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S.B. 83 Enrolled
AN ACT RELATING TO PENSIONS; CREATING A NONCONTRIBUTORY RETIREMENT
SYSTEM FOR JUDGES; PROVIDING DEFINITIONS; PROVIDING ELIGIBILITY
AND CONVERSION REQUIREMENTS; ESTABLISHING THAT CONTRIBUTIONS
TO THE SYSTEM ARE TO BE MADE ENTIRELY BY THE EMPLOYER;
PROVIDING FOR BENEFITS; PROVIDING FOR ADMINISTRATION OF THE
SYSTEM; AND PROVIDING AN EFFECTIVE DATE.
This act affects sections of Utah Code Annotated 1953 as follows:
ENACTS:
49-6a-101, Utah Code Annotated 1953
49-6a-102, Utah Code Annotated 1953
49-6a-103, Utah Code Annotated 1953
49-6a-201, Utah Code Annotated 1953
49-6a-202, Utah Code Annotated 1953
49-6a-203, Utah Code Annotated 1953
49-6a-301, Utah Code Annotated 1953
49-6a-401, Utah Code Annotated 1953
49-6a-402, Utah Code Annotated 1953
49-6a-501, Utah Code Annotated 1953
49-6a-601, Utah Code Annotated 1953
49-6a-602, Utah Code Annotated 1953
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 49-6a-101 is enacted to read:
49-6a-101. Title.
This chapter is known as the "Judges' Noncontributory Retirement Act."
Section 2. Section 49-6a-102 is enacted to read:
49-6a-102. Purpose.
The purpose of this chapter is to establish a retirement plan for judges which provides the
following:
(1) a uniform system of membership;
(2) retirement requirements;
(3) benefits for judges;
(4) funding on an actuarially sound basis;
(5) contributions made entirely by employers; and
(6) economy and efficiency in public service.
Section 3. Section 49-6a-103 is enacted to read:
49-6a-103. Definitions.
As used in this chapter:
(1) (a) "Compensation," "salary," or "wages" means the total amount of payments which are
currently includable in gross income made by an employer to an employee for services rendered to
the employer.
(b) "Compensation" includes:
(i) performance-based bonuses;
(ii) cost-of-living adjustments;
(iii) payments subject to Social Security deductions;
(iv) any payments in excess of the maximum amount subject to deduction under Social
Security law; and
(v) amounts which the employee authorizes to be deducted or reduced for salary deferral or
other authorized benefit programs.
(c) "Compensation" for purposes of this chapter may not exceed the amount allowed under
Internal Revenue Code Section 401(a)(17).
(d) "Compensation," "salary," or "wages" does not include:
(i) the monetary value of remuneration paid in kind, such as a residence or use of equipment;
(ii) all contributions made by an employer under any plan for the benefit of a participant;
(iii) salary paid to an employee working under the minimum number of hours required for
membership;
(iv) salary paid to a temporary or exempt employee;
(v) payments upon termination or any other special payments including early retirement
inducements; or
(vi) uniform, travel, or similar allowances.
(2) "Final average salary" means the amount computed by averaging the highest two years
of annual compensation preceding retirement subject to Subsections (a) and (b).
(a) Except as provided in Subsection (b), the percentage increase in annual compensation
in any one of the years used may not exceed the previous year's salary by more than 10% plus a
cost-of-living adjustment equal to the decrease in the purchasing power of the dollar during the
previous year, as measured by the Consumer Price Index prepared by the United States Bureau of
Labor Statistics.
(b) In cases where the employing unit provides acceptable documentation to the board, the
limitation in Subsection (a) may be exceeded if:
(i) the member has transferred from another employing unit; or
(ii) the member has been promoted to a new position.
(3) "Normal retirement age" means the age of 65 years.
(4) "Years of service" or "service years" mean the number of periods, each to consist of 12
full months or as determined by the board, whether consecutive or not, during which a member was
employed to perform services for the employer.
