1     
RETIREMENT SYSTEMS AMENDMENTS

2     
2017 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Daniel Hemmert

5     
House Sponsor: Jefferson Moss

6     

7     LONG TITLE
8     General Description:
9          This bill modifies the Utah State Retirement and Insurance Benefit Act by amending
10     retirement and insurance provisions.
11     Highlighted Provisions:
12          This bill:
13          ▸     modifies the responsibility for certain functions within the Utah Retirement
14     Systems;
15          ▸     modifies an exception to the postretirement reemployment restrictions;
16          ▸     modifies certain retiree notification and benefit conversion provisions relating to
17     retirement options affected by death or divorce;
18          ▸     specifies additional names for the Public Employees' Benefit and Insurance
19     Program; and
20          ▸     makes technical changes.
21     Money Appropriated in this Bill:
22          None
23     Other Special Clauses:
24          This bill provides a special effective date.
25     Utah Code Sections Affected:
26     AMENDS:
27          49-11-602, as last amended by Laws of Utah 2013, Chapter 109
28          49-11-603, as last amended by Laws of Utah 2015, Chapter 243

29          49-11-1205, as enacted by Laws of Utah 2016, Chapter 310
30          49-11-1207, as enacted by Laws of Utah 2016, Chapter 310
31          49-12-402, as last amended by Laws of Utah 2014, Chapter 15
32          49-13-402, as last amended by Laws of Utah 2014, Chapter 15
33          49-20-103, as renumbered and amended by Laws of Utah 2002, Chapter 250
34          49-22-305, as last amended by Laws of Utah 2011, Chapter 439
35          49-23-304, as last amended by Laws of Utah 2011, Chapter 439
36     

37     Be it enacted by the Legislature of the state of Utah:
38          Section 1. Section 49-11-602 is amended to read:
39          49-11-602. Participating employer to maintain records -- Time limit -- Penalties
40     for failure to comply.
41          (1) A participating employer shall:
42          (a) maintain records necessary to calculate benefits under this title and other records
43     necessary for proper administration of this title as required by the office; and
44          (b) maintain records that indicate whether an employee is receiving:
45          (i) a benefit under state or federal law that, under Subsection 49-12-102(1)(b)(vi) or
46     (vii), is excluded from the definition of benefits normally provided for purposes of Chapter 12,
47     Public Employees' Contributory Retirement Act, Chapter 13, Public Employees'
48     Noncontributory Retirement Act, or Chapter 22, New Public Employees' Tier II Contributory
49     Retirement Act; or
50          (ii) a benefit under a benefit package generally offered to similarly situated employees.
51          (2) A participating employer shall maintain the records required under Subsection (1)
52     until the earliest of:
53          (a) three years after the date of retirement of the employee from a system or plan;
54          (b) three years after the date of death of the employee; or
55          (c) 65 years from the date of employment with the participating employer.

56          (3) A participating employer shall be liable to the office for:
57          (a) any liabilities and expenses, including administrative expenses and the cost of
58     increased benefits to members, resulting from the participating employer's failure to maintain
59     records under this section; and
60          (b) a penalty equal to 1% of the participating employer's last month's contributions.
61          (4) The executive director may waive all or any part of the interest, penalties, expenses,
62     and fees if the executive director finds there were extenuating circumstances surrounding the
63     participating employer's failure to comply with this section.
64          (5) The [executive director] office may estimate the length of service, compensation, or
65     age of any member, if that information is not contained in the records.
66          (6) (a) A participating employer shall enroll an employee, make reports, submit
67     contributions, and provide other requested information electronically in a manner approved by
68     the office.
69          (b) A participating employer shall treat any information provided electronically or
70     otherwise by the office as subject to the confidentiality provisions of this title.
71          Section 2. Section 49-11-603 is amended to read:
72          49-11-603. Participating employer to report and certify -- Time limit -- Penalties
73     for failure to comply.
74          (1) As soon as administratively possible, but in no event later than 30 days after the
75     end of each pay period, a participating employer shall report and certify to the office:
76          (a) the eligibility for service credit accrual of:
77          (i) each current employee;
78          (ii) each new employee as the new employee begins employment; and
79          (iii) any changes to eligibility for service credit accrual of each employee;
80          (b) the compensation of each current employee eligible for service credit; and
81          (c) other factors relating to the proper administration of this title as required by the
82     executive director.

