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H.B. 173
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5 AN ACT RELATING TO PENSIONS; AMENDING THE POWERS OF THE RETIREMENT
6 BOARD; AMENDING DEFINITIONS; AMENDING RETIREMENT ELIGIBILITY
7 REQUIREMENTS; MAKING TECHNICAL CORRECTIONS; AND PROVIDING AN
8 EFFECTIVE DATE.
9 This act affects sections of Utah Code Annotated 1953 as follows:
10 AMENDS:
11 49-1-203, as last amended by Chapter 197, Laws of Utah 1995
12 49-1-401, as last amended by Chapter 197, Laws of Utah 1995
13 49-1-406, as last amended by Chapter 197, Laws of Utah 1995
14 49-1-607, as enacted by Chapter 1, Laws of Utah 1987
15 49-2-103, as last amended by Chapter 231, Laws of Utah 1996
16 49-2-205, as last amended by Chapter 246, Laws of Utah 1993
17 49-3-103, as last amended by Chapter 231, Laws of Utah 1996
18 49-3-206, as last amended by Chapter 246, Laws of Utah 1993
19 49-4-103, as last amended by Chapter 231, Laws of Utah 1996
20 49-4-601, as enacted by Chapter 1, Laws of Utah 1987
21 49-4-704, as last amended by Chapters 239 and 304, Laws of Utah 1994
22 49-4a-103, as last amended by Chapter 231, Laws of Utah 1996
23 49-4a-704, as last amended by Chapters 239 and 304, Laws of Utah 1994
24 49-5-103, as last amended by Chapter 231, Laws of Utah 1996
25 49-5-601, as last amended by Chapter 319, Laws of Utah 1994
26 49-5-704, as last amended by Chapter 239, Laws of Utah 1994
27 49-6-103, as last amended by Chapter 197, Laws of Utah 1995
1 Be it enacted by the Legislature of the state of Utah:
2 Section 1. Section 49-1-203 is amended to read:
3 49-1-203. Powers and duties of board.
4 (1) The board shall:
5 (a) appoint an executive director to administer the retirement office;
6 (b) receive and act upon reports covering the operations of the systems, plans, programs,
7 and funds administered by the retirement office;
8 (c) ensure that the systems, plans, programs, and funds are administered according to law;
9 (d) sit as a board of appeal on any appeal filed by a member of a system, plan, or program
10 or by a covered employer;
11 (e) examine and approve an annual operating budget for the retirement office;
12 (f) serve as investment trustees of the retirement fund;
13 (g) maintain, in conjunction with participating employers and members, the systems,
14 plans, and programs on an actuarially sound or approved basis, subject to the responsibility of the
15 Legislature to adjust benefits and contribution rates when recommended by the board;
16 (h) receive and act upon recommendations of the executive director;
17 (i) recommend to the governor and Legislature any necessary or desirable changes in the
18 statutes governing the systems, plans, and programs administered by the retirement office;
19 (j) develop broad policy for the long-term operation of the various retirement systems,
20 plans, and programs and is granted broad discretion and power to perform its policymaking
21 functions, including the specific authority to interpret and define any provision or term under this
22 title;
23 (k) establish the compensation of the director and adopt compensation plans and policies
24 based on market surveys for fiduciary and administrative positions in the office;
25 (l) regulate the duties of employing units and other public authorities which are imposed
26 upon them by this title and specify the time, place, and manner in which contributions shall be
27 withheld and paid, and obtain any reports necessary for the administration of this title;
28 (m) adopt rules consistent with this title for the management of the systems, plans, and
29 programs in order to carry out the purposes of this title, and perform all other acts necessary for
30 the administration of the retirement systems, plans, and programs;
31 (n) comply with the procedures and requirements of Title 63, Chapter 46b, Administrative
1 Procedures Act, in its adjudicative proceedings;
2 (o) otherwise exercise the powers and perform the duties conferred on it by this title; and
3 (p) provide for audits of the retirement system.
4 (2) The board may:
5 (a) subpoena witnesses and compel their attendance to testify before it, for which purpose
6 each member and the secretary of the board may administer oaths and affirmations to witnesses
7 and others transacting business of the retirement system;
8 (b) establish membership councils to advise the board and the director on policies affecting
9 members of any system administered by the board and may pay the travel expenses of members
10 who attend council meetings; and
11 (c) sue and be sued in its own name.
12 Section 2. Section 49-1-401 is amended to read:
13 49-1-401. Service credit -- Transfer of credit or employment -- Provisions applicable
14 for service credit -- Direct transfer or rollover.
15 (1) The board shall make the transfer of service credits, together with related member and
16 employer contributions, from one retirement system to another upon terms and conditions
17 established by the board. The terms and conditions may not result in a loss of accrued benefits.
18 Transfer of employment from a position covered by one public retirement system to a position
19 covered by another system does not either:
20 (a) cause the employee to lose active membership status in the system; or
21 (b) constitute a termination of employment prerequisite to qualifying for a refund of
22 contributions.
23 (2) In the establishment of service credits, the following provisions apply:
24 (a) Any member of a retirement system who performs covered services shall receive
25 service credit for the service.
26 (b) Any member who is not in an active service status because of sickness, injury, leave
27 of absence, including service in the armed forces of the United States, or because the member is
28 in the process of transfer from one employing unit to another shall, upon returning to active status,
29 have the same rights and be subject to the same requirements as other employees under this title.
30 (c) (i) For the purpose of computing the amount of a member's retirement allowance, no
31 service credit may be given to any member for the period during which the member is on leave of
1 absence without compensation, except as otherwise provided in this title or Subsection (2)(c)(ii).