Section 4. Section 49-6a-201 is enacted to read:
49-6a-201. Creation of system.
There is created for justices and judges of courts of record, the Judges' Noncontributory
Retirement System.
Section 5. Section 49-6a-202 is enacted to read:
49-6a-202. Creation of trust fund.
There is created the "Judges' Noncontributory Retirement Trust Fund" for the purpose of
paying the benefits and costs of administering this system. The fund shall consist of all money and
assets transferred to it under any terminated system, the money paid into it under this system,
whether in the form of cash, securities, or other assets, and of all money received from any other
source. Custody, management, and investment of the fund shall be governed by Title 49, Chapter
1.
Section 6. Section 49-6a-203 is enacted to read:
49-6a-203. Eligibility for membership in the system -- Conversion.
(1) Justices and judges of courts of record appointed after July 1, 1997, shall automatically
become members of this system.
(2) Any justice or judge appointed prior to July 1, 1997, may either become a member of this
noncontributory system or remain a member of the Judges' Retirement System established under
Title 49, Chapter 6, Judges' Retirement Act, by following the procedures established by the board
pursuant to this chapter.
(3) Justices and judges may only elect to participate in the noncontributory system under
Subsection (2) prior to January 1, 1998.
Section 7. Section 49-6a-301 is enacted to read:
49-6a-301. Contributions by employees and employers -- Retirement fees -- Report.
(1) The system shall be maintained on a financially and actuarially sound basis by means
of contributions and fees made entirely by the employer.
(2) Fees and contributions shall be remitted monthly to the retirement office.
(3) The board shall report to the governor, the Legislature, and the employing unit the
contribution rates and any adjustments necessary to maintain the system on a financially and
actuarially sound basis, and the employer shall pay the certified contribution rates.
Section 8. Section 49-6a-401 is enacted to read:
49-6a-401. Eligibility for service retirement -- Date of retirement -- Qualifications.
(1) (a) Any judge who qualifies for service retirement may retire by applying in writing to
the retirement office stating the proposed effective date of retirement, which may not be more than
90 days before or after the date of application.
(b) The effective date shall be the 1st or 16th day of the month, as selected by the member,
but must be after the last day of actual work.
(c) The member shall actually terminate employment and provide evidence of termination.
(2) The member is qualified to retire upon termination of services on or before the effective
date of retirement if one of the following requirements on that date is met:
(a) the member has been credited with at least six years of service and has attained an age
of 70 years or more;
(b) the member has been credited with at least ten years of service and has attained an age
of 62 years or more;
(c) the member has been credited with at least 20 years of service and has attained an age
of 55 years or more; or
(d) the member has been credited with at least 25 years of service.
Section 9. Section 49-6a-402 is enacted to read:
49-6a-402. Service retirement plan -- Calculation of retirement benefit -- Adjustment
to formula permitted.
Upon the service retirement of a justice or judge under Section 49-6a-401, the justice or
judge shall receive a retirement allowance determined as follows:
(1) If the justice or judge has attained the age of 62 years and has ten or more years of
judicial service credit, the retirement allowance is a monthly amount equal to:
(a) 5% of the final average monthly salary multiplied by the number of years of judicial
service credited, limited to ten years, plus
(b) 2.25% of the final average monthly salary multiplied by the number of years of judicial
service credited in excess of ten years but less than 20 years, plus
(c) 1% of the final average monthly salary multiplied by the number of years of judicial
service credited in excess of 20 years. Total monthly retirement allowance to which a justice or
judge is entitled may not exceed 75% of the final average monthly salary.
(2) If the justice or judge has attained the age of 70 years and has six years or more of
judicial service credit, the retirement allowance is the same as computed under Subsection (1).
(3) If the justice or judge has 25 years or more of judicial service credit, the retirement
allowance is the same as computed under Subsection (1).
