Arkansas Administrative Code

24 CAR § 20-1001. Purpose. (a) The purpose of this subpart is to describe the administration of the deferred retirement option plan (DROP) as it affects the benefit levels and funding of the pension funds. (b) Acts 1993, No. 757, established the DROP for police officers. (c) Acts…

24 CAR § 20-1002. Local election of DROP program. (a) Acts 1993, No. 757, and Acts 1993, No. 1004, made the DROP a local option. (b) If the local pension board wishes to make it available to its members, the local pension board must vote to do so. (c) If a local pension board doe…

24 CAR § 20-1003. Accumulation of DROP account. Each individual member's DROP account is credited with the following items during the DROP period: (1)(A) DROP payments. (B) The DROP account is credited each month of the DROP period with the DROP payments. (C) The amount of the DR…

24 CAR § 20-1004. Employee contributions. (a) The member continues to make employee contributions during the DROP period. (b) These employee contributions are credited to the local plan and not to the individual's DROP account. (c) Effective July 1, 1999, for municipalities with …

24 CAR § 20-1005. Interest rate certification. (a)(1) The rate of interest that is to be credited to the DROP account is to be certified by the actuary for the Arkansas Fire and Police Pension Review Board. (2) The board will communicate the necessary information from the annual …

24 CAR § 20-1006. Conclusion of DROP. (a)(1) The DROP period will conclude at the date of termination of employment but no later than five (5) years after the date that the individual member began participation in the DROP. (2) Termination of employment means leaving the employme…

24 CAR § 20-1007. Death benefits. (a) If a member of a fire or police department dies during the period of participation in the DROP, a lump-sum payment equal to the balance of the DROP account will be paid pursuant to Acts 1993, No. 757, or Acts 1993, No. 1004. (b) The widow's b…

24 CAR § 20-1008. Distribution of DROP account. (a)(1) A member who has a DROP account must be allowed to choose to receive his or her DROP account as either a lump sum or a true annuity, as described below. (2) At the option of the local pension board, other forms of distributio…

24 CAR § 20-1009. Actuarial equivalence and interest equivalence — Definitions. As used in this subpart: (1) “Actuarial equivalence” means that the amounts produce the same lump sum based on the 1983 Group Annuity Mortality Table with five percent (5%) interest; and (2) “Interest…

24 CAR § 20-101. Description of the board — Method of operation — Methods for public access to the information — Election of chair. (a)(1) The Arkansas Fire and Police Pension Review Board was established by Acts 1983, No. 381. (2) Its legal charge is to enforce: (A) Arkansas law…

24 CAR § 20-1010. Reporting requirements. (a) The financial and member information required to be reported annually will be supplemented by a detailed listing of each member currently on DROP and the amount of their DROP account as of the end of the current reporting period. (b) …

24 CAR § 20-1011. Ten-year DROP. (a)(1) The duration of participation in the DROP may be extended to a maximum of ten (10) years. (2) This extension must apply to all active members and be approved by the local pension board. (3) The extension must also be approved by a majority …

24 CAR § 20-1012. Continued employment after DROP. (a) Acts 2003, No. 1372, allows the sponsoring municipality and the local pension board to agree to allow participants to work after the conclusion of the DROP period, whether it is five (5) years or ten (10) years. (b) The parti…

24 CAR § 20-102. Actuarial cost studies for legislative proposals. The Executive Director of the Arkansas Fire and Police Pension Review Board will not pay for actuarial costing of proposed legislation without prior approval of the Arkansas Fire and Police Pension Review Board.…

24 CAR § 20-103. Actuarial cost studies for depository insurance recoveries. Local plans will be responsible for charges incurred for actuarial services required to recover pension fund assets from depository insurance corporations.

24 CAR § 20-1101. Asset valuation method generally. (a)(1) Acts 1999, No. 1293, amended Arkansas Code § 24-11-207. (2) This act states that the assets will be valued on the asset valuation method determined by the Arkansas Fire and Police Pension Review Board in consultation with…

24 CAR § 20-1102. Actuarial value of assets. The value of assets determined by the method defined by this subpart will be called the actuarial value of the assets.