2 (ii) A member with full-time public service while on an approved leave of absence may
3 purchase, or the employer may purchase on their behalf, credit equal to the public service by
4 making contributions fixed by the administrator.
5 (d) No service credit may be given to a member for the period during which the member
6 was in any inactive status unless the service is purchased according to the provisions of this title.
7 (e) Credit for service shall be granted in proportion to the work performed under rules
8 adopted by the board.
9 (f) In no case may a retirement allowance or other benefit be granted under this title which
10 is based upon the same service as has been the basis for retirement benefits under some other state
11 retirement system.
12 (g) Members shall be credited with any fractions of years of service to which they are
13 entitled.
14 (h) The board shall fix the minimum time per day, per month, and per year upon the basis
15 of which one year of service and proportionate parts of a year shall be credited toward qualification
16 for retirement. Service may be computed on a fiscal or calendar year basis and portions of years
17 served shall be accumulated and counted as service. In any event, all of the service rendered in
18 any one fiscal or calendar year may not count for more than one year.
19 (i) Any employee who is transferred to the Division of Information of Technology Service
20 from the Department of Public Safety, and who was a member in the Public Safety Retirement
21 System or Public Safety Noncontributory Retirement System, shall be entitled to remain a member
22 in the system he participated in prior to being transferred regardless of whether the employee's
23 current position is covered by the respective public safety system. This exception does not apply
24 to any person hired on or after January 1, 1992.
25 (3) (a) The board may adopt rules under which a member may make the necessary
26 contributions to the system for purchases or redeposits under this title through a direct transfer,
27 direct rollover or rollover from a qualified plan under Section 401, Internal Revenue Code, or an
28 eligible individual retirement account.
29 (b) The board may reject any contributions if the board determines the tax status of the
30 system would be jeopardized by allowing the contribution.
31 (c) For purposes of this section, a direct rollover shall be determined under the provisions
1 of Section 401(a)(31), Internal Revenue Code.
2 Section 3. Section 49-1-406 is amended to read:
3 49-1-406. Retirement credits from different systems or plans -- Eligibility and
4 calculation of benefits.
5 (1) Any member who has years of service credit from two or more systems or plans
6 administered by the board which is not concurrent service may combine these credits for purposes
7 of determining eligibility for retirement.
8 (2) To be eligible for the calculation under Subsection (3), the member's years of service
9 credits earned under the two or more different retirement systems shall at least equal the minimum
10 number of years required to retire under the system from which the member is seeking to retire.
11 (3) If the member meets the requirements of Subsection (2), the board shall calculate the
12 member's retirement allowance using all credits earned from any retirement system, with no
13 actuarial reduction applied to the allowance, except the years of service credit used to calculate the
14 benefit shall be increased or decreased to reflect the value of the assets transferred to effectuate the
15 calculation of the allowance.
16 (4) The retirement board shall adopt rules to establish the standards used for calculating
17 any increase or decrease in the years of service credit.
18 Section 4. Section 49-1-607 is amended to read:
19 49-1-607. Benefits payable in name of beneficiary -- Delivery.
20 (1) Any benefits payable to a beneficiary or dependent beneficiary shall be made in the
21 name of the beneficiary or beneficiaries and delivered to the lawfully appointed guardian or
22 conservator of the beneficiary, or delivered as otherwise ordered by a court of competent
23 jurisdiction pursuant to Title 75, [
24 where the benefit involves a payment not to exceed an amount authorized by the Utah Uniform
25 Probate Code to any one beneficiary, the administrator may, without the appointment of a guardian
26 or conservator or the giving of a bond, pay the amount due to the beneficiaries themselves or to
27 the person, persons, or institutions assuming their support in either a lump sum or in monthly
28 amounts, and the total of the payments so made shall be a full discharge and release to the system
29 from any further claims.
30 (2) All continuing monthly benefits payable to beneficiaries upon the death of an active
31 member shall be paid on the first day of the month following the date of death of the member.
1 Section 5. Section 49-2-103 is amended to read:
2 49-2-103. Definitions.
3 As used in this chapter:
4 (1) "Appointive officer" means an employee appointed to a position for a definite and
5 fixed term of office by official and duly recorded action of the governing body of an employing
6 unit who earns $500 or more per month over a 12-month period adjusted annually by the Bureau
7 of Labor Statistics Consumer Price Index.
8 (2) (a) "Compensation," "salary," or "wages" means the total amount of payments made
9 by an employer to an employee for services rendered to the employer, including:
10 (i) bonuses;
11 (ii) cost-of-living adjustments;
12 (iii) other payments currently includable in gross income and that are subject to Social
13 Security deductions, including any payments in excess of the maximum amount subject to
14 deduction under Social Security law; and
15 (iv) amounts that the employee authorizes to be deducted or reduced for salary deferral or
16 other benefit programs authorized by federal law.
17 (b) "Compensation" for purposes of this chapter may not exceed the amount allowed under
18 Internal Revenue Code Section 401(a)(17).
19 (c) "Compensation," "salary," or "wages" does not include:
20 (i) the monetary value of remuneration paid in kind, such as a residence or use of
21 equipment;
22 (ii) all contributions made by an employer under any plan for the benefit of a participant;
23 (iii) salary paid to an employee working under the minimum number of hours required for
24 membership;
25 (iv) salary paid to a temporary or exempt employee;
26 (v) any payments upon termination, including accumulated vacation, sick leave payments,
27 or any other special payments; or
28 (vi) uniform, travel, or similar allowances.
