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2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-844.04 - Termination of deferred retirement option plan participation

38-844.04.
Termination of deferred retirement option plan participation
A. A member may terminate participation in the deferred retirement option plan by voluntarily terminating employment at any time before the completion of the deferred retirement option plan participation period designated by the member on the appropriate deferred retirement option plan participation form.
B. Participation in the deferred retirement option plan terminates on the first occurrence of any of the following:
1. Completion of the deferred retirement option plan participation period designated by the member on the appropriate deferred retirement option plan participation form.
2. Termination of employment. If termination of employment for cause is reversed,  a member's participation in the deferred retirement option plan,  minus any benefits previously distributed pursuant to this article,  shall be reinstated for the duration of the original deferred retirement option plan participation period designated by the member on the appropriate deferred retirement option plan participation form.
3. Death of the member.
4. Approval of disability retirement benefits pursuant to section 38-844,  subsection B.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-844.05 - Deferred retirement option benefits and participation accounts

38-844.05.
Deferred retirement option benefits and participation accounts
A. A deferred retirement option plan participation account is an account established within the system on behalf of each deferred retirement option plan participant. All benefits accrued pursuant to this article shall be accounted for in the deferred retirement option plan participation account. A deferred retirement option plan participant does not have a claim on the assets of the system with respect to the member's deferred retirement option plan participation account and assets shall not be set aside for any deferred retirement option plan participant that are separate from all other system assets.
B. All amounts credited to a member's deferred retirement option plan participation account are fully vested.
C. A member's deferred retirement option plan participation account shall be credited with the following:
1. An amount,  credited monthly,  that is computed in the same manner as a normal retirement benefit using the factors of credited service and average monthly benefit compensation in effect on the date of deferred retirement option plan participation.
2. For the first sixty months,  an amount,  credited monthly,  that represents interest on the amount credited pursuant to paragraph 1 of this subsection at a rate equal to the assumed rate of return determined by the board.
D. Beginning on or before January 1,  2023,  at the end of the first sixty-month period,  for a member who extended the member's period of participation in the deferred retirement option plan past sixty months,  the system shall transfer the accumulated balance of a member's deferred retirement option plan participation account to an account created for the member in a defined contribution plan. For the subsequent period of time in the deferred retirement option plan,  up to twenty-four months,  all deferred retirement option plan benefits that are accrued and credited monthly pursuant to subsection C,  paragraph 1 of this section shall be deposited in the member's defined contribution plan account. A member may not withdraw the assets of the member's defined contribution plan account until the member terminates employment.
E. The participant is not entitled to receive any amount prescribed by section 38-856.05 or 38-857 during the deferred retirement option plan participation period.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-844.06 - Additional deferred retirement option plan provisions

38-844.06.
Additional deferred retirement option plan provisions
A. Beginning on the day after the date the member elects to participate in the deferred retirement option plan,  employee and employer contributions pursuant to section 38-843 cease with respect to that member.
B. A member who elects to participate in the deferred retirement option plan and who develops a disability during the period of deferred retirement option plan participation is eligible to apply for disability retirement benefits. If the application for disability retirement benefits is approved by the local board:
1. The disability retirement benefits shall be computed using the factors of credited service and average monthly benefit compensation in effect the day before the effective date of the member's deferred retirement option plan participation.
2. All amounts in the member's deferred retirement option plan participation account shall be distributed pursuant to section 38-844.08.
C. If a member dies during the period of the member's deferred retirement option plan participation,  the entire amount in the member's deferred retirement option plan participation account shall be transferred by the system's trustee directly to the trustee of the public safety personnel defined contribution retirement plan established pursuant to article 4.1 of this chapter and deposited in an account established on behalf of the deceased member. On deposit of the monies in the account,  the monies shall be made immediately available to the member's beneficiary to either withdraw all or any portion of the monies or directly transfer all or any portion of the monies to an eligible retirement plan in accordance with section 401(a)(31) of the internal revenue code.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-844.07 - Designation of deferred retirement option plan beneficiaries

