Arizona State Retirement System

1. Arizona State Retirement System 2011 Legislative Update May 11, 2011

2. Statistics (June 30, 2010) • Approximate Plan Membership: • Active 214,000 • Inactive 210,000 • Retired & Survivors 101,000 • System 1,640 • ER Contribution Rate (pre-tax): • FY 2011 – 9.01% • FY 2012 – 9.87% The System is included in the above results using Plan assumptions.

3. Distribution of ASRS Pensions as of June 30, 2010 Average Pension $19,840.10

4. Defined Benefit Plan Projected Contribution Rates* Contribution Rates Rates of return * Excludes potential PBIs Based on June 30, 2010 Projections with constant Investment Returns and 0% Population Growth

5. 2011 Legislation SB 1614 – The Budget Bill SB 1609 – Pension Reform Bill HB 2024 – The ASRS Pension/LTD Bill

6. Significant 2011 Legislative Outcomes • Contribution Rate Split • From 50/50 to 53/47 • State and education ERs to remit the difference to the General Fund (state, universities, public school districts and charter schools) (counties, cities & towns, special districts and community colleges do not transfer funds) • 27-week Waiting Period for New State Employees for ASRS Membership

7. Significant 2011 Legislative Outcomes • Felony Forfeitures • Return to Work Alternate Contribution Rate • Service Purchase Program Limitations • Normal Retirement Age for New Hires (effective July 1, 2011) • Defined Contribution and Retirement Study Committee

8. 2011 Legislation Highlights • Return to Work (RTW) Violations • Clarify ASRS’ ability to suspend and recollect pensions from members who violate RTW statutes • Clarify charges against employers who hire such members • Employers • Allow ASRS to intercept other state payments for all monies due, not just contributions • Long-Term Disability (LTD) Program • 12-Month Claim Deadline, “Good Cause” exception • Penalties for refusing to provide information • Administration • Member outreach via electronic means

9. 2011 Legislation Highlights • Distributions • Define “disabled” child for enhanced survivor benefit; eliminate “stepchild” and replace with “adopted” child • Remove $20 lump sum threshold and allow the Board to establish the amount • Terminate an alternate payee’s split under a Qualified Domestic Relations Order (QDRO) if the alternate payee pre-deceases the member • Service Purchase • Conform Military Service Purchase statutes to Federal Law • Clarify Leave of Absence statute requires a member to forfeit benefits the member may have accrued in another system if the member purchases the time with the ASRS • Clarify the salary calculation for purchases by a transferring in member who does not meet another statutory criteria • Technical and Federal Conforming Changes

10. 2011 Legislation Highlights • Return to Work (RTW) Alternate Contribution Rate (ACR) • Applies to all retirees returning to work in a position ordinarily filled by an employee of the employer • ACR begins on the date the retiree returns to employment (regardless of direct, leasing, or contracting status) • Retirees still must wait 365 days before returning to direct employment with the Employer • Calculated as the “deficit” portion of the Total ASRS Contribution Rate • Floor of 2%, Cap of ER portion of DB + LTD Total Rate • Starting July 1, 2012

11. Alternate Contribution Rate Contribution Rates 8% Rate of Return

12. Questions?