29 (3) "Educational institution" means a political subdivision or instrumentality of the state
30 or a combination thereof primarily engaged in educational activities or the administration or
31 servicing of educational activities, including:
1 (a) the State Board of Education and its instrumentalities;
2 (b) any institution of higher learning and its branches;
3 (c) any school district and its instrumentalities;
4 (d) any vocational and technical school; and
5 (e) any entity arising out of a consolidation agreement between entities under this
6 definition.
7 (4) (a) "Employee" or "regular employee" means any regular full-time employee whose
8 term of employment for an employer contemplates continued employment during a calendar or
9 school year and who performs covered service for one or more employers.
10 (b) "Employee" or "regular employee" means an officer, elective or appointive, who
11 receives as compensation from an employer $500 or more per month over a 12-month period
12 adjusted annually by the Bureau of Labor Statistics Consumer Price Index.
13 (5) "Employer" or "employing unit" means any department, educational institution,
14 political subdivision, or organization or agency financed in whole or in part by public funds for
15 which any employee or member performs services subject to this chapter.
16 (6) "Final average salary" means the amount computed by averaging the highest five years
17 of annual compensation preceding retirement subject to Subsections (a), (b), (c), and (d).
18 (a) Except as provided in Subsection (b), the percentage increase in annual compensation
19 in any one of the years used may not exceed the previous year's salary by more than 10% plus a
20 cost-of-living adjustment equal to the decrease in the purchasing power of the dollar during the
21 previous year, as measured by the Consumer Price Index prepared by the United States Bureau of
22 Labor Statistics.
23 (b) In cases where the employing unit provides acceptable documentation to the board, the
24 limitation in Subsection (a) may be exceeded if:
25 (i) the member has transferred from another employing unit; or
26 (ii) the member has been promoted to a new position.
27 (c) If the member retires more than six months from the date of termination of
28 employment and for purposes of computing the member's final average salary only, the member
29 is considered to have been in service at the member's last salary rate from the date of the
30 termination of employment to the date retirement becomes effective if the member so requests.
31 (d) If participating service is less than five years, final average salary means the average
1 annual compensation paid to the member during the full period of participating service.
2 (7) "Normal retirement age" means the age of 65 years.
3 (8) "Organization or agency financed in whole or in part by public funds" means an
4 agency, association, or organization that receives public funds. The term does not include political
5 subdivisions, departments, or educational institutions.
6 (9) "Public funds" means those funds derived, either directly or indirectly, from public
7 taxes or public revenue, dues or contributions paid or donated by the membership of the
8 organization, used to finance an activity whose objective is to improve, on a nonprofit basis, the
9 governmental, educational, and social programs and systems of the state or its political
10 subdivisions.
11 (10) (a) "Regular full-time employee," in qualifying for membership in the system, means
12 an employee whose employment normally requires an average of 20 hours or more per week,
13 except as modified by the board, and who receives benefits normally provided by the employing
14 unit.
15 (b) "Regular full-time employee" includes a teacher who teaches half-time or more, or a
16 classified school employee who works an average of 20 hours per week or more, regardless of
17 benefits provided.
18 (11) "Years of service" or "service years" means:
19 (a) the number of periods, each to consist of 12 full months as determined by the board;
20 (b) a period determined by the board, whether consecutive or not, during which an
21 employee performed services for an employer or employers, including any time the employee
22 rendered service in the armed forces of the United States before membership in the system or was
23 absent on a paid leave of absence granted by an employer or absent in the service of the United
24 States government on military duty as provided by this chapter; or
25 (c) for a teacher, school administrator, or other contract employee of an educational
26 institution, not less than eight months of full-time service constitutes a service year.
27 Section 6. Section 49-2-205 is amended to read:
28 49-2-205. Exclusions from membership in system.
29 The following employees are excluded from membership in the retirement system:
30 (1) Every employee whose employment status is temporary in nature due to the nature or
31 the type of work to be performed. If the term of employment exceeds six months, then for that
1 employee a regular full-time status shall be assumed, and the employee shall be enrolled in the
2 system effective the beginning of the seventh month of employment. If the same employee,
3 previously terminated prior to enrollment as a member, is again employed within three months of
4 termination by the same employer, the employee shall be immediately enrolled as a member if the
5 work constitutes full-time as defined in this chapter.
6 (2) Full-time students or the spouse of a full-time student and persons employed in a
7 trainee relationship may be excluded from coverage by rules adopted by the board.
8 (3) Every current or future employee of a two-year or four-year college or university who
9 holds, or is entitled to hold, pursuant to Section 49-2-206, a retirement annuity contract with the
10 Teachers' Insurance and Annuity Association of America or with any other public or private
11 system, organization, or company during any period in which that employee has received
12 contributions toward the premiums required on compensation from the employing unit. The
13 employee, upon cessation of the employer contributions, shall immediately become a contributing
14 member.
15 (4) Every employee serving as an exchange employee from outside the state.
16 (5) Elected officials who file a formal request for exemption.
17 (6) Executive department heads of the state, members of the State Tax Commission, the
18 Public Service Commission, and other members of full-time or part-time boards or commissions
19 who file a formal request to be excluded from coverage.
20 (7) (a) Employees of the Department of Employment Security who are covered under
21 another retirement system allowed under Title 35, Chapter 4, Employment Security Act; or
22 (b) employees of the Department of Workforce Services who were covered under
23 Subsection (a) and who are covered under another retirement system allowed under Title 35A,
24 Chapter 4, Employment Security Act.
25 [
26 employed by a city, town, county, or other political subdivision who are not entitled to merit or
27 civil service protection. Persons eligible for exclusion under this subsection shall file a formal
28 request for exclusion from coverage and be employed in a position designated as exempt under
29 an employee exemption plan developed by the city, town, county, or political subdivision.
