Arizona StateRetirement System

Arizona State Retirement System

May 11, 2011

2011 Legislative Update

Arizona StateRetirement System

Statistics (June 30, 2010)

Approximate Plan Membership: Active 214,000 Inactive 210,000 Retired & Survivors 101,000 System 1,640

ER Contribution Rate (pre-tax): FY 2011 – 9.01% FY 2012 – 9.87%

The System is included in the above results using Plan assumptions. 2

Assets Liabilities Funded Status

Actuarial Market Discounted at 8%

Actuarial Market

$27.6 B $22.1 B $36.1 B 76.4% 61.4%

Arizona StateRetirement System

Distribution of ASRS Pensions as of June 30, 2010

3

Average Pension$19,840.10

Average Years of Service

36.7

37.3

34.9

33.8

33.8

33.5

32.3

28.5

15.1

Arizona StateRetirement System

Rates of return

Defined Benefit Plan

4

Projected Contribution Rates*

* Excludes potential PBIs

Based on June 30, 2010 Projections with constant Investment Returns and 0% Population Growth

Arizona StateRetirement System

2011 Legislation

SB 1614 – The Budget Bill

SB 1609 – Pension Reform Bill

HB 2024 – The ASRS Pension/LTD Bill

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Arizona StateRetirement System Significant 2011

Legislative Outcomes

Contribution Rate Split From 50/50 to 53/47

State and education ERs to remit the difference to the General Fund

(state, universities, public school districts and charter schools)

(counties, cities & towns, special districts and community colleges do not transfer funds)

27-week Waiting Period for New State Employees for ASRS Membership

6

Arizona StateRetirement System Significant 2011

Legislative Outcomes

Felony Forfeitures

Return to Work Alternate Contribution Rate

Service Purchase Program Limitations

Normal Retirement Age for New Hires (effective July 1, 2011)

Defined Contribution and Retirement Study Committee

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Arizona StateRetirement System 2011 Legislation

Highlights Return to Work (RTW) Violations

Clarify ASRS’ ability to suspend and recollect pensions from members who violate RTW statutes

Clarify charges against employers who hire such members Employers

Allow ASRS to intercept other state payments for all monies due, not just contributions

Long-Term Disability (LTD) Program 12-Month Claim Deadline, “Good Cause” exception Penalties for refusing to provide information

Administration Member outreach via electronic means

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Arizona StateRetirement System 2011 Legislation

Highlights Distributions

Define “disabled” child for enhanced survivor benefit; eliminate “stepchild” and replace with “adopted” child

Remove $20 lump sum threshold and allow the Board to establish the amount

Terminate an alternate payee’s split under a Qualified Domestic Relations Order (QDRO) if the alternate payee pre-deceases the member

Service Purchase Conform Military Service Purchase statutes to Federal Law Clarify Leave of Absence statute requires a member to forfeit benefits

the member may have accrued in another system if the member purchases the time with the ASRS

Clarify the salary calculation for purchases by a transferring in member who does not meet another statutory criteria

Technical and Federal Conforming Changes

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Arizona StateRetirement System 2011 Legislation

Highlights

Return to Work (RTW) Alternate Contribution Rate (ACR) Applies to all retirees returning to work in a position

ordinarily filled by an employee of the employer ACR begins on the date the retiree returns to

employment (regardless of direct, leasing, or contracting status)

Retirees still must wait 365 days before returning to direct employment with the Employer

Calculated as the “deficit” portion of the Total ASRS Contribution Rate

Floor of 2%, Cap of ER portion of DB + LTD Total Rate Starting July 1, 2012

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Arizona StateRetirement System Alternate Contribution

Rate

11

8% Rate of Return

Arizona StateRetirement System

Questions?

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