38-844.07.
Designation of deferred retirement option plan beneficiaries
A. A member who elects to participate in the deferred retirement option plan shall designate a beneficiary. A member's beneficiary designation applies to all amounts in the member's deferred retirement option plan participation account.
B. If a designated beneficiary predeceases a deferred retirement option plan participant who dies before designating a new beneficiary,  the beneficiary of the participant's deferred retirement option plan participation account shall be the following persons in the following order of priority:
1. The participant's surviving spouse.
2. The participant's natural or adopted children in equal shares.
3. The participant's estate.
C. A member shall not make a beneficiary designation pursuant to this section that results in an abrogation of a member's community property obligations under the applicable laws of this state.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-844.08 - Payment of deferred retirement option plan benefits

38-844.08.
Payment of deferred retirement option plan benefits
A. On the simultaneous termination of deferred retirement option plan participation and employment,  a member is entitled to receive all of the following:
1. The monthly retirement allowance in the amount determined pursuant to section 38-845 that was credited monthly to the member's deferred retirement option plan participation account at the date of termination of deferred retirement option plan participation.
2. All amounts credited to the member's deferred retirement option plan participation account on the effective date of termination of deferred retirement option plan participation.
B. The form of payment shall be a lump sum distribution that is directly deposited in an account created for the member in the public safety personnel defined contribution retirement plan established by article 4.1 of this chapter. On deposit of the lump sum payment,  the member shall immediately be able to either withdraw all or any portion of the lump sum deposit or directly transfer all or any portion of the lump sum deposit to an eligible retirement plan as required by section 401(a)(31) of the internal revenue code.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-844.09 - Internal revenue code compliance

38-844.09.
Internal revenue code compliance
The deferred retirement plan option shall not jeopardize in any way the tax qualified status of the system under the rules of the internal revenue service. The board may adopt additional provisions to the extent necessary or appropriate for the deferred retirement option plan to comply with applicable federal laws or rules.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-844.10 - Deferred retirement option plan; employer; extension approval

38-844.10.
Deferred retirement option plan;  employer;  extension approval
(Rpld. 1/1/28)
Notwithstanding the age and service requirements prescribed in section 38-844.03,  an employer may approve,  for a member of the public safety personnel retirement system who is participating in the deferred retirement option plan on the effective date of this section,  an extension of the member's period of participation for up to an additional twenty-four months.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-845.01 - Maximum annual pension; limitations; definition

38-845.01.
Maximum annual pension;  limitations;  definition
A. The maximum annual pension for a limitation year shall not exceed the following:
1. For limitation years beginning before 1995,  the lesser of ninety thousand dollars,  as indexed for inflation,  or one hundred per cent of the member's average monthly benefit compensation.
2. For limitation years beginning in 1995 and ending before 2002,  ninety thousand dollars,  as indexed for inflation.
3. For limitation years ending in and after 2002,  one hundred sixty thousand dollars,  as indexed for inflation.
B. The limitations prescribed in subsection A shall be determined under section 415 of the internal revenue code and the regulations that are then in effect under that section.
C. Notwithstanding this section,  the pension payable under this system may be reduced to the extent necessary,  as determined by the system,  to prevent disqualification of the system under section 415 of the internal revenue code,  which imposes additional limitations on the pension payable to members who also may be participating in another tax qualified pension plan or other plan of this state. The system shall advise affected members of any additional limitation of their pension required by this section.
D. For the purposes of this section,  " limitation year"  means the system's fiscal year.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-845.03 - Early retirement

38-845.03.
Early retirement
Members who are hired on or after July 1,  2017 and who have earned at least fifteen years of credited service may retire at fifty-two and one-half years of age and will receive an actuarially equivalent retirement benefit to the benefit amount prescribed in section 38-845,  subsection H.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-846.01 - Deferred annuity; exception

38-846.01.
Deferred annuity;  exception
A. If any member who has at least ten years of credited service terminates employment for reasons other than retirement or disability,  the member may elect to receive a deferred annuity,  except that if the annuitant withdraws all or part of the annuitant's accumulated contributions in the system all rights in and to a deferred annuity shall be forfeited by the annuitant. A deferred annuity is a lifetime monthly payment actuarially equivalent to the annuitant's accumulated contributions in the system plus an equal amount paid by the employer and shall commence on application on or after the sixty-second birthday of the annuitant. The annuity is not a retirement benefit and annuitants are not entitled to receive any amount prescribed by section 38-845,  subsection F or section 38-846,  38-856.05 or 38-857.
B. This section does not apply to a member who becomes a member of the system on or after January 1,  2012. For a member who is hired on or after January 1,  2012 and before July 1,  2017,  a member who attains a normal retirement date is eligible for retirement and a retirement benefit even if the member terminates employment with an employer before the age requirement for normal retirement if the member attains the service requirement for normal retirement. For a member who is hired on or after July 1,  2017,  a member who attains a normal retirement date is eligible for retirement and a retirement benefit even if the member terminates employment with an employer before the age requirement for normal retirement if the member attains the credited service requirement for normal retirement. Once a member described in this subsection reaches the normal retirement age,  the member may receive payments made under section 38-845.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-846.03 - Reinstatement of surviving spouse's pension

