PSPRS Hall Decision

The Who, When and How of carrying out the Hall decision

The Hall lawsuit decided last week impacts certain – but not all –
members and retirees of all three plans managed by PSPRS. The court’s
decision requires payment by PSPRS-managed plans to thousands of
currently contributing members and retirees.
The largest pool of those eligible to receive money back from
PSPRS-managed plans are actively contributing EORP and PSPRS members
who paid the increased contribution rates mandated by Senate Bill 1609
that were struck down by the courts. A far smaller section of retirees
of all three plans are entitled to receive retroactive permanent
benefit increases.
Please read the following information carefully in order to determine
whether you are entitled to receive payment of excess employee
retirement contributions or a permanent increase to retiree benefits:

I am an active member – will some of my contributions be refunded?

* This depends upon members’ hiring dates and whether they are a
member of EORP (the defendant in the lawsuit) or PSPRS.
* CORP members did not have their contribution rates changed by SB1609
and therefore are not impacted by the Hall lawsuit.
* PSPRS and EORP employees hired prior to the July 1, 2011, effective
date of the contribution rate increase will receive a refund of
contributions in excess of the rate that was in effect when they were
hired.
* Those hired on or after July 1, 2011, are not affected by the Hall
lawsuit as they began their employment with the understanding and
agreement of employee contribution levels that were established by
Senate Bill 1609 passed in 2011.
I am a retiree – will I receive a retroactive permanent benefit
increase?

* This depends entirely on when a person retired.
* The Hall lawsuit impacts certain members of all three plans – PSPRS,
CORP and EORP.
* Employees who retired prior to Aug. 1, 2011, are not affected by the
Halllawsuit. This class already received retroactive permanent benefit
increase (PBI) payments as a result of the Fields lawsuit in 2014.
* Those who retired after July 2011 may be eligible to receive
retroactive benefit increases depending on when they retired.
* In order to receive a permanent benefit increase, the reinstated
state law requires that a member be retired for at least two years or
be retired for at least one year and be at least 55 years old by July
1 during years when investment returns are sufficient to trigger the
distribution of PBIs. For the purposes of the Hall lawsuit,
PSPRS-managed plans distributed PBIs in 2013 and 2014, meaning
retirees must have met either the minimum retirement period and/or age
criteria by July 1, 2013, or July 1, 2014, to qualify for a benefit
increase under the Hall ruling.
* Importantly, all PSPRS (excluding CORP and EORP) members and
retirees will be impacted by Prop 124, which voters passed in May 2016.
Prop 124 replaces the current permanent benefit increase (PBI)
mechanism with a cost of living adjustment (COLA) for PSPRS retirees
beginning July 1, 2018.
When can I expect to receive money?

* The Arizona Supreme Court ruled against provisions of SB1609 and
remanded the lawsuit to the trial court to determine how the payments
will be made to members.
* PSPRS will work with the litigants to determine how the Arizona
Supreme Court’s opinion will be carried out.
* The process involves multiple lawsuits (Hall v. EORP and Parker v.
PSPRS) and there are several outstanding issues. This includes
interest determination and ultimately applying agreed upon remedies
under Hall to the Parker case, which requires additional legal proceedings.
* It is not likely that impacted members and retirees will receive
excess contributions or retroactive PBI adjustments before the end of
the calendar year.
* PSPRS acknowledges and respects the court decision and all impacted
members and retirees will receive all owed excess contributions and/or
benefit increases.
I am an employer/payroll employee – Which contribution rate do I use?

* Keep using the 11.65 percent employee contribution rate (or 13
percent for EORP) until notified otherwise by PSPRS.
* The employee contribution rate for those impacted by the Hall
decision will return to 7 percent for EORP members and 7.65 percent
for PSPRS members upon notification by PSPRS.

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Retirement System

Contact Information:
PSPRS Administrative Offices
(Also for CORP & EORP)

3010 E. Camelback Rd., Suite 200
Phoenix, AZ 85016
602.255.5575 Telephone
602.255.5572 Fax