How Arizona State Retirement Works

Kelly Hernandez
A retired man reading a book in a pool deck chair.

The Arizona State Retirement System (ASRS) was designed to ensure public and state workers contribute to a retirement savings plan so they can eventually stop working and live comfortably. The ASRS includes several pension plans that state employees qualify for depending on their occupation. Many of these pension plans also include different retirement payout options so workers may choose how they receive their retirement benefits.

ASRS retirement plans are organized by tier and employees are eligible for different tiers based on their employment start date. If you’re preparing for retirement, it’s important to understand the pension plan that applies to your occupation and which tier you’re eligible for.

Other factors, such as retirement income taxes and how long you worked for the state affect how much you’ll receive in benefits when you retire. By learning how your pension plan works, it may be easier for you to decide how you want to save for retirement.

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Arizona State Retirement Types

If you’re a state employee or considering a role with the state, review the benefits associated with the role. The ASRS includes several types of retirement plans so the one that applies to you depends on the position you accept. These plans vary by the percentage of pay you must contribute, how pension benefits are distributed, and the types of employees eligible to participate.

Arizona State Retirement System (ASRS)

The Arizona State Retirement System (ASRS) covers most state employees, including:

  • Public school and university teachers;
  • County employees;
  • City workers;
  • Town employees;
  • Workers employed by state commissions or authorities.

When you accept a job as a state worker, you’re enrolled in the ASRS. Upon enrollment, you have several choices that affect the way your retirement benefits are paid out when you stop working. There are seven different ASRS plan options to choose from and some allow you to choose a beneficiary while others do not. With certain ASRS choices, you may also receive long-term disability benefits and supplemental health insurance.

As of July 1, 2019, state employees were required to contribute 12.11% of their pay to their ASRS. This minimum contribution is set to increase to 12.22% on July 1, 2020. The percentage of your pay that goes to your ASRS funds your retirement pension, health insurance benefits, and long-term disability income plan.

Public Safety Personnel Retirement System (PSPRS)

Firefighters and police officers who work for cities, districts, and agencies in Arizona participate in the Public Safety Personnel Retirement System (PSPRS). In addition to retirement pension, this system also includes health insurance, survivor benefits, pension for disability, and enrollment in the Public Safety Cancer Insurance Policy program (CIP). The CIP assists public safety workers with medical care costs related to cancer treatments.

Public safety employees are enrolled in the PSPRS in one of three tiers depending on their start date. These tiers are as follows:

  • Tier 1: Began work before January 1, 2012;
  • Tier 2: Began work on or after January 1, 2012;
  • Tier 3: Began work on or after July 1, 2018.

The tier you fall in determines the age at which you may retire and receive full pension benefits. The amount of your pension benefits is determined by your retirement age, the time you were employed without changing jobs, and your average monthly salary while you were working.

Corrections Officer Retirement Plan (CORP)

As a correction, probation, or detention officer for a city, agency, or district in Arizona, you qualify for the Corrections Officer Retirement Plan (CORP). The benefits provided through this plan are the same as the PSPRS. Similar to the PSPRS, you fall into a tier within the program that’s determined by your start date. The start dates that correspond to the three tiers in CORP are the same as the dates and tiers in the PSPRS.

Your tier determines the percentage of your paycheck you must contribute to participate in CORP. The type of occupation you have also determines your minimum contribution. Non-dispatcher employees are usually required to contribute a higher percentage of pay to the plan than dispatcher employees.

When you retire and you’re eligible to receive pension benefits through CORP, your retirement benefit amount is determined by the tier you’re in and your average monthly salary you earned. Once you choose a retirement date, your first pension payment becomes effective the first day of the following month.

Elected Officials’ Retirement Plan (EORP)

The Elected Officials’ Retirement Plan (EORP) is reserved for elected officials who are required to participate in the retirement savings program. Officials who must participate in EORP include the following:

  • Judges who serve on the court of appeals or superior court;
  • Officials who were elected by Arizona voters;
  • Commissioners or justices who serve on the state’s supreme court.

The plan utilizes a three-tier system to determine contributions and distributions of benefits. The tier that applies to you depends on when you began to serve your term and are as follows:

  • Tier 1: Began serving before January 1, 2012;
  • Tier 2: Began serving on or after January 1, 2012;
  • Tier 3: Began serving on or after January 1, 2014.

Tier 3 members are required to contribute to the Elected Officials Defined Contribution (DC) Retirement System (EODCRS).

The tier you’re in determines the age at which you may retire and receive full benefits through EORP. Your benefit eligibility is determined by a Board of Trustees who are individually appointed by the state governor. In some cases, cost of living adjustments are taken into account when pension benefits are calculated.

Arizona Benefit Tier List

The tier list is an important part of any Arizona retirement plan because it determines how much you must contribute to your plan and your pension distribution amount. The tier you fall into is determined by the date you began employment with the state and the type of retirement plan you participate in.

Arizona Retirement System Annuity

When you begin a job as a state employee in Arizona and enroll in your ASRS plan, you have several options, including how you want your benefits to be paid out when you retire. One of the most basic options is a straight-life annuity, which pays the highest monthly retirement benefit. However, you can’t name a beneficiary to receive benefits if you pass away.

There are other options you may choose that pay out lower monthly benefits but allow you to choose a beneficiary. You may also choose a term-certain annuity, which ensures you’ll receive benefits for the term, usually 10 or 15 years. A term-certain annuity with a longer term generates lower monthly benefit payments but may provide a higher payout throughout the life of the annuity.

Retirement Taxes in Arizona

If you’re counting on your retirement benefits, it’s important to review the Arizona state taxes and federal taxes you may need to pay when you begin receiving these monthly payments.


When you withdraw funds from your retirement benefits or begin receiving pension plan payments, you must pay federal income taxes on what you receive. It’s important to factor in the taxes you may be required to pay when planning your retirement age and budget.


Arizona is not a state that doesn’t impose taxes on retirement funds. If you receive retirement benefits that total more than $2,500 for the year, you must pay state income taxes on these benefits. You may choose to withhold quarterly estimated taxes from your pension plan benefit distributions, which may make it easier to create a realistic retirement budget.

Financial Health of the Arizona State Retirement System

The ASRS has a 72.3% funded status and expects to be fully funded in a total of 27 years. When the ASRS is fully funded, it means the system has the financial backing to provide retirement benefits to all workers who have paid into it. It shows a 9.7% rate of return since its inception and over 608,150 state workers currently contribute to the system.

Arizona State Retirement Benefits Estimate

You can use the online ASRS retirement benefits estimate tool to figure out approximately how much your pension plan will pay out each month when you retire. This tool assists you when planning your retirement age by giving you an idea of the income you’ll receive from the system.

Tips for Retirement

Preparing for Retirement

  • Create a strict budget so you can start saving now.
  • Diversify your retirement plan to include several different investments.
  • Consider your retirement savings untouchable and off-limits.
  • Pay off your debts, including credit card balances and loans.

During Retirement

  • Eliminate unnecessary expenses, such as cable streaming services or eating out frequently.
  • Be sure you understand your health insurance coverage and remain prepared for out-of-pocket medical expenses.
  • Stay out of debt by paying off credit card balances and not applying for loans.
  • Consider taking on a part-time job or side gig for extra spending money.

As an Arizona state employee, you contribute to a pension plan that helps you save for retirement. It’s important to review the plan you’re eligible for, the tier you qualify for, your projected retirement age, and the choices you’ve made for benefit distribution. These factors affect how much pension you’ll receive each month after you retire.

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