38-846.03.
Reinstatement of surviving spouse's pension
A. A surviving spouse whose pension was terminated by reason of remarriage is entitled to reinstatement of the surviving spouse's pension if the surviving spouse is otherwise qualified for a surviving spouse's pension and applies for reinstatement with the public safety personnel retirement system and no other person is currently receiving a guardian's or conservator's pension for an eligible child of the member or retired member. The level of pension payments shall be that amount which was received by the surviving spouse at the date the surviving spouse's pension was terminated,  adjusted to reflect ad hoc and scheduled increases from the date of termination to the date of reinstatement.
B. A surviving spouse who is receiving a guardian's or conservator's pension by reason of remarriage and who is otherwise eligible may apply for reinstatement of a surviving spouse's pension. If the surviving spouse's pension becomes payable the guardian's or conservator's pension is terminated.
C. Reinstated surviving spouse's pensions are not retroactive. Payment of a reinstated surviving spouse's pension shall commence as of the first day of the month following receipt by the public safety personnel retirement system of a properly executed written application for reinstatement from the surviving spouse.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-846.04 - Reinstatement of credited service; effect of prior law

38-846.04.
Reinstatement of credited service;  effect of prior law
A. A member who received a severance refund on termination of employment as provided in section 38-846.02,  who is subsequently reemployed by an employer and who may have redeposited the amount withdrawn with interest as provided in section 38-849 or a member who redeems prior service pursuant to statute is subject to the benefits and duties in effect at the following times for the specified situations:
1. At the time of the member's reemployment if the member is reemployed by an employer other than the same employer.
2. At the time of the member's reemployment if the member is reemployed by the same employer at least ninety days after the date of termination.
3. At the time of the member's most recent termination if the member is reemployed by the same employer in any capacity within ninety days after the date of termination.
B. Subsection A of this section does not apply if a court of competent jurisdiction orders reinstatement of benefits and duties under a prior law.
C. If a member was initially employed on or after July 1,  2017,  regardless of whether the member received a severance refund or redeposits the amount withdrawn with interest,  the member shall return to the system as irrevocably elected pursuant to section 38-842.01.
D. A member who transfers credited service from one employer to another employer pursuant to section 38-853 retains the benefits and duties in effect at the time of the member's transfer.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-846.05 - Retiree pool account; transfers; funding

38-846.05.
Retiree pool account;  transfers;  funding
A. The retiree pool account is established in the fund for the purpose of sharing the actuarial liability attributable to uncontrollable costs for the employers of members who are hired on or after July 1,  2017 and who are determined eligible for a normal retirement benefit pursuant to section 38-844 or for an accidental,  ordinary or catastrophic disability pension pursuant to section 38-844 and for survivors of members who are hired on or after July 1,  2017 and who are determined eligible for a death benefit pursuant to section 38-846.
B. For members who are determined eligible for a normal retirement benefit pursuant to section 38-844,  an amount equal to the actuarial present value of future benefit payments,  calculated as of the member's retirement date,  shall be transferred from the employer's account to the retiree pool account.
C. For a member who is determined eligible for an accidental,  ordinary or catastrophic disability pension pursuant to section 38-844 and who has not reached the member's normal retirement date,  an amount equal to the actuarial present value of future benefit payments already accrued,  calculated as of the date of disability retirement,  shall be transferred from the employer's account to the retiree pool account. If a member who is determined eligible for an accidental,  ordinary or catastrophic disability pension has reached the member's normal retirement date,  the amount transferred to the retiree pool account is calculated in the same manner as a normal retirement pursuant to subsection B of this section.
D. For a survivor of a deceased member determined eligible for a death benefit pursuant to section 38-846,  if the member was not retired and had not reached the member's normal retirement date,  an amount equal to the actuarial present value of future survivor benefit payments already accrued,  calculated as of the survivor's retirement date,  shall be transferred from the employer's account to the retiree pool account. If the deceased member had reached the member's normal retirement date,  an amount equal to the actuarial present value of future survivor benefit payments,  plus any amount payable,  calculated as of the survivor's retirement date,  shall be transferred from the employer's account to the retiree pool account.
E. The retiree pool account shall remain one hundred percent funded. In any fiscal year that the retiree account is not one hundred percent funded as of June 30,  the amount necessary to adjust the retiree pool account up or down to one hundred percent funded shall be transferred from or to the investment earnings of the fund before those earnings are distributed to each employer's account.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-846.06 - Eligible rollover distributions; direct rollovers

