Legislation passed in 2011 under Senate Bill 1609 authorizes the ASRS to implement an Alternate Contribution Rate (ACR) to employers who hire ASRS retirees who return to work. The rate will be charged to and remitted to the ASRS by the employer. The purpose of the legislation is to mitigate the potential actuarial impact that retired members who return to work may have on the Trust Fund.
Here is a summary of the provisions now contained in Arizona Revised Statute 38-766.02:
- Beginning July 1, 2012, requires employers to pay an Alternate Contribution Rate (ACR) for members who return to work in any capacity and in a position ordinarily filled by an employee of the employer.
- Charges the ACR starting the first day after retirement for a member who reached normal retirement and for a member who is an early retiree working less than 20/20 for as long as that member stays in service and for any future employment periods during which the member does not suspend their benefits and resume active membership.
- States that the retired member does not accrue credited service, member service (for UORP), account balances, retirement benefits or LTD Program benefits, and the time is not later eligible for service purchase.
- Requires employers to pay the ACR on behalf of any retiree that it employs regardless of 20/20 status, direct/leasing/contracting arrangement, or whether the retiree satisfied the 12-month break in service without working in a leased or contract arrangement.
- States that late contributions are subject to interest (8%) and may be recovered in court or by state revenue offsets.
- Requires employers to submit any reports, data, paperwork, or materials required by the ASRS to determine the function, utilization, efficacy or operation of the return to work program.
- Includes a Legislative Intent clause that states the purpose of the legislation is to mitigate the potential actuarial impact that retired members who return to work might have on the Trust Fund.
ASRS Return to Work - Violations
- Clarifies the period for which a member shall repay suspended pensions to the ASRS starts with the date the ASRS notifies the member in writing that their employment violated the statute, the date the ASRS determines the member knew or should have known that their employment violated the statute, or any other time period that approximates the duration of the violation, as determined by the ASRS.
- Requires an employer that employed a member whose pension was suspended to pay the ASRS the ACR starting with the date the member returned to employment. The employer is required to make the ACR payment through the earlier of:
- The date the member terminates employment,
- The date the employer begins making the ACR payment required by the new Return to Work statute, or
- The date the member resumes active membership in the ASRS.
Current ACR Information
Alternate Contribution Rate
Fiscal year 2016-17, effective July 1, 2016 9.47%
Fiscal year 2017-18, effective July 1, 2017 9.36%
ACR Guide - Step-by-step instructions for online alternate contribution rate processing and payment. (Updated March 2016)
ACR Template - This template is for web-based contribution reporting employers to provide the required ACR data to the ASRS.
Frequently Asked Questions
When is the ACR effective?
Is there a grandfather clause?
For which ASRS retirees is the ACR applicable?
The ACR also applies to all ASRS retirees who return to work in any capacity in a position ordinarily filled by an employee of the employer. The ASRS retiree may return to work as a direct hire, as an independent contractor, or as an employee of a leasing company. The determining factor is whether that returning retiree works in a position that would be considered an employee position of the employer.
If the employer provides proof that the retired member is leased from a third party, all employees in the entire class of positions to which the retired member’s position belongs have been leased from a third party, and the employer does not have any direct employees performing the same, or substantially similar, functions or duties as the retired member, then the employer is not required to pay the ACR for that retiree. As an example, a school who leases an ASRS-retiree substitute teacher through a leasing company would pay ACR even if all substitute teachers were leased from a third party, as long as the school has at least one direct employee (not leased from a third party) who is a teacher.
What is the ACR this year, and how is it determined?
How is the ACR applied?
Does the ACR apply to ASRS retirees who are hired to work less than 20 hours per week or less than 20 weeks?
What kind of data is collected for ACR payments?
What if an employer uses a third party employer for staffing purposes?
How are ACR data and payments submitted to ASRS?
-Employers may download a template from the ASRS website, which is a Comma Separated Values (CSV) file. Once the employer completes the information required and saves the file in CSV format, the file can be uploaded to the ASRS website.
-In lieu of the ASRS template provided, a CSV file generated by the employer’s payroll system can be uploaded to the ASRS website each pay period. The ASRS CSV file format is available within the ACR Guide.
Employers whose payroll system is unable to produce a compatible CSV file must use the ASRS template provided. The amount calculated by the ACR shall be remitted on a per pay period basis through the ASRS website. ACR payments must be submitted to ASRS online via Automated Clearing House (ACH). There are no exceptions. If your employer does not yet have an ACH account set up, please refer to the ACR Guide located on this page and on the Employer Reference Materials page of the ASRS website.
Can there be multiple files for the same pay period?
How frequently is ACR due?
The term “last day of the applicable pay period” may be different for some employers. Some employers pay weekly, bi-weekly, semi-monthly, or monthly while other employers use different pay periods for different employee classifications and still others may have customized pay period schedules. An ASRS retiree who works for an employer as an independent contractor or as an employee of a leasing company may not receive payment for their services on a schedule that matches the “last day of an applicable pay period” used for active contributing members. Therefore, to provide employers some degree of flexibility in administering the ACR for eligible ASRS retirees who return to work and to avoid delinquent ACR payments, the following is provided:
-If the ASRS retiree returns to work as a direct hire of the employer, the remittance of ACR payments is due by 14 calendar days after the last day of the applicable pay period commonly used by the employer for its employees in general or for that employee classification in particular, if warranted, and,
-If the ASRS retiree returns to work as an independent contractor or as an employee of a leasing company, the remittance of ACR payments is due by 14 calendar days after the last day of the applicable pay period that is subsequent to
--The payment for the services rendered by the independent contractor or
--Payment to the leasing company for the services rendered by the leasing company’s employees.
The employer retains the flexibility to remit ACR payments for those retirees who return to work as independent contractors or as employees of a leasing company on the employer’s normal pay period basis (i.e., using an accrual method) if the employer wishes to do so. However, doing so may cause the employer to make adjustments during the subsequent reporting period if the retiree’s schedule as an independent contractor or as an employee of a leasing company is not reported accurately. If you are an employer that handles payroll for an ASRS employer, please make sure you have contacted that employer to determine which entity will be submitting ACR payments to ASRS.