H.B. 36

1

RETIREMENT OFFICE AMENDMENTS
2 2001 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: Ron Bigelow
5 This act modifies the Utah State Retirement Act to amend definitions, h service credit
5a purchases, h contribution transfers,
6 post retirement limitations, employer obligations, beneficiary payments, alternate payee
7 benefits, the administrative hearing process, h membership exclusions, h and firefighter
7a disability benefit provisions.
8 This act has an immediate effective date.
9 This act affects sections of Utah Code Annotated 1953 as follows:
10 AMENDS:
10a h 49-1-407, as enacted by Chapter 202, Laws of Utah 1996 h
11 49-1-502, as last amended by Chapter 285, Laws of Utah 1990
12 49-1-505, as last amended by Chapter 283, Laws of Utah 2000
13 49-1-601, as last amended by Chapter 197, Laws of Utah 1995
14 49-1-606, as last amended by Chapter 283, Laws of Utah 2000
15 49-1-609, as last amended by Chapter 283, Laws of Utah 2000
16 49-1-610, as last amended by Chapter 226, Laws of Utah 1993
17 49-2-103, as last amended by Chapter 292, Laws of Utah 1999
18 49-3-103, as last amended by Chapter 292, Laws of Utah 1999
18a h 49-3-206, as last amended by Chapters 202 and 262, Laws of Utah 1998 h
19 49-3-410, as last amended by Chapters 83 and 328, Laws of Utah 1999
20 49-4-704, as last amended by Chapter 31, Laws of Utah 1997
21 49-4a-704, as last amended by Chapter 31, Laws of Utah 1997
22 49-5-502, as last amended by Chapter 267, Laws of Utah 1998
23 49-5-704, as last amended by Chapter 31, Laws of Utah 1997
24 Be it enacted by the Legislature of the state of Utah:

24a h Section 1. Section 49-1-407 is amended to read:
24b 49-1-407. Member with public service not otherwise qualifying for benefit may purchase
24c credit.
24d (1) A member may purchase service credit equal to the member's service in the following:
24e (a) federal employment;
24f (b) private school employment;
24g (c) public employment in this or another state that does not qualify for service credit under a
24h system administered by the board;
24i (d) employment in a university or a public school system if the
24j member is on a leave of absence for reasons relating to employment; [or]
24k (e) forfeited public service in this state if the member does not qualify for a retirement benefit
24l for that service[.]; OR
24m (f) THE PERIOD OF TIME FOR WHICH DISABILITY BENEFITS WERE PAID IF:
24n (i) THE MEMBER WAS RECEIVING:
24o (A) LONG-TERM DISABILITY BENEFITS;
24p (B) SHORT-TERM DISABILITY BENEFITS; OR
24q (C) WORKER'S COMPENSATION DISABILITY BENEFITS; AND
24r (ii) THE MEMBER'S EMPLOYER HAD NOT ENTERED INTO A BENEFIT PROTECTION
24s CONTRACT PURSUANT TO SECTION 49-1-404 DURING THE PERIOD THE MEMBER WAS DISABLED
24t DUE TO SICKNESS OR ACCIDENT.
24u (2) To purchase credit, the member shall pay an amount fixed by the administrator that is
24v established on an actuarial equivalent basis.
24w (3) The purchase may be made through payroll deductions or through a lump-sum deposit.
24x (4) The employer may make the purchase on behalf of the member.
24y (5) Total payment must be completed prior to retirement or service will be prorated in
24z accordance with the amount paid. h
25 Section h [ 1. ] 2. h Section 49-1-502 is amended to read:
26 49-1-502. Refunds of vested contributions -- Transfers of contributions.
27 (1) If a member shall for any cause, except retirement, permanent or temporary disability,

28 or death, cease to be employed in covered services for an employer then the member may:
29 (a) By signing a written request, affirming therein that the member has neither applied for,
30 nor contemplates further employment with a covered unit, and directing the request to the
31 retirement office, receive a refund of all accumulated contributions, less a withdrawal fee the
32 amount of which the board shall establish by rule for the purpose of reimbursing its administrative
33 fund for the cost entailed by the withdrawal. Notwithstanding the written request, if a member
34 who has requested a refund accepts employment with another covered unit within the 60-day
35 period, the member shall inform the retirement office immediately. In the event of this election,
36 a terminating employee, upon later reemployment by an employer under this title, unless the
37 employee redeposits the refund as permitted by this section, shall be treated as a new employee and
38 the employee's service history and benefit rights shall then be based upon current services from the
39 date of reemployment in covered services.
40 (b) Leave the member's account in the fund intact. In the event of this election, a
41 terminating employee shall retain status as a member of the system, except for the lack of
42 contributions paid into the fund by the member or on the member's behalf. In the event of
43 reemployment by an employer for services covered by this title, the employee's service history and
44 benefit rights shall be based upon the service credit accredited to the employee at the time of the
45 employee's most recent termination of employment, as well as upon the current service credit that
46 is acquired as the result of reemployment.
47 (2) Upon the attainment of retirement age, an inactive member has the same rights to
48 retirement benefits, if so eligible, as any active employee member.
49 (3) Refunds of vested contributions may not be made prior to 60 days from the last day the
50 contributions were made, and only upon the termination of the member.
51 (4) No refund may be made to an active member of any retirement system administered
52 by the board. Contributions made in error will be returned to the employing unit.
53 (5) Members who are exempted from a retirement system administered by the board but
54 who remain employed by a covered unit may request a plan-to-plan transfer of vested, untaxed
55 employee contributions to a salary deferral plan administered by the board, as permitted by federal
56 law.
57 (6) An employee, who is no longer a member of a retirement system administered by the
58 board because the employee's employing unit withdrew from the retirement systems under this

