolio. The interest rate used in this valuation was 4.21%, resulting in an LDROM of
$10,306,175 for Tiers 1 and 2 and $406,148,719 for Tier 3. The LDROM should not be considered the “correct”
liability measurement; it simply shows a possible outcome if the Board elected to hold a very low risk asset
portfolio. The Board actually invests the pension plan’s contributions in a diversified portfolio of stocks and
bonds and other investments with the objective of maximizing investment returns at a reasonable level of risk.
Consequently, the difference between the plan’s Actuarial Accrued Liability disclosed earlier in this section
and the LDROM can be thought of as representing the expected taxpayer savings from investing in the plan’s
diversified portfolio compared to investing only in high quality bonds.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
31
The actuarial valuation reports the funded status and develops contributions based on the expected return of the
plan’s investment portfolio. If instead, the plan switched to investing exclusively in high quality bonds, the
LDROM illustrates that reported funded status would be lower (which also implies that the Actuarially
Determined Contributions would be higher), perhaps significantly. Unnecessarily high contribution
requirements in the near term may not be affordable and could imperil plan sustainability and benefit security.
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
32
Plan Maturity Measures and Other Risk Metrics - Tiers 1 & 2
1 Determined as total contributions minus benefit payments. Administrative expenses are typically included but are
considered part of the net interest rate assumption for this plan.
6/30/2024
6/30/2023
6/30/2022
6/30/2021
6/30/2020
Support Ratio
Total Actives
9
8
10
12
12
Total Inactives
3
3
2
1
1
Actives / Inactives
300.0%
266.7%
500.0%
1,200.0%
1,200.0%
Asset Volatility Ratio
Market Value of Assets (MVA)
6,024,731
4,833,939
4,296,420
4,341,747
2,583,920
Total Annual Payroll
978,379
720,006
746,710
894,536
885,856
MVA / Total Annual Payroll
615.8%
671.4%
575.4%
485.4%
291.7%
Accrued Liability (AL) Ratio
Inactive Accrued Liability
2,335,687
2,245,784
1,572,029
84,078
81,645
Total Accrued Liability
6,489,224
5,469,001
4,579,343
3,862,905
3,488,227
Inactive AL / Total AL
36.0%
41.1%
34.3%
2.2%
2.3%
Funded Ratio
Actuarial Value of Assets (AVA)
5,962,670
4,923,045
4,413,384
3,969,301
2,782,074
Total Accrued Liability
6,489,224
5,469,001
4,579,343
3,862,905
3,488,227
AVA / Total Accrued Liability
91.9%
90.0%
96.4%
102.8%
79.8%
Net Cash Flow Ratio
Net Cash Flow 1
689,470
252,811
132,739
970,506
204,754
Market Value of Assets (MVA)
6,024,731
4,833,939
4,296,420
4,341,747
2,583,920
Net Cash Flow / MVA
11.4%
5.2%
3.1%
22.4%
7.9%
Arizona Public Safety Personnel Retirement System
Actuarial Valuation Report as of June 30, 2024 – Wickenburg Fire Dept. (217)
33
Plan Maturity Measures and Other Risk Metrics - Tier 3 1
1 Tier 3 results are shown for the Risk Sharing group, where applicable.
2 Determined as total contributions minus benefit payments. Administrative expenses are typically included but are
considered part of the net interest rate assumption for this plan.