24 CAR § 20-1103. Book value of assets. (a) The book value of assets will be the cost value of the asset, that is, the amount paid for the asset. (b) If the asset has an amortized cost basis, such as a bond, the book value of the asset will be the amortized cost basis.…

24 CAR § 20-1104. Local plans with over $5,000,000 book value. (a) Local plans with a book value of assets equal to or greater than five million dollars ($5,000,000) will use the method in this section to determine the actuarial value of assets. (b) This method is a five-year smo…

24 CAR § 20-1105. Local plans with less than $5,000,000 book value. The actuarial value of assets for local plans with less than five million dollars ($5,000,000) of book value of assets will be the book value as defined in this subpart.

24 CAR § 20-1106. Effective dates. (a) This asset valuation method will be used for all calculations made as of December 31, 1999, and later. (b) The first actuarial valuation using this method will be the January 1, 2000, valuation. (c) The DROP interest rate for 1999 based on D…

24 CAR § 20-1201. Premium tax turnback allocation. (a) Arkansas Code § 24-11-101 et seq., as amended by Acts 2011, No. 979, affects the allocation of premium taxes that are to be turned back to qualified locations to defray a portion of the employer contributions to the local pla…

24 CAR § 20-1202. Definitions. As used in this subpart: (1)(A) “Actuarial cost for local plans” means the basis for the allocation of premium tax as provided in Arkansas Code § 24-11-214(b)(2). (B) The actuarial cost for local plans is calculated using the base benefits of the lo…

24 CAR § 20-1203. Allocation report. (a) The actuary for the Arkansas Fire and Police Pension Review Board will present an allocation report to the board by June 15 of each year. (b) This report will show the distribution of the entire Firemen’s and Police Officers’ Pension and R…

24 CAR § 20-1204. Noncomplying locations — Corrections. (a)(1) A noncomplying location will be able to correct any issues of noncompliance and be approved for an allocation of premium taxes after the date of the allocation report. (2) The process to effect this correction is as f…

24 CAR § 20-1205. Changes in location status. (a)(1) The Executive Director of the Arkansas Fire and Police Pension Review Board may add new qualified locations by December 15 of each year. (2) A certified location continues in the allocation formula with the same area and popula…

24 CAR § 20-1206. Overlapping locations. (a) There may be situations where locations certify maps where part of the area in those maps overlap. (b) The locations and Arkansas Forestry Commission will be notified of the overlap. (c) The locations are encouraged to work together wi…

24 CAR § 20-1207. Division of a location’s premium tax between local plan and the system. (a)(1) The premium tax allocated to a location is to be used for the location’s local fire or police pension and relief fund and Arkansas Local Police and Fire Retirement System. (2) This di…

24 CAR § 20-1208. Transition period 2012 – 2015 allocations. (a) Acts 2011, No. 979, added Arkansas Code § 24-11-214(l) which defines the percentage of the Arkansas Local Police and Fire Retirement System-only cost that premium tax is allocated to cover. (b) This section also sta…

24 CAR § 20-1209. Payment to local plan when an excess subsidy account exists. (a) The amount calculated for each subsidy account was determined using the 1997 – 2002 premium tax distributions and costs for each local plan and the Arkansas Local Police and Fire Retirement System.…

24 CAR § 20-1210. Additional allocation. (a)(1) As provided in Arkansas Code § 24-11-217, beginning with the 2012 allocation, local plans meeting eligibility requirements will receive an additional allocation. (2) The additional allocation is calculated so that no local plan will…

24 CAR § 20-1301. Minimum asset management standards generally. Acts 2007, No. 851, codified as Arkansas Code § 24-11-216, establishes minimum asset management standards for local plans subject to the jurisdiction of the Arkansas Fire and Police Pension Review Board and directs t…

24 CAR § 20-1302. Definitions. As used in this subpart: (1)(A) “Actuarially sound” is defined in 24 CAR § 20-401 et seq. (2) If a local plan is considered actuarially sound by virtue of a cash flow projection valuation or alternate cash flow projection valuation as defined in tha…