83          (2) Each participating employer shall submit the reports required under Subsection (1)
84     in a format approved by the office.
85          (3) A participating employer shall be liable to the office for:
86          (a) any liabilities and expenses, including administrative expenses and the cost of
87     increased benefits to employees, resulting from the participating employer's failure to correctly
88     report and certify records under this section;
89          (b) a penalty equal to the greater of:
90          (i) $250; or
91          (ii) 50% of the total contributions for the employees for the period of the reporting
92     error; and
93          (c) attorney fees.
94          (4) The executive director may waive all or any part of the interest, penalties, expenses,
95     and fees if the executive director finds there were extenuating circumstances surrounding the
96     participating employer's failure to comply with this section.
97          (5) The [executive director] office may estimate the length of service, compensation, or
98     age of any employee, if that information is not contained in the records.
99          Section 3. Section 49-11-1205 is amended to read:
100          49-11-1205. Postretirement reemployment restriction exceptions.
101          (1) (a) The office may not cancel the retirement allowance of a retiree who is
102     reemployed with a participating employer within one year of the retiree's retirement date if:
103          (i) the retiree is not reemployed by a participating employer for a period of at least 60
104     days from the retiree's retirement date;
105          (ii) upon reemployment after the break in service under Subsection (1)(a)(i), the retiree
106     does not receive any employer paid benefits, including:
107          (A) retirement service credit or retirement-related contributions;
108          (B) medical benefits;
109          (C) dental benefits;

110          (D) other insurance benefits except for workers' compensation as provided under Title
111     34A, Chapter 2, Workers' Compensation Act, Title 34A, Chapter 3, Utah Occupational Disease
112     Act, and withholdings required by federal or state law for social security, Medicare, and
113     unemployment insurance; or
114          (E) paid time off, including sick, annual, or other type of leave; and
115          (iii) (A) the retiree does not earn in any calendar year of reemployment an amount in
116     excess of the lesser of $15,000 or one-half of the retiree's final average salary upon which the
117     retiree's retirement allowance is based[.]; or
118          (B) the retiree is reemployed as a judge as defined under Section 78A-11-102.
119          (b) Beginning January 1, 2013, the board shall adjust the amounts under Subsection
120     (1)(a)(iii) by the annual change in the Consumer Price Index during the previous calendar year
121     as measured by a United States Bureau of Labor Statistics Consumer Price Index average as
122     determined by the board.
123          (2) A retiree shall be considered as having completed the one-year separation from
124     employment with a participating employer required under Section 49-11-1204, if the retiree:
125          (a) before retiring:
126          (i) was employed with a participating employer as a public safety service employee as
127     defined in Section 49-14-102, 49-15-102, or 49-23-102;
128          (ii) and during the employment under Subsection (2)(a)(i), suffered a physical injury
129     resulting from external force or violence while performing the duties of the employment, and
130     for which injury the retiree would have been approved for total disability in accordance with
131     the provisions under Chapter 21, Public Employees' Long-Term Disability Act, if years of
132     service are not considered;
133          (iii) had less than 30 years of service credit but had sufficient service credit to retire,
134     with an unreduced allowance making the public safety service employee ineligible for
135     long-term disability payments under Chapter 21, Public Employees' Long-Term Disability Act,
136     or a substantially similar long-term disability program; and