30 Employee exemption plans shall be subject to the following limitations:
31 (a) The total number of positions a city, town, county, or political subdivision may exempt
1 may not exceed the lesser of 30 positions or a number equal to 10% of the employees of the city,
2 town, county, or political subdivision. However, every city, town, county, or political subdivision
3 is entitled to a minimum exemption of one eligible employee.
4 (b) Employee exemption plans shall be filed annually with the retirement office, and the
5 city, town, county, or political subdivision shall update the exemption plan in the event of any
6 change.
7 (c) The retirement office may promulgate rules to implement this subsection.
8 Section 7. Section 49-3-103 is amended to read:
9 49-3-103. Definitions.
10 As used in this chapter:
11 (1) "Appointive officer" means an employee appointed to a position for a definite and
12 fixed term of office by official and duly recorded action of the governing body of an employing
13 unit and who earns $500 or more per month over a 12-month period adjusted by the Bureau of
14 Labor Statistics Consumer Price Index.
15 (2) (a) "Compensation," "salary," or "wages" means the total amount of payments made
16 by an employer to an employee for services rendered to the employer, including:
17 (i) bonuses;
18 (ii) cost-of-living adjustments;
19 (iii) other payments currently includable in gross income and that are subject to Social
20 Security deductions, including any payments in excess of the maximum amount subject to
21 deduction under Social Security law; and
22 (iv) amounts that the employee authorizes to be deducted or reduced for salary deferral or
23 other benefit programs authorized by federal law.
24 (b) "Compensation" for purposes of this chapter may not exceed the amount allowed under
25 Internal Revenue Code Section 401(a)(17).
26 (c) "Compensation," "salary," or "wages" does not include:
27 (i) the monetary value of remuneration paid in kind, such as a residence or use of
28 equipment;
29 (ii) all contributions made by an employer under any plan for the benefit of a participant;
30 (iii) salary paid to an employee working under the minimum number of hours required for
31 membership;
1 (iv) salary paid to a temporary or exempt employee;
2 (v) any payments upon termination, including accumulated lump-sum vacation, sick leave
3 payments, or any other special payments; or
4 (vi) uniform, travel, or similar allowances.
5 (3) "Educational institution" means a political subdivision or instrumentality of the state
6 or a combination thereof primarily engaged in educational activities or the administration or
7 servicing of educational activities, including:
8 (a) the State Board of Education and its instrumentalities;
9 (b) any institution of higher learning and its branches;
10 (c) any school district and its instrumentalities;
11 (d) any vocational and technical school; and
12 (e) any entity arising out of a consolidation agreement between entities under this
13 definition.
14 (4) "Effective date" of the noncontributory system means 12:01 a.m., July 1, 1986.
15 (5) (a) "Employee" or "regular employee" means any regular full-time employee whose
16 term of employment for an employer contemplates continued employment during a calendar or
17 school year and who performs covered service for one or more employers.
18 (b) "Employee" or "regular employee" means an officer, elective or appointive, who
19 receives as compensation from an employer $500 or more per month over a 12-month period
20 adjusted by the Bureau of Labor Statistics Consumer Price Index.
21 (6) "Employer" or "employing unit" means any department, educational institution,
22 political subdivision, or eligible organization, or agency financed in whole or in part by public
23 funds for which any employee or member performs services subject to this chapter.
24 (7) "Final average salary" means the amount computed by averaging the highest three
25 years of annual compensation preceding retirement subject to Subsections (a), (b), and (c).
26 (a) Except as provided in Subsection (b), the percentage increase in annual compensation
27 in any one of the years used may not exceed the previous year's salary by more than 10% plus a
28 cost-of-living adjustment equal to the decrease in the purchasing power of the dollar during the
29 previous year, as measured by the Consumer Price Index prepared by the United States Bureau of
30 Labor Statistics.
31 (b) In cases where the employing unit provides acceptable documentation to the board,
1 the limitation in Subsection (a) may be exceeded if:
2 (i) the member has transferred from another employing unit; or
3 (ii) the member has been promoted to a new position.
4 (c) If the member retires more than six months from the date of termination of
5 employment and for purposes of computing the member's final average salary only, the member
6 is considered to have been in service at his last salary rate from the date of the termination of
7 employment to the date retirement becomes effective if the member so requests.
8 (8) "Normal retirement age" means the age of 65 years.
9 (9) "Organization or agency financed in whole or in part by public funds" means an
10 agency, association, or organization that receives public funds. The term does not include political
11 subdivisions, departments, or educational institutions.
12 (10) "Public funds" means those funds derived, either directly or indirectly, from public
13 taxes or public revenue, dues, or contributions paid or donated by the membership of the
14 organization used to finance an activity whose objective is to improve, on a nonprofit basis, the
15 governmental, educational, and social programs and systems of the state or its political
16 subdivisions.
17 (11) (a) "Regular full-time employee," in qualifying for membership in the system, means
18 an employee whose employment normally requires an average of 20 hours or more per week,
19 except as modified by the board, and who receives benefits normally provided by the employing
20 unit.
21 (b) "Regular full-time employee" includes a teacher who teaches half-time or more or a
22 classified school employee who works an average of 20 hours per week or more, regardless of
23 benefits provided.