38-846.06.
Eligible rollover distributions;  direct rollovers
A. Notwithstanding any other provision of this article,  a member or the member's surviving spouse beneficiary who is entitled to receive an eligible rollover distribution may elect to directly roll over all or part of that distribution to an eligible retirement plan.
B. A member's beneficiary who is not the member's spouse may elect to directly roll over all or part of an eligible rollover distribution from the system on the death of the member under the same terms and conditions as apply to a member or the member's surviving spouse beneficiary pursuant to this section,  except that a nonspouse beneficiary may elect to make a direct rollover only to an eligible retirement plan as defined in section 38-842,  paragraph 25,  subdivision (a) or (b).
C. If a member or the member's beneficiary elects to have an eligible rollover distribution paid directly to an eligible retirement plan,  that distribution shall be made in the form of a direct trustee-to-trustee transfer to the specified eligible retirement plan. The distribution shall be made in the form and at the time prescribed by the board.
D. All rollovers made pursuant to this section are subject to the direct rollover requirements under section 401(a)(31) of the internal revenue code,  the rollover notice requirements under section 402(f) of the internal revenue code and the mandatory withholding requirements under section 3405(c) of the internal revenue code. The period for providing the rollover notice as required under section 402(f) of the internal revenue code is not less than thirty days and not more than one hundred eighty days before the date of distribution.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-847.01 - Membership in retirement plan; eligibility

38-847.01.
Membership in retirement plan;  eligibility
A. Each employee of an eligible group shall participate in the plan on proper determination of eligibility for membership by the local board pursuant to section 38-847,  subsection D.
B. The employer shall provide to the local board all necessary information to render a decision on the employee's eligibility for membership. The information shall include:
1. The date the employee was hired or appointed to the position.
2. The employee's position title.
3. A description of the essential functions for the position.
C. An employee receiving a pension from the plan is not subject to this section,  but is subject to section 38-849.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-847.02 - Voluntary local board consolidation; membership; duties

38-847.02.
Voluntary local board consolidation;  membership;  duties
A. A local board may enter into an intergovernmental agreement with other local boards to consolidate the boards for the respective employers.
B. The consolidated local board shall work with the board of trustees to ensure that the new board is duly empaneled consistent with the representation outlined in section 38-847,  subsection A and that all appointments or elections for local board members are completed in a timely manner. The consolidated local board shall submit to the board of trustees the names of the members of the consolidated local board and the consolidated local board's secretary and independent legal counsel and shall submit any changes to those positions within ten days after the change.
C. The consolidated local board shall decide eligibility for membership and disability and in the line of duty death benefits and have all of the duties and responsibilities of a local board pursuant to this article.
D. Within one hundred eighty days after appointment or election,  all consolidated local board members and the local board's secretary shall complete local board training as prescribed by the board of trustees,  including open meeting laws,  ethics,  legal review and fiduciary responsibilities and duties. The local board's independent legal counsel shall review the model uniform rules for local board procedure that are issued by the board of trustees.
E. The local board's independent legal counsel may not be employed by or contracted with the employer or any employee organizations. The independent legal counsel may not represent a member of the plan before any local board or any judicial appeal of a local board decision.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-847.03 - Uniform medical review; administrator; disability decisions; definitions