137          (iv) does not receive any long-term disability benefits from any participating employer;
138     and
139          (b) is reemployed by a different participating employer.
140          (3) (a) The office may not cancel the retirement allowance of a retiree who is employed
141     as an affiliated emergency services worker within one year of the retiree's retirement date if the
142     affiliated emergency services worker does not receive any compensation, except for:
143          (i) a nominal fee, stipend, discount, tax credit, voucher, or other fixed sum of money or
144     cash equivalent payment not tied to productivity and paid periodically for services;
145          (ii) a length-of-service award;
146          (iii) insurance policy premiums paid by the participating employer in the event of death
147     of an affiliated emergency services worker or a line-of-duty accidental death or disability; or
148          (iv) reimbursement of expenses incurred in the performance of duties.
149          (b) For purposes of Subsections (3)(a)(i) and (ii), the total amount of any discounts, tax
150     credits, vouchers, and payments to an affiliated emergency services worker may not exceed
151     $500 per month.
152          (c) Beginning January 1, 2016, the board shall adjust the amount under Subsection
153     (3)(b) by the annual change in the Consumer Price Index during the previous calendar year as
154     measured by a United States Bureau of Labor Statistics Consumer Price Index average as
155     determined by the board.
156          (4) (a) If a retiree is reemployed under the provisions of Subsection (1) or (3), the
157     termination date of the reemployment, as confirmed in writing by the participating employer, is
158     considered the retiree's retirement date for the purpose of calculating the separation
159     requirement under Section 49-11-1204.
160          (b) The office shall cancel the retirement allowance of a retiree for the remainder of the
161     calendar year if the reemployment with a participating employer exceeds the limitation under
162     Subsection (1)(a)(iii) or (3)(b).
163          Section 4. Section 49-11-1207 is amended to read:

164          49-11-1207. Postretirement reemployment -- Violations -- Penalties.
165          (1) (a) If the office receives notice or learns of the reemployment of a retiree in
166     violation of Section 49-11-1204 or 49-11-1205, the office shall:
167          (i) immediately cancel the retiree's retirement allowance;
168          (ii) keep the retiree's retirement allowance cancelled for the remainder of the calendar
169     year if the reemployment with a participating employer exceeded the limitation under
170     Subsection 49-11-1205(1)(a)(iii)(A) or (3)(b); and
171          (iii) recover any overpayment resulting from the violation in accordance with the
172     provisions of Section 49-11-607 before the allowance may be reinstated.
173          (b) Reinstatement of an allowance following cancellation for a violation under this
174     section is subject to the procedures and provisions under Section 49-11-1204.
175          (2) If a retiree or participating employer failed to report reemployment in violation of
176     Section 49-11-1206, the retiree, participating employer, or both, who are found to be
177     responsible for the failure to report, are liable to the office for the amount of any overpayment
178     resulting from the violation.
179          (3) A participating employer is liable to the office for a payment or failure to make a
180     payment in violation of this part.
181          (4) If a participating employer fails to notify the office in accordance with Section
182     49-11-1206, the participating employer is immediately subject to a compliance audit by the
183     office.
184          Section 5. Section 49-12-402 is amended to read:
185          49-12-402. Service retirement plans -- Calculation of retirement allowance --
186     Social security limitations.
187          (1) (a) Except as provided under Section 49-12-701, retirees of this system may choose
188     from the six retirement options described in this section.
189          (b) Options Two, Three, Four, Five, and Six are modifications of the Option One
190     calculation.

191          (2) The Option One benefit is an annual allowance calculated as follows:
192          (a) If the retiree is at least 65 years of age or has accrued at least 30 years of service
193     credit, the allowance is:
194          (i) an amount equal to 1.25% of the retiree's final average monthly salary multiplied by
195     the number of years of service credit accrued prior to July 1, 1975; plus
196          (ii) an amount equal to 2% of the retiree's final average monthly salary multiplied by
197     the number of years of service credit accrued on and after July 1, 1975.
198          (b) If the retiree is less than 65 years of age, the allowance shall be reduced 3% for
199     each year of retirement from age 60 to age 65, unless the member has 30 or more years of
200     accrued credit in which event no reduction is made to the allowance.
201          (c) (i) Years of service includes any fractions of years of service to which the retiree
202     may be entitled.
203          (ii) At the time of retirement, if a retiree's combined years of actual, not purchased,
204     service credit is within 1/10 of one year of the total years of service credit required for
205     retirement, the retiree shall be considered to have the total years of service credit required for
206     retirement.
207          (d) An Option One allowance is only payable to the member during the member's
208     lifetime.
209          (3) The allowance payable under Options Two, Three, Four, Five, and Six is calculated
210     by reducing an Option One benefit based on actuarial computations to provide the following:
211          (a) Option Two is a reduced allowance paid to and throughout the lifetime of the
212     retiree, and, if the retiree receives less in annuity payments than the amount of the retiree's
213     member contributions, the remaining balance of the retiree's member contributions shall be
214     paid in accordance with Sections 49-11-609 and 49-11-610.
215          (b) Option Three is a reduced allowance paid to and throughout the lifetime of the
216     retiree, and, upon the death of the retiree, the same reduced allowance paid to and throughout
217     the lifetime of the retiree's lawful spouse at the time of retirement.

