38-749 Termination Incentive Programs (TIP)

The ASRS employs a number of safeguards to ensure final pension payments made to members are fair and accurate.  One of the final steps in the process is a review of the contributions reported to the ASRS in the member's last ten years to ensure the correct figures were used in calculating the final benefit payment. 

The ASRS reviews all contributions submitted by employers to determine if the member received a substantial increase in salary that may fall under a TIP.  This type of program requires employers to notify the ASRS before implementing a program that may affect ASRS funding. 

Effective January 1, 2018, two rules that identify how A.R.S. §38-749 is enforced were implemented.  A report is generated on a monthly basis.  This report identifies members who retired the preceding month and received a 30% or greater increase in their compensation and the compensation was used to calculate their pension benefit.  A letter is forwarded to the employer of members who receive these increases.  If the increase was due to a promotion and not a termination incentive, documentation confirming the promotion is requested.  If a response is not received or, if the employer states the increase is due to a TIP, then an invoice letter is forwarded to the employer for payment of the unfunded liability.

This law and the rules are covered in the Basics for Employers meetings. If you have any questions, please contact your employer liaison.

Written by Marina Keith, Employer Liaison

This article appeared in "Employer Relations News" (Q3-2018), a digital publication of the ASRS

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