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H.B. 253 Enrolled
LONG TITLE
General Description:
This bill modifies the Utah State Retirement and Insurance Benefit Act provisions,
including many technical or conforming amendments.
Highlighted Provisions:
This bill:
. adds "Utah State Retirement Systems" as an alternative official name for the Utah
State Retirement Office;
. provides that reemployment restrictions following retirement does not apply to
appointive officers;
. amends the length of time a participating employer is required to maintain records
needed for retirement purposes to the earliest of three years after the date of
retirement or the date of death of the employee;
. amends the criteria for being unable to locate surviving beneficiaries in order to pay
benefits to within 12 months of the date a reasonable attempt is made to locate the
beneficiaries;
. allows a retiree in either the contributory or noncontributory system whose
retirement date is on or after July 1, 1995, to make an irrevocable cancellation of
lump-sum death benefits;
. requires a member in the contributory system who is transferred or reemployed to
transfer to the noncontributory system if the new employer is a participating
employer in the noncontributory system;
. provides that contribution rates for each participating employer in the public safety
contributory system and the public safety noncontributory systems may be different based on the
participating employers current funding status and actuarial experience;
. provides that employers that maintain a regularly constituted fire department are
eligible to participate in the firefighters retirement system;
. provides that employees who have medical employee benefit plan coverage at the time
of their retirement are eligible for future Medicare supplement coverage; and
. makes technical corrections.
Monies Appropriated in this Bill:
None
Other Special Clauses:
This bill takes effect on July 1, 2004.
Utah Code Sections Affected:
AMENDS:
49-11-201, as renumbered and amended by Chapter 250, Laws of Utah 2002
49-11-504, as last amended by Chapter 240, Laws of Utah 2003
49-11-602, as last amended by Chapter 240, Laws of Utah 2003
49-11-609, as last amended by Chapter 240, Laws of Utah 2003
49-11-612, as last amended by Chapter 240, Laws of Utah 2003
49-12-404, as renumbered and amended by Chapter 250, Laws of Utah 2002
49-13-205, as renumbered and amended by Chapter 250, Laws of Utah 2002
49-13-404, as renumbered and amended by Chapter 250, Laws of Utah 2002
49-14-301, as renumbered and amended by Chapter 250, Laws of Utah 2002
49-15-301, as renumbered and amended by Chapter 250, Laws of Utah 2002
49-16-201, as renumbered and amended by Chapter 250, Laws of Utah 2002
49-19-401, as last amended by Chapter 240, Laws of Utah 2003
49-19-402, as enacted by Chapter 250, Laws of Utah 2002
49-20-201, as renumbered and amended by Chapter 250, Laws of Utah 2002
49-20-401, as last amended by Chapter 240, Laws of Utah 2003
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 49-11-201 is amended to read:
49-11-201. Establishment of retirement office -- An independent state agency --
Office exemption.
(1) (a) There is established the Utah State Retirement Office, which may also be known
and function as the Utah State Retirement Systems.
(b) The office shall administer the systems, plans, and programs and perform all other
functions assigned to it under this title.
(2) (a) The office is an independent state agency.
(b) It is subject to legislative and executive department budgetary review and comment.
(3) The office may establish branch offices upon approval of the board.
(4) The board and office are exempt from those acts which are applicable to state and
other governmental entities under this code.
Section 2. Section 49-11-504 is amended to read:
49-11-504. Reemployment of a retiree -- Restrictions.
(1) A person who retires from a nonparticipating employer is not subject to any
postretirement restrictions under this title.
(2) A retiree of an agency who returns to work at a different agency is not subject to any
postretirement restrictions under this section and may not earn additional service credit.
(3) For the purposes of Subsections (4) and (5), "full-time" employment means
employment requiring 20 hours of work per week or more or at least a half-time teaching
contract.
(4) A retiree of an agency who is reemployed on a full-time basis by the same agency
within six months of the date of retirement is subject to the following:
(a) the agency shall immediately notify the office;
(b) the office shall cancel the retiree's allowance and reinstate the retiree to active
member status;
(c) the allowance cancellation and reinstatement to active member status is effective on
the first day of the month following the date of reemployment;
(d) the reinstated retiree may not retire again with a recalculated benefit for a two-year
period from the date of cancellation of the original allowance, and if the retiree retires again
within the two-year period, the original allowance shall be resumed; and
(e) a reinstated retiree retiring after the two-year period shall be credited with the service
credit in the retiree's account at the time of the first retirement and from that time shall be treated
as a member of a system, including the accrual of additional service credit, but subject to
recalculation of the allowance under Subsection (9).