218          (c) Option Four is a reduced allowance paid to and throughout the lifetime of the
219     retiree, and upon the death of the retiree, an amount equal to 1/2 of the retiree's allowance paid
220     to and throughout the lifetime of the retiree's lawful spouse at the time of retirement.
221          (d) Option Five is a modification of Option Three so that if the lawful spouse at the
222     time of retirement predeceases the retiree, an allowance equivalent to the amount payable at the
223     time of initial retirement under Option One shall be paid to the retiree for the remainder of the
224     retiree's life, beginning on the first day of the month following the month in which the:
225          (i) spouse died, if [the application is] notification and supporting documentation for the
226     death are received by the office within 90 days of the spouse's death; or
227          (ii) [application is] notification and supporting documentation for the death are
228     received by the office, if the [application is] notification and supporting documentation are
229     received by the office more than 90 days after the spouse's death.
230          (e) Option Six is a modification of Option Four so that if the lawful spouse at the time
231     of retirement predeceases the retiree, an allowance equivalent to the amount payable at the time
232     of initial retirement under Option One shall be paid to the retiree for the remainder of the
233     retiree's life, beginning on the first day of the month following the month in which the:
234          (i) spouse died, if [the application is] notification and supporting documentation for the
235     death are received by the office within 90 days of the spouse's death; or
236          (ii) [application is] notification and supporting documentation for the death are
237     received by the office, if the [application is] notification and supporting documentation are
238     received by the office more than 90 days after the spouse's death.
239          (4) (a) (i) The final average salary is limited in the computation of that part of an
240     allowance based on service rendered prior to July 1, 1967, during a period when the retiree
241     received employer contributions on a portion of compensation from an educational institution
242     toward the payment of the premium required on a retirement annuity contract with a public or
243     private system, organization, or company designated by the State Board of Regents to $4,800.
244          (ii) This limitation is not applicable to retirees who elected to continue in this system

245     by July 1, 1967.
246          (b) Periods of employment which are exempt from this system under Subsection
247     49-12-203(1)(b), may be purchased by the member for the purpose of retirement only if all
248     benefits from a public or private system, organization, or company designated by the State
249     Board of Regents based on this period of employment are forfeited.
250          (5) (a) If a retiree under Option One dies within 90 days after the retiree's retirement
251     date, the retirement is canceled and the death shall be considered as that of a member before
252     retirement.
253          (b) Any payments made to the retiree shall be deducted from the amounts due to the
254     beneficiary.
255          (6) (a) If a retiree retires under either Option Five or Six and subsequently divorces, the
256     retiree may elect to convert the benefit to a Option One benefit at the time of divorce, if there is
257     no court order filed in the matter.
258          (b) A conversion to an Option One benefit under this Subsection (6) begins on the first
259     day of the month following the month in which the notification and supporting documentation
260     for the divorce are received by the office.
261          Section 6. Section 49-13-402 is amended to read:
262          49-13-402. Service retirement plans -- Calculation of retirement allowance --
263     Social security limitations.
264          (1) (a) Except as provided under Section 49-13-701, retirees of this system may choose
265     from the six retirement options described in this section.
266          (b) Options Two, Three, Four, Five, and Six are modifications of the Option One
267     calculation.
268          (2) The Option One benefit is an allowance calculated as follows:
269          (a) If the retiree is at least 65 years of age or has accrued at least 30 years of service
270     credit, the allowance is an amount equal to 2% of the retiree's final average monthly salary
271     multiplied by the number of years of service credit accrued.