24 (12) "Years of service" or "service years" means:
25 (a) the number of periods, each to consist of 12 full months as determined by the board;
26 (b) a period determined by the board, whether consecutive or not, during which an
27 employee performed services for an employer or employers, including any time the employee
28 rendered service in the armed forces of the United States before membership in the system or was
29 absent on a paid leave of absence granted by an employer or absent in the service of the United
30 States government on military duty as provided by this chapter; or
31 (c) for a teacher, school administrator, or other contract employee of an educational
1 institution, not less than eight months of full-time service constitutes a service year.
2 Section 8. Section 49-3-206 is amended to read:
3 49-3-206. Exclusions from membership in system.
4 The following employees are excluded from membership in the retirement system:
5 (1) Every employee whose employment status is temporary in nature due to the nature or
6 the type of work to be performed. If the term of employment exceeds six months, then for that
7 employee a regular full-time status shall be assumed, and the employee shall be enrolled in the
8 system effective the beginning of the seventh month of employment. If the same employee,
9 previously terminated prior to enrollment as a member, is again employed within three months of
10 termination by the same employer, the employee shall be immediately enrolled as a member if the
11 work constitutes full-time as defined in this chapter.
12 (2) Full-time students or the spouse of a full-time student and persons employed in a
13 trainee relationship may be excluded from coverage by rules adopted by the board.
14 (3) Every current or future employee of a two-year or four-year college or university who
15 holds, or is entitled to hold, pursuant to Section 49-2-206, a retirement annuity contract with the
16 Teachers' Insurance and Annuity Association of America or with any other public or private
17 system, organization, or company during any period in which that employee has received
18 contributions toward the premiums required on compensation from the employing unit. The
19 employee, upon cessation of the employer contributions, shall immediately become a contributing
20 member.
21 (4) Every employee serving as an exchange employee from outside the state.
22 (5) Elected officials who file a formal request for exemption.
23 (6) Executive department heads of the state, members of the State Tax Commission, the
24 Public Service Commission, and other members of full-time or part-time boards or commissions
25 who file a formal request to be excluded from coverage.
26 (7) (a) Employees of the Department of Employment Security who are covered under
27 another retirement system allowed under Title 35, Chapter 4, Employment Security Act; or
28 (b) employees of the Department of Workforce Services who were covered under
29 Subsection (a) and who are covered under another retirement system allowed under Title 35A,
30 Chapter 4, Employment Security Act.
31 [
1 employed by a city, town, county, or other political subdivision, who are not entitled to merit or
2 civil service protection. Persons eligible for exclusion under this subsection shall file a formal
3 request for exclusion from coverage and be employed in a position designated as exempt under
4 an employee exemption plan developed by the city, town, county, or political subdivision.
5 Employee exemption plans shall be subject to the following limitations:
6 (a) The total number of positions a city, town, county, or political subdivision may exempt
7 may not exceed the lesser of 30 positions or a number equal to 10% of the employees of the city,
8 town, county, or political subdivision. However, every city, town, county, or political subdivision
9 is entitled to a minimum exemption of one eligible employee.
10 (b) Employee exemption plans shall be filed annually with the retirement office, and the
11 city, town, county, or political subdivision shall update the exemption plan in the event of any
12 change.
13 (c) The retirement office may promulgate rules to implement this section.
14 Section 9. Section 49-4-103 is amended to read:
15 49-4-103. Definitions.
16 As used in this chapter:
17 (1) (a) "Compensation," "salary," or "wages" means the total amount of payments which
18 are currently includable in gross income made by an employer to an employee covered under the
19 retirement system for services rendered to the employer as base income. Base income shall be
20 determined prior to any salary deductions or reductions for any salary deferral or pretax benefit
21 programs authorized by federal law.
22 (b) "Compensation" includes performance-based bonuses and cost-of-living adjustments.
23 (c) "Compensation" does not include:
24 (i) overtime;
25 (ii) sick pay incentives;
26 (iii) retirement pay incentives;
27 (iv) the monetary value of remuneration paid in kind, such as a residence, use of
28 equipment or uniform or travel allowances;
29 (v) a lump-sum payment or special payments covering accumulated leave; and
30 (vi) all contributions made by an employer under this plan or under any other employee
31 benefit plan maintained by an employer for the benefit of a participant.
1 (d) "Compensation" for purposes of this chapter may not exceed the amount allowed under
2 Internal Revenue Code Section 401(a)(17).
3 (2) "Final average salary" means the amount computed by averaging the highest three
4 years of annual compensation preceding retirement, subject to Subsections (a) and (b).
5 (a) Except as provided in Subsection (b), the percentage increase in annual compensation
6 in any one of the years used may not exceed the previous year's salary by more than 10% plus a
7 cost-of-living adjustment equal to the decrease in the purchasing power of the dollar during the
8 previous year, as measured by the Consumer Price Index prepared by the United States Bureau of
9 Labor Statistics.
10 (b) In cases where the employing unit provides acceptable documentation to the board, the
11 limitation in Subsection (a) may be exceeded if:
12 (i) the member has transferred from another employing unit; or
13 (ii) the member has been promoted to a new position.
14 (3) "Full-time service" means 2,080 hours a year.
15 (4) "Line-of-duty death" means a death resulting from external force, violence, or disease
16 occasioned by an act of duty as a police officer or other public safety member.
17 (5) (a) "Participating service" means public safety service rendered during which a person
18 was a member of this system as well as any of the terminated systems during which the person was
19 paid compensation upon which member contributions were taken.
20 (b) Participating service also means public safety service rendered for an employer covered
21 by the retirement system and standing to the credit of a member as of June 30, 1969, who
22 transferred to coverage under the public safety retirement system on July 1, 1969.