38-847.03.
Uniform medical review;  administrator;  disability decisions;  definitions
A. Within ten days after a local board receives an application for disability benefits or in the line of duty death benefits,  the local board secretary shall submit the application to the administrator.
B. After a local board has made a determination on the application,  or the application is deemed granted pursuant to section 38-847,  subsection D,  paragraph 3 or section 38-893,  subsection D,  paragraph 2 for disability benefits or in the line of duty death benefits,  the administrator or the administrator's designee shall review the findings. The administrator may contract with medical professionals to review applications under this section.
C. The board of trustees or the administrator may require additional records from the local board or the employer or may require that the local board conduct a rehearing on the matter.
D. If the board of trustees disagrees with the decision of the local board after a rehearing requested pursuant to subsection C of this section,  the decision is subject to judicial review pursuant to title 12,  chapter 7,  article 6.
E. For the purposes of this section:
1. " Administrator"  means the administrator appointed by the board pursuant to section 38-848.
2. " Local board"  means a local board formed under section 38-847,  38-847.02,  38-893 or 38-893.01.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-847.04 - Board of trustees; determination of retirement benefits; definitions

38-847.04.
Board of trustees;  determination of retirement benefits;  definitions
A. Each employer,  within ten days after receiving a completed retirement application from a member,  shall submit the retirement application to the board. The board or its designee shall decide all questions of eligibility for service credits and retirement benefits and will determine the amount,  manner and time of payment of the retirement benefits. If the board or its designee finds discrepancies in the information received,  the board or its designee shall contact the employer and applicant and resolve the discrepancies before the start date of the benefits.
B. For the purposes of this section,  " employer"  and " member"  have the same meanings prescribed in section 38-842 or 38-881.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-848.02 - Board of trustees; report on employer and employee costs; posting funding ratio

38-848.02.
Board of trustees;  report on employer and employee costs;  posting funding ratio
A. On or before December 1 of each year,  the board of trustees shall provide to the legislature and the joint legislative budget committee and shall post on its website the shared cost structure of employees and employers,  the funding status and the rate of return. The report to the legislature shall include when the trigger to the reduction in the employee rates is being met.
B. The board of trustees shall post on its website for each plan the board administers each employer's funding ratio.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-848.03 - Appointed investment management

38-848.03.
Appointed investment management
A. The board may appoint investment management. Investment management shall have:
1. The highest professional and fiduciary recommendations.
2. Not less than three years' experience at handling institutional investments of at least two hundred fifty million dollars. This paragraph is satisfied if investment management,  the individual retained by investment management or individual employees in a firm of investment managers meet this requirement.
3. Had responsibility for investment decision making as an insurance company investment fund,  an investment division of a bank,  a mutual fund,  an investment organization or institution,  a pension fund or an investment adviser who is designated as a chartered financial analyst by the chartered financial analyst institute.
B. A bank serving as investment management does not have a conflict of interest because it is also a depository in which any monies administered by the board are deposited.
C. The board shall appoint investment management for a term of one year and may appoint the investment management to succeeding terms. The board may remove investment management for not complying with this article or for failure to comply with or adhere to the board's investment goals,  objectives or policies.
D. Investment management appointed by the board:
1. May purchase and sell in the name of the system and other plans that the board administers any of the securities and investments held by the system or plans.
2. Subject to any restrictions imposed by the board,  is responsible for making all investment decisions relating to the investments the board has assigned investment management to manage.
E. Investment management shall not directly or indirectly:
1. Except for the fees agreed to be paid by the board to investment management or as otherwise agreed by the board,  have any interest in the investments being managed by investment management for the board.
2. Borrow monies,  funds or deposits of the system or other plans that the board administers or use these monies in any manner except as directed under this article.
3. Be an endorser,  surety or obligor on investments made under this article.
F. Subject to the limitations in this article,  the board may authorize the administrator,  chief investment officer and other in-house investment professionals employed by the board to make discretionary investments for the system and other plans or trusts that the board administers that do not exceed fifty per cent of the assets of the system and other plans or trusts measured at cost.
G. To exercise the responsibilities prescribed in this article,  the board may enter into contracts that may be interpreted and enforced under the laws of a jurisdiction other than this state and that are not subject to section 35-214 or 38-511 or title 41,  chapter 23.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-852 - Taxation of benefits; exemption of contributions and securities

38-852.
Taxation of benefits;  exemption of contributions and securities
The employer contributions and the securities in the several funds provided for in this article shall be exempt from state,  county and municipal taxes. Employee and employer contributions that are withdrawn from the system after December 31,  1974 by a public officer or employee from the accounts of the system and not received as benefits therefrom and benefits,  annuities and pensions received by a public officer or employee from the system after December 31,  1988 shall be subject to tax pursuant to title 43.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-852.01 - Benefits not to be reduced by social security payments

