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Friday, May 17, 2013

Vesting of benefits for PSPRS members (an update)

With sincere apologies for the long time between posts, here is a further update about the vesting of benefits for PSPRS members.  This Pension Committee Report comes courtesy of the Fraternal Order of Police Arizona Valley Lodge 44's Facebook page and is dated July 7, 2012.  It is a summary of a PSPRS monthly meeting held on June 6, 2012.  It contains specific information from PSPRS Administrator Jim Hacking about the Arizona Revised Statutes (A.R.S.) that deal with the vesting of benefits for PSPRS, EORP, and CORP members.  These statutes are pertinent to the lawsuits against PSPRS relating to reforms made by SB 1609.  As web links can often disappear without notice, the following is taken verbatim from the Facebook post:

PSPRS: A.R.S 38-844.01
Effective 07/27/1983. This states those hired after 07/27/1983 are not vested until the member applies for and is approved for retirement benefits.

CORP: A.R.S. 38-900.01
Effective 07/18/2000, but is retroactive to, from and after 06/30/1986. This states those hired after 06/30/1986 are not vested until the member applies for and is approved for retirement benefits.

EORP: A.R.S. 38.810.02

Effective 07/18/2000, but is retroactive to, from and after 08/06/1985. This states those hired after 08/06/1985 are not vested until the member applies for and is approved for retirement benefits.

This post is extremely helpful because it gives firm dates when the relevant vesting statutes went into effect.  According to this, only those who joined PSPRS before July 28, 1983 would be affected by a victory in the Parker vs. PSPRS lawsuit.  This would seem to mean that a PSPRS member would have to have nearly 30 years in the PSPRS system in order to be affected by a victory.  I do not know the length of PSPRS service of the plaintiffs in the Parker lawsuit, but PSPRS' 2012 Consolidated Annual Financial Report shows only 58 active PSPRS members with at least 30 years of service as of June 30, 2012.  A layman's read of this would mean that a victory in the Parker lawsuit would have no effect on the vast majority of active PSPRS members as it relates to the new contribution rates and new cost of living allowance (COLA) formulas that were imposed by SB 1609.

However, this is in the courts and will eventually get to the Arizona Supreme Court.  A recent victory (PSPRS lawsuit update: Arizona Judges 2, EORP 0) by active judges against EORP shows that the judge in that case did not allow the use of retroactive vesting back to1985 referenced above and instead used the year 2000.  This shows that the situation will be highly dependent on the judgment of a small number of judges and Supreme Court justices, whose opinions are the only ones that matter.  Stay tuned.

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