59 title, may request a plan transfer of vested employee contributions to a plan offered by the
60 employer that is qualified to receive the transfer under federal law.
61 Section 2. Section 49-1-505 is amended to read:
62 49-1-505. Reemployment of a retired member of a system administered by the board.
63 The following laws govern the reemployment of a member of any system administered by
64 the board who has retired from any agency and who returns to work at that agency after retirement.
65 A member of any system administered by the board who has retired from any agency and who
66 returns to work for a private employer or at a different agency from which the member retired is
67 not subject to any reemployment restrictions under this section, except as provided in Subsection
68 (4).
69 (1) (a) (i) If a member of any system administered by the board retires from any agency
70 and is reemployed within a six month period by the agency from which the member retired,
71 including exempt positions, but excluding part-time or full-time elected officials, the employer
72 shall immediately notify the administrator.
73 (ii) If the member has full-time employment and is not subject to Subsection (1)(b), the
74 administrator shall cancel the member's retirement allowance and reinstate the member to active
75 member status.
76 (iii) This cancellation of retirement and reinstatement to active status is effective on the
77 first day of the month following the date of reemployment.
78 (iv) If a member's retirement allowance is cancelled and the member is reinstated to active
79 member status pursuant to this subsection, the member may not retire again with a recalculated
80 benefit for a two-year period from the date of cancellation of the original retirement. If the
81 member retires again within the two-year period, the original retirement benefit shall be resumed.
82 (v) A reinstated member shall be credited with the service credits standing to the member's
83 account at the time of the first retirement and from that time shall be treated as a member of the
84 system in all respects, including the accrual of additional service credits but subject to recalculation
85 of the retirement allowance under Subsection (4).
86 (b) (i) If the member is reemployed on a part-time basis or is not an elected official and
87 is otherwise subject to Section 49-4-205 , 49-4a-206 , or 49-5-204 , that member or employee may
88 earn, without penalty, compensation from that position or employment which is not in excess of
89 the exempt earnings permitted by Social Security.

90 (ii) If a member or an employee receives compensation in a calendar year in excess of the
91 limitation, 25% of the retirement allowance shall be suspended.
92 (iii) The effective date of a suspension and reinstatement of an allowance shall be set by
93 the administrator.
94 (iv) Any suspension of a member's retirement allowance pursuant to Subsection (1)(b)(ii)
95 shall be calculated on a calendar year basis.
96 (2) The member and employer shall maintain an accurate record of gross earnings in
97 employment after retirement, shall report the gross earnings on a monthly basis to the retirement
98 office, and shall immediately notify the administrator in writing of any postretirement earnings
99 under Subsection (1)(a) and whether postretirement earnings equal or exceed the exempt earnings
100 under Subsection (1)(b).
101 (3) If a member is reinstated to active service and subsequently retires after the two-year
102 period as provided in Subsection (1)(a)(iv), the member's retirement allowance shall be calculated
103 using:
104 (a) the formula in effect at the date of the member's original retirement for all service prior
105 to that date; and
106 (b) the formula in effect at the date of the subsequent retirement for all service rendered
107 between the first and the subsequent retirement dates.
108 (4) (a) A member who has retired from any agency and who returns to work at that agency
109 or a different agency from which the member retired may not accrue any additional service credit,
110 except that a member who cancels the retirement allowance under Subsection (1) may earn
111 additional service credit.
112 (b) If a member may not accrue additional service credit under Subsection (4)(a), then the
113 member's employer shall contribute the same percentage of the member's salary h THAT WOULD
113a HAVE BEEN CONTRIBUTED IF THE MEMBER WERE A MEMBER OF THE RETIREMENT SYSTEM h
113b to a h :
113c (i) h defined
114 contribution plan administered by the board h [ that would have been contributed if the member were
115 a member of the retirement system ] IF THE EMPLOYER PARTICIPATES IN THE DEFINED
115a CONTRIBUTION PLAN ADMINISTERED BY THE BOARD; OR
115b (ii) DEFINED CONTRIBUTION PLAN OFFERED BY THE EMPLOYER IF THE EMPLOYER DOES
115c NOT PARTICIPATE IN THE DEFINED CONTRIBUTION PLAN ADMINISTERED BY THE BOARD h .
116 (5) For the purposes of this section:
117 (a) "full-time" employment means employment of 20 or more hours per week; and
118 (b) "part-time" employment means employment [contemplated as less than full-time by
119 the employer at the time of hire] of less than 20 hours per week.
120 (6) The board may make rules to implement this section.

