First Substitute H.B. 83

Representative C. Brent Wallis proposes the following substitute bill:

1 PUBLIC EMPLOYEES' RETIREMENT -
2 SPOUSAL ELECTION
3 2010 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: C. Brent Wallis
6 Senate Sponsor: ____________
7
8 LONG TITLE
9 General Description:
10 This bill modifies provisions of the Utah State Retirement and Insurance Benefit Act by
11 amending election of retirement provisions.
12 Highlighted Provisions:
13 This bill:
14 . requires the Utah State Retirement Office to provide written notice to a retiree's
15 spouse of the retirement allowance option election made by the retiree under the
16 Public Employees' Contributory or Noncontributory Retirement Act if there is a
17 spouse of the retiree on file with the office;
18 . requires the Utah State Retirement Office to provide written notice to a retiree's
19 spouse of the partial lump-sum payment option made by the retiree at the time of
20 application for retirement if there is a spouse of the retiree on file with the office;
21 . provides that the Utah State Retirement Office is not required to notify a spouse on
22 file with the office if the person is no longer the retiree's spouse; and
23 . makes technical changes.
24 Monies Appropriated in this Bill:
25 None

26 Other Special Clauses:
27 None
28 Utah Code Sections Affected:
29 AMENDS:
30 49-11-1001, as enacted by Laws of Utah 2006, Chapter 305
31 49-12-402, as last amended by Laws of Utah 2007, Chapters 130 and 306
32 49-13-402, as last amended by Laws of Utah 2007, Chapter 130
33
34 Be it enacted by the Legislature of the state of Utah:
35 Section 1. Section 49-11-1001 is amended to read:
36 49-11-1001. Partial lump-sum payment option.
37 (1) (a) At the time of application for retirement, a member may elect to receive a
38 lump-sum payment of a portion of the member's retirement allowance equal to 12 or 24 months
39 of the member's allowance to be paid upon retirement.
40 (b) (i) If there is a spouse of the retiree on file with the office, the office shall provide
41 written notice to the retiree's spouse of the retirement election made by the retiree under this
42 section within 60 days of the retirement date.
43 (ii) The office is not required to notify a spouse on file with the office in accordance
44 with Subsection (1)(b)(i) if the person is no longer the retiree's spouse.
45 (2) The member's allowance shall be reduced to reflect the actuarial value of the
46 lump-sum received under Subsection (1).
47 (3) A member who has received a lump-sum payment under this section is not eligible
48 for another lump-sum payment under this section.
49 (4) The board may make rules to implement this section.
50 Section 2. Section 49-12-402 is amended to read:
51 49-12-402. Service retirement plans -- Calculation of retirement allowance --
52 Social Security limitations.
53 (1) (a) Except as provided under Section 49-12-701 , retirees of this system may choose
54 from the six retirement options described in this section.
55 (b) (i) If there is a spouse of the retiree on file with the office, the office shall provide
56 written notice to the retiree's spouse of the retirement election made by the retiree under this

57 section within 60 days of the retirement date.
58 (ii) The office is not required to notify a spouse on file with the office in accordance
59 with Subsection (1)(b)(i) if the person is no longer the retiree's spouse.
60 [(b)] (c) Options Two, Three, Four, Five, and Six are modifications of the Option One
61 calculation.
62 (2) The Option One benefit is an annual allowance calculated as follows:
63 (a) If the retiree is at least 65 years of age or has accrued at least 30 years of service
64 credit, the allowance is:
65 (i) an amount equal to 1.25% of the retiree's final average monthly salary multiplied by
66 the number of years of service credit accrued prior to July 1, 1975; plus
67 (ii) an amount equal to 2% of the retiree's final average monthly salary multiplied by
68 the number of years of service credit accrued on and after July 1, 1975.
69 (b) If the retiree is less than 65 years of age, the allowance shall be reduced 3% for
70 each year of retirement from age 60 to age 65, unless the member has 30 or more years of
71 accrued credit in which event no reduction is made to the allowance.
72 (c) (i) Years of service includes any fractions of years of service to which the retiree
73 may be entitled.
74 (ii) At the time of retirement, if a retiree's combined years of actual, not purchased,
75 service credit is within 1/10 of one year of the total years of service credit required for
76 retirement, the retiree shall be considered to have the total years of service credit required for
77 retirement.
78 (d) An Option One allowance is only payable to the member during the member's
79 lifetime.
80 (3) The allowance payable under Options Two, Three, Four, Five, and Six is calculated
81 by reducing an Option One benefit based on actuarial computations to provide the following:
82 (a) Option Two is a reduced allowance paid to and throughout the lifetime of the
83 retiree, and, if the retiree receives less in annuity payments than the amount of the retiree's
84 member contributions, the remaining balance of the retiree's member contributions shall be
85 paid in accordance with Sections 49-11-609 and 49-11-610 .
86 (b) Option Three is a reduced allowance paid to and throughout the lifetime of the
87 retiree, and, upon the death of the retiree, the same reduced allowance paid to and throughout

88 the lifetime of the retiree's lawful spouse at the time of retirement.
89 (c) Option Four is a reduced allowance paid to and throughout the lifetime of the
90 retiree, and upon the death of the retiree, an amount equal to 1/2 of the retiree's allowance paid
91 to and throughout the lifetime of the retiree's lawful spouse at the time of retirement.
92 (d) Option Five is a modification of Option Three so that if the lawful spouse at the
93 time of retirement predeceases the retiree, an allowance equivalent to the amount payable at the
94 time of initial retirement under Option One shall be paid to the retiree for the remainder of the
95 retiree's life, beginning on the last day of the month following the month in which the lawful
96 spouse dies.
97 (e) Option Six is a modification of Option Four so that if the lawful spouse at the time
98 of retirement predeceases the retiree, an allowance equivalent to the amount payable at the time
99 of initial retirement under Option One shall be paid to the retiree for the remainder of the
100 retiree's life, beginning on the last day of the month following the month in which the lawful
101 spouse dies.
102 (4) (a) (i) The final average salary is limited in the computation of that part of an
103 allowance based on service rendered prior to July 1, 1967, during a period when the retiree
104 received employer contributions on a portion of compensation from an educational institution
105 toward the payment of the premium required on a retirement annuity contract with the
106 Teachers' Insurance and Annuity Association of America or with any other public or private
107 system, organization, or company to $4,800.
108 (ii) This limitation is not applicable to retirees who elected to continue in this system
109 by July 1, 1967.
110 (b) Periods of employment which are exempt from this system under Subsection
111 49-12-203 (1)(b), may be purchased by the member for the purpose of retirement only if all
112 benefits from the Teachers' Insurance and Annuity Association of America or any other public
113 or private system or organization based on this period of employment are forfeited.
114 (5) (a) If a retiree under Option One dies within 90 days after the retiree's retirement
115 date, the retirement is canceled and the death shall be considered as that of a member before
116 retirement.
117 (b) Any payments made to the retiree shall be deducted from the amounts due to the
118 beneficiary.

