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S.B. 83
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6 AN ACT RELATING TO PENSIONS; CREATING A NONCONTRIBUTORY RETIREMENT
7 SYSTEM FOR JUDGES; PROVIDING DEFINITIONS; PROVIDING ELIGIBILITY AND
8 CONVERSION REQUIREMENTS; ESTABLISHING THAT CONTRIBUTIONS TO THE
9 SYSTEM ARE TO BE MADE ENTIRELY BY THE EMPLOYER; PROVIDING FOR
10 BENEFITS; PROVIDING FOR ADMINISTRATION OF THE SYSTEM; AND PROVIDING
11 AN EFFECTIVE DATE.
12 This act affects sections of Utah Code Annotated 1953 as follows:
13 ENACTS:
14 49-6a-101, Utah Code Annotated 1953
15 49-6a-102, Utah Code Annotated 1953
16 49-6a-103, Utah Code Annotated 1953
17 49-6a-201, Utah Code Annotated 1953
18 49-6a-202, Utah Code Annotated 1953
19 49-6a-203, Utah Code Annotated 1953
20 49-6a-301, Utah Code Annotated 1953
21 49-6a-401, Utah Code Annotated 1953
22 49-6a-402, Utah Code Annotated 1953
23 49-6a-501, Utah Code Annotated 1953
24 49-6a-601, Utah Code Annotated 1953
25 49-6a-602, Utah Code Annotated 1953
26 Be it enacted by the Legislature of the state of Utah:
27 Section 1. Section 49-6a-101 is enacted to read:
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3 49-6a-101. Title.
4 This chapter is known as the "Judges' Noncontributory Retirement Act."
5 Section 2. Section 49-6a-102 is enacted to read:
6 49-6a-102. Purpose.
7 The purpose of this chapter is to establish a retirement plan for judges which provides the
8 following:
9 (1) a uniform system of membership;
10 (2) retirement requirements;
11 (3) benefits for judges;
12 (4) funding on an actuarially sound basis;
13 (5) contributions made entirely by employers; and
14 (6) economy and efficiency in public service.
15 Section 3. Section 49-6a-103 is enacted to read:
16 49-6a-103. Definitions.
17 As used in this chapter:
18 (1) (a) "Compensation," "salary," or "wages" means the total amount of payments which
19 are currently includable in gross income made by an employer to an employee for services
20 rendered to the employer.
21 (b) "Compensation" includes:
22 (i) performance-based bonuses;
23 (ii) cost-of-living adjustments;
24 (iii) payments subject to Social Security deductions;
25 (iv) any payments in excess of the maximum amount subject to deduction under Social
26 Security law; and
27 (v) amounts which the employee authorizes to be deducted or reduced for salary deferral
28 or other authorized benefit programs.
29 (c) "Compensation" for purposes of this chapter may not exceed the amount allowed under
30 Internal Revenue Code Section 401(a)(17).
31 (d) "Compensation," "salary," or "wages" does not include:
1 (i) the monetary value of remuneration paid in kind, such as a residence or use of
2 equipment;
3 (ii) all contributions made by an employer under any plan for the benefit of a participant;
4 (iii) salary paid to an employee working under the minimum number of hours required for
5 membership;
6 (iv) salary paid to a temporary or exempt employee;
7 (v) payments upon termination or any other special payments including early retirement
8 inducements; or
9 (vi) uniform, travel, or similar allowances.
10 (2) "Final average salary" means the amount computed by averaging the highest two years
11 of annual compensation preceding retirement subject to Subsections (a) and (b).
12 (a) Except as provided in Subsection (b), the percentage increase in annual compensation
13 in any one of the years used may not exceed the previous year's salary by more than 10% plus a
14 cost-of-living adjustment equal to the decrease in the purchasing power of the dollar during the
15 previous year, as measured by the Consumer Price Index prepared by the United States Bureau of
16 Labor Statistics.
17 (b) In cases where the employing unit provides acceptable documentation to the board, the
18 limitation in Subsection (a) may be exceeded if:
19 (i) the member has transferred from another employing unit; or
20 (ii) the member has been promoted to a new position.
21 (3) "Normal retirement age" means the age of 65 years.
22 (4) "Years of service" or "service years" mean the number of periods, each to consist of
23 12 full months or as determined by the board, whether consecutive or not, during which a member
24 was employed to perform services for the employer.
25 Section 4. Section 49-6a-201 is enacted to read:
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27 49-6a-201. Creation of system.
28 There is created for justices of the Supreme Court and judges of the appellate, district,
29 circuit, and juvenile courts, the Judges' Noncontributory Retirement System.
30 Section 5. Section 49-6a-202 is enacted to read:
31 49-6a-202. Creation of trust fund.
1 There is created the Judges' Noncontributory Retirement Trust Fund for the purpose of
2 paying the benefits and costs of administering this system. The fund shall consist of all money and
3 assets transferred to it under any terminated system, the money paid into it under this system,
4 whether in the form of cash, securities, or other assets, and of all money received from any other
5 source. Custody, management, and investment of the fund shall be governed by Title 49, Chapter
6 1.
7 Section 6. Section 49-6a-203 is enacted to read:
8 49-6a-203. Eligibility for membership in the system -- Conversion.
9 (1) Justices of the Supreme Court, and judges of the appellate, district, circuit, and juvenile
10 courts appointed after July 1, 1997, shall automatically become members of this system.
11 (2) Any justice or judge appointed prior to July 1, 1997, may either become a member of
12 this noncontributory system or remain a member of the Judges' Retirement System established
13 under Title 49, Chapter 6, Judges' Retirement Act, by following the procedures established by the
14 board pursuant to this chapter.
15 (3) Justices and judges may only elect to participate in the noncontributory system under
16 Subsection (2) prior to January 1, 1998.
17 Section 7. Section 49-6a-301 is enacted to read:
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19 49-6a-301. Contributions by employees and employers -- Retirement fees -- Report.
20 (1) The system shall be maintained on a financially and actuarially sound basis by means
21 of contributions and fees made entirely by the employer.
22 (2) Fees and contributions shall be remitted monthly to the retirement office.
23 (3) The board shall report to the governor, the Legislature, and the employing unit the
24 contribution rates and any adjustments necessary to maintain the system on a financially and
25 actuarially sound basis, and the employer shall pay the certified contribution rates.
26 Section 8. Section 49-6a-401 is enacted to read:
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28 49-6a-401. Eligibility for service retirement -- Date of retirement -- Qualifications.
29 (1) (a) Any judge who qualifies for service retirement may retire by applying in writing
30 to the retirement office stating the proposed effective date of retirement, which may not be more
31 than 90 days after the date of application.
1 (b) The effective date shall be the 1st or 16th day of the month, as selected by the member,
2 but must be after the last day of actual work.
3 (2) The member is qualified to retire upon termination of services on or before the
4 effective date of retirement if one of the following requirements on that date is met:
5 (a) the member has been credited with at least six years of service and has attained an age
6 of 70 years or more;
7 (b) the member has been credited with at least ten years of service and has attained an age
8 of 62 years or more;
9 (c) the member has been credited with at least 20 years of service and has attained an age
10 of 55 years or more; or
11 (d) the member has been credited with at least 25 years of service.
12 Section 9. Section 49-6a-402 is enacted to read:
13 49-6a-402. Service retirement plan -- Calculation of retirement benefit -- Adjustment
14 to formula permitted.
15 Upon the service retirement of a justice or judge under Section 49-6a-401, the justice or
16 judge shall receive a retirement allowance determined as follows:
17 (1) If the justice or judge has attained the age of 62 years and has ten or more years of
18 judicial service credit, the retirement allowance is a monthly amount equal to:
19 (a) 5% of the final average monthly salary multiplied by the number of years of judicial
20 service credited, limited to ten years, plus
21 (b) 2.25% of the final average monthly salary multiplied by the number of years of judicial
22 service credited in excess of ten years but less than 20 years, plus
23 (c) 1% of the final average monthly salary multiplied by the number of years of judicial
24 service credited in excess of 20 years. Total monthly retirement allowance to which a justice or
25 judge is entitled may not exceed 75% of the final average monthly salary.
26 (2) If the justice or judge has attained the age of 70 years and has six years or more of
27 judicial service credit, the retirement allowance is the same as computed under Subsection (1).
