Arizona State Retirement FAQs
1) When am I eligible to retire?
2) How is my Pension determined?
3) How do I apply for my retirement benefits?
4) What are the rules allowing a member to retire but continue to work?
5) Is the ASRS a 401 (k) plan?
6) Can I contribute additional amounts to my retirement account?
7) Can I borrow from my retirement account for emergency purposes?
8) What is the current contribution rate? How is it determined?
9) What are my options if I leave my current employment?
1) Q. When am I eligible to retire?
A. Normal retirement is the earliest you may retire with a full benefit as calculated by the ASRS benefit formula. Normal retirement occurs with any of the following:
· You reach the age 65
· You turn 62 and have 10 or more years of service.
· You have any combination of years of service and age totaling 80 points.
A point is equal to each year of service and each year of your age. For example, if you are 60 years old and have 20 years of service, you have 80 points (60+20). However, at the ASRS, you also may be eligible to retire early. If you are at least 50 years of age with 5 or more years of service you may retire before your normal retirement date. With early retirement, the ASRS reduces the full amount of your retirement benefit for each year your age at retirement is under your normal retirement date. For more information refer to the ASRS Member handbook, or contact the ASRS member service center
For new membership after July 1, 2011
1) Modifies the average monthly compensation used in a retiring members retirement benefit calculation from thee average of the highest consecutive 36 months in the last 120 months to the average of the highest consecutive 60 months in the last 120 months.
2) Modifies one of the normal retirement date definitions from 80-85 points (age+years of service)
3) Eliminates employer contribution refunds except for a member who was terminated due to an employer reduction in force of position elimination in which case the member will receive the current refund vesting schedule.
4) Makes conforming changes to early retirement to adjust for the 85 points normal retirement.
2) Q: How is my pension determined?
A: Your pension is based on a formula. Your monthly pension at retirement is calculated by multiplying your total years of service with ASRS covered employment by your average monthly compensation and by a multiplier factor depending on years of service. Generally, your average monthly compensation is the average of your highest 36 months of compensation.
3) Q: How do I apply for my retirement benefits?
A: Before applying for your retirement benefits the ASRS recommends you call the Member Service Center to request a benefit estimate six months to one year prior to your retirement. The figures provided are only estimates; the actual benefit at retirement may be different. Then, you need to submit a retirement application to the ASRS about three months prior to your planned retirement date. An application for retirement and other necessary documents will be included in the Retirement Packet sent with your benefit estimate.
4) Q: What are the rules allowing a member to retire but continue to work?
A: There continues to be confusion over the rules passed last year by the State Legislature to permit members in some circumstances to retire and continue to work after retirement. Members who have reached normal retirement age may begin receiving retirement benefits without having to first terminate employment - as long as the continued work after retirement does not meet the ASRS membership requirement of 20 weeks a year at 20 or more hours a week. The member must submit an application for retirement as with any retirement situation.
Normal retirement is defined as either (1) reaching age 65, (2) reaching age 62 along with at least 10 years of ASRS service credit, or (3) earning at least 80 points. Points are figured by adding your age and the number of years of service.
Under these new provisions, if the member continues to work after retirement without a termination of employment, the weeks worked in that fiscal year before the retirement date must be counted in determining whether the member's continued work meets the ASRS membership criteria. The following examples will illustrate how the rules are applied to different situations.
EXAMPLE 1: Mr. Smith is age 55 with 25 years of service (80 points) when he retires effective January 1, 2008. He plans to continue work after retirement without a termination of employment. Mr. Smith has already worked 26 weeks in the fiscal year (since July 1) at 20 or more hours a week. Therefore, his continued work after retirement in the same fiscal year is limited to less than 20 hours a week. In later fiscal years, he may work as many as 19 weeks at 20 or more hours and the remainder of the year at fewer than 20 hours a week. If the employment exceeds these limits, Mr. Smith returns to active membership and the retirement benefits would be suspended.
EXAMPLE 2: Ms. Davis will be age 62 and has more than 10 years of ASRS service credit (normal retirement) when she retires October 31. She wants to continue working after retirement. Ms. Davis will work 10 full time weeks in the fiscal year before the start of her retirement. She may work 9 more weeks at 20 or more hours a week in the same fiscal year (a total of 19) and may work the remaining weeks of the year as long as they are at less than 20 hours a week.
EXAMPLE 3: Mr. Jones also has reached normal retirement. He plans to retire effective January 1 and continue working full time at his same job and capacity. Because the employment after retirement will continue to meet the ASRS membership criteria (counting the weeks already worked that year), Mr. Jones will not be eligible to begin receiving retirement benefits.
5) Q: Is the ASRS a 401k plan?
A: No. The ASRS is not a 401(k) retirement plan. It is a 401(a) "defined benefit plan," which means your pension will be determined by a formula, not by the amount of money in your account.
6) Q: Can I contribute additional amounts to my retirement account?
A: No. ASRS rules do not permit voluntary contributions except for credited service purchases under the ASRS Service Purchase Program. Additional contributions would not affect your retirement benefit because your ASRS benefit is based on your years of service and salary; therefore, the amount in your retirement account does not affect your retirement benefit.
7) Q: Can I borrow from my retirement account for emergency purposes?
A: No. The Arizona Revised Statutes do not allow the ASRS to lend you money from your account. Funds can be paid out (refunded) only when you leave work with your ASRS employer.
8) Q: What is the current contribution rate? How is it determined?
A: The total contribution rate for members for the 2017-18 fiscal year is 11.50% (11.34% retirement plan, plus 0.16% for the long term disability plan). The retirement portion is a pre-tax deduction, while the LTD portion is a post-tax deduction.
Contribution rates are set by the ASRS Board, and are based on an actuarial valuation calculated to ensure future benefit obligations are met.
9) Q: What are my options if I leave my current employment?
A: When you leave employment before retirement, you may choose to do one of the following:
• Request a refund of your employee contributions plus accrued interest.
• Roll over your account to another qualified retirement program.
• Leave your account on deposit with the ASRS.
There must be 21 days between the last day of employment and the beginning of new employment with an ASRS employer before the ASRS considers you to be "terminated" for refund or rollover purposes. If you are hired with another ASRS employer within 21 days of leaving employment, the ASRS will not refund your contributions.
A member who began membership prior to July 1, 2011, who terminates employment may be eligible to receive a percentage of the employer’s contribution based upon a minimum of five years of service for 25 percent of the employers contributions and increasing by 15-percent increments for each year of additional service, until the employee reaches 100 percent return at 10 years of credited service. This option applies only to members who were hired on or before June 30, 2011.
Interest applied to member accounts for purposes of refunds prior to retirement is set at 4 percent as of July 1, 2005.