38-852.01.
Benefits not to be reduced by social security payments
From and after the effective date of this section,  all benefits now or hereafter received pursuant to this article or prior retirement systems shall not be reduced because of any payment received as benefits under the federal old age and survivors insurance system.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-853 - Transfer of credited service

38-853.
Transfer of credited service
A member who terminates employment with an employer and accepts a position with the same or another employer participating in the system,  after completing an application that is acceptable to the board,  shall have the member's credited service transferred to the member's record with the new employer provided the member leaves the member's accumulated contributions on deposit with the fund. The termination of employment shall not constitute a break in service. However,  the period not employed shall not be considered as service.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-853.01 - Redemption of prior service; calculation

38-853.01.
Redemption of prior service;  calculation
A. Except as provided in subsection B of this section,  an active member of the system who has at least five years of service with the system may elect to redeem up to sixty months of any part of the following prior service or employment by paying into the system any amounts required under subsection C of this section if the prior service or employment is not on account with any other retirement system:
1. Prior service in this state as an employee with an employer now covered by the system or prior service with an agency of the United States government,  a state of the United States or a political subdivision of this state or of a state of the United States as a full-time paid firefighter,  full-time paid certified peace officer or full-time paid corrections officer engaged in law enforcement duties.
2. Subject to any limitations prescribed by federal law,  prior employment as an employee of a corporation that contracted with an employer now covered by the system to provide firefighting services on behalf of that employer as a full-time paid firefighter or that provided firefighting services for a political subdivision of this state.
B. An active member who became a member of the system before January 1,  2012 may redeem any amount of eligible prior service as specified in subsection A of this section without having to have accrued any minimum amount of credited service.
C. An active member who elects to redeem any part of the prior service or employment for which the employee is deemed eligible by the board under this section shall pay into the system the amounts previously withdrawn by the member,  if any,  as a refund of the member's accumulated contributions plus accumulated interest as determined by the board and the additional amount,  if any,  computed by the system's actuary that is necessary to equal the increase in the actuarial present value of projected benefits resulting from the redemption calculated using the actuarial methods and assumptions prescribed by the system's actuary.
D. A member electing to redeem service pursuant to this section may pay for service being redeemed in the form of a lump sum payment to the system,  a trustee-to-trustee transfer or a direct rollover of an eligible distribution from a plan described in section 402(c)(8)(B)(iii),  (iv),  (v) or (vi) of the internal revenue code or a rollover of an eligible distribution from an individual retirement account or annuity described in section 408(a) or (b) of the internal revenue code.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-853.02 - Purchase of service; payment

38-853.02.
Purchase of service;  payment
A member who purchases service pursuant to this article or section 38-922 or 38-924 shall make payments directly to the system in whole or in part by any one or a combination of the following methods:
1. In lump sum payments.
2. Through an arrangement with the system that the payments be made in installment payments over a period of time.
3. Subject to the limitations prescribed in sections 401(a)(31) and 402(c) of the internal revenue code,  accepting a direct transfer of any eligible rollover distribution or a contribution by a member of an eligible rollover distribution from one or more:
(a) Retirement programs that are qualified under section 401(a) or 403(a) of the internal revenue code.
(b) Annuity contracts described in section 403(b) of the internal revenue code.
(c) Eligible deferred compensation plans described in section 457(b) of the internal revenue code that are maintained by a state,  a political subdivision of a state or any agency or instrumentality of a state or a political subdivision of a state.
4. Subject to the limitations prescribed in section 408(d)(3)(A)(ii) of the internal revenue code,  accepting from a member a rollover contribution of that portion of a distribution from an individual retirement account or individual retirement annuity described in section 408(a) or 408(b) of the internal revenue code that is eligible to be rolled over and would otherwise be includable as gross income.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-854 - Guarantees from prior systems