272          (b) If the retiree is less than 65 years of age, the allowance shall be reduced 3% for
273     each year of retirement from age 60 to age 65, plus a full actuarial reduction for each year of
274     retirement prior to age 60, unless the member has 30 or more years of accrued credit, in which
275     event no reduction is made to the allowance.
276          (c) (i) Years of service include any fractions of years of service to which the retiree
277     may be entitled.
278          (ii) At the time of retirement, if a retiree's combined years of actual, not purchased,
279     service credit is within 1/10 of one year of the total years of service credit required for
280     retirement, the retiree shall be considered to have the total years of service credit required for
281     retirement.
282          (d) An Option One allowance is only payable to the member during the member's
283     lifetime.
284          (3) The allowance payable under Options Two, Three, Four, Five, and Six is calculated
285     by reducing an Option One benefit based on actuarial computations to provide the following:
286          (a) Option Two is a reduced allowance paid to and throughout the lifetime of the
287     retiree, and, if the retiree receives less in annuity payments than the amount of the retiree's
288     member contributions, the remaining balance of the retiree's member contributions shall be
289     paid in accordance with Sections 49-11-609 and 49-11-610.
290          (b) Option Three is a reduced allowance paid to and throughout the lifetime of the
291     retiree, and, upon the death of the retiree, the same reduced allowance paid to and throughout
292     the lifetime of the retiree's lawful spouse at the time of retirement.
293          (c) Option Four is a reduced allowance paid to and throughout the lifetime of the
294     retiree, and upon the death of the retiree, an amount equal to one-half of the retiree's allowance
295     paid to and throughout the lifetime of the retiree's lawful spouse at the time of retirement.
296          (d) Option Five is a modification of Option Three so that if the lawful spouse at the
297     time of retirement predeceases the retiree, an allowance equivalent to the amount payable at the
298     time of initial retirement under Option One shall be paid to the retiree for the remainder of the

299     retiree's life, beginning on the first day of the month following the month in which the:
300          (i) spouse died, if [the application is] notification and supporting documentation for the
301     death are received by the office within 90 days of the spouse's death; or
302          (ii) [application is] notification and supporting documentation for the death are
303     received by the office, if the [application is] notification and supporting documentation are
304     received by the office more than 90 days after the spouse's death.
305          (e) Option Six is a modification of Option Four so that if the lawful spouse at the time
306     of retirement predeceases the retiree, an allowance equivalent to the amount payable at the time
307     of initial retirement under Option One shall be paid to the retiree for the remainder of the
308     retiree's life, beginning on the first day of the month following the month in which the:
309          (i) spouse died, if [the application is] notification and supporting documentation for the
310     death are received by the office within 90 days of the spouse's death; or
311          (ii) [application is] notification and supporting documentation for the death are
312     received by the office, if the [application is] notification and supporting documentation are
313     received by the office more than 90 days after the spouse's death.
314          (4) (a) (i) The final average salary is limited in the computation of that part of an
315     allowance based on service rendered prior to July 1, 1967, during a period when the retiree
316     received employer contributions on a portion of compensation from an educational institution
317     toward the payment of the premium required on a retirement annuity contract with a public or
318     private system, organization, or company designated by the State Board of Regents to $4,800.
319          (ii) This limitation is not applicable to retirees who elected to continue in the Public
320     Employees' Contributory Retirement System by July 1, 1967.
321          (b) Periods of employment which are exempt from this system as permitted under
322     Subsection 49-13-203(1)(b) may be purchased by the member for the purpose of retirement
323     only if all benefits from a public or private system, organization, or company designated by the
324     State Board of Regents based on this period of employment are forfeited.
325          (5) (a) If a retiree under Option One dies within 90 days after the retiree's retirement

326     date, the retirement is canceled and the death shall be considered as that of a member before
327     retirement.
328          (b) Any payments made to the retiree shall be deducted from the amounts due to the
329     beneficiary.
330          (6) (a) If a retiree retires under either Option Five or Six and subsequently divorces, the
331     retiree may elect to convert the benefit to an Option One benefit at the time of divorce, if there
332     is no court order filed in the matter.
333          (b) A conversion to an Option One benefit under this Subsection (6) begins on the first
334     day of the month following the month in which the notification and supporting documentation
335     for the divorce are received by the office.
336          Section 7. Section 49-20-103 is amended to read:
337          49-20-103. Creation of insurance program.
338          (1) There is created for the employees of the state, its educational institutions, and
339     political subdivisions the "Public Employees' Benefit and Insurance Program" within the office.
340          (2) The program may also be known and function as the Public Employees' Health
341     Program, PEHP, or PEHP Health and Benefits.
342          Section 8. Section 49-22-305 is amended to read:
343          49-22-305. Defined benefit service retirement plans -- Calculation of retirement
344     allowance -- Social security limitations.
345          (1) (a) The retirees of this system may choose from the six retirement options described
346     in this section.
347          (b) Options Two, Three, Four, Five, and Six are modifications of the Option One
348     calculation.
349          (2) The Option One benefit is an annual allowance calculated as follows:
350          (a) If the retiree is at least 65 years of age or has accrued at least 35 years of service
351     credit, the allowance is an amount equal to 1.5% of the retiree's final average salary multiplied
352     by the number of years of service credit accrued on and after July 1, 2011.

