Effective June 28, 2022, Senate Bill 1082 allowed ASRS employers to prepay pension contributions with the ASRS and designated that they may utilize funding to be applied towards employer contribution payments for a self-designated time at some point in the future. The employer may also opt to leave the prepaid contributions, allowing the amount to continue to accrue earnings based on the amount contributed as a prepayment. This became the Contribution Prepayment Program or CPP.
From the 2023 Legislative session, House Bill 2008 removed the requirement for an employer to begin amortizing its prepaid contributions at a specific time. The amendment also indicated that the rate of return on prepaid contributions may be the actual rate of return of a short-term investment account through ASRS, as requested by the employer and agreed to by ASRS. This update went into effect on October 30, 2023.
It may be helpful to note, that participation in the CPP does not require any changes to your payroll processes. The only change for employers, after contributing to the program, is when they choose to utilize the funds, they will not have to contribute the employer contribution, but the payroll file will be the same. When the CPP was initially rolled out, some employers believed that this program would not work for them, whether they had the money to prepay or not, because it would require system changes on their end.
The CPP does not require system changes on your part, your payroll file remains the same, you just don't pay the full amount when you amortize/utilize prepaid amounts.
Additional information regarding the CPP is available on our public website here:
https://www.azasrs.gov/content/contribution-prepayment-program
If your organization is interested in participating in this program or learning more about the program, you can request information by emailing [email protected].
Written by William Roberts, Employer Relations
Published November 2023