121 Section 3. Section 49-1-601 is amended to read:
122 49-1-601. Payment of employer contributions, fees, and premium taxes -- Failure to
123 comply -- Interest added -- Adjustments to be made.
124 (1) The employer contributions, fees, and premium taxes shall be paid to the fund by the
125 participating employer in accordance with rules adopted by the board.
126 (2) Any employing unit that fails to withhold the amount of any employee contributions
127 is required to pay the contribution, together with any employer contribution, fee, or premium tax,
128 to the fund, if necessary, out of its own funds.
129 (3) (a) If an employing unit does not make the payments required by this title as the
130 payments become due, there is added as part of the amounts due, except for corrections in the
131 amounts of contributions, fees, and premium taxes arising out of error in computation, interest
132 established under this title.
133 (b) The board may waive all or any part of the interest if the board finds there were
134 extenuating circumstances surrounding any delinquencies.
135 (4) If more or less than the correct amount of contributions, fees, and premium taxes
136 required by this title is deducted with respect to any payment of compensation, the employer shall
137 make the necessary adjustment with or without interest as required by the board.
138 Section 4. Section 49-1-606 is amended to read:
139 49-1-606. Beneficiary designations -- Revocation of beneficiary designation --
140 Procedure -- Beneficiary not designated -- Payment to survivors in order established under
141 the Uniform Probate Code -- Restrictions on payment -- Payment of deceased's expenses.
142 (1) The beneficiary designation in a member's file at the retirement office at the time of
143 the member's death is binding in the payment of any benefits due under this title.
144 (2) A member may revoke a designation of beneficiary at any time and may file a different
145 beneficiary designation by executing and filing with the retirement office a written beneficiary
146 designation on forms provided by the retirement office, except where an optional continuing plan
147 is chosen, or the law makes a specific benefit designation to a dependent spouse, in which case the
148 beneficiary designation may not be revoked.
149 (3) If no beneficiary is designated, all benefits payable from the retirement system[,
150 including retirement benefits accrued but not received prior to death,] may be paid or applied to
151 the benefit of the surviving next of kin of the deceased in the order of precedence established under

152 Title 75, Chapter 2, Intestate Succession and Wills.
153 (4) No payment may be made to persons included in any of these groups if at the date of
154 payment there are living persons in any of the groups preceding it. Payment to the persons in any
155 group based upon receipt from those persons of an affidavit in a form satisfactory to the
156 administrator that:
157 (a) there are no living individuals in the group preceding it;
158 (b) that the probate of the estate of the deceased has not been commenced; and
159 (c) that more than three months have elapsed since the date of death of the decedent, shall
160 be in full satisfaction and discharge of all claims for benefits under this title and payable by reason
161 of the death of the decedent.
162 (5) If the location of the nominated beneficiary cannot be ascertained or if the nominated
163 beneficiary is the estate of the deceased person, the administrator may pay the costs of the
164 deceased's last illness, convalescent care, and funeral expenses directly to the undertaking
165 establishment, hospital, doctor, or convalescent home which provided the service. The
166 administrator shall require verified statements of the charges before making partial or full payment.
167 The payment shall discharge the obligation of the system and of the fund up to the amount paid.
168 Section 5. Section 49-1-609 is amended to read:
169 49-1-609. Nonassignability of benefits or payments -- Exemption from legal process
170 -- Deduction of amounts owned.
171 (1) Except as provided in Subsection (4), the right of any member or beneficiary to any
172 benefit, payment, or any other right accrued or accruing to any person under this title and the assets
173 of the fund created by this title are not subject to alienation or assignment by the member or
174 beneficiary and are not subject to attachment, execution, garnishment, or any other legal or
175 equitable process.
176 (2) This section may not be construed to prohibit the administrator from deducting medical
177 or other insurance premiums from a retirant's allowance as requested by the retirant providing that
178 any request is within limitations and rules prescribed by the board.
179 (3) (a) Notwithstanding Subsection (1), the retirement board shall provide for the division
180 of a member's service retirement allowance, continuing monthly death benefit, or refund of
181 contributions upon termination to former spouses and family members pursuant to an order of a
182 court of competent jurisdiction with respect to domestic relations matters on file with the