(5) A retiree of an agency who is reemployed by the same agency within six months of
retirement on a less than full-time basis by the same agency is subject to the following:
(a) the retiree may earn, without penalty, compensation from that position which is not in
excess of the exempt earnings permitted by Social Security;
(b) if a retiree receives compensation in a calendar year in excess of the Social Security
limitation, 25% of the allowance shall be suspended for the remainder of the six-month period;
(c) the effective date of a suspension and reinstatement of an allowance shall be set by the
office; and
(d) any suspension of a retiree's allowance under this Subsection (5) shall be applied on a
calendar year basis.
(6) For six months immediately following retirement, the retiree and participating
employer shall:
(a) maintain an accurate record of gross earnings in employment;
(b) report the gross earnings at least monthly to the office;
(c) immediately notify the office in writing of any postretirement earnings under
Subsection (4); and
(d) immediately notify the office in writing whether postretirement earnings equal or
exceed the exempt earnings under Subsection (5).
(7) A retiree of an agency who is reemployed by the same agency after six months from
the retirement date is not subject to any postretirement [
may not earn additional service credit.
(8) If a participating employer hires a retiree that may not earn additional service credit
under this section, the participating employer shall contribute the same percentage of a retiree's
salary that the participating employer would have been required to contribute if the retiree were
an active member, up to the amount allowed by federal law, to a retiree designated:
(a) defined contribution plan administered by the board, if the participating employer
participates in the defined contribution plan administered by the board; or
(b) defined contribution plan offered by the participating employer if the participating
employer does not participate in a defined contribution plan administered by the board.
(9) Notwithstanding any other provision of this section, a retiree who has returned to
work, accrued additional service credit, and again retires shall have the retiree's allowance
recalculated using:
(a) the formula in effect at the date of the retiree's original retirement for all service credit
accrued prior to that date; and
(b) the formula in effect at the date of the subsequent retirement for all service credit
accrued between the first and subsequent retirement dates.
(10) This section does not apply to appointive officers or elected positions.
(11) The board may make rules to implement this section.
Section 3. Section 49-11-602 is amended to read:
49-11-602. Participating employer to maintain records -- Time limit -- Penalties for
failure to comply.
(1) A participating employer shall maintain records necessary to calculate benefits under
this title and other records necessary for proper administration of this title as required by the
office.
(2) A participating employer shall maintain the records required under Subsection (1)
until the [
(a) three years after the date of retirement of the employee from a system or plan;
(b) three years after the date of death of the employee; or
(c) 65 years from the date [
employer.
(3) A participating employer shall be liable to the office for:
(a) any liabilities and expenses, including administrative expenses and the cost of
increased benefits to members, resulting from the participating employer's failure to maintain
records under this section; and
(b) a penalty equal to 1% of the participating employer's last month's contributions.
(4) The executive director may waive all or any part of the interest, penalties, expenses,
and fees if the executive director finds there were extenuating circumstances surrounding the
participating employer's failure to comply with this section.
(5) The executive director may estimate the length of service, compensation, or age of
any member, if that information is not contained in the records.
Section 4. Section 49-11-609 is amended to read:
49-11-609. Beneficiary designations -- Revocation of beneficiary designation --
Procedure -- Beneficiary not designated -- Payment to survivors in order established under
the Uniform Probate Code -- Restrictions on payment -- Payment of deceased's expenses.
(1) As used in this section, "member" includes a member, retiree, participant, covered
individual, a spouse of a retiree participating in the insurance benefits created by Sections
49-12-404 and 49-13-404 , or an alternate payee under a domestic relations order dividing a
defined contribution account.
(2) The most recent beneficiary designations contained in office records, including
electronic records, at the time of the member's death are binding in the payment of any benefits
due under this title.
(3) (a) Except where an optional continuing benefit is chosen, or the law makes a specific
benefit designation to a dependent spouse, a member may revoke a beneficiary designation at any
time and may execute and file a different beneficiary designation with the office.
