Plan cuts retirement age for Arkansas State Police

Hutchinson deems it recruitment aid

In this file photo Gov. Asa Hutchinson speaks at the Arkansas Rural Economic Development Conference at the Hot Springs Convention Center.
In this file photo Gov. Asa Hutchinson speaks at the Arkansas Rural Economic Development Conference at the Hot Springs Convention Center.

Gov. Asa Hutchinson said he wants lawmakers to reduce the time Arkansas State Police troopers must serve in order to retire, from 30 years to 28 years, as a way to improve recruitment.

Commissioned troopers are members of the Arkansas State Police Retirement System, which has two tiers of members.

System members hired before April 3, 1997, belong to the system's tier 1 retirement plan, while those hired on or after that date belong to the tier 2 retirement plan.

Hutchinson's proposal to reduce the service requirement would apply to tier 2 plan members, said Hutchinson spokeswoman Katie Beck. That change is not needed for tier 1 plan members because they receive 1.5 years of service for every year served, she said.

The tier 2 plan's working members total 457 with an average age of 38.3, average service of 9.8 years and an average salary of $58,002 a year, said Duncan Baird, who heads the Arkansas State Police Retirement System.

The tier 1 plan has 25 working members with an average age of 51.1, average service of 23 years and an average salary of $81,436 a year.

Any system member with 30 years of actual service can retire at any age to receive retirement benefits from the system under state law, he said.

A member who has more than five years of service, but less than 30 years of actual service, can retire at age 65, he said. The age 65 requirement is reduced by 0.75 of a month for each month of actual service, but in no event younger than 55, Baird said.

AFFORDABLE PLAN

In an interview, Hutchinson was asked about the cost of reducing the service requirement to 28 years, which he said "we can handle with our retirement funds."

Hutchinson said some people contend the service requirement should be reduced further, to 25 years of service.

"But the funding is not there in the retirement system," he said. "Hopefully, eventually we can go down further."

State Rep. Les Warren, R-Hot Springs, said he plans to introduce legislation this week to reduce the tier 2 service requirement to 28 years.

Most of the state's other retirement plans allow their members to retire after 28 years of service, he said, and most of Arkansas' surrounding states allow their state troopers to retire after 25 years of service.

Warren said he will seek an analysis of the cost of reducing the service requirement.

"We are not going to compromise the integrity of the plan by taking a huge jump," he said.

Warren is a co-chairman of the Legislature's Joint Committee on Public Retirement and Social Security Programs.

TASK FORCE STUDY

Hutchinson's Task Force to Advance the State of Law Enforcement, formed last year, recommended that actuarial studies be conducted on all applicable retirement systems to determine the cost and feasibility of reducing actual service for law enforcement officers to take retirement to no more than 25 years.

"There is a wide consensus out there and a growing call that we lower all law enforcement to 25 [years]," said Sen. Jason Rapert, R-Conway.

"What we hope is that we are going to look and study, even in this session, is there a way forward to get to 25 for all concerned," he said.

"But we absolutely must get the state police at least to 28 years and parity with the rest of law enforcement agencies, so ... that's for all intent and purposes, the governor's bill, which I support," he said.

Rapert said he is a part of a coalition of lawmakers who voted to create a Back the Blue Caucus. He said he expects the caucus to support the bills resulting from the governor's task force, as well as other measures to help law enforcement.

The governor's task force said the actuarial studies conducted should include separating law enforcement officers from civilian employers in the Arkansas Public Employees Retirement System.

Retirement packages pertaining to law enforcement officers are available at the State Police Retirement System, Arkansas Public Employees Retirement System, and Arkansas Local Police and Fire Retirement System, according to the task force.

Law enforcement officers employed by counties or some state agencies fall under the Public Employees Retirement System, while law enforcement officers employed by cities are members of the Local Police and Fire Retirement System, the task force found.

The task force also recommended that actuarial studies be conducted on the retirement systems to determine the cost and feasibility of providing the equivalent of full benefits to officers who retire because of work-related injuries.

It also also recommended that law enforcement agencies provide long-term disability insurance for all officers.

The task force recommended exempting from state income tax the first 50% of retirement benefits received by an officer from an individual account or from public or private employment-related retirement systems, plans or programs.

SYSTEM FINANCIALS

The State Police Retirement System's investments -- which are managed as part of the Public Employees Retirement System's portfolio -- totaled $327.6 million as of June 30, said Baird.

The target rate of return for both systems is 7.15% a year, and their average rate of return has been 9.16% a year over the past 10 years, he said.

The system's unfunded liabilities total $121 million with a projected pay-off period of 19 years, he said. Actuaries often compare the projected pay-off period for unfunded liabilities to a mortgage on a house.

The State Police System's employer contribution to the tier 2 plan is $5.2 million a year and to the tier 1 plan is $1.9 million a year, according to Baird.

The employer's supplemental contributions and other funding sources, including court fees and insurance premium taxes, are $14.6 million a year, Baird said. The system's members don't contribute part of their salary because the plan is noncontributory, he said.

The rate of reduction for early retirement is one-half of 1% for each month the employee retires before the full benefit age of 65, Baird said. The multiplier used for determining tier 2 retirement benefits is 2.475%, he said.

In fiscal 2020 that ended June 30, the system had 33 new age and service retirees and deferred retirement plan participants in the two tiers with an average age of 55.4, average service of 21.6 years and an average pension of $4,106 a month, he said. (Baird said the system's actuary didn't provide information on average pensions for tier 1 and tier 2 members separately.)

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