23 (6) (a) "Public safety service" means full-time paid service rendered by:
24 (i) peace officers in accordance with Section 77-1a-1;
25 (ii) correctional officers in accordance with Section 77-1a-2; and
26 (iii) special function officers in accordance with Subsection 49-4-203(5) and Section
27 77-1a-4.
28 (b) Subsection (a) does not apply to any person who became a member of the system prior
29 to January 1, 1984.
30 (7) "Years of service" or "service years" means the number of periods, each to consist of
31 12 full months as determined by the board, whether consecutive or not, during which an employee
1 performed services for an employer or employers, including time the employee was absent in the
2 service of the United States government on military duty.
3 Section 10. Section 49-4-601 is amended to read:
4 49-4-601. Annual cost-of-living adjustment.
5 (1) The retirement office shall compute and pay, upon approval by the board, an annual
6 cost-of-living adjustment to all retired members after the members have been retired one year. The
7 adjustment shall be equal to the decrease in the purchasing power of the dollar during the
8 preceding year, as measured by the Consumer Price Index, U.S. City Average, prepared by the
9 United States Bureau of Labor Statistics, and shall be limited to a maximum of 2.5% of the
10 retirant's or beneficiary's retirement allowance at the time of retirement. Decreases in the
11 purchasing power of the dollar exceeding 2.5% annually shall be accumulated and used in
12 subsequent allowances when the cost-of-living adjustment is less than 2.5%.
13 (2) The cost-of-living adjustment shall be reduced if the index shows a decline of 4% or
14 more during any period of more than one year. These reductions may not exceed 2% per year
15 based upon the original retirement allowance. Payments made under this section shall be a part
16 of the retired member's allowance. Payments and adjustments for the retirant shall also apply to
17 the beneficiary [
18 Section 11. Section 49-4-704 is amended to read:
19 49-4-704. Death of retired member -- Benefits.
20 (1) Except as provided in Subsection (3), if the member retired under Division A or
21 Division B, the death benefit payable to the dependent spouse after the death of the retired member
22 of this system is a monthly amount equal to 65% of the allowance that was being paid to the retired
23 member at the time of death.
24 (2) (a) Except as provided in Subsection (3), if the member retired solely under Division
25 B or dies leaving dependent children, the children shall qualify for a benefit as prescribed for
26 children under Section 49-4-702, with the total being paid as limited by that section.
27 (b) The effective date of accrual of this pension is on the first day of the month following
28 the month in which the retirant died.
29 (c) Except as provided in Subsection (3), payment of the full pension for this latter month
30 shall be made to the dependent beneficiary in lieu of the deceased member.
31 (3) (a) In the event of a court order complying with Section 49-1-609, a former spouse of
1 a retired member is entitled to the court designated share of the retired member's monthly
2 retirement benefit and the [
3 (b) This subsection supersedes conflicting subsections of this section.
4 Section 12. Section 49-4a-103 is amended to read:
5 49-4a-103. Definitions.
6 As used in this chapter:
7 (1) (a) "Compensation," "salary," or "wages" means the total amount of payments which
8 are currently includable in gross income made by an employer to an employee for services
9 rendered to the employer as base income for the position covered under the retirement system.
10 Base income shall be determined prior to any salary deductions or reductions for any salary
11 deferral or pretax benefit programs authorized by federal law.
12 (b) "Compensation" includes performance-based bonuses and cost-of-living adjustments.
13 (c) "Compensation" does not include:
14 (i) overtime;
15 (ii) sick pay incentives;
16 (iii) retirement pay incentives;
17 (iv) the monetary value of remuneration paid in kind, as in a residence, use of equipment
18 or uniform or travel allowances;
19 (v) a lump-sum payment or special payment covering accumulated leave; and
20 (vi) all contributions made by an employer under this plan or under any other employee
21 benefit plan maintained by an employer for the benefit of a participant.
22 (d) "Compensation" for purposes of this chapter may not exceed the amount allowed under
23 Internal Revenue Code Section 401(a)(17).
24 (2) "Final average salary" means the amount computed by averaging the highest three
25 years of annual compensation preceding retirement subject to Subsections (a) and (b).
26 (a) Except as provided in Subsection (b), the percentage increase in annual compensation
27 in any one of the years used may not exceed the previous year's salary by more than 10% plus a
28 cost-of-living adjustment equal to the decrease in the purchasing power of the dollar during the
29 previous year, as measured by the Consumer Price Index prepared by the United States Bureau of
30 Labor Statistics.
31 (b) In cases where the employing unit provides acceptable documentation to the board, the
1 limitation in Subsection (a) may be exceeded if:
2 (i) the member has transferred from another employing unit; or
3 (ii) the member has been promoted to a new position.
4 (3) "Full-time service" means 2,080 hours a year.
5 (4) "Line-of-duty death" means a death resulting from external force, violence, or disease
6 occasioned by an act of duty as a policeman or other public safety member.
7 (5) "Public safety service" means full-time paid service rendered by:
8 (a) peace officers in accordance with Section 77-1a-1;
9 (b) correctional officers in accordance with Section 77-1a-2; and
10 (c) special function officers in accordance with Subsection 49-4a-203(7) and Section
11 77-1a-4.
12 (6) "Years of service" or "service years" means the number of periods, each to consist of
13 12 full months as determined by the board, whether consecutive or not, during which an employee
14 performed services for an employer or employers, including time the employee was absent in the
15 service of the United States government on military duty.
16 Section 13. Section 49-4a-704 is amended to read:
17 49-4a-704. Death of retired member -- Benefits.