(b) A change of beneficiary designation shall be completed on forms provided by the
office.
(4) (a) All benefits payable by the office may be paid or applied to the benefit of the
surviving next of kin of the deceased in the order of precedence established under Title 75,
Chapter 2, Intestate Succession and Wills, if:
(i) no beneficiary is designated or if all designated beneficiaries have predeceased the
member;
(ii) the location of the beneficiary or secondary beneficiaries cannot be ascertained by the
office within 12 months of the date [
attempt is made by the office to locate the beneficiaries; or
(iii) the beneficiary has not completed the forms necessary to pay the benefits within six
months of the date that beneficiary forms are sent to the beneficiary's last-known address.
(b) (i) A payment may not be made to a person included in any of the groups referred to
in Subsection (4)(a) if at the date of payment there is a living person in any of the groups
preceding it.
(ii) Payment to a person in any group based upon receipt from the person of an affidavit
in a form satisfactory to the office that:
(A) there are no living individuals in the group preceding it;
(B) the probate of the estate of the deceased has not been commenced; and
(C) more than three months have elapsed since the date of death of the decedent.
(5) Benefits paid under this section shall be:
(a) a full satisfaction and discharge of all claims for benefits under this title; and
(b) payable by reason of the death of the decedent.
Section 5. Section 49-11-612 is amended to read:
49-11-612. Nonassignability of benefits or payments -- Exemption from legal
process.
(1) Except as provided in Subsections (2), (3), and (4), the right of any member, retiree,
participant, or beneficiary to any retirement benefit, retirement payment, or any other retirement
right accrued or accruing under this title and the assets of the funds created by this title are not
subject to alienation or assignment by the member, retiree, participant, or their beneficiaries and
are not subject to attachment, execution, garnishment, or any other legal or equitable process.
(2) The office may, upon the request of the retiree, deduct from the retiree's allowance
insurance premiums or other dues payable on behalf of the retiree, but only to those entities that
have received the deductions prior to February 1, 2002.
(3) (a) The office shall provide for the division of an allowance, defined contribution
account, continuing monthly death benefit, or refund of member contributions upon termination to
former spouses and family members under an order of a court of competent jurisdiction with
respect to domestic relations matters on file with the office.
(b) The court order shall specify the manner in which the allowance, defined contribution
account, continuing monthly death benefit, or refund of member contributions shall be partitioned,
whether as a fixed amount or as a percentage of the benefit.
(c) Allowances, continuing monthly death benefits, and refunds of member contributions
split under a domestic relations order are subject to the following:
(i) the amount to be paid or the period for which payments shall be made under the
original domestic relations order may not be altered if the alteration affects the actuarial
calculation of the allowance;
(ii) payments to an alternate payee shall begin at the time the member or beneficiary
begins receiving payments; and
(iii) the alternate payee shall receive payments in the same form as [
received by the member or beneficiary.
(4) In accordance with federal law, the board may deduct the required amount from any
benefit, payment, or other right accrued or accruing to any member of a system, plan, or program
under this title to offset any amount that member owes to a system, plan, or program administered
by the board.
(5) The board shall make rules to implement this section.
Section 6. Section 49-12-404 is amended to read:
49-12-404. Lump-sum death benefit for retiree and spouse.
(1) (a) Upon retirement, a retiree may elect to have the office deduct an actuarially
determined amount from the retiree's allowance to provide a lump-sum benefit payable to a
beneficiary upon the death of the retiree.
(b) [
amount deducted from the retiree's allowance to provide a lump-sum death benefit payable to a
beneficiary upon the death of the retiree's lawful spouse at the time of retirement.
(c) The board may make rules for the administration of this lump-sum death benefit.
(2) (a) For [
section through a reduction of an allowance, benefits shall be paid in accordance with Sections
49-11-609 and 49-11-610 .
(b) If the retiree chooses Option Three, Four, Five, or Six, and a lump-sum death benefit
is payable after the death of the retiree [
its original amount.
(3) (a) A retiree whose retirement date is on or after July 1, 1995, may elect to cancel the
lump-sum death benefit under this section.
(b) The cancellation under this Subsection (3) is irrevocable.