183 retirement office.
184 (b) The court order shall specify the manner in which the retirement allowance or refund
185 of contributions shall be partitioned, whether as a fixed amount or as a percentage of the benefit.
186 (c) The board may also provide for the division of a member's defined contribution
187 account.
188 (d) Once benefit payments under a domestic relations order begin, the period for which
189 the payment shall be made may not be altered.
190 (e) Benefit payments to an alternate payee shall begin at the time the member or
191 beneficiary begins receiving benefit payments.
192 (f) The alternate payee shall receive benefits in the same form as benefits are received by
193 the member.
194 [(d)] (g) The board shall make rules to implement this section.
195 (4) In accordance with federal law, the board may deduct the required amount from any
196 benefit, payment, or other right accrued or accruing to any member of a system, plan, or program
197 under this title to offset any amount that member owes to a system, plan, or program administered
198 by the board.
199 Section 6. Section 49-1-610 is amended to read:
200 49-1-610. Right of appeal to hearing officer -- Council review of hearings -- Further
201 board review -- Rules of procedure applied -- Judicial review.
202 (1) (a) All members of a system, plan, or program under this title shall acquaint themselves
203 with their rights and obligations as members.
204 (b) A member shall request a ruling by the administrator on any benefit claim or legal right
205 under this title.
206 (c) Any person who is dissatisfied by a ruling of the administrator with respect to any
207 benefit claim or legal right under any system, plan, or program under this title shall request a
208 review of that claim by a hearing officer.
209 (d) The hearing officer shall:
210 (i) be hired by the executive director after consultation and review with the membership
211 council; and
212 (ii) follow the procedures and requirements of Title 63, Chapter 46b, Administrative
213 Procedures Act.

214 (2) (a) (i) The hearing officer shall hear and determine all facts pertaining to applications
215 for benefits under any retirement system, plan, or program under this title and all matters
216 pertaining to the administration of the system.
217 (ii) The membership council may examine the record of the hearing, provide a
218 recommendation to the board, and recommend any necessary changes in retirement policy or
219 procedure to the Legislature.
220 (b) (i) If the executive officer of the board cannot determine from the records or other
221 information available the length of service, compensation, or age of any member, the executive
222 officer may estimate, for the purpose of any determination required to be made, any of these
223 factors.
224 (ii) The board shall review all decisions of the hearing officer.
225 (3) The moving party in any proceeding brought under this section shall bear the burden
226 of proof.
227 [(3)] (4) Any applicant may file an application for reconsideration according to the
228 procedures and requirements of Title 63, Chapter 46b, Administrative Procedures Act, upon any
229 of the following grounds:
230 (a) that the board acted in excess of its powers;
231 (b) that the order or award was procured by fraud;
232 (c) that the evidence does not justify the determination of the board; or
233 (d) that the applicant has discovered new material evidence that could not, with reasonable
234 diligence, have been discovered or procured at the hearing.
235 [(4)] (5) A member aggrieved by the board's decision may obtain judicial review by
236 complying with the procedures and requirements of Title 63, Chapter 46b, Administrative
237 Procedures Act.
238 Section 7. Section 49-2-103 is amended to read:
239 49-2-103. Definitions.
240 As used in this chapter:
241 (1) "Appointive officer" means an employee appointed to a position for a definite and
242 fixed term of office by official and duly recorded action of the governing body of an employing
243 unit who earns $500 or more per month over a 12-month period adjusted annually by the Bureau
244 of Labor Statistics Consumer Price Index.

245 (2) (a) "Compensation," "salary," or "wages" means the total amount of payments made
246 by an employer to an employee for services rendered to the employer, including:
247 (i) bonuses;
248 (ii) cost-of-living adjustments;
249 (iii) other payments currently includable in gross income and that are subject to Social
250 Security deductions, including any payments in excess of the maximum amount subject to
251 deduction under Social Security law; and
252 (iv) amounts that the employee authorizes to be deducted or reduced for salary deferral or
253 other benefit programs authorized by federal law.
254 (b) "Compensation" for purposes of this chapter may not exceed the amount allowed under
255 Internal Revenue Code Section 401(a)(17).
256 (c) "Compensation," "salary," or "wages" does not include:
257 (i) the monetary value of remuneration paid in kind, such as a residence or use of
258 equipment;
259 (ii) all contributions made by an employer under any plan for the benefit of a participant;
260 (iii) salary paid to an employee working under the minimum number of hours required for
261 membership;
262 (iv) salary paid to a temporary or exempt employee;
263 (v) any payments upon termination, including accumulated vacation, sick leave payments,
264 or any other special payments; or
265 (vi) uniform, travel, or similar allowances.
266 (3) "Educational institution" means a political subdivision or instrumentality of the state
267 or a combination thereof primarily engaged in educational activities or the administration or
268 servicing of educational activities, including:
269 (a) the State Board of Education and its instrumentalities;
270 (b) any institution of higher learning and its branches;
271 (c) any school district and its instrumentalities;
272 (d) any vocational and technical school; and
273 (e) any entity arising out of a consolidation agreement between entities under this
274 definition.
275 (4) (a) "Employee" or "regular employee" means any regular full-time employee whose