6/30/2024
6/30/2023
6/30/2022
6/30/2021
6/30/2020
Support Ratio
Total Actives
3,658
3,054
2,417
2,560
1,408
Total Inactives
570
450
327
307
130
Actives / Inactives
641.8%
678.7%
739.1%
833.9%
1,083.1%
Asset Volatility Ratio
Market Value of Assets (MVA)
184,210,874
119,338,352
74,774,123
51,992,240
22,964,925
Total Annual Payroll
295,480,312
226,680,964
165,151,543
115,883,115
84,448,996
MVA / Total Annual Payroll
62.3%
52.6%
45.3%
44.9%
27.2%
Accrued Liability (AL) Ratio
Inactive Accrued Liability
16,792,236
9,349,377
4,598,114
2,290,610
1,173,104
Total Accrued Liability
165,671,690
110,961,191
68,939,204
42,733,537
23,239,599
Inactive AL / Total AL
10.1%
8.4%
6.7%
5.4%
5.0%
Funded Ratio
Actuarial Value of Assets (AVA)
178,758,433
119,101,476
76,171,857
45,863,401
23,570,444
Total Accrued Liability
165,671,690
110,961,191
68,939,204
42,733,537
23,239,599
AVA / Total Accrued Liability
107.9%
107.3%
110.5%
107.3%
101.4%
Net Cash Flow Ratio
Net Cash Flow 2
47,922,185
36,208,171
25,802,686
18,607,209
13,192,598
Market Value of Assets (MVA)
184,210,874
119,338,352
74,774,123
51,992,240
22,964,925
Net Cash Flow / MVA
26.0%
30.3%
34.5%
35.8%
57.4%
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VIII. SUMMARY OF CURRENT PLAN
The following is a summary of the benefit provisions provided in Title 38, Chapter 5, Article 4 of the Arizona
Revised Statutes.
Membership
Full-time employees of an eligible group, prior to attaining age 65,
who are engaged to work for more than six months in a calendar year.
Tier 3 Defined Contribution members are able to elect participation in
post-retirement health insurance subsidy.
Benefit Tiers
Benefits differ for members based on their hire date:
Tier
Hire Date
1
Hired before January 1, 2012
2
Hired on or after January 1, 2012 but before July 1,
2017
3
Hired on or after July 1, 2017
Compensation
Compensation is the amount including base salary, overtime pay, shift
and military differential pay, compensatory time used in lieu of
overtime pay, and holiday pay, paid to an employee on a regular
payroll basis and longevity pay paid at least every six months for
which contributions are made to the System. For Tier 3 members,
compensation is limited by statutory cap ($110,000 with adjustments
by the Board).
Average Monthly Benefit
Tier 1:
Compensation
The highest compensation paid to member during three consecutive
years out of the last 20 years of Credited Service, divided by months.
Tier 2:
The highest compensation paid to member during five consecutive
years out of the last 20 years of Credited Service, divided by months.
Tier 3:
The highest compensation paid to member during five consecutive
years out of the last 15 years of Credited Service, divided by months.
Credited Service
Total periods of service, both before and after the member’s date of
participation, for which the member made contributions to the fund.
Normal Retirement
Date
Tier 1:
First day of month following attainment of 1) 20 years of service or
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2) 62nd birthday and completion of 15 years of service.
Tier 2:
First day of month following the attainment of age 52.5 and com-
pletion of 15 years of service.
Tier 3:
First day of month following the attainment of age 55 and comple-
tion of 15 years of service.
Benefit
Tier 1:
50% of Average Monthly Benefit Compensation, adjusted based on
Credited Service as follows (maximum benefit of 80% of Average
Monthly Benefit Compensation):
Credited Service
Benefit Adjustment
15 years, but less than 20
Reduced 4% per year less than 20
20 years, but less than 25
Plus 2% per year between 20 and 25
25+ years
Plus 2.5% per year above 20
Tier 2:
Benefit multiplier (below) times Average Monthly Benefit
Compensation times Credited Service (maximum benefit of 80% of
Average Monthly Benefit Compensation):
Credited Service
Benefit Multiplier
15 years, but less than 17
1.50%
17 years, but less than 19
1.75%
19 years, but less than 22
2.00%
22 years, but less than 25
2.25%
25+ years
2.50%
Tier 3:
Benefit multiplier (below) times Average Monthly Benefit
Compensation times Credited Service (maximum benefit of 80% of
Average Monthly Benefit Compensation):
Credited Service
Benefit Multiplier
15 years, but less than 17
1.50%
17 years, but less than 19
1.75%
19 years, but less than 22
2.00%
22 years, but less than 25
2.25%
25+ years
2.50%
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Form of Benefit
For married retirees, an annuity payable for the life of the member
with 80% continuing to the eligible spouse upon death. For unmarried
retirees, the normal form is a single life annuity.
