The Arkansas Public Employees Retirement System (APERS), formerly the Arkansas State Employees Retirement System, was established by the General Assembly in 1957 as a multi-employer defined benefit retirement plan for State of Arkansas employees. From 1957 through 1965, county employers (via Act 42 of 1959), municipal employers (via Act 64 of 1961), college and university employers (via Act 149 of 1963), and non-teaching public school employers (via Act 63 of 1965), all joined the System.
Any member joining the System prior to January 1, 1978 was required to contribute a percentage of his or her salary to the System. However, effective January 1, 1978, new members were not required to contribute to the System; only the employer contributed. At that time, all contributory members of the System were given an opportunity to remain contributory or they could choose to be non-contributory.
Act 653 of 1989 required that all newly hired public school employees be enrolled in the Arkansas Teacher Retirement System (ATRS). The School Division then became a closed plan.
In 2005, the 86th General Assembly provided for the establishment of a new contributory provision for the System. Therefore, effective July 1, 2005, all new members of the System would be enrolled as contributory members and would be required to contribute 5% of their salary into the System. Current members of the System were given the option to remain non-contributory or choose to be a contributory member of the System.
Effective July 1, 2007, the Arkansas District Judges Retirement System (ADJRS) was transferred to APERS by Act 177 of the 2007 Arkansas Legislature. ADJRS was treated as a closed system and as a result of the change was recorded as one of APERS’ “divisions.” District judges entering the System after July 1, 2007 are treated as APERS employees and fall under the same benefits as APERS employees.
Prior to January 1, 2012, when a member began participation in the DROP or retired (and then was rehired), the employer didn’t pay matching on those individual’s salaries. Act 558 of 2011, effective January 1, 2012, amended Arkansas Code §24-4-402 to provide that employers in APERS must make contributions for both active and retired members who have returned to work in an eligible APERS covered position. Act 558 amended Arkansas Code §24-4-802 regarding participation in the APERS Deferred Retirement Option Plan (DROP) to state that when a member begins participation in the DROP employee contributions to the System cease but that employer contributions on behalf of the member shall continue.
The Arkansas Public Employees Retirement System (APERS) has developed into a mature system that continues to satisfy the general financial objective of level contribution financing. As of June 30, 2013, the assets of the System remained healthy at $6.4 billion. The APERS investment program has seen rates of return that range from (20.89)% (for fiscal year 2009) to 26.00% (for fiscal year 2011). The investment of these assets is allocated among numerous investment managers that invest in domestic equities, domestic fixed income, international equities and alternative investments (i.e. timber, real estate).
Based on our most recent actuarial valuation, the financial position of the System remains strong at 74.3%.
From inception until 1985, the investment of the trust fund was governed by Arkansas statutes that provided a permissible list of investments. In 1985, Act 412 repealed the permissible list of investments and enacted the prudent investor rule. It also allowed the establishment of a custodial bank relationship. The act stated that the System shall seek to invest at least five percent, but no more than ten percent of the System’s portfolio in Arkansas related investments, but, only when consistent with the fiduciary requirements of the trustees. In 1989, Act 302 allowed the System to employ multiple discretionary money managers as appropriate. In 1997, Act 1194 revised and updated the investment policies and rules, including the prudent investor rule.
Act 1242 of 2009 merged the investable assets of the Arkansas State Police Retirement System (ASPRS) with those of APERS while granting all investment authority to the APERS Board of Trustees. The reporting schedules contained herein reflect the respective values allocated to each pension plan.
Retirement Benefit Program
Prior to July 1, 1991, a member could only receive a full month of service credit. Act 757 of 1991 provided for fractional service credit for members who work less than 80 hours per month.
Act 1143 of 1997 required adherence by retirement systems to Qualified Domestic Relation Orders (QDROs). Also, during the 1997 Legislative Session, reciprocity was established. With the establishment of reciprocity, service rendered to other state-authorized retirement systems could be recognized for vesting in conjunction with service rendered to APERS.