276 term of employment for an employer contemplates continued employment during a calendar or
277 school year and who performs covered service for one or more employers.
278 (b) "Employee" or "regular employee" means an officer, elective or appointive, who
279 receives as compensation from an employer $500 or more per month over a 12-month period
280 adjusted annually by the Bureau of Labor Statistics Consumer Price Index.
281 (5) "Employer" or "employing unit" means any department, educational institution,
282 political subdivision, or organization or agency financed in whole or in part by public funds for
283 which any employee or member performs services subject to this chapter.
284 (6) "Final average salary" means the amount computed by averaging the highest five years
285 of annual compensation preceding retirement subject to Subsections (6)(a), (b), (c), and (d).
286 (a) Except as provided in Subsection (6)(b), the percentage increase in annual
287 compensation in any one of the years used may not exceed the previous year's salary by more than
288 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power of the dollar
289 during the previous year, as measured by the Consumer Price Index prepared by the United States
290 Bureau of Labor Statistics.
291 (b) In cases where the employing unit provides acceptable documentation to the board, the
292 limitation in Subsection (6)(a) may be exceeded if:
293 (i) the member has transferred from another employing unit; or
294 (ii) the member has been promoted to a new position.
295 (c) If the member retires more than six months from the date of termination of employment
296 and for purposes of computing the member's final average salary only, the member is considered
297 to have been in service at the member's last salary rate from the date of the termination of
298 employment to the date retirement becomes effective if the member so requests.
299 (d) If participating service is less than five years, final average salary means the average
300 annual compensation paid to the member during the full period of participating service.
301 (7) "Normal retirement age" means the age of 65 years.
302 (8) "Organization or agency financed in whole or in part by public funds" means an
303 agency, association, or organization that receives public funds. The term does not include political
304 subdivisions, departments, or educational institutions.
305 (9) "Public funds" means those funds derived, either directly or indirectly, from public
306 taxes or public revenue, dues or contributions paid or donated by the membership of the

307 organization, used to finance an activity whose objective is to improve, on a nonprofit basis, the
308 governmental, educational, and social programs and systems of the state or its political
309 subdivisions.
310 (10) (a) "Regular full-time employee," in qualifying for membership and accrual of service
311 credit under this system, means an employee whose employment normally requires an average of
312 20 hours or more per week, except as modified by the board, and who receives benefits normally
313 provided by the employing unit.
314 (b) "Regular full-time employee" includes:
315 (i) a teacher who teaches half-time or more, or a classified school employee who works
316 an average of 20 hours per week or more, regardless of benefits provided[.]; and
317 (ii) an individual who otherwise meets the definition of this Subsection (10) who performs
318 services for a participating employer through an employee leasing or similar arrangement.
319 (11) "Years of service" or "service years" means:
320 (a) the number of periods, each to consist of 12 full months as determined by the board;
321 (b) a period determined by the board, whether consecutive or not, during which an
322 employee performed services for an employer or employers, including any time the employee
323 rendered service in the armed forces of the United States before membership in the system or was
324 absent on a paid leave of absence granted by an employer or absent in the service of the United
325 States government on military duty as provided by this chapter; or
326 (c) for a teacher, school administrator, or other contract employee of an educational
327 institution, not less than eight months of full-time service constitutes a service year.
328 Section 8. Section 49-3-103 is amended to read:
329 49-3-103. Definitions.
330 As used in this chapter:
331 (1) "Appointive officer" means an employee appointed to a position for a definite and
332 fixed term of office by official and duly recorded action of the governing body of an employing
333 unit and who earns $500 or more per month over a 12-month period adjusted by the Bureau of
334 Labor Statistics Consumer Price Index.
335 (2) (a) "Compensation," "salary," or "wages" means the total amount of payments made
336 by an employer to an employee for services rendered to the employer, including:
337 (i) bonuses;

338 (ii) cost-of-living adjustments;
339 (iii) other payments currently includable in gross income and that are subject to Social
340 Security deductions, including any payments in excess of the maximum amount subject to
341 deduction under Social Security law; and
342 (iv) amounts that the employee authorizes to be deducted or reduced for salary deferral or
343 other benefit programs authorized by federal law.
344 (b) "Compensation" for purposes of this chapter may not exceed the amount allowed under
345 Internal Revenue Code Section 401(a)(17).
346 (c) "Compensation," "salary," or "wages" does not include:
347 (i) the monetary value of remuneration paid in kind, such as a residence or use of
348 equipment;
349 (ii) all contributions made by an employer under any plan for the benefit of a participant;
350 (iii) salary paid to an employee working under the minimum number of hours required for
351 membership;
352 (iv) salary paid to a temporary or exempt employee;
353 (v) any payments upon termination, including accumulated lump-sum vacation, sick leave
354 payments, or any other special payments; or
355 (vi) uniform, travel, or similar allowances.
356 (3) "Educational institution" means a political subdivision or instrumentality of the state
357 or a combination thereof primarily engaged in educational activities or the administration or
358 servicing of educational activities, including:
359 (a) the State Board of Education and its instrumentalities;
360 (b) any institution of higher learning and its branches;
361 (c) any school district and its instrumentalities;
362 (d) any vocational and technical school; and
363 (e) any entity arising out of a consolidation agreement between entities under this
364 definition.
365 (4) "Effective date" of the noncontributory system means 12:01 a.m., July 1, 1986.
366 (5) (a) "Employee" or "regular employee" means any regular full-time employee whose
367 term of employment for an employer contemplates continued employment during a calendar or
368 school year and who performs covered service for one or more employers.