353          (b) If the retiree is less than 65 years of age, the allowance shall be reduced by the full
354     actuarial amount for each year of retirement from age 60 to age 65, unless the member has 35
355     or more years of accrued credit in which event no reduction is made to the allowance.
356          (c) (i) Years of service includes any fractions of years of service to which the retiree
357     may be entitled.
358          (ii) At the time of retirement, if a retiree's combined years of actual, not purchased,
359     service credit is within one-tenth of one year of the total years of service credit required for
360     retirement, the retiree shall be considered to have the total years of service credit required for
361     retirement.
362          (d) An Option One allowance is only payable to the member during the member's
363     lifetime.
364          (3) The allowance payable under Options Two, Three, Four, Five, and Six is calculated
365     by reducing an Option One benefit based on actuarial computations to provide the following:
366          (a) Option Two is a reduced allowance paid to and throughout the lifetime of the
367     retiree, and, if the retiree receives less in annuity payments than the amount of the retiree's
368     member contributions, the remaining balance of the retiree's member contributions shall be
369     paid in accordance with Sections 49-11-609 and 49-11-610.
370          (b) Option Three is a reduced allowance paid to and throughout the lifetime of the
371     retiree, and, upon the death of the retiree, the same reduced allowance is paid to and throughout
372     the lifetime of the retiree's lawful spouse at the time of retirement.
373          (c) Option Four is a reduced allowance paid to and throughout the lifetime of the
374     retiree, and upon the death of the retiree, an amount equal to one-half of the retiree's allowance
375     is paid to and throughout the lifetime of the retiree's lawful spouse at the time of retirement.
376          (d) Option Five is a modification of Option Three so that if the lawful spouse at the
377     time of retirement predeceases the retiree, an allowance equivalent to the amount payable at the
378     time of initial retirement under Option One shall be paid to the retiree for the remainder of the
379     retiree's life, beginning on the first day of the month following the month in which the:

380          (i) [following the month in which the] spouse died, if [the application is] notification
381     and supporting documentation for the death are received by the office within 90 days of the
382     spouse's death; or
383          (ii) [following the month in which the application is] notification and supporting
384     documentation for the death are received by the office, if the [application is] notification and
385     supporting documentation are received by the office more than 90 days after the spouse's death.
386          (e) Option Six is a modification of Option Four so that if the lawful spouse at the time
387     of retirement predeceases the retiree, an allowance equivalent to the amount payable at the time
388     of initial retirement under Option One shall be paid to the retiree for the remainder of the
389     retiree's life, beginning on the first day of the month following the month in which the:
390          (i) [following the month in which the] spouse died, if [the application is] notification
391     and supporting documentation for the death are received by the office within 90 days of the
392     spouse's death; or
393          (ii) [following the month in which the application is] notification and supporting
394     documentation for the death are received by the office, if the [application is] notification and
395     supporting documentation are received by the office more than 90 days after the spouse's death.
396          (4) (a) If a retiree under Option One dies within 120 days after the retiree's retirement
397     date, the retirement is canceled and the death shall be considered as that of a member before
398     retirement.
399          (b) Any payments made to the retiree shall be deducted from the amounts due to the
400     beneficiary.
401          (5) (a) If a retiree retires under either Option Five or Six and subsequently divorces, the
402     retiree may elect to convert the benefit to an Option One benefit at the time of divorce, if there
403     is no court order filed in the matter.
404          (b) A conversion to an Option One benefit under this Subsection (5) begins on the first
405     day of the month following the month in which the notification and supporting documentation
406     for the divorce are received by the office.