Early Retirement
Only applicable to Tier 3 members:
Date
Attainment of age 52.5 and 15 years of Credited Service.
Benefit
Actuarial equivalent of Normal Retirement benefit.
Disability Benefit – Accidental (duty-related)
Eligibility
Total and permanent disability incurred in performance of duty.
Benefit Amount
A maximum of:
a.) 50% of Average Monthly Benefit Compensation, and;
b.) The monthly Normal Retirement pension that the member is
entitled to receive if he or she retired immediately.
Disability Benefit – Ordinary (not duty-related)
Eligibility
Total and permanent disability not incurred in performance of duty.
Benefit Amount
Normal Retirement pension that the member is entitled to receive,
prorated based on Credited Service earned over the required Credited
Service for Normal Retirement (maximum ratio of 1).
Disability Benefit – Other
Temporary
Benefit equals 1/12 of 50% of compensation during year preceding
date of disability. Payments terminate after 12 months.
Catastrophic
Benefit equals 90% of Average Monthly Benefit Compensation. After
60 months member receives greater of 62.5% Average Monthly
Benefit Compensation and accrued normal pension.
Pre-Retirement Death Benefit
Payable following death of active member
Service Incurred
100% of Average Monthly Benefit Compensation, reduced by child’s
pension.
Non-Service Incurred
80% of benefit based on calculation for accidental disability
retirement.
Child’s Pension
10% of pension for each child (maximum 20% paid) based on
calculation for accidental disability retirement. Payable to dependent
child under age 18 (23 if full-time student).
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Guardian’s Pension
Same as spouse’s pension. Payable (along with child’s pension) when
no spouse is being paid and there is at least one child under 18 (23, if
full-time student).
Accumulated Contributions
Any contributions remaining upon the death of the last beneficiary
shall be paid as a lump sum.
Vesting (Termination)
Vesting Service Requirement
Tier 1:
10 years of Credited Service.
Tiers 2 & 3:
15 years of Credited Service.
Non-Vested Benefit
Tier 1:
Lump sum payment of accumulated contributions, plus additional
amount based on years of Credited Service.
Service
Additional % of Contributions
Less than 5 years
0%
5 years
25%
6 years
40%
7 years
55%
8 years
70%
9 years
85%
10+ years
100%
Tiers 2 & 3:
Lump sum payment of accumulated contributions, with interest at rate
determined by the Board.
Vested Benefit
Tier 1:
Deferred retirement annuity based on two times member’s
accumulated contributions, deferred to age 62. Member is not entitled
to survivor benefits, benefit increases, or group health insurance
subsidy.
Tiers 2 & 3:
Calculated same as normal retirement pension. Payable if
contributions left in fund until reach age requirement. Member is
entitled to survivor benefits, benefit increases, and group health
insurance subsidy.
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Cost-of-Living Adjustment
Payable to retired member or survivor of retired member
Tiers 1 & 2:
Compound cost-of-living adjustment on base benefit. First payment is
made on July 1, 2018, with annual adjustments effective every July 1
thereafter. Adjustment does not apply while in DROP.
Cost-of-living adjustment will be based on the average annual
percentage change in the Metropolitan Phoenix-Mesa Consumer Price
Index published by the United States Department of Labor, Bureau of
Statistics. Maximum increase of 2%.
Tier 3:
Compound cost-of-living adjustment on base benefit beginning earlier
of first calendar year after the 7th anniversary of retirement or when
the retired member reaches 60 years of age.
A cost-of-living adjustment shall be paid on July 1 each year that the
funded ratio for members hired on or after July 1, 2017 is 70% or
more.
The cost-of-living adjustment will be based on the average annual
percentage change in the Metropolitan Phoenix-Mesa Consumer Price
Index published by the United States Department of Labor, Bureau of
Statistics. The cost-of-living adjustment will not exceed:
2%, if funded ratio for members who are hired on or after July 1,
2017 is 90% or more;
1.5%, if funded ratio for members who are hired on or after July
1, 2017 is 80-90%;
1%, if funded ratio for members who are hired on or after July 1,
2017 is 70-80%.