119 (6) If a retiree retires under either Option Five or Six and subsequently divorces, the
120 retiree may elect to convert the benefit to a Option One benefit at the time of divorce, if there is
121 no court order filed in the matter.
122 Section 3. Section 49-13-402 is amended to read:
123 49-13-402. Service retirement plans -- Calculation of retirement allowance --
124 Social Security limitations.
125 (1) (a) Except as provided under Section 49-13-701 , retirees of this system may choose
126 from the six retirement options described in this section.
127 (b) (i) If there is a spouse of the retiree on file with the office, the office shall provide
128 written notice to the retiree's spouse of the retirement election made by the retiree under this
129 section within 60 days of the retirement date.
130 (ii) The office is not required to notify a spouse on file with the office in accordance
131 with Subsection (1)(b)(i) if the person is no longer the retiree's spouse.
132 [(b)] (c) Options Two, Three, Four, Five, and Six are modifications of the Option One
133 calculation.
134 (2) The Option One benefit is an allowance calculated as follows:
135 (a) If the retiree is at least 65 years of age or has accrued at least 30 years of service
136 credit, the allowance is an amount equal to 2% of the retiree's final average monthly salary
137 multiplied by the number of years of service credit accrued.
138 (b) If the retiree is less than 65 years of age, the allowance shall be reduced 3% for
139 each year of retirement from age 60 to age 65, plus a full actuarial reduction for each year of
140 retirement prior to age 60, unless the member has 30 or more years of accrued credit, in which
141 event no reduction is made to the allowance.
142 (c) (i) Years of service include any fractions of years of service to which the retiree
143 may be entitled.
144 (ii) At the time of retirement, if a retiree's combined years of actual, not purchased,
145 service credit is within 1/10 of one year of the total years of service credit required for
146 retirement, the retiree shall be considered to have the total years of service credit required for
147 retirement.
148 (d) An Option One allowance is only payable to the member during the member's
149 lifetime.

150 (3) The allowance payable under Options Two, Three, Four, Five, and Six is calculated
151 by reducing an Option One benefit based on actuarial computations to provide the following:
152 (a) Option Two is a reduced allowance paid to and throughout the lifetime of the
153 retiree, and, if the retiree receives less in annuity payments than the amount of the retiree's
154 member contributions, the remaining balance of the retiree's member contributions shall be
155 paid in accordance with Sections 49-11-609 and 49-11-610 .
156 (b) Option Three is a reduced allowance paid to and throughout the lifetime of the
157 retiree, and, upon the death of the retiree, the same reduced allowance paid to and throughout
158 the lifetime of the retiree's lawful spouse at the time of retirement.
159 (c) Option Four is a reduced allowance paid to and throughout the lifetime of the
160 retiree, and upon the death of the retiree, an amount equal to 1/2 of the retiree's allowance paid
161 to and throughout the lifetime of the retiree's lawful spouse at the time of retirement.
162 (d) Option Five is a modification of Option Three so that if the lawful spouse at the
163 time of retirement predeceases the retiree, an allowance equivalent to the amount payable at the
164 time of initial retirement under Option One shall be paid to the retiree for the remainder of the
165 retiree's life, beginning on the last day of the month following the month in which the lawful
166 spouse dies.
167 (e) Option Six is a modification of Option Four so that if the lawful spouse at the time
168 of retirement predeceases the retiree, an allowance equivalent to the amount payable at the time
169 of initial retirement under Option One shall be paid to the retiree for the remainder of the
170 retiree's life, beginning on the last day of the month following the month in which the lawful
171 spouse dies.
172 (4) (a) (i) The final average salary is limited in the computation of that part of an
173 allowance based on service rendered prior to July 1, 1967, during a period when the retiree
174 received employer contributions on a portion of compensation from an educational institution
175 toward the payment of the premium required on a retirement annuity contract with the
176 Teachers' Insurance and Annuity Association of America or with any other public or private
177 system, organization, or company to $4,800.
178 (ii) This limitation is not applicable to retirees who elected to continue in the Public
179 Employees' Contributory Retirement System by July 1, 1967.
180 (b) Periods of employment which are exempt from this system as permitted under

181 Subsection 49-13-203 (1)(b) may be purchased by the member for the purpose of retirement
182 only if all benefits from the Teachers' Insurance and Annuity Association of America or any
183 other public or private system or organization based on this period of employment are forfeited.
184 (5) (a) If a retiree under Option One dies within 90 days after the retiree's retirement
185 date, the retirement is canceled and the death shall be considered as that of a member before
186 retirement.
187 (b) Any payments made to the retiree shall be deducted from the amounts due to the
188 beneficiary.
189 (6) If a retiree retires under either Option Five or Six and subsequently divorces, the
190 retiree may elect to convert the benefit to an Option One benefit at the time of divorce, if there
191 is no court order filed in the matter.