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State workers to see drop in pension rate
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State employees and other government workers who participate in the Arizona State Retirement System will get a tiny relief to their contribution rate next July.
The board that makes decisions on contributions voted late last month to lower the total contribution rate for the 2009-10 year by .05 percent. The drop comes after a .15 percent drop for the 2008-09 fiscal year.
State employees await changes to retirement plan
Employees and their employers will each contribute 9.4 percent of each paycheck to the pension plan. This year, they are each contributing 9.45 percent.
Though the pension and health insurance portion of the contribution rate rose slightly because of investment performances in the last 10 years, a drop in the rate for the long-term disability plan brought about the decrease.
"We feel pretty good it was able to, overall, go down just a bit," said David Cannella, spokesman for the Arizona State Retirement System. "It makes it a little bit easier for the employer participants to do their budgeting."
The formula for contributions looks at the average of 10 years of returns on the $20 billion fund. The current 10-year average return is 5.5 percent.
The rates are averaged over a 10-year period to keep large investment swings - such as Monday's drop of nearly 8 percent - from affecting the pension contribution rate greatly from one year to the next.
Thousands of city, state and school employees participate in the state pension plan.
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