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Arizona Retirement System


Arizona state and local employees should feel confident about the quality of the state’s retirement system, as well as each of its subcategories. It also boasts a simple set of retirement systems that are particularly inclusive. This makes it extremely easy to differentiate between plans and understand the benefits for which you’ll be eligible. Retirement planning includes many factors, though, and many financial advisors have experience dealing with these situations. SmartAsset’s financial advisor matching tool can pair you with up to three advisors who serve your area.

Arizona Retirement System: Varieties

The pensions that await public employees is one of the best perks of the job. Beyond this, you could find yourself eligible to receive long-term disability benefits, health insurance, survivor benefits and other advantages for retirement. In some cases, tiers dictate what you’re eligible to receive. As a result, make sure you know where you stand within these systems.

Arizona Retirement Systems

Plan TitleEligible Employees
Arizona State Retirement System (ASRS)– Teachers at public schools/universities
– Employees of Arizona’s various political subdivisions (counties, cities, towns, commissions and authorities of the state)
Public Safety Personnel Retirement System (PSPRS)– Police officers and firefighters of cities, agencies and districts of Arizona
Corrections Officer Retirement Plan (CORP)– Detention, correction and probation employees of cities, agencies and districts of Arizona
Elected Officials’ Retirement Plan (EORP)– Elected officials, judges of the court of appeals and superior court, commissioners and justices of the supreme court of Arizona

Arizona’s Retirement System Overview

Arizona Retirement System

Arizona State Retirement System: The ASRS is a defined benefit plan. That means that the pension contributions of you and your employer are outlined by law. Participants of this plan can choose from seven different retirement payment options, depending on if they want a beneficiary or not. Also, if you need it, you could be eligible for supplemental health insurance and benefits for long-term disability.

Public Safety Personnel Retirement System: Members can choose to receive various types of retirement plans within the PSPRS, but the decision comes down to when you were hired. If you fall under Tier 1 or 2, you are forced into a defined benefit plan, whereas Tier 3 members can also take part in a defined contribution plan. Benefits include disability pension, health insurance, survivor benefits and entry into the Public Safety Cancer Insurance Policy program (CIP).

  • Tier 1: Hired prior to 1/1/2012
  • Tier 2: Hired on or after 1/1/2012
  • Tier 3: Hired on or after 7/1/2017

Corrections Officer Retirement Plan: The three membership tiers of this program determine how your retirement distributions are calculated. Variables include your age, average salary, service credit and other factors. The benefits offered by this plan are very similar to the two systems above, with health insurance, disability and survivor benefits headlining.

  • Tier 1: Hired prior to 1/1/2012
  • Tier 2: Hired on or after 1/1/2012
  • Tier 3: Hired on or after 7/1/2018

Elected Officials’ Retirement Plan: Tier 3 members must pay into the Elected Officials’ Defined Contribution (DC) Retirement System (EODCRS), whereas the Defined Benefit plan is reserved for Tier 1 and 2 participants. While you will receive standard perks for retirement as part of this system, it does come with a higher probability for plan upgrades, such as cost of living adjustments.

  • Tier 1: Newly appointed or elected prior to 1/1/2012
  • Tier 2: Newly appointed or elected on or after 1/1/2012
  • Tier 3: Newly appointed or elected on or after 7/1/2014

Retirement Taxes in Arizona


The vast majority of funds that go into a pension plan are tax-deferred. This means that they bypass the federal income tax, saving you money in the short-term. But you can’t evade the tax man forever. In other words, the income tax will apply once you begin taking payments from your account in retirement. In order to take care of these taxes, you may have them taken out in either traditional withholdings or as quarterly estimated tax payments.

If you won’t need your retirement distributions when they begin coming, you can try rolling them over into one of your existing retirement accounts. These could be in the form of an individual retirement account (IRA) or a 401(k). However, this will only delay the inevitable, as once those funds make their way out of that secondary account, the income tax will apply.

Roth IRAs use the opposite strategy, though. For these, you pay when you make the rollover, with the expectation that the majority of your payments down the road will be tax-free.


Arizona treats your retirement income from a pension the exact same as if it was a paycheck from your past job. Therefore your tax rates will not change. Make sure you take advantage of the $2,500 deduction, though. But if you’re moving from another state to retire in Arizona, you cannot use this deduction.

Arizona Retirement System Current Financial Health

Arizona Retirement System

Arizona’s retirement system is in good health. The plan is currently valued at $50 billion and has a 10-year rate of return of 8.9%. It is currently 71.5% funded, meaning it has enough money to pay out around $0.72 for every dollar it owes.

Tips for a Successful Retirement

  • Figuring out your monthly budget ahead of actually retiring can take much of the stress out of the transition. The general rule is to have 80% of your pre-retirement income for retirement. But allocating your assets intelligently can help you get by with less.
  • Do you have questions about building a retirement plan? A financial advisor can help with this. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

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