Deferred Retirement Option Plan (DROP):
Eligibility
Tier 1 and 20 years of Credited Service.
DROP Period
Maximum 84 months.
Member Contributions
Cease upon DROP entry.
Benefit Amount
Calculated based on Credited Service and average monthly
compensation as of the beginning of the DROP period, credited to
DROP participation account for DROP period.
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Interest on DROP
Beginning Year
Interest Rate
Participation Account
July 1, 2016
7.40%
July 1, 2018
7.30%
July 1, 2022
7.20%
Payment of DROP
Payable as lump sum distribution to Public Safety Personnel
Participation Account
Defined Contribution Retirement Plan at earlier of 1) end of DROP
period, 2) at termination, or 3) five years.
Payment Monthly Benefit
System commences payment of benefit amount at the earlier of 1) the
end of the DROP period and 2) at termination.
Post-Retirement Health Insurance Subsidy
Eligibility
Retired member or survivor who elect health coverage provided by
the state or participating employer.
Maximum Subsidy Amounts
Member Only
With Dependents
(monthly)
Medicare Eligible
$100
$170
One w/ Medicare
N/A
$215
Not Medicare Eligible
$150
$260
Employee Contributions
Tiers 1 & 2:
7.65% (effective July 1, 2023).
Tier 3:
50% of total contribution, which is Normal Cost plus a level-
dollar amortization of unfunded actuarial accrued liability over
a closed period not to exceed 10 years.
Employer Contributions
Tiers 1 & 2:
Normal Cost plus amortization of unfunded actuarial accrued
liability over a closed period not to exceed 20 years (subject to
one-time election to extend to closed period not to exceed 30
years).
Tier 3:
50% of total contribution, which is Normal Cost plus a level-
dollar amortization of unfunded actuarial accrued liability over
a closed period not to exceed 10 years.
Changes to Benefit Provisions Since the Prior Valuation
None.
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IX. ACTUARIAL FUNDING POLICY
A pension plan funding policy describes how pension funding will improve for underfunded plans or maintain
funded benefits for funded plans over time for those benefits defined in Arizona Revised Statutes (ARS). Those
benefits defined in ARS are to be equitably managed and administered by the Arizona Public Safety Personnel
Retirement System (PSPRS agency).
This Actuarial Funding Policy identifies the funding objectives and elements of the actuarial funding policy set
by the Board for the PSPRS agency. The Board adopted this Funding Policy to help ensure the systematic
funding of future benefit payments for members of the retirement systems as established by the legislature.
This policy covers all retirements systems administered by the Board: The Public Safety Personnel Retirement
System (PSPRS); the Correction Officers Retirement Plan (CORP); and the Elected Officials Retirement Plan
(EORP).
To achieve the systematic funding of future benefits, metrics are identified to measure the progress, or the lack
of progress, over time to identify trends. These trends inform the continuation of the current policies or identify
areas of needed research for consideration.
This funding policy is reviewed annually and adopted by the Board in accordance with ARS 38-863.02. This
policy was reviewed and adopted by the Board in September 2024.
PSPRS Statement of Purpose
The Purpose of the Public Safety Personnel Retirement System is to provide uniform, consistent, and equitable
statewide retirement programs for those who have been entrusted to our care.
Funding Objectives
1. Maintain adequate assets so that current plan assets, plus future contributions and investment earnings, are
sufficient to fund all benefits expected to be paid to members and their beneficiaries.
a. Corollary 1a: Current and future contributions should be calculated based upon assumptions that
reflect the Board’s best estimate of future experience and methods that appropriately allocate costs
to address generational equity.
b. Corollary 1b: While the shorter-term objective is to fully fund the Actuarial Accrued Liability
(AAL) that estimates benefits earned as of the valuation date, contributions should target the long-
term Present Value of Benefits (PVB) to fund all benefits and help offset risks.
c. As closed plans mature, the target funding should be 110% of AAL or 100% of PVB, whichever is
greater.