24 CAR § 20-1303. Verification of legally constituted board and meetings. (a) Along with the annual financial report required to be filed with the Arkansas Fire and Police Pension Review Board, the local plan must include verification by the chairperson of the local board of trus…

24 CAR § 20-1304. Written investment policy. (a)(1) If the Arkansas Fire and Police Pension Review Board determines that a local plan does not meet the minimum asset management standards as required by law, it will notify the local plan and sponsoring municipality of its determin…

24 CAR § 20-1305. Professional investment management. (a)(1) If the Arkansas Fire and Police Pension Review Board determines that a local plan does not meet the minimum asset management standards as required by law, it will notify the local plan and sponsoring municipality of its…

24 CAR § 20-1306. Written plan of action. (a)(1) If a local plan does not meet the minimum asset management standards and then does not create a written investment policy and hire professional investment management within six (6) months of notification, then they must file a writ…

24 CAR § 20-1307. Noncompliance. (a)(1) If the local plan does not meet the minimum asset management standards, it must create a written investment policy and hire professional investment management. (2) The Arkansas Fire and Police Pension Review Board will consider the local pl…

24 CAR § 20-1308. Appeal process. (a) A local plan that is out of compliance with this law may appeal the findings of staff used to reach that decision to the entire Arkansas Fire and Police Pension Review Board at its next regularly scheduled or specially called meeting. (b) If …

24 CAR § 20-201. Procedure for increasing benefits from local plans generally. (a)(1) There are two (2) methods by which a local plan may increase benefits to its members. (2) The first is by legislation which mandates an increase. (3) The second is by securing an actuarial valua…

24 CAR § 20-301. Annual disclosures of the financial activities of local plans generally. (a) Pursuant to Acts 1979, No. 700, as amended, each local plan is required annually to compile a financial report of the local plan. (b) These annual financial reports must be filed with th…

24 CAR § 20-401. Definition of actuarial soundness generally. (a) Under law, the financial objectives of the local plans shall be to establish and receive contributions which: (1) Will remain approximately level from year to year; and (2) Will not have to be increased for future …

24 CAR § 20-402. Conditions to become actuarially sound. A local plan that is designated as actuarially sound must meet one (1) of the following conditions: (1) The contribution test and the short condition test; (2) The contribution test and the funded percentage test; (3) Cash …

24 CAR § 20-403. Contribution test. (a) The contributions made to the local plan must be equal to or more than the actuarially computed contributions to pay for the local plan’s proposed total benefits. (b) Such computed contributions shall consist of the following items: (1) Nor…

24 CAR § 20-404. Short condition test. The local plan’s current assets (cash and investments) must be sufficient to cover: (1) Active member contributions on deposit; (2) The proposed total liabilities for future benefits to present retired lives and inactive members; and (3)(A) …

24 CAR § 20-405. Funded percentage test. (a) The local plan’s current assets (cash and investments) must be sufficient to cover a portion of the proposed total liabilities of all participants of the local plan. (b) The portion is defined in the table below. Testing Dates as ofDec…

24 CAR § 20-406. Cash flow projection valuation. (a) If the local plan has fifty (50) or more participants, the local plan may show actuarial soundness using a cash flow projection valuation. (b) This valuation will project the assets, future income, and future benefit obligation…

24 CAR § 20-407. Alternate cash flow projection valuation. (a)(1) If a local plan has less than fifty (50) participants, the local plan may show actuarial soundness using an alternate cash flow projection valuation as defined in this section. (2) This valuation will project the a…

24 CAR § 20-501. Benefit levels and annual financial disclosure generally. Pursuant to law, the Arkansas Fire and Police Pension Review Board is required to withhold premium tax turnback to local plans and their sponsoring locations, as described in 24 CAR § 20-1201 et seq., that…

24 CAR § 20-502. For benefit payments that are too low. (a)(1) Arkansas Fire and Police Pension Review Board staff shall notify the local plan in writing of its noncompliance and shall inform the local board of the proper benefit levels to be paid. (2) Staff will ask the local bo…