2005 Arizona Revised Statutes - Revised Statutes §38-895  Maximum annual pensions

A. The maximum annual pension, financed by other than accumulated member contributions, payable by the retirement plan shall not exceed the lesser of ninety thousand dollars or one hundred per cent of the member's average annual compensation for the highest three consecutive calendar years of compensation while an active member of the retirement plan.

B. The limitations of subsection A are subject to the following conditions:

1. The maximum annual pension applies to a single life pension which is the actuarial equivalent of the pension paid by the plan.

2. If payment begins before the date the payee attains sixty-two years of age, the maximum annual pension is reduced to the actuarial equivalent of the annual maximum at sixty-two years of age. The actuarial equivalent maximum shall not be less than seventy-five thousand dollars if payment commences on or after the date the payee attains fifty-five years of age. If payment commences before the date the payee attains fifty-five years of age, the actuarial equivalent maximum shall be computed from seventy-five thousand dollars payable at fifty-five years of age.

3. If payment commences after the date the payee attains sixty-five years of age, the ninety thousand dollar maximum shall be increased to the actuarial equivalent of ninety thousand dollars payable at sixty-five years of age.

4. If the member has less than ten years of credited service, the applicable maximum shall be multiplied by a fraction of which the numerator is the member's credited service and the denominator is ten.

5. The maximums of ninety thousand dollars and seventy-five thousand dollars shall be increased as permitted by law to reflect cost of living increases.

6. Actuarial equivalents shall be computed using an interest rate of five per cent a year, compounded yearly, and the 1971 group annuity mortality table.

C. Notwithstanding the provisions of subsection A, the pension payable by the plan may be reduced to the extent necessary, as determined by the plan, to prevent disqualification of the plan under section 415 of the internal revenue code which imposes additional limitations on the pension payable to members who also participate in other qualified pension, profit sharing, savings or stock bonus plans of this state. The plan shall advise affected members of any additional limitation of their pension required by this subsection.