2. Maintain public policy goals of accountability and transparency through stakeholder communication and
education. Each policy element is clear in intent and effect, and each should be considered in a balanced
approach to determine how and when the funding requirements of the plan will be met.
a. Corollary 2a: Board shall provide stakeholders with separate reports and tools to help explain
current results as well as to help model future funding requirements.
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3. Promote intergenerational equity. Defined benefit pensions are designed with a long-term perspective and
designed to minimize contribution volatility that cannot avoid some level of generational cost shift.
However, the goal is that each generation of members and employers (taxpayers) should, to the extent
possible, incur the cost of benefits for the employees who provide services to them, rather than shifting
those costs to other generations of members and employers (taxpayers).
a. Corollary 3a: A systematic reduction of the Unfunded Actuarial Accrued Liability (UAAL) over a
reasonable time period is paramount to achieving this objective.
Consideration can be given to reduce volatility, to the extent possible, of employer and employee contribution
rates as long as the integrity of the objectives listed above is not compromised.
Elements of Actuarial Funding Policy
1. Actuarial Cost Method
a. The Entry Age Normal level percent of pay actuarial cost method of valuation shall be used in
determining the AAL and Normal Cost. Differences in the past between assumed experience and
actual experience (“actuarial gains and losses”) shall become part of the AAL. The Normal Cost
shall be determined on an individual basis for each active member.
2. Asset Smoothing Method
a. The investment gains or losses of each valuation period, resulting from the difference between the
actual investment return and assumed investment return, shall be recognized annually in level
amounts over five years (Tier 3) or seven years (Tiers 1 and 2) in calculating the Actuarial Value
of Assets (AVA).
b. The AVA so determined shall be subject to a 20% corridor relative to the Market Value of Assets
(MVA).
3. Amortization Method (Unfunded Amounts)
a. The AVA is subtracted from the computed AAL. Any unfunded amount is amortized as a level
percent of payroll over a closed period.
b. The unfunded liabilities, for EORP and Tiers 1 & 2 for both PSPRS and CORP, determined in the
6/30/2019 actuarial valuation will become the initial layer for each employer beginning with the
6/30/2020 actuarial valuation and amortized using the current closed year period for that employer
and continue to decrease each year.
i. The payroll growth rate assumption used to amortize the PSPRS 6/30/2019 Unfunded Liability
will be decreased by 0.5% beginning with the 6/30/2021 actuarial valuation and again each
year with the intention of ultimately achieving 0.0%.
ii. The payroll growth rate used to amortize the Correction Officers Retirement Plan (CORP)
6/30/2019 Unfunded Liability will be 3.0% beginning with the 6/30/2020 actuarial valuation,
and future years will be reduced by 0.5% until 0.0% is reached.
iii. The payroll growth rate used to amortize the Elected Officials Retirement Plan (EORP)
6/30/2019 Unfunded Liability will be 2.5% beginning with the 6/30/2020 actuarial valuation,
and future years will be reduced by 0.5% until 0.0% is reached.
c. Gains and losses, for EORP and Tiers 1 & 2 for both PSPRS and CORP, for each employer
beginning with the 6/30/2020 actuarial valuation will be amortized as a new layer over the same
amortization period as the regular unfunded liability to a minimum of 15 years. Once the
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amortization period for each employer decreases to 15 years, each subsequent year’s gains and
losses will be amortized as a new 15-year closed layer.
i. The payroll growth rate used to amortize the unfunded liability for all Plans under this
paragraph will be 0.0% (i.e. level-dollar amortization).
d. Tier 3 amortization methods are established in ARS 38-843.G and ARS 38-891.K.
4. Amortization Method (Overfunded Amounts)
a. The AVA is subtracted from the target funding level (greater of 110% of AAL or 100% of PVB).
Any overfunded amount is amortized as a level dollar amount over an open 10-year period.