Enhancements to the monthly retirement annuity have included ad hoc increases for retirees and increases in the multipliers for active and deferred (non-retired) members as well as a reduction in the years utilized to calculate the final average salary.
Act 975 of 1991 changed the final average salary (FAS) used in the calculation of retirement benefits from five (5) years to four (4) years.
Act 104 of 1999 allowed members to retire with an unreduced benefit with 28 years actual service. Act 1137 of 1997 set the way for the FAS to be set at three (3) years.
Act 1356 of 1995.Effective July 1, 1997, the vesting requirements changed from ten (10) years to five (5) years for all active and future members of the System except for certain General Assembly members who must have ten (10) years of service to vest.
Prior to July 1, 1999 if you were retired from another state sponsored retirement system and worked in a position covered by APERS and met the eligibility requirements, you couldn’t receive service credit in APERS. That changed, effective July 1, 1999, when a retired member of another state-sponsored retirement system, who worked in a position covered by APERS and met the eligibility requirements, could be reported to APERS.
With changes in the retirement world, APERS has experienced the implementation of other retirement options that include a Deferred Retirement Option Plan (DROP) and a Partial Annuity Withdrawal (PAW).
Act 295 of 2009, which went into effect in March 2009, broadened members’ ability to purchase retirement credit for time served in the military or armed forces reserves. Vested members who are either eligible for or currently receiving military retirement benefits may purchase up to, but not more than, five (5) years of service in APERS. Similarly vested members may purchase up to five (5) years of armed forces reserve time in the system. Act 295 also invoked the federal protections afforded by the Uniformed Services Employment and Reemployment Rights Act (USERRA) for APERS members called to active duty.
The 2011 legislative session brought about the following changes in addition to those previously discussed:
Act 38, effective February 16, 2011, states that when an APERS DROP participant’s participation ceases that member is not eligible for employment in any position covered by any authorized state retirement plan.
Act 563, effective July 1, 2011, amended Arkansas Code §24-4-521 to restrict the amount of credited service earned by a local non-contributory elected public official to one (1) year of retirement credit for every year worked unless additional contributions are provided.
Act 774, effective March 30, 2011, extends the termination period required for retirement purposes of
individuals who receive at least two-for-one service credit under APERS to one year.
The 2013 legislative session also brought a number of changes that included:
Act 332, effective March 14, 2013, states under Section 3 – “Public Safety (police officer or firefighter)”
employees that were hired prior to July 1, 1997 are eligible to receive multiple service credit. This Section
clarifies that “police officer” does not include a person who has not satisfied the training requirements to be a police officer established by the Arkansas Commission on Law Enforcement Standards and Training under ACA 12-9-106. ACA 24-4-101(34)(A)
Section 6 – A retirant shall not begin receiving annuity payments until all requirements for terminating qualified employment are satisfied.
Section 8 – Requires a participating public employer to promptly provide all information
requested concerning the status of an employee to the System.
Section 9 – The disability annuity shall be effective the first day of the calendar month following
APERS approval of the disability application and are not retroactive. ACA 24-4-511(a)(2)
Section 12 – A non-contributory APERS member can convert to the contributory provisions at any time. The effective date of the member’s contributory coverage shall be the first payroll period that is paid and reported in the next month after the contributory election is made and provided to APERS. This provision is prospective only and is irrevocable.
Act 288, effective January 1, 2014, states a contributory elected position covered by APERS on or after
January 1, 2014, shall be credited as service at two (2) times the regular rate for crediting purposes, and the employee shall contribute an additional two and one-half percent (2.5%) of the gross payroll, and the employer shall contribute an additional two and one-half percent (2.5%) of the gross payroll for the additional service that exceeds the regular rate of service.
Act 378, effective July 1, 2013, amended ACA 14-14-1320(a)(2) by requiring any county elected officer who
resigns during a term of office shall be ineligible for appointment to any county elective office during the term for which he or she resigned.