369 (b) "Employee" or "regular employee" means an officer, elective or appointive, who
370 receives as compensation from an employer $500 or more per month over a 12-month period
371 adjusted by the Bureau of Labor Statistics Consumer Price Index.
372 (6) "Employer" or "employing unit" means any department, educational institution,
373 political subdivision, or eligible organization, or agency financed in whole or in part by public
374 funds for which any employee or member performs services subject to this chapter.
375 (7) "Final average salary" means the amount computed by averaging the highest three years
376 of annual compensation preceding retirement subject to Subsections (7)(a), (b), and (c).
377 (a) Except as provided in Subsection (7)(b), the percentage increase in annual
378 compensation in any one of the years used may not exceed the previous year's salary by more than
379 10% plus a cost-of-living adjustment equal to the decrease in the purchasing power of the dollar
380 during the previous year, as measured by the Consumer Price Index prepared by the United States
381 Bureau of Labor Statistics.
382 (b) In cases where the employing unit provides acceptable documentation to the board, the
383 limitation in Subsection (a) may be exceeded if:
384 (i) the member has transferred from another employing unit; or
385 (ii) the member has been promoted to a new position.
386 (c) If the member retires more than six months from the date of termination of employment
387 and for purposes of computing the member's final average salary only, the member is considered
388 to have been in service at his last salary rate from the date of the termination of employment to the
389 date retirement becomes effective if the member so requests.
390 (8) "Normal retirement age" means the age of 65 years.
391 (9) "Organization or agency financed in whole or in part by public funds" means an
392 agency, association, or organization that receives public funds. The term does not include political
393 subdivisions, departments, or educational institutions.
394 (10) "Public funds" means those funds derived, either directly or indirectly, from public
395 taxes or public revenue, dues, or contributions paid or donated by the membership of the
396 organization used to finance an activity whose objective is to improve, on a nonprofit basis, the
397 governmental, educational, and social programs and systems of the state or its political
398 subdivisions.
399 (11) (a) "Regular full-time employee," in qualifying for membership and accrual of service

400 credit under this system, means an employee whose employment normally requires an average of
401 20 hours or more per week, except as modified by the board, and who receives benefits normally
402 provided by the employing unit.
403 (b) "Regular full-time employee" includes:
404 (i) a teacher who teaches half-time or more or a classified school employee who works an
405 average of 20 hours per week or more, regardless of benefits provided[.]; and
406 (ii) an individual who otherwise meets the definition of this Subsection (11) who performs
407 services for a participating employer through an employee leasing or similar arrangement.
408 (12) "Years of service" or "service years" means:
409 (a) the number of periods, each to consist of 12 full months as determined by the board;
410 (b) a period determined by the board, whether consecutive or not, during which an
411 employee performed services for an employer or employers, including any time the employee
412 rendered service in the armed forces of the United States before membership in the system or was
413 absent on a paid leave of absence granted by an employer or absent in the service of the United
414 States government on military duty as provided by this chapter; or
415 (c) for a teacher, school administrator, or other contract employee of an educational
416 institution, not less than eight months of full-time service constitutes a service year.
416a h Section 9. Section 49-3-206 is amended to read:
416b 49-3-206. Exclusions from membership in system.
416c The following employees are excluded from membership in the retirement system:
416d (1) Every employee whose employment status is temporary in nature due to the nature or the
416e type of work to be performed. If the term of employment exceeds six months, then for that employee
416f a regular full-time status shall be assumed, and the employee shall be enrolled in the system effective
416g the beginning of the seventh month of employment. If the same employee, previously terminated
416h prior to enrollment as a member, is again employed within three months of termination by the same
416i employer, the employee shall be immediately enrolled as a member if the work constitutes full-time as
416j defined in this chapter.
416k (2) Full-time students or the spouse of a full-time student and persons employed in a trainee
416l relationship may be excluded from coverage by rules adopted by the board.
416m (3) Every current or future employee of a two-year or four-year college or university who
416n holds, or is entitled to hold, pursuant to Section 49-2-206, a retirement annuity contract with the
416o Teachers' Insurance and Annuity Association of America or with any other public or private system,
416p organization, or company during any period in which that employee has received contributions
416q toward the premiums required on compensation from the employing unit. The employee, upon
416r cessation of the employer contributions, shall immediately become a contributing member.
416s (4) Every employee serving as an exchange employee from outside the state.
416t (5) Elected officials who file a formal request for exemption. h