38-854.
Guarantees from prior systems
A. An employee covered under the prior systems set forth in sections 9-912 to 9-934,  inclusive,  and in sections 9-951 to 9-971,  inclusive,  or prior statutes amended thereby and antecedent thereto,  and covered under such prior systems on June 30,  1968,  and who becomes a member of this system shall nevertheless retain the right to elect,  prior to retirement,  benefits under this system or to elect benefits under the employee's prior system for which the employee's service and age make the employee eligible,  provided that an employee shall elect in writing at the time benefits are claimed the system under which the employee elects to have the employee's eligibility for benefits and the amount thereof determined. Such election shall be irrevocable on retirement and shall be filed with the employee's local board.
B. An employee of the state highway patrol who was a member of the state highway patrol retirement system on June 30,  1968 and who became a member on July 1,  1968 and who qualifies for a pension under the system,  shall have the employee's pension determined in an actuarial equivalent form of payment such that the system's benefits shall not be less than the amount payable during this period under the preexisting system. Any such employee shall nevertheless retain rights to elect to receive any benefit for which the employee's service and age make the employee eligible,  including but not limited to the following:
1. The employee shall be entitled to a pension if the employee's employment terminates after attainment of age sixty and completion of at least twenty years of service in an amount equal to fifty per cent of the employee's average monthly compensation.
2. The employee shall be entitled to a separation benefit in the form of a deferred vested pension if the employee's employment terminates after completion of at least twenty years of service,  provided that the employee leaves the employee's accumulated contributions on deposit with the fund.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-855 - Transfer outside the public safety personnel retirement system

38-855.
Transfer outside the public safety personnel retirement system
A member who changes employment or transfers or is assigned to a position in which such member is no longer eligible to be a member of this system,  because of a change in duties or otherwise,  with the same or another public employer of this state maintaining a retirement program for public officers or employees authorized by law may have all credited service transferred to the retirement system or program applicable to the new position. If the member does not transfer credited service as provided in this section within two years after the change in employment or transfer,  the member shall request a refund of member contributions or shall have the credited service transferred pursuant to this section. Any transfer of credited service pursuant to this section to a state retirement system or plan shall be made pursuant to article 7 of this chapter and must be approved by the board.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-856.05 - Cost-of-living adjustment; members hired on or before June 30, 2017

38-856.05.
Cost-of-living adjustment;  members hired on or before June 30,  2017
A. For members hired on or before June 30,  2017,  each retired member or survivor of a retired member is eligible to receive a compounding cost-of-living adjustment in the base benefit as provided in this section. The first payment under this section shall be made immediately following the first year the cost-of-living adjustment specified in subsection C of this section is paid. The cost-of-living adjustment shall be made on July 1 each year thereafter.
B. A retired member or a survivor of a retired member shall receive annually a cost-of-living adjustment in the base benefit 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 labor statistics,  with the immediately preceding year as the base year for making the determination,  not to exceed annually two percent of the retired member's or survivor's base benefit.
C. In the first year of a member's retirement,  the cost-of-living adjustment specified in subsection B of this section shall be prorated based on the date of retirement.
D. The system actuary shall include the projected cost of providing the cost-of-living adjustment specified in subsection B of this section in the calculation of normal cost and accrued liability.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-856.06 - Cost-of-living adjustment; members hired on or after July 1, 2017; definition

38-856.06.
Cost-of-living adjustment;  members hired on or after July 1,  2017;  definition
A. For members who are hired on or after July 1,  2017,  each eligible retired member or survivor of a retired member may receive a compounding cost-of-living adjustment in the base benefit as provided in this section.
B. A retired member or survivor of a retired member is eligible to receive a cost-of-living adjustment under this section beginning the earlier of the first calendar year after the seventh anniversary of the retired member's retirement or when the retired member is or would have been sixty years of age.
C. A cost-of-living adjustment shall be paid on July 1 each year that the funded ratio for members who are hired on or after July 1,  2017 is seventy percent or more,  as reported in the most recent actuarial valuation.
D. An eligible retired member or survivor of a retired member shall receive annually a cost-of-living adjustment in the base benefit 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 labor statistics,  with the immediately preceding year as the base year for making the determination,  not to exceed annually the following:
1. Two percent of the retired member's or survivor's base benefit if the funded ratio for members who are hired on or after July 1,  2017 is ninety percent or more,  as reported in the most recent actuarial valuation.
2. One and one-half percent of the retired member's or survivor's base benefit if the funded ratio for members who are hired on or after July 1,  2017 is eighty percent or more but less than ninety percent,  as reported in the most recent actuarial valuation.
3. One percent of the retired member's or survivor's base benefit if the funded ratio for members who are hired on or after July 1,  2017 is seventy percent or more but less than eighty percent,  as reported in the most recent actuarial valuation.
E. The system actuary shall include the projected cost of providing the cost-of-living adjustment specified in subsection D of this section in the calculation of normal cost and accrued liability.
F. For the purposes of this section,  " funded ratio"  means the ratio of the market value of assets to the actual accrued liabilities.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-861 - Future benefit increases; payment; cost calculation; definition

