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H.B. 59
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7 LONG TITLE
8 General Description:
9 This bill modifies the Utah State Retirement and Insurance Benefit Act related to
10 changes in retirement allowance options after retirement.
11 Highlighted Provisions:
12 This bill:
13 . repeals a provision allowing a retiree who divorces to change the retiree's retirement
14 allowance option under the contributory and noncontributory systems if there is no
15 court order filed on the matter.
16 Monies Appropriated in this Bill:
17 None
18 Other Special Clauses:
19 None
20 Utah Code Sections Affected:
21 AMENDS:
22 49-12-402, as last amended by Chapter 116, Laws of Utah 2005
23 49-13-402, as last amended by Chapter 116, Laws of Utah 2005
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25 Be it enacted by the Legislature of the state of Utah:
26 Section 1. Section 49-12-402 is amended to read:
27 49-12-402. Service retirement plans -- Calculation of retirement allowance --
28 Social Security limitations.
29 (1) (a) Except as provided under Section 49-12-701 , retirees of this system may choose
30 from the six retirement options described in this section.
31 (b) Options Two, Three, Four, Five, and Six are modifications of the Option One
32 calculation.
33 (2) The Option One benefit is an annual allowance calculated as follows:
34 (a) If the retiree is at least 65 years of age or has accrued at least 30 years of service
35 credit, the allowance is:
36 (i) an amount equal to 1.25% of the retiree's final average monthly salary multiplied by
37 the number of years of service credit accrued prior to July 1, 1975; plus
38 (ii) an amount equal to 2% of the retiree's final average monthly salary multiplied by
39 the number of years of service credit accrued on and after July 1, 1975.
40 (b) If the retiree is less than 65 years of age, the allowance shall be reduced 3% for
41 each year of retirement from age 60 to age 65, unless the member has 30 or more years of
42 accrued credit in which event no reduction is made to the allowance.
43 (c) (i) Years of service includes any fractions of years of service to which the retiree
44 may be entitled.
45 (ii) At the time of retirement, if a retiree's combined years of actual, not purchased,
46 service credit is within 1/10 of one year of the total years of service credit required for
47 retirement, the retiree shall be considered to have the total years of service credit required for
48 retirement.
49 (3) The allowance payable under Options Two, Three, Four, Five, and Six is calculated
50 by reducing an Option One benefit based on actuarial computations to provide the following:
51 (a) Option Two is a reduced allowance paid to and throughout the lifetime of the
52 retiree, and, if the retiree receives less in annuity payments than the amount of the retiree's
53 member contributions, the remaining balance of the retiree's member contributions shall be
54 paid in accordance with Sections 49-11-609 and 49-11-610 .
55 (b) Option Three is a reduced allowance paid to and throughout the lifetime of the
56 retiree, and, upon the death of the retiree, the same reduced allowance paid to and throughout
57 the lifetime of the retiree's lawful spouse at the time of retirement.
58 (c) Option Four is a reduced allowance paid to and throughout the lifetime of the
59 retiree, and upon the death of the retiree, an amount equal to 1/2 of the retiree's allowance paid
60 to and throughout the lifetime of the retiree's lawful spouse at the time of retirement.
61 (d) Option Five is a modification of Option Three so that if the lawful spouse at the
62 time of retirement predeceases the retiree, an allowance equivalent to the amount payable at the
63 time of initial retirement under Option One shall be paid to the retiree for the remainder of the
64 retiree's life, beginning on the last day of the month following the month in which the lawful
65 spouse dies.
66 (e) Option Six is a modification of Option Four so that if the lawful spouse at the time
67 of retirement predeceases the retiree, an allowance equivalent to the amount payable at the time
68 of initial retirement under Option One shall be paid to the retiree for the remainder of the
69 retiree's life, beginning on the last day of the month following the month in which the lawful
70 spouse dies.
71 (4) (a) (i) The final average salary is limited in the computation of that part of an
72 allowance based on service rendered prior to July 1, 1967, during a period when the retiree
73 received employer contributions on a portion of compensation from an educational institution
74 toward the payment of the premium required on a retirement annuity contract with the
75 Teachers' Insurance and Annuity Association of America or with any other public or private
76 system, organization, or company to $4,800.
77 (ii) This limitation is not applicable to retirees who elected to continue in the this
78 system by July 1, 1967.
79 (b) Periods of employment which are exempt from this system under Subsection
80 49-12-203 (1)(b), may be purchased by the member for the purpose of retirement only if all
81 benefits from the Teachers' Insurance and Annuity Association of America or any other public
82 or private system or organization based on this period of employment are forfeited.
83 (5) (a) If a retiree under Option One dies within 90 days after the retiree's retirement
84 date, the retirement is canceled and the death shall be considered as that of a member before
85 retirement.
86 (b) Any payments made to the retiree shall be deducted from the amounts due to the
87 beneficiary.
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91 Section 2. Section 49-13-402 is amended to read:
92 49-13-402. Service retirement plans -- Calculation of retirement allowance --
93 Social Security limitations.
94 (1) (a) Except as provided under Section 49-13-701 , retirees of this system may choose
95 from the six retirement options described in this section.
96 (b) Options Two, Three, Four, Five, and Six are modifications of the Option One
97 calculation.
98 (2) The Option One benefit is an allowance calculated as follows:
99 (a) If the retiree is at least 65 years of age or has accrued at least 30 years of service
100 credit, the allowance is an amount equal to 2% of the retiree's final average monthly salary
101 multiplied by the number of years of service credit accrued.
102 (b) If the retiree is less than 65 years of age, the allowance shall be reduced 3% for
103 each year of retirement from age 60 to age 65, plus a full actuarial reduction for each year of
104 retirement prior to age 60, unless the member has 30 or more years of accrued credit, in which
105 event no reduction is made to the allowance.
106 (c) (i) Years of service include any fractions of years of service to which the retiree
107 may be entitled.
108 (ii) At the time of retirement, if a retiree's combined years of actual, not purchased,
109 service credit is within 1/10 of one year of the total years of service credit required for
110 retirement, the retiree shall be considered to have the total years of service credit required for
111 retirement.
112 (3) The allowance payable under Options Two, Three, Four, Five, and Six is calculated
113 by reducing an Option One benefit based on actuarial computations to provide the following:
114 (a) Option Two is a reduced allowance paid to and throughout the lifetime of the
115 retiree, and, if the retiree receives less in annuity payments than the amount of the retiree's
116 member contributions, the remaining balance of the retiree's member contributions shall be
117 paid in accordance with Sections 49-11-609 and 49-11-610 .
118 (b) Option Three is a reduced allowance paid to and throughout the lifetime of the
119 retiree, and, upon the death of the retiree, the same reduced allowance paid to and throughout
120 the lifetime of the retiree's lawful spouse at the time of retirement.
121 (c) Option Four is a reduced allowