ASRS; termination incentive programs

New pension costs for public employers

Arizona public employers must notify ASRS before starting an incentive program that may affect pension funding. If the program creates an unfunded liability, the employer must pay the amount ASRS sets with its actuary. Any unpaid amount accrues interest after 90 days, at the board-approved actuarial rate until paid. For a qualifying pay increase of at least 30% that is not a promotion and counts toward retirement pay, ASRS calculates the cost using the increase above 30%. For other money, service credit, or points tied to leaving, ASRS compares the liability if the member retires under the program with the liability if the member stays active. Vacation, sick leave, and extra-time payments count only when they exceed the employer’s usual payment.