(4) If the justice or judge has attained the age of 55 years and has 20 years or more of
judicial service credit, the retirement allowance is the same as computed under Subsection (1)
reduced to an amount payable monthly for life which would be the same actuarial equivalent based
on the justice's or judge's age at retirement as would be the value of the retirement pay based on life
expectancy if the justice or judge were 65 years of age.
(5) All members and their beneficiaries, as of July 1, 1983, shall receive an increase in
monthly benefits in the amount of $120 for each member or $60 for each beneficiary. The cost of
implementing this subsection shall be shared equally between the employer and employee.
(6) Years of service include any fractions of years of service to which the members may be
entitled. Notwithstanding the formula for computing the service retirement allowance for members
participating in the program, the board shall, in as far as practical, adjust the percentage factor used
in the service retirement allowance formula, in its application to the years of service of a retiring
member to a percentage amount which maintains the retirement trust account on an actuarially sound
basis if the employer contributions, retirement court fees, and earnings of the fund are insufficient
to fund the benefits provided for members participating in the program.
Section 10. Section 49-6a-501 is enacted to read:
49-6a-501. Annual cost-of-living adjustment.
(1) There shall be computed and paid from the Judges' Noncontributory Retirement Fund
an annual cost-of-living allowance adjustment to all retired members after one year of retirement
equal to the decrease in the purchasing power of the dollar during the preceding year measured by
the Consumers Price Index. The cost-of-living adjustment shall be limited each year to a maximum
of 4% of the retired member's or beneficiary's monthly retirement allowance. Decreases in the
purchasing power of the dollar in excess of 4% annually shall be accumulated over two or more
years and used in whole or in part in making subsequent annual adjustments when the cost-of-living
adjustment is less than 4%.
(2) The cost-of-living adjustment is based upon the retirant's or beneficiary's allowance, is
subject to reduction if the cost-of-living shows a decline of 4% for more than one year, and applies
to any cost-of-living increase. These reductions may not exceed the rate of 2% per year based upon
the established retirement allowance base. Payments made under this section are a part of the retired
member's allowance. The payments and subsequent adjustments as prescribed for the retirant shall
likewise apply to any beneficiary who is paid an allowance.
(3) Funds for the benefits provided by this section shall be obtained from contributions and
fees paid on covered salaries.
Section 11. Section 49-6a-601 is enacted to read:
49-6a-601. Death benefit for active and inactive members before retirement --
Computation of benefit.
(1) Upon the receipt of acceptable proof of death of a member or an inactive member before
the effective date of retirement, the dependent spouse shall have the choice of the following death
benefits:
(a) a refund of accumulated contributions, if any, including interest, plus 65% of the judge's
final average salary on a yearly rate; or
(b) a monthly allowance equal to 65% of the monthly allowance computed on the basis of
the service retirement allowance formula, based upon the years of service and final average salary,
but disregarding early retirement reductions.
(2) The pension may not exceed an amount which would have been paid if the deceased
judge served to age 70 and had the retirement allowance then computed on the basis of final average
salary under Section 49-6a-402.
Section 12. Section 49-6a-602 is enacted to read:
49-6a-602. Death benefit for active and inactive members after retirement --
Computation of benefit.
(1) The death benefit payable to a dependent spouse after the death of a retired member of
this system is a monthly amount equal to 65% of the allowance which was being paid to the retired
member at the time of death. The effective date of the accrual of this pension is the first day of the
month following the month in which the retirant died. Payment of the full pension for this latter
month shall be made to the dependent beneficiary in lieu of the deceased member.
(2) A member may elect to increase the surviving spouse's monthly allowance up to 75%
of a monthly allowance computed on the basis of the service retirement allowance formula under
Section 49-6a-402. The amount payable to the member upon retirement would be reduced to an
amount payable monthly for life, which would reflect the actuarial equivalent necessary to fund the
increased percentage for the surviving spouse above 65%.
Section 13. Effective date.
This act takes effect on July 1, 1997.
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