18 (1) Except as provided in Subsection (3), if the member retired under Division A or
19 Division B, the death benefit payable to the dependent spouse after the death of the retired member
20 of this system is a monthly amount equal to 65% of the allowance that was being paid to the retired
21 member at the time of death.
22 (2) (a) Except as provided in Subsection (3), if the member retired solely under Division
23 B or dies leaving dependent children, the children shall qualify for a benefit as prescribed for
24 children under Section 49-4a-702, with the total being paid as limited by that section.
25 (b) The effective date of accrual of this pension is on the first day of the month following
26 the month in which the retirant died.
27 (c) Except as provided in Subsection (3), payment of the full pension for this latter month
28 shall be made to the dependent beneficiary in lieu of the deceased member.
29 (3) (a) In the event of a court order complying with Section 49-1-609, a former spouse of
30 a retired member is entitled to a court designated share of the retired member's monthly retirement
31 benefit and the [
1 (b) This subsection supersedes conflicting subsections of this section.
2 Section 14. Section 49-5-103 is amended to read:
3 49-5-103. Definitions.
4 As used in this chapter:
5 (1) (a) "Compensation," "salary," or "wages" means the total amount of payments which
6 are currently includable in gross income made by an employer to an employee for services
7 rendered to the employer as base income. Base income shall be determined prior to any salary
8 deductions or reductions for any salary deferral or pretax benefit programs authorized by federal
9 law, for the position covered under the retirement system.
10 (b) "Compensation" includes performance-based bonuses and cost-of-living adjustments.
11 (c) "Compensation" does not include:
12 (i) overtime;
13 (ii) sick pay incentives;
14 (iii) retirement pay incentives;
15 (iv) remuneration paid in kind such as a residence, use of equipment, uniforms, or travel
16 allowances;
17 (v) a lump-sum payment or special payments covering accumulated leave; and
18 (vi) all contributions made by an employer under this plan or under any other employee
19 benefit plan maintained by an employer for the benefit of a participant.
20 (d) "Compensation" for purposes of this chapter may not exceed the amount allowed under
21 Internal Revenue Code Section 401(a)(17).
22 (2) (a) "Disability" means a physical or mental condition which, in the judgment of the
23 board, is total and presumably permanent, prevents a member from fulfilling the responsibilities
24 of the member's assignment, and prevents the member from performing satisfactorily in some
25 other assignment of the same general class.
26 (b) The determination of disability is based upon medical and other evidence satisfactory
27 to the board.
28 (3) "Employer" or "employing unit" means any regularly constituted fire department of
29 a political subdivision for which any employee or member performs services subject to this
30 chapter.
31 (4) "Final average salary" means the amount computed by averaging the highest three
1 years of annual compensation preceding retirement, but not including overtime or lump-sum or
2 special salary adjustments received instead of uniform or other allowances or expenses or other
3 payments made covering accumulated leave.
4 (a) Except as provided in Subsection (b), the percentage increase in any one of the years
5 used may not exceed the previous year's salary by more than 10% plus a cost-of-living adjustment
6 equal to the decrease in the purchasing power of the dollar during the previous year, as measured
7 by the Consumer Price Index prepared by the United States Bureau of Labor Statistics.
8 (b) In cases where the employing unit provides acceptable documentation to the board the
9 limitation in Subsection (a) may be exceeded if:
10 (i) the member has transferred from another employing unit; or
11 (ii) the member has been promoted to a new position.
12 (5) "Firefighter service" means full-time paid service rendered as an individual or as a
13 member of a group of firefighters regularly assigned to a regularly constituted fire department.
14 (6) "Full-time service" means 2,080 hours per year.
15 (7) "Inactive member" means a member who has received no compensation for a period
16 of longer than four months.
17 (8) "Line-of-duty death or disability" means a death or any physical or mental disability
18 resulting from external force, violence, or disease occasioned by an act of duty as a firefighter and
19 includes for a paid firefighter, after five years of credited service, any death or disability resulting
20 from heart disease, lung disease, or respiratory tract, but if a firefighter ceases to be a contributing
21 member because of personal illness or service-connected disability, neither of which is related to
22 heart or lung disease nor the respiratory tract for a period of six months or more and then again
23 becomes a contributing member, the provision relating to death or disability resulting from heart,
24 lung, or respiratory disease does not apply until the member again becomes a contributing member
25 for a period of not less than two years or unless clear and precise evidence is presented that the
26 heart, lung, or respiratory disease was, in fact, occasioned in the line-of-duty.
27 (9) (a) "Member" means any person included in the membership of the retirement system.
28 (b) A person is a member if the person has contributions on deposit with the retirement
29 system.
30 (c) A person hired on or after July 1, 1971, in a fire department, who is assigned directly
31 to a clerical position, and because of lack of training in fire fighting techniques, is not subject to
1 reassignment into positions of hazardous duty, is not eligible for membership in this system.
2 (i) The person in a clerical position shall become a contributing member of the appropriate
3 retirement system.
4 (ii) The required employer contributions shall be paid by the fire department.
5 (iii) This membership exclusion may not be interpreted to prohibit the assignment of a
6 handicapped or partially disabled firefighter to that position.
7 (iv) If Subsection (iii) applies, the firefighter retains status as a contributing member of
8 this system and continues to accrue service credits while so employed.
9 (10) "Regularly constituted fire department" means a fire department which employs a
10 full-time fire chief and promulgates rules.
11 (11) (a) "Service" or "covered service" means firefighter service rendered an employer for
12 compensation which is included in computations relating to membership status or benefit rights
13 under this chapter.
14 (b) A retirement allowance or other benefit may not be granted under this system that is
15 based upon the same service for retirement benefits under some other retirement system
16 administered by the board.
