Clarification on Senate Bill 572

Applies to Employees Switching from the ARP Defined Contribution Plan to the ERB Regular Defined Benefit Plan

At its September 11, 2009 meeting, the ERB took action to clarify the ARP legislation recently enacted as SB 572. Senate Bill 572 provides that any participant who has made contributions to the Alternative Retirement Plan (ARP) for a cumulative total of seven years or more, will have a one-time option of electing to switch to the ERB regular defined benefit plan. Action taken at the ERB's September 11 meeting allows ARP service to be counted toward satisfying the current ERB regular defined benefit plan "25 Year/Rule of 75" retirement requirements.

Example: An employee who contributed to the ARP for 15 years, switches to the ERB regular defined benefit plan, and participates in the ERB regular defined benefit plan for 10 years. The employee may use the total of 25 years to qualify to retire. The contributions to the ARP remain in the ARP (invested with the ARP vendors), and the employees ERB calculations will use the high five-year average salary for the 10 years he or she contributed to the ERB regular defined benefit plan to determine his or her retirement benefit.

This example illustrates that an employee will still have to participate in the Defined Benefit plan for a minimum of 5 years (vesting requirement), and the employee may not purchase service for time that he or she participated in the ARP.

For questions, additional information, or to confirm how these changes may impact your retirement benefits, please contact the local ERB office at (505) 888-1560.

- 09.16.09
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