407          Section 9. Section 49-23-304 is amended to read:
408          49-23-304. Defined benefit service retirement plans -- Calculation of retirement
409     allowance -- Social security limitations.
410          (1) (a) The retirees of this system may choose from the six retirement options described
411     in this section.
412          (b) Options Two, Three, Four, Five, and Six are modifications of the Option One
413     calculation.
414          (2) The Option One benefit is an annual allowance calculated as follows:
415          (a) If the retiree is at least 65 years of age or has accrued at least 25 years of service
416     credit, the allowance is an amount equal to 1.5% of the retiree's final average salary multiplied
417     by the number of years of service credit accrued on and after July 1, 2011.
418          (b) If the retiree is less than 65 years of age, the allowance shall be reduced by the full
419     actuarial amount for each year of retirement from age 60 to age 65, unless the member has 25
420     or more years of accrued credit in which event no reduction is made to the allowance.
421          (c) (i) Years of service includes any fractions of years of service to which the retiree
422     may be entitled.
423          (ii) At the time of retirement, if a retiree's combined years of actual, not purchased,
424     service credit is within 1/10 of one year of the total years of service credit required for
425     retirement, the retiree shall be considered to have the total years of service credit required for
426     retirement.
427          (d) An Option One allowance is only payable to the member during the member's
428     lifetime.
429          (3) The allowance payable under Options Two, Three, Four, Five, and Six is calculated
430     by reducing an Option One benefit based on actuarial computations to provide the following:
431          (a) Option Two is a reduced allowance paid to and throughout the lifetime of the
432     retiree, and, if the retiree receives less in annuity payments than the amount of the retiree's
433     member contributions, the remaining balance of the retiree's member contributions shall be

434     paid in accordance with Sections 49-11-609 and 49-11-610.
435          (b) Option Three is a reduced allowance paid to and throughout the lifetime of the
436     retiree, and, upon the death of the retiree, the same reduced allowance is paid to and throughout
437     the lifetime of the retiree's lawful spouse at the time of retirement.
438          (c) Option Four is a reduced allowance paid to and throughout the lifetime of the
439     retiree, and upon the death of the retiree, an amount equal to 1/2 of the retiree's allowance is
440     paid to and throughout the lifetime of the retiree's lawful spouse at the time of retirement.
441          (d) Option Five is a modification of Option Three so that if the lawful spouse at the
442     time of retirement predeceases the retiree, an allowance equivalent to the amount payable at the
443     time of initial retirement under Option One shall be paid to the retiree for the remainder of the
444     retiree's life, beginning on the first day of the month following the month in which the:
445          (i) [following the month in which the] spouse died, if [the application is] notification
446     and supporting documentation for the death are received by the office within 90 days of the
447     spouse's death; or
448          (ii) [following the month in which the application is] notification and supporting
449     documentation for the death are received by the office, if the [application is] notification and
450     supporting documentation are received by the office more than 90 days after the spouse's death.
451          (e) Option Six is a modification of Option Four so that if the lawful spouse at the time
452     of retirement predeceases the retiree, an allowance equivalent to the amount payable at the time
453     of initial retirement under Option One shall be paid to the retiree for the remainder of the
454     retiree's life, beginning on the first day of the month following the month in which the:
455          (i) [following the month in which the] spouse died, if [the application is] notification
456     and supporting documentation for the death are received by the office within 90 days of the
457     spouse's death; or
458          (ii) [following the month in which the application is] notification and supporting
459     documentation for the death are received by the office, if the [application is] notification and
460     supporting documentation are received by the office more than 90 days after the spouse's death.

461          (4) (a) If a retiree under Option One dies within 120 days after the retiree's retirement
462     date, the retirement is canceled and the death shall be considered as that of a member before
463     retirement.
464          (b) Any payments made to the retiree shall be deducted from the amounts due to the
465     beneficiary.
466          (5) (a) If a retiree retires under either Option Five or Six and subsequently divorces, the
467     retiree may elect to convert the benefit to an Option One benefit at the time of divorce, if there
468     is no court order filed in the matter.
469          (b) A conversion to an Option One benefit under this Subsection (5) begins on the first
470     day of the month following the month in which the notification and supporting documentation
471     for the divorce are received by the office.
472          Section 10. Effective date.
473          This bill takes effect on July 1, 2017.