Hall Case


I just wanted to forward all of you the latest update regarding the Hall/Parker lawsuit. I just spoke with the PSPRS Director, Jared Smout this morning to go into detail regarding how we move forward regarding the Boards decision yesterday afternoon. The PSPRS Board of Directors voted to apply the same rules to our lawsuit(Parker) as they did the Hall case. So this means starting April 1st, 2017 those employees hired on or before July 19th, 2011 will have their contribution rates lowered back to their original PSPRS contribution rate of 7.65%.

Employees hired after July 19th, 2011, in the Tier 2, will not be impacted by the decision.

“Excess contributions will be returned, but PSPRS is unable to provide an estimated time frame of when that will happen before the parties agree in Superior Court as to the rate of interest, the time period for which that interest applies and the methods for which the contributions may be returned.”

As of today we still do not have a court date set.

This means for those members in Tier 1 you should see the first full 4% decrease in your PSPRS contributions on the April 21st paycheck.

***Disclaimer*** This is assuming that our payroll department has the mechanisms in place to implement these changes quickly. This decision was just made late yesterday afternoon and April 1st is this Saturday..

I’ll provide any further updates as soon as they become available.

Respectfully,

Justin Harris

President-Glendale Law Enforcement Association
President_ Arizona Police Officer Association

 

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 Hall lawsuit. 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.