416u h (6) Executive department heads of the state h OR LEGISLATIVE DIRECTORS h , senior
416v executives employed by the governor's office, members of the State Tax Commission, the Public
416w Service Commission, the State Olympic Officer, and other members of full-time or part-time boards or
416x commissions who file a formal request to be excluded from coverage.
416y (7) (a) Employees of the Department of Employment Security who are covered under another
416z retirement system allowed under Title 35A, Chapter 4, Employment Security Act; or
416aa (b) employees of the Department of Workforce Services who were covered under Subsection
416ab (7)(a) and who are covered under another retirement system allowed under Title 35A, Chapter 4,
416ac Employment Security Act.
416ad (8) Persons appointed as city managers or chief city administrators or other persons
416ae employed by a city, town, county, or other political subdivision, who are not entitled to merit or civil
416af service protection. Persons eligible for exclusion under this subsection shall file a formal request for
416ag exclusion from coverage and be employed in a position designated as exempt under an employee
416ah exemption plan developed by the city, town, county, or political subdivision. Employee exemption
416ai plans shall be subject to the following limitations:
416aj (a) The total number of positions a city, town, county, or political subdivision may exempt
416ak may not exceed the lesser of 30 positions or a number equal to 10% of the employees of the city,
416al town, county, or political subdivision. However, every city, town, county, or political subdivision is
416am entitled to a minimum exemption of one eligible employee.
416an (b) Employee exemption plans shall be filed annually with the retirement office, and the city,
416ao town, county, or political subdivision shall update the exemption plan in the event of any change.
416ap (c) The retirement office may promulgate rules to implement this section. h
417 Section h [ 9. ] 10. h Section 49-3-410 is amended to read:
418 49-3-410. Purchase of retirement credit -- Conditions -- Cost.
419 (1) Any member of this system may receive retirement service credit in accordance with
420 Subsection (2).
421 (2) (a) A member may purchase or a member and an employing unit may jointly purchase
422 a combined maximum total of five years of retirement service credit which is not otherwise
423 purchasable under this chapter.
424 (b) The number of years of retirement service credit purchased may exceed the number of
425 years or age required by the member to retire with no actuarial reduction.
426 (c) The purchase of retirement service credit must allow the member to meet the retirement
427 eligibility requirements of this system with no actuarial reduction.
428 (d) The member must retire effective immediately after the purchase of retirement service
429 credit is made.
430 (e) The member shall pay at least 5% of the cost of the purchase.

431 (3) The purchase price for the retirement service credit shall be calculated and paid for as
432 provided in Section 49-1-407 .
433 (4) (a) The employing unit may elect to purchase retirement service credit for a member
434 under Subsection (2) while the member is on an unpaid leave of absence.
435 (b) If the member is on an unpaid leave of absence, the employing unit may make
436 installment payments towards the purchase in amounts fixed by the administrator.
437 (c) The member shall retire when the purchase obligations are fulfilled.
438 (5) [(a)] A member who retires after the employer purchases retirement service credit
439 under this section [may not be reemployed by the employing unit from which the member retired]
440 shall be subject to the provisions of Section 49-1-505 .
441 [(b) Subsection (5)(a) does not apply to a member if the member does not earn
442 compensation in excess of the exempt earnings permitted by Social Security.]
443 (6) Prior to making any purchase of service credit under this section, an employing unit
444 shall adopt a purchase policy that includes nondiscriminatory participation standards for all
445 employees.
446 Section 10. Section 49-4-704 is amended to read:
447 49-4-704. Death of retired member -- Benefits.
448 (1) [Except as provided in Subsection (3), if] If the member retired under Division A or
449 Division B, the death benefit payable to the dependent spouse after the death of the retired member
450 of this system is a monthly amount equal to 65% of the allowance that was being paid to the retired
451 member at the time of death.
452 (2) (a) [Except as provided in Subsection (3), if] If the member retired solely under
453 Division B or dies leaving dependent children, the children shall qualify for a benefit as prescribed
454 for children under Section 49-4-702 , with the total being paid as limited by that section.
455 (b) The effective date of accrual of this pension is on the first day of the month following
456 the month in which the retirant died.
457 (c) [Except as provided in Subsection (3), payment] Payment of the full pension for this
458 latter month shall be made to the dependent beneficiary in lieu of the deceased member.
459 [(3) (a) In the event of a court order complying with Section 49-1-609 , a former spouse
460 of a retired member is entitled to the court designated share of the retired member's monthly
461 retirement benefit and the same percentage share of the spouse's death benefit.]

462 [(b) This subsection supersedes conflicting subsections of this section.]
463 Section 11. Section 49-4a-704 is amended to read:
464 49-4a-704. Death of retired member -- Benefits.
465 (1) [Except as provided in Subsection (3), if] If the member retired under Division A or
466 Division B, the death benefit payable to the dependent spouse after the death of the retired member
467 of this system is a monthly amount equal to 65% of the allowance that was being paid to the retired
468 member at the time of death.
469 (2) (a) [Except as provided in Subsection (3), if] If the member retired solely under
470 Division B or dies leaving dependent children, the children shall qualify for a benefit as prescribed
471 for children under Section 49-4a-702 , with the total being paid as limited by that section.
472 (b) The effective date of accrual of this pension is on the first day of the month following
473 the month in which the retirant died.
474 (c) [Except as provided in Subsection (3), payment] Payment of the full pension for this
475 latter month shall be made to the dependent beneficiary in lieu of the deceased member.
476 [(3) (a) In the event of a court order complying with Section 49-1-609 , a former spouse
477 of a retired member is entitled to a court designated share of the retired member's monthly
478 retirement benefit and the same percentage share of the spouse's death benefit.]
479 [(b) This subsection supersedes conflicting subsections of this section.]
480 Section 12. Section 49-5-502 is amended to read:
481 49-5-502. Disability retirement -- Disability allowance eligibility -- Conversion to
482 service retirement -- Examinations -- Reemployment.
483 The following rules apply to all members applying for disability retirement under this part:
484 (1) Any member who applies and is qualified for disability retirement shall receive a
485 disability allowance until the earlier of:
486 (a) the date the member is no longer disabled h [ from performing firefighter duties ] h ;
487 [(a)] (b) the date the member has accumulated 20 years of service credit, including years
488 earned while disabled; or
489 [(b)] (c) the member has received disability benefits for the following time periods:
490 (i) if the member is under age 60, the disability allowance is payable until age 65;
491 (ii) if the member is 60-61, the disability allowance is payable for five years;
492 (iii) if the member is 62-63, the disability allowance is payable for four years;