(c) Upon cancellation, the allowance shall be restored to its original amount and benefits
under this section may not be paid.
Section 7. Section 49-13-205 is amended to read:
49-13-205. Conversion to system -- Time schedule -- Conversion windows.
(1) An employee governed under Section 49-13-201 shall make the election to participate
in this system within six months of July 1, 1986.
(2) (a) (i) An employer governed under Sections 49-13-201 and 49-13-202 shall make the
election to participate in this system within six months of July 1, 1986.
(ii) The employer shall indicate whether or not it elects to participate by enacting a
resolution or ordinance to that effect.
(iii) Prior to the enactment of the resolution or ordinance, a hearing shall be held by the
employer, at which all employees of the political subdivision shall be given an opportunity to be
heard on the question of participating in this system.
(iv) Notice of the hearing shall be mailed to all employees within 30 days of the hearing
and shall contain the time, place, and purpose of the hearing.
(b) A regular full-time employee has six months from the date the employer elects to
participate in this system in which to make the election to participate in this system and become
eligible for service credit in this system.
(3) Subsections (1) and (2) shall be used to provide a second time period of conversion to
this system beginning July 1, 1990.
(4) Subsections (1) and (2) shall be used to provide a third time period of conversion to
this system beginning July 1, 1995.
(5) A member of the Contributory Retirement System who is employed by one agency
and who either transfers to or is reemployed by another agency shall transfer to the
Noncontributory Retirement System as of the date of employment, if the participating employer
has elected to participate in the Noncontributory Retirement System.
Section 8. Section 49-13-404 is amended to read:
49-13-404. Lump-sum death benefit for retiree and spouse.
(1) (a) Upon retirement, a retiree may elect to have the office deduct an actuarially
determined amount from the retiree's allowance to provide a lump-sum benefit payable to a
beneficiary upon the death of the retiree.
(b) [
amount deducted from the retiree's allowance to provide a lump-sum death benefit payable to a
beneficiary upon the death of the retiree's lawful spouse at the time of retirement.
(c) The board shall make rules for the administration of this lump-sum death benefit.
(2) (a) For [
section through a reduction of an allowance, benefits shall be paid in accordance with Sections
49-11-609 and 49-11-610 .
(b) If the retiree chooses Option Three, Four, Five, or Six, and a lump-sum death benefit
is payable after the death of the retiree [
its original amount.
(3) (a) A retiree whose retirement date is on or after July 1, 1995, may elect to cancel the
lump-sum death benefit under this section.
(b) The cancellation under this Subsection (3) is irrevocable.
(c) Upon cancellation, the allowance shall be restored to its original amount and benefits
under this section may not be paid.
Section 9. Section 49-14-301 is amended to read:
49-14-301. Contributions -- Two divisions -- Election by employer to pay employee
contributions -- Accounting for and vesting of member contributions -- Deductions.
(1) Participating employers and members shall jointly pay the certified contribution rates
to the office to maintain this system on a financially and actuarially sound basis.
(2) For purposes of determining contribution rates, this system is divided into two
divisions according to Social Security coverage as follows:
(a) members of this system with on-the-job Social Security coverage are in Division A;
and
(b) members of this system without on-the-job Social Security coverage are in Division B.
(3) (a) A participating employer may elect to pay all or part of the required member
contributions, in addition to the required participating employer contributions.
(b) Any amount contributed by a participating employer under this section shall vest to
the member's benefit as though the member had made the contribution.
(c) The required member contributions shall be reduced by the amount that is paid by the
participating employer.
(4) (a) All member contributions are credited by the office to the account of the individual
member.
(b) This amount, plus refund interest, is held in trust for the payment of benefits to the
member or the member's beneficiaries.
(c) All member contributions are vested and nonforfeitable.
(5) (a) Each member is considered to consent to payroll deductions of member
contributions.
(b) The payment of compensation less these payroll deductions is considered full payment
for services rendered by the member.
(6) Contribution rates for a participating employer may be different than for other
participating employers based on the participating employer's current funding status and actuarial
experience.
Section 10. Section 49-15-301 is amended to read:
49-15-301. Contributions -- Two divisions.
(1) Participating employers shall pay the certified contribution rates to the office to
maintain this system on a financially and actuarially sound basis.