5. Tier 3 Rate Calculation
a. Tier 3 is distinct from Tiers 1 & 2 in PSPRS and CORP as the contributions are a shared percentage
(50/50 split for PSPRS: for CORP, employer 1/3 and member 2/3 of the normal cost plus 50 percent
each, member and employer, of the UAAL amortization) for employers and members based on the
actuarially calculated rate. To reduce the impact of volatility to rates, the Tier 3 rates will be
smoothed over a 3-year rolling period based on the actuarially calculated rates for each year’s
actuarial valuation.
i. Beginning with the 6/30/2023 valuation, the prospective Tier 3 rates set by the Board of
Trustees are planned to be a rolling average of the actuarial calculated Tier 3 rates using
the 6/30/2023, 6/30/2022 and 6/30/2021 rates in the initial process.
ii. As assumptions may be updated year-to-year, the prior calculated rates are not updated for
those changes, the prior calculated rates are used to smooth in the new rates.
b. At the May 2023 Board Meeting, the Board changed the assumed rate of return for CORP Tier 3,
which was at 7.2%, to match the 7.0% assumed rate of return for PSPRS Tier 3. The Board com-
mitted to continue to monitor market conditions and directions with the intent to ultimately adopt
a single assumed rate of return for all investments for retirement systems/plans administered by
PSPRS agency.
6. Assumed Rate of Return (ARR)
a. At the May 2023 Board Meeting, the Board changed the assumed rate of return for CORP Tier 3,
which was at 7.2%, to match the 7.0% assumed rate of return for PSPRS Tier 3. The Board will
continue to monitor market conditions and directions with the intent to ultimately adopt a single
assumed rate of return for all investments for retirement systems/plans administered by PSPRS
agency.
7. EORP Floor Considerations
a. Establish a “floor” for EORP based on the immediately previous valuation by adjusting payroll
growth, amortization periods of the original layer or other possible options, to improve funding in
maintaining contribution levels opposed to reducing employer contributions.
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Metrics to Monitor Funding Objectives
1. Appropriateness of Assumptions – Gain/Loss Experience (Corollary 1a)
a. Metric: Do the cumulative gain/loss layers over the prior five years exceed 8% of plan assets?
b. Measurement: History of annual gain/loss (split by asset and liability experience) and five-year
cumulative results will be tracked.
c. Action Plan: This metric assumes that a full experience study is performed at least every five years so
objective of measurement is to monitor interim experience. If the metric answer is yes, a review of the
sources or causes of gains and losses should be analyzed and presented to the Advisory Committee to
provide a recommendation to the Board of Trustees. The analysis and presentation are intended to
provide a basis for consideration if assumption changes are warranted between full experience studies.
2. Funding Targets (Corollary 1b)
a. Metric: Has the funded status, on both an AAL and PVB basis when compared to the MVA, increased
over a five-year period?
b. Measurement: History of funded status measures will be tracked.
c. Action Plan: If the answer is no and not readily explainable (e.g., significant assumption change), a
review of the reason(s) for the decrease should be researched and presented to the Advisory Committee
to provide a recommendation to the Board of Trustees. The analysis and presentation are intended to
provide a basis for consideration if changes to assumptions and/or methods are warranted between full
experience studies.
3. Communication with Stakeholders (Corollary 2a)
a. Metric: Have reports and budgeting tools been provided to stakeholders in a timely fashion?
b. Measurement: Yes/No answer based on input from PSPRS administrator. (An annual standard survey
of stakeholders – 3 to 5 questions.)
c. Action Plan: If the answer is no, and periodically regardless (e.g., every three years), PSPRS staff will
revisit this metric to report to the Advisory Committee to provide a recommendation to the Board of
Trustees if current reports / tools are sufficient and if the delivery timing is appropriate.
4. Timely Recognition of Costs (Corollary 3a)
a. Metric: Has the percentage of unfunded liability subject to negative amortization decreased over a five-
year lookback period?
b. Measurement: History of unfunded liability subject to negative amortization as a percentage of total
unfunded liability will be tracked.
c. Action Plan: If the answer is no, and not readily explainable (e.g., adopted assumption changes being
phased in are anticipated to address negative amortization), a review of the reason(s) for negative
amortization should be researched and presented to the Advisory Committee to provide a
recommendation to the Board of Trustees. The analysis and presentation are intended to provide a
basis for consideration if changes to assumptions and/or methods are warranted between full experience
studies.