493 (iv) if the member is 64-65, the disability allowance is payable for three years;
494 (v) if the member is 66-68, the disability allowance is payable for two years; and
495 (vi) if the member is age 69 or older, the disability benefit is payable for one year.
496 (2) (a) The member shall receive service credit in this system during the period of
497 disability. However, if the member is employed by a participating employer during the period of
498 disability, the member may not receive service credit for that employment.
499 (b) The disability retirement shall be converted to a service retirement at the time the
500 disability benefits terminate.
501 (3) The board shall approve or disapprove applications for disability retirement based upon
502 both:
503 (a) the evaluation and recommendations of one or more physicians along with medical
504 records relating to the disability which may, at the board's option, be reviewed by an independent
505 medical examiner selected by the board, to the effect that the member is mentally or physically
506 totally disabled; and
507 (b) receipt of proof by the board from the employer that the member has become totally
508 disabled.
509 (4) Any disability retirant who regains health and is regularly employed shall have the
510 disability allowance reduced or suspended as the retirant's earnings justify.
511 (5) (a) Members receiving benefits under this section shall, upon request of the
512 administrator, submit to a medical examination by one or more physicians as directed by the board.
513 (b) If the member resides outside the state and is requested to submit to an examination,
514 the member shall be examined under the same rules in the area in which the member resides.
515 (c) If, after an examination, the examiners report that the retirant is physically able and
516 capable of resuming employment, the retirant shall be reinstated at the retirant's former
517 classification and rank, and disability benefits terminate.
518 (d) Examinations may not be required more than once every year.
519 (e) A retirant who returns to employment [of] with a participating employer in this system
520 shall immediately commence accruing service credit that shall be added to that credit that has been
521 accrued by virtue of previous service, including service credited while disabled.
522 (6) Retired members are not subject to medical examinations after reaching age 55.
523 (7) Refusal or neglect to submit to an examination is sufficient cause for suspension or

524 discontinuance of benefits and if the refusal or neglect continues for one year, the member's rights
525 to all benefits may be revoked by the board.
526 (8) Retirants who receive benefits under this part shall file a sworn statement with the
527 retirement office on or before January 15 of each year for the first five years a retirant receives
528 benefits. The sworn statement shall indicate whether or not the retirant engaged in any gainful
529 employment during the preceding year and, if so, the amount of earnings received during the
530 calendar year.
531 (a) If the retirant has been gainfully employed, the retirant's benefit payments shall be
532 reduced in the year following employment so that the total payments, when added to the
533 compensation received for employment, do not exceed 125% of the retirant's final average salary.
534 (b) If any retirant refuses or neglects to file a sworn statement as required, the
535 administrator may suspend payment of any and all benefits pending receipt of the statement. Upon
536 filing the statement, the retirant's payments shall be resumed.
537 (9) The disability allowance shall be improved by the annual cost-of-living increase factor
538 applied to retired members of the system that covered the employee at the time of disability.
539 (10) A line of duty disability allowance paid on or after January 1, 2002, under Subsection
540 49-5-501 (1) is exempt from taxation to the extent permitted under federal law.
541 Section 13. Section 49-5-704 is amended to read:
542 49-5-704. Death of retired member -- Benefits.
543 (1) (a) [Except as provided in Subsection (3), the] The death benefit payable to a
544 dependent spouse after death of the retirant is a monthly amount equal to 75% of the allowance
545 being paid to the retirant at the time of death.
546 (b) The effective date of accrual of this pension is the first day of the month following the
547 month the retirant died.
548 (c) [Except as provided in Subsection (3), payment] Payment of the full pension for this
549 latter month shall be made to the dependent beneficiary instead of the deceased member.
550 (2) If the member retires under Division B and dies leaving dependent children, they
551 qualify for benefits prescribed for children under Section 49-5-701 or 49-5-702 .
552 [(3) (a) In the event of a court order complying with Section 49-1-609 , a former spouse
553 of a retired member is entitled to the court designated share of the retirant's monthly retirement
554 benefit and the same percentage share of the spouse's death benefit.]

555 [(b) This subsection supersedes conflicting subsections of this section.]
556 Section 14. Effective date.
557 If approved by two-thirds of all the members elected to each house, this act takes effect
558 upon approval by the governor, or the day following the constitutional time limit of Utah
559 Constitution Article VII, Section 8, without the governor's signature, or in the case of a veto, the
560 date of veto override.




Legislative Review Note
as of 11-30-00 9:32 AM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel

Committee Note

The Quasi-Governmental Entities Committee recommended this bill.