SB 1340 Summary

• Amends Arizona Revised Statutes to establish the Arizona State Defined Contribution Retirement System as the mandatory retirement program for all state and political subdivision employees hired on or after January 1, 2012, replacing the existing defined benefit system (ASRS) for new hires.

• Requires employees to contribute 0-15% of gross compensation annually to individual annuity accounts, with employers matching contributions up to 5% of employee compensation.

• Provides vesting schedules for employer contributions: 6 years of service earns one-third of employer contributions, 9 years earns two-thirds, and 12 years earns 100% of employer contributions.

• Allows members to retire and receive distributions at age 55 or later through various payout options including lump sums, joint and survivor annuities, and variable annuities funded solely from existing account balances.

• Permits existing ASRS members to voluntarily elect membership in the defined contribution system, either freezing existing benefits or withdrawing contributions to transfer to the new system.