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X. GLOSSARY
Actuarial Accrued Liability – Computed differently under different funding methods, the actuarial accrued
liability generally represents the portion of the actuarial present value of benefits attributable to service credit
earned (or accrued) as of the valuation date.
Actuarial Present Value of Benefits – Amount which, together with future interest, is expected to be sufficient
to pay all benefits to be paid in the future, regardless of when earned, as determined by the application of a
particular set of actuarial assumptions; equivalent to the actuarial accrued liability plus the present value of
future normal costs attributable to the members.
Actuarial Assumptions – Assumptions as to the occurrence of future events affecting pension costs. These
assumptions include rates of investment earnings, changes in salary, rates of mortality, withdrawal, disablement,
and retirement as well as statistics related to marriage and family composition.
Actuarial Cost Method – A method of determining the portion of the cost of a pension plan to be allocated to
each year; sometimes referred to as the "actuarial funding method." Each cost method allocates a certain portion
of the actuarial present value of benefits between the actuarial accrued liability and future normal costs.
Actuarial Equivalence – Series of payments with equal actuarial present values on a given date when valued
using the same set of actuarial assumptions.
Actuarial Present Value - The amount of funds required as of a specified date to provide a payment or series of
payments in the future. It is determined by discounting future payments at predetermined rates of interest, and
by probabilities of payments between the specified date and the expected date of payment.
Actuarial Value of Assets – The value of cash, investments, and other property belonging to the pension plan
as used by the actuary for the purpose of the actuarial valuation. This may correspond to market value of assets,
or some modification using an asset valuation method to reduce the volatility of asset values.
Asset Gain (Loss) – That portion of the actuarial gain attributable to investment performance above (below) the
expected rate of return in the actuarial assumptions.
Amortization – Paying off an interest-discounted amount with periodic payments of interest and (generally)
principal, as opposed to paying off with a lump sum payment.
Amortization Payment – That portion of the pension plan contribution designated to pay interest and reduce the
outstanding principal balance of unfunded actuarial accrued liability. If the amortization payment is less than
the accrued interest on the unfunded actuarial accrued liability the outstanding principal balance will increase.
Assumed Earnings Rate – The interest rate used in developing present values to reflect the time value of money.
Decrements – Events which result in the termination of membership in the system such as retirement, disability,
withdrawal, or death.
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Entry Age Normal (EAN) Funding Method – A standard actuarial funding method whereby each member’s
normal costs (service costs) are generally level as a percentage of pay from entry age until retirement. The
annual cost of benefits is comprised of the normal cost plus an amortization payment to reduce the UAL.
Experience Gain (Loss) – The difference between actual unfunded actuarial accrued liabilities and anticipated
unfunded actuarial accrued liabilities during the period between two valuation dates. It is a measurement of the
difference between actual and expected experience, and may be related to investment earnings above (or below)
those expected or changes in the liability due to fewer (or greater) than expected numbers of retirements, deaths,
disabilities, or withdrawals, or variances in pay increases relative to assumed pay increases. The effect of such
gains (or losses) is to decrease (or increase) future costs.
Funded Ratio – A measure of the ratio of the actuarial value of assets to liabilities of the system. Typically, the
assets used in the measure are the actuarial value of assets as determined by the asset valuation method. The
funded ratio depends not only on the financial strength of the plan but also on the asset valuation method used
to determine the assets and on the funding method used to determine the liabilities.
Market Value of Assets (MVA) – The value of assets as they would trade on an open market.
Normal Cost – Computed differently under different funding methods, generally that portion of the actuarial
present value of benefits allocated to the current plan year.
Unfunded Actuarial Accrued Liability (UAAL) – The excess of the actuarial accrued liability over the valuation
assets; sometimes referred to as "unfunded past service liability". UAAL increases each time an actuarial loss
occurs and when new benefits are added without being fully funded initially and decreases when actuarial gains
occur.