17 (12) (a) "Volunteer firefighter" means any individual that is not regularly employed as a
18 firefighter, but who is on the rolls of a regularly constituted fire department.
19 (b) An individual that volunteers assistance but is not a regularly enrolled firefighter is not
20 a volunteer firefighter.
21 (c) Service as a volunteer firefighter is not creditable towards qualifying for a service
22 retirement allowance.
23 (13) "Years of service" or "service years" means the number of periods consisting of 12
24 full months as determined by the board, whether consecutive or not, during which an employee
25 performed services for an employer or received full-time pay while on sick leave, including any
26 time the employee was absent in the service of the United States.
27 Section 15. Section 49-5-601 is amended to read:
28 49-5-601. Annual cost-of-living allowance.
29 (1) (a) The retirement office shall compute and pay, upon approval by the board, an annual
30 cost-of-living adjustment to all retired members after those members have been retired for one
31 year.
1 (b) The adjustment is equal to the decrease in the purchasing power of the dollar during
2 the preceding year, as measured by the Consumer Price Index, United States City Average,
3 prepared by the United States Bureau of Labor Statistics, and is limited to a maximum of 4% of
4 the retirant's or beneficiary's original retirement allowance.
5 (c) Decreases in the purchasing power of the dollar exceeding 4% annually are
6 accumulated and used in subsequent allowances when the cost-of-living adjustment is less than
7 4% annually.
8 (2) (a) The cost-of-living adjustment shall be reduced if the index shows a decline of 4%
9 or more during any period of more than one year.
10 (b) These reductions may not exceed 2% per year based upon the original retirement
11 allowance.
12 (c) Payments made under this section are a part of the retired member's allowance.
13 (d) Payments and adjustments for the retirant also apply to the beneficiary [
14
15 (e) The net cost of increasing the cost-of-living adjustment from 2-1/2% to 4% annually
16 under this section, after recognizing the decrease in the contribution rates for actuarial expense,
17 is 1.74% for Division A firefighters and 1.9% for Division B firefighters. The net cost shall be
18 added to the employee contribution rate in Division A and Division B.
19 Section 16. Section 49-5-704 is amended to read:
20 49-5-704. Death of retired member -- Benefits.
21 (1) (a) Except as provided in Subsection (3), the death benefit payable to a dependent
22 spouse after death of the retirant is a monthly amount equal to 75% of the allowance being paid
23 to the retirant at the time of death.
24 (b) The effective date of accrual of this pension is the first day of the month following the
25 month the retirant died.
26 (c) Except as provided in Subsection (3), payment of the full pension for this latter month
27 shall be made to the dependent beneficiary instead of the deceased member.
28 (2) If the member retires under Division B and dies leaving dependent children, they
29 qualify for benefits prescribed for children under Section 49-5-701 or 49-5-702.
30 (3) (a) In the event of a court order complying with Section 49-1-609, a former spouse of
31 a retired member is entitled to the court designated share of the retirant's monthly retirement
1 benefit and the [
2 (b) This subsection supersedes conflicting subsections of this section.
3 Section 17. Section 49-6-103 is amended to read:
4 49-6-103. Definitions.
5 As used in this chapter:
6 (1) (a) "Compensation," "salary," or "wages" means the total amount of payments which
7 are currently includable in gross income made by an employer to an employee for services
8 rendered to the employer.
9 (b) "Compensation" includes:
10 (i) performance-based bonuses;
11 (ii) cost-of-living adjustments;
12 (iii) payments subject to Social Security deductions;
13 (iv) any payments in excess of the maximum amount subject to deduction under Social
14 Security law; and
15 (v) amounts which the employee authorizes to be deducted or reduced for salary deferral
16 or other authorized benefit programs.
17 (c) "Compensation" for purposes of this chapter may not exceed the amount allowed under
18 Internal Revenue Code Section 401(a)(17).
19 (d) "Compensation," "salary," or "wages" does not include:
20 (i) the monetary value of remuneration paid in kind, such as a residence or use of
21 equipment;
22 (ii) all contributions made by an employer under any plan for the benefit of a participant;
23 (iii) salary paid to an employee working under the minimum number of hours required for
24 membership;
25 (iv) salary paid to a temporary or exempt employee;
26 (v) payments upon termination or any other special payments including early retirement
27 inducements; or
28 (vi) uniform, travel, or similar allowances.
29 (2) "Final average salary" means the amount computed by averaging the highest two years
30 of annual compensation preceding retirement subject to Subsections (a) and (b).
31 (a) Except as provided in Subsection (b), the percentage increase in annual compensation
1 in any one of the years used may not exceed the previous year's salary by more than 10% plus a
2 cost-of-living adjustment equal to the decrease in the purchasing power of the dollar during the
3 previous year, as measured by the Consumer Price Index prepared by the United States Bureau of
4 Labor Statistics.
5 (b) In cases where the employing unit provides acceptable documentation to the board, the
6 limitation in Subsection (a) may be exceeded if:
7 (i) the member has transferred from another employing unit; or
8 (ii) the member has been promoted to a new position.
9 (3) "Normal retirement age" means the age of 65 years.
10 (4) "Years of service" or "service years" means the number of periods, each to consist of
11 12 full months [
12 member was employed to perform services for the employer.
13 Section 18. Effective date.
14 This act takes effect on July 1, 1997.
Legislative Review Note
as of 11-27-96 12:24 PM
A limited legal review of this bill raises no obvious constitutional or statutory concerns.
Office of Legislative Research and General Counsel
Committee Note
The Retirement Interim Committee recommended this bill.
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