38-861.
Future benefit increases;  payment;  cost calculation;  definition
A. Any future benefit increase adopted by the legislature or any participating employer for any member of the system shall be fully paid in the year of enactment of the benefit and may not be amortized over any period of years. A benefit for members hired before July 1,  2017 shall be paid by the employer and the cost of the benefit for members hired on or after July 1,  2017 shall be split equally between the employer and the member.
B. The plan actuary shall calculate the cost of the benefit increase using all of the following:
1. A discount rate equal to the ten-year treasury constant maturity rate for the fiscal year in which the benefit is enacted.
2. An expected rate of return on assets equal to the ten-year treasury constant maturity rate for the fiscal year in which the benefit is enacted.
3. A mortality table based on the most recent proposal from the retirement plans experience committee of the society of actuaries that is not older than the RP-2014 mortality table.
4. All other actuarial assumptions approved by the board for the most recent fiscal year valuation.
C. For the purposes of this section,  " future benefit increase"  includes any benefit increase that leads to a change in the present value of future benefits or a change to accrued liabilities.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-862 - Discount rate; service purchase; transfer of service credits

38-862.
Discount rate;  service purchase;  transfer of service credits
A. Beginning July 1,  2017,  the discount rate specified in subsection B of this section applies to service purchases or transfers of service credits to the system pursuant to the following sections:
1. Section 38-849,  subsection D.
2. Section 38-853.01,  subsection C.
3. Section 38-858,  subsection A or B.
4. Sections 38-921,  38-922,  38-923 and 38-924.
B. For members enrolled in the system:
1. Before July 1,  2017,  the discount rate is the assumed rate of return that is prescribed by the board.
2. On or after July 1,  2017,  the discount rate is an amount equal to the lesser of the assumed rate of return that is prescribed by the board or an amount equal to the yield on a ten-year treasury note as of March 1 that is published by the federal reserve board plus two percent. The discount rate is effective beginning in the next fiscal year,  and the board shall recalculate the rate each year.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-863.01 - Pension funding policies; employers

38-863.01.
Pension funding policies;  employers
A. Each governing body of an employer shall annually:
1. Adopt a pension funding policy for the system for employees who were hired before July 1,  2017. The pension funding policy shall include funding objectives that address at least the following:
(a) How to maintain stability of the governing body's contributions to the system.
(b) How and when the governing body's funding requirements of the system will be met.
(c) Defining the governing body's funded ratio target under the system and the timeline for reaching the targeted funded ratio.
2. Formally accept the employer's share of the assets and liabilities under the system based on the system's actuarial valuation report.
B. The governing body shall post the pension funding policy on the governing body's public website and transmit the pension funding policy to the board.
2023 Arizona Revised Statutes › Title 38 - Public Officers and Employees › § 38-863.02 - Pension funding policies; board; employers' pension funding policies; posting; popular annual financial report

38-863.02.
Pension funding policies;  board;  employers' pension funding policies;  posting;  popular annual financial report
A. The board shall annually review and adopt a pension funding policy for each defined benefit retirement plan and system administered by the board that analyzes and reviews the methods to ensure systematic funding of all retirement benefit payments for the members of each defined benefit retirement plan and system and that outlines the strategy to achieve financial solvency of each plan and system.
B. The board shall annually consolidate the pension funding policies of employers adopted pursuant to section 38-863.01 and post the document on the system's public website.
C. On or before June 30 of each year,  the board shall submit a popular annual financial report to the governor,  the president of the senate and the speaker of the house of representatives and post to the system's public website that includes the following:
1. For each retirement system and plan that is administered by the board:
(a) Funding status.
(b) Aggregate contribution rates.
(c) Demographic updates.
2. For the aggregate of the systems and plans administered by the board:
(a) Investment returns.
(b) An analysis of the system's aggregate experience over the previous year.
(c) Major policy and governance changes.
(d) Future trends and objectives.