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Wednesday, April 3, 2013

Vesting of benefits for PSPRS members

In the previous post about the Hall lawsuit versus the Elected Officials' Retirement Plan (EORP), an intriguing point was raised regarding when pension benefits vest.  The active judges suing EORP are attempting to overturn the reforms of SB 1609 that change how the cost of living allowances are calculated and the increase in employee contributions.  They were not completely successful in the lawsuit since there was a law passed in 2000 that changed the timing of vesting from the start of employment to the date of retirement.  This means that those hired after 2000 are subject to the reforms of SB 1609, while those hired in 2000 or prior are not.  This will obviously have a major effect on those active law enforcement personnel who are suing PSPRS over the same changes to COLA's and employee contributions in Parker v. PSPRS.

The Arizona Revised Statute (ARS) 38-844.01 relating to PSPRS states:

A member of the system does not have vested rights to benefits under the system, except as provided in section 38-854, until he files an application for benefits and is found eligible for those benefits as provided in this article. An eligible claimant's rights to benefits vest on the date of his application for those benefits or his last day of employment under the system, whichever occurs first.(italics mine)
This is quite clear that for PSPRS members benefits do not vest until they retire.  However, I can not find a date for this particular statute, so I do not know to whom it may apply.  It could apply to every law enforcement officer and firefighter currently serving or only some, depending on when it was passed by  the legislature.  Making this even more confusing is that the ARS Article dealing with EORP does not have any similar language clearly stating when members' benefits vest, although such language must exist as it was referenced in the most recent decision in the Hall lawsuit.  Furthermore, the annual reports for PSPRS and EORP state, "Generally, all benefits vest after five years of credited service."  Unfortunately, all of this makes it difficult for the layman with a stake in the outcome to know how the Hall and Parker lawsuits will affect him. I guess this is why attorneys make hundreds of dollars an hour.

Once again, we will have to wait for Arizona Supreme Court to rule before we have any definitive answers.  Stay tuned.