Arizona

The Arizona State Retirement System administers pension and other benefits for most state employees, public and charter school teachers, and employees of other political subdivisions that have elected to participate. The state maintains separate plans for public safety personnel, correctional officers, and elected officials; and the cities of Phoenix and Tucson maintain their plans.

The Arizona Public Safety Personnel Retirement System administers pension and other benefits for police and firefighters employed by the state and political subdivisions that have elected to participate.

The City of Phoenix Employees Retirement System administers pension, disability, and survivors benefits for city employees except those eligible for membership in the Arizona PSPRS.

Authorizing Statutes

38-712 of the Arizona Statutes establishes the Arizona State Retirement System as a trust fund to provide retirement benefits.

A. The primary intent of ASRS is to 1. Provide an incentive in the recruitment and retention of employees of the highest possible quality. 2. Contribute toward providing a total compensation package that is generally equivalent to comparable employment in other public and private organizations in this state. 3. Provide a retirement system that encourages employees to remain in service for periods that will provide public employers with the full benefit of the training and experience gained by the employees. 4. Provide an orderly method of promoting and maintaining a high level of service to the public through an equitable separation procedure that is available to employees at retirement or on becoming disabled. 5. Provide a base retirement benefit that is less than one hundred percent of a member's post-retirement income requirements, recognizing that personal savings and social security also contribute toward total post-retirement income requirements.

The Arizona Public Safety Personnel Retirement System is established by statute 38.841

A. Before the establishment of the public safety personnel retirement system, municipal firemen and policemen, employees of the Arizona highway patrol and other public safety personnel in the state of Arizona were covered under various local, municipal and state retirement programs. These heterogeneous programs provided for wide and significant differentials in employee contribution rates, benefit eligibility provisions, types of benefit protection and benefit formulas. B. To provide a uniform, consistent and equitable statewide program for public safety personnel who are regularly assigned hazardous duty in the employ of the state of Arizona or a political subdivision thereof, this retirement system was created effective as of July 1, 1968, as an amendment to and continuation of three prior systems. Groups of employees covered under the three prior systems as of June 30, 1968, and the assets and liabilities accumulated thereunder for such employees, are transferred with prior service credits to this retirement system as of the effective date, and both they and their employers shall be required to make stipulated contributions to support the system's benefit structure on a sound actuarial basis. Future employees in such groups shall commence participation in, and contributions to, the system immediately on commencement of covered employment.

Board Composition

38-713 establishes the ASRS board, which is composed of

• Five members from among the members of ASRS to represent the members of ASRS as follows: an educator; an employee of a political subdivision; a retired member; an employee of this state; an at large member who may represent any ASRS member group;

• Four members who are not members of ASRS to represent the public

Four members of the Board shall have at least ten years' substantial experience as any one or a combination of the following:

• A portfolio manager acting in a fiduciary capacity;

• A securities analyst;

• An employee or principal of a trust institution, investment organization or endowment fund acting either in a management or an investment related capacity;

• A chartered financial analyst in good standing as determined by the association for investment management and research;

• A professor at the university level teaching economics or investment related subjects;

• An economist;

• Any other professional engaged in the field of public or private finances.

The Arizona Public Safety Personnel Retirement System is established by statute 38.841.

Contributions

Per the U.S. Census, in FY 2021, employer contributions to Arizona state and local government pension plans were 5.46 percent of all state and local government direct general spending.

Constitutional Protections

Membership in a public retirement system is a contractual relationship that is subject to Article II, §25, and public retirement system benefits shall not be diminished or impaired. See Yeazel! v. Copins, 98 Ariz. 109, 402 P.2d541, 545 (Ariz. 1965)(holding rights vest upon employment acceptance and cannot thereafter be altered without mutual assent); Op.Atty.Gen. No.I09-009, 2009 WL4100152 (plain language of Article 29 of the Arizona Constitution prohibits reduction of benefit payments to retirees; as regards the lawful source or sources of funds to satisfy a shortfall in the System fund balance, the Plan trust fund would furnish the benefit payments of those individuals who retired on or after July 1, 1981, since those individuals now have benefits and accounts that are funded through the Plan. For those System members who retired before July 1, 1981, if there are insufficient monies remaining in the System trust fund to pay all of their guaranteed benefits, those remaining benefits would require a legislative appropriation). (AZ CONST., Article XIX, §1) Source: Robert Klausner, Esq., State Constitutional Protections for Public Sector Retirement Benefits