(2) For purposes of determining contribution rates, this system is divided into two
divisions according to Social Security coverage.
(a) Members of this system with on-the-job Social Security coverage are Division A.
(b) Members of this system without on-the-job Social Security coverage are in Division B.
(3) Contribution rates for a participating employer may be different than for other
participating employers based on the participating employer's current funding status and actuarial
experience.
Section 11. Section 49-16-201 is amended to read:
49-16-201. System membership -- Eligibility.
(1) A firefighter service employee who performs firefighter service for an employer
participating in this system is eligible for service credit in this system upon the earliest of:
(a) July 1, 1971, if the firefighter service employee was employed by the participating
employer on July 1, 1971, and the participating employer was participating in this system on that
date;
(b) the date the participating employer begins participating in this system if the firefighter
service employee was employed by the participating employer on that date; or
(c) the date the firefighter service employee is hired to perform firefighter services for a
participating employer.
(2) (a) (i) A participating employer that has public safety service and firefighter service
employees that require cross-training and duty shall enroll the dual purpose employees in the
system in which the greatest amount of time is actually worked.
(ii) The employees shall either be full-time public safety service or full-time firefighter
service employees of the participating employer.
(b) (i) Prior to transferring a dual purpose employee from one system to another, the
participating employer shall receive written permission from the office.
(ii) The office may request documentation to verify the appropriateness of the transfer.
(3) (a) A person hired by a regularly constituted fire department on or after July 1, 1971,
who does not perform firefighter service is not eligible for service credit in this system.
(b) The nonfirefighter service employee shall become a member of the system for which
the nonfirefighter service employee qualifies for service credit.
(c) The service credit exclusion under this Subsection (3) may not be interpreted to
prohibit the assignment of a disabled or partially disabled firefighter to a nonfirefighter service
position.
(d) If Subsection (3)(c) applies, the firefighter service employee remains eligible for
service credit in this system.
(4) An allowance or other benefit may not be granted under this system that is based upon
the same service for benefits received under some other system.
(5) Service as a volunteer firefighter is not eligible for service credit in this system.
(6) An employer that maintains a regularly constituted fire department is eligible to
participate in this system.
Section 12. Section 49-19-401 is amended to read:
49-19-401. Eligibility for an allowance -- Governor -- Legislator.
(1) A governor is qualified to receive an allowance when:
(a) the governor has submitted to the office a notarized retirement application form that
states the proposed retirement date; and
(b) one of the following conditions is met as of the retirement date:
(i) the governor has completed at least one full term in office and has attained an age of
65 years; or
(ii) the governor has served as governor of the state for at least ten years and has attained
an age of 62 years.
(2) A legislator is qualified to receive an allowance when:
(a) the legislator has submitted to the office a notarized retirement application form that
states the proposed retirement date; and
(b) one of the following conditions is met as of the retirement date:
(i) the legislator has completed at least four years in the Legislature and has attained an
age of 65 years; or
(ii) the legislator has completed at least ten years in the Legislature and has attained an
age of 62 years.
(3) (a) The retirement date shall be the 1st or the 16th day of the month as selected by the
member.
(b) The retirement date may not be more than 90 days before or after the date the
application is received by the office.
(4) A member who withdraws member contributions shall forfeit all allowances based on
those contributions.
(5) If a retired legislator is elected to another term in the Legislature or continues to serve
in the Legislature [
session under rules established by the board, but is restored at the same amount at the end of the
session.
(6) A member receiving an allowance while serving as a legislator is eligible for additional
service credits and allowance adjustments at the end of each term of office if the legislator
continues as a contributing member during the member's service as a legislator.
Section 13. Section 49-19-402 is amended to read:
49-19-402. Calculation of allowance -- Reduction for early retirement.
(1) (a) The base retirement amount for a governor under this plan is $500 per term,
adjusted as provided in Section 49-19-404 since 1973.
(b) A governor's allowance shall be calculated by multiplying the base retirement amount
at the [
including fractions of terms.
(2) (a) The base retirement amount for a legislator under this plan is $10 per year of
service in the Legislature, adjusted as provided in Section 49-19-404 , since 1967.
(b) A legislator's allowance shall be calculated by multiplying the base retirement amount
at the [
including fractions of years.