28 (3) If the justice or judge has 25 years or more of judicial service credit, the retirement
29 allowance is the same as computed under Subsection (1).
30 (4) If the justice or judge has attained the age of 55 years and has 20 years or more of
31 judicial service credit, the retirement allowance is the same as computed under Subsection (1)
1 reduced to an amount payable monthly for life which would be the same actuarial equivalent based
2 on the justice's or judge's age at retirement as would be the value of the retirement pay based on
3 life expectancy if the justice or judge were 65 years of age.
4 (5) All members and their beneficiaries, as of July 1, 1983, shall receive an increase in
5 monthly benefits in the amount of $120 for each member or $60 for each beneficiary. The cost
6 of implementing this subsection shall be shared equally between the employer and employee.
7 (6) Years of service include any fractions of years of service to which the members may
8 be entitled. Notwithstanding the formula for computing the service retirement allowance for
9 members participating in the program, the board shall, in as far as practical, adjust the percentage
10 factor used in the service retirement allowance formula, in its application to the years of service
11 of a retiring member to a percentage amount which maintains the retirement trust account on an
12 actuarially sound basis if the employer contributions, retirement court fees, and earnings of the
13 fund are insufficient to fund the benefits provided for members participating in the program.
14 Section 10. Section 49-6a-501 is enacted to read:
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16 49-6a-501. Annual cost-of-living adjustment.
17 (1) There shall be computed and paid from the Judges' Noncontributory Retirement Fund
18 an annual cost-of-living allowance adjustment to all retired members after one year of retirement
19 equal to the decrease in the purchasing power of the dollar during the preceding year measured by
20 the Consumers Price Index. The cost-of-living adjustment shall be limited each year to a
21 maximum of 4% of the retired member's or beneficiary's monthly retirement allowance. Decreases
22 in the purchasing power of the dollar in excess of 4% annually shall be accumulated over two or
23 more years and used in whole or in part in making subsequent annual adjustments when the
24 cost-of-living adjustment is less than 4%.
25 (2) The cost-of-living adjustment is based upon the retirant's or beneficiary's allowance,
26 is subject to reduction if the cost of living shows a decline of 4% for more than one year, and
27 applies to any cost-of-living increase. These reductions may not exceed the rate of 2% per year
28 based upon the established retirement allowance base. Payments made under this section are a part
29 of the retired member's allowance. The payments and subsequent adjustments as prescribed for the
30 retirant shall likewise apply to any beneficiary who is paid an allowance.
31 (3) Funds for the benefits provided by this section shall be obtained from contributions and
1 fees paid on covered salaries.
2 Section 11. Section 49-6a-601 is enacted to read:
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4 49-6a-601. Death benefit for active and inactive members before retirement --
5 Computation of benefit.
6 Upon the receipt of acceptable proof of death of a member or an inactive member before
7 the effective date of retirement, the dependent spouse shall have a death benefit consisting of a
8 monthly allowance equal to 65% of the monthly allowance computed on the basis of the service
9 retirement allowance formula, based upon the years of service and final average salary, but
10 disregarding early retirement reductions. The pension may not exceed an amount which would
11 have been paid if the deceased judge served to age 70 and had the retirement allowance then
12 computed on the basis of final average salary under Section 49-6a-402.
13 Section 12. Section 49-6a-602 is enacted to read:
14 49-6a-602. Death benefit for active and inactive members after retirement --
15 Computation of benefit.
16 (1) The death benefit payable to a dependent spouse after the death of a retired member
17 of this system is a monthly amount equal to 65% of the allowance which was being paid to the
18 retired member at the time of death. The effective date of the accrual of this pension is the first
19 day of the month following the month in which the retirant died. Payment of the full pension for
20 this latter month shall be made to the dependent beneficiary in lieu of the deceased member.
21 (2) A member may elect to increase the surviving spouse's monthly allowance up to 75%
22 of a monthly allowance computed on the basis of the service retirement allowance formula under
23 Section 49-6a-402. The amount payable to the member upon retirement would be reduced to an
24 amount payable monthly for life, which would reflect the actuarial equivalent necessary to fund
25 the increased percentage for the surviving spouse above 65%.
26 Section 13. Effective date.
27 This act takes effect on July 1, 1997.
Legislative Review Note
as of 11-25-96 4:34 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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