As a member of the Arizona State Retirement System (ASRS), both you and your employer contribute toward your future retirement. These contributions make it possible for ASRS to provide a variety of benefits, including a lifetime monthly income once you retire.
There are two portions to the ASRS contribution rate: the Pension & Health Insurance Benefit supplement contribution rate, which pays for retirement benefits, and the Long-Term Disability contribution rate, which pays for Long-Term Disability claims.
How Often Do Contribution Rates Change?
The ASRS contribution rate has the potential to change at the beginning of each fiscal year, which is July 1. That said, in order to provide stability to our members and employers, we make sure to avoid any large year-to-year swings in contribution rate adjustments.
What is the long-term vision for contribution rates?
Our primary goal related to contribution rates is a steady overall decline for the foreseeable future, keeping the ASRS on a path to a single-digit contribution rate.
How Rates Are Set
Contribution rates are established through an annual actuarial valuation that measures the plan’s financial health. Every four to five years, a more detailed experience study reviews assumptions such as investment returns, retirement patterns, and life expectancy. These studies ensure that projections used to set contribution rates remain accurate for the long term.
Contributions: Pre-Tax or Post-Tax?
Most contributions, including those for pension and health insurance, are taken out pre-tax and are labeled “ASRSRET” on paystubs. The long-term disability contribution is a post-tax deduction and appears as “ASRS LTD” on pay stubs. Pre-tax contributions reduce taxable income during employment but are taxed when benefits are paid out in retirement
