AZ SB1609

Establishes separate benefit structures and contribution rates for members hired before and after January 1, 2012 across three retirement systems: elected officials' retirement plan, public safety personnel retirement system, and corrections officer retirement plan.

Increases member contribution rates for existing members (before January 1, 2012) with phased increases through fiscal year 2013-2014, and higher rates for newly hired members starting January 1, 2012.

Modifies pension calculation formulas and retirement eligibility requirements for members hired on or after January 1, 2012, including longer service requirements (25-25.5 years) and lower benefit accrual rates (2.5-3 percent versus 4 percent).

Adds provisions allowing retired members who return to work to continue receiving pension payments while employers pay reduced "alternate contribution rates" to fund unfunded liabilities rather than normal costs.

Modifies benefit increase formulas to suspend cost-of-living adjustments when fund funding ratios fall below 70-80 percent, based on the ratio of market value of assets to actuarial accrued liability.