(3) If a governor or legislator retires prior to age 65, the allowance shall be reduced by
3% for each year of retirement between age 62 and age 65.
Section 14. Section 49-20-201 is amended to read:
49-20-201. Program participation -- Eligibility -- Optional for certain groups.
(1) (a) The state shall participate in the program on behalf of its employees.
(b) Other employers, including political subdivisions and educational institutions, are
eligible, but are not required, to participate in the program on behalf of their employees.
(2) (a) The Department of Health may participate in the program for the purpose of
providing health and dental benefits to children enrolled in the Utah Children's Health Insurance
Program created in Title 26, Chapter 40, Utah Children's Health Insurance Act, if the provisions
in Subsection 26-40-110 (4) occur.
(b) If the Department of Health participates in the program under the provisions of this
Subsection (2), all insurance risk associated with the Children's Health Insurance Program shall be
the responsibility of the Department of Health and not the program or the office.
(3) A covered individual covered under a medical employee benefit plan shall be eligible
for coverage after termination of employment under rules adopted by the board.
(4) [
are eligible for Medicare supplement coverage under this chapter upon becoming eligible for
Medicare Part A and Part B coverage[
(a) retirees;
(b) members;
(c) participants;
(d) employees who have medical employee benefit plan coverage at the time of their
retirement; and
(e) current spouses of those who are eligible under Subsections (4)(a) through (d).
Section 15. Section 49-20-401 is amended to read:
49-20-401. Program -- Powers and duties.
(1) The program shall:
(a) act as a self-insurer of employee benefit plans and administer those plans;
(b) enter into contracts with private insurers or carriers to underwrite employee benefit
plans as considered appropriate by the program;
(c) indemnify employee benefit plans or purchase commercial reinsurance as considered
appropriate by the program;
(d) provide descriptions of all employee benefit plans under this chapter in cooperation
with covered employers;
(e) process claims for all employee benefit plans under this chapter or enter into contracts,
after competitive bids are taken, with other benefit administrators to provide for the
administration of the claims process;
(f) obtain an annual actuarial review of all health and dental benefit plans and a periodic
review of all other employee benefit plans;
(g) consult with the covered employers to evaluate employee benefit plans and develop
recommendations for benefit changes;
(h) annually submit a budget and audited financial statements to the governor and
Legislature which includes total projected benefit costs and administrative costs;
(i) maintain reserves sufficient to liquidate the unrevealed claims liability and other
liabilities of the employee benefit plans as certified by the program's consulting actuary;
(j) submit its recommended benefit adjustments for state employees to the director of the
state Department of Human Resource Management;
(k) determine benefits and rates, upon approval of the board, for multiemployer risk
pools, retiree coverage, and conversion coverage;
(l) determine benefits and rates, upon approval of the board and the Legislature, for state
employees;
(m) administer benefits and rates, upon ratification of the board, for single employer risk
pools;
(n) request proposals for provider networks or health and dental benefit plans
administered by third party carriers at least once every three years for the purposes of:
(i) stimulating competition for the benefit of covered individuals;
(ii) establishing better geographical distribution of medical care services; and
(iii) providing coverage for both active and retired covered individuals;
(o) offer proposals which meet the criteria specified in a request for proposals and
accepted by the program to active and retired state covered individuals and which may be offered
to active and retired covered individuals of other covered employers at the option of the covered
employer;
(p) perform the same functions established in Subsections (1)(a), (b), (e), and (h) for the
Department of Health if the program provides program benefits to children enrolled in the Utah
Children's Health Insurance Program created in Title 26, Chapter 40, Utah Children's Health
Insurance Act;
(q) establish rules and procedures governing the admission of political subdivisions or
educational institutions and their employees to the program;
(r) contract directly with medical providers to provide services for covered individuals;
and
(s) take additional actions necessary or appropriate to carry out the purposes of this
chapter.
(2) (a) Funds budgeted and expended shall accrue from rates paid by the covered
employers and covered individuals.
(b) Administrative costs shall be approved by the board and reported to the governor and
the Legislature.
(3) The Department of Human Resource Management shall include the benefit
adjustments described in Subsection (1)(j) in the total compensation plan recommended to the
governor required under Subsection 67-19-12 (6)(a).
Section 16. Effective date.
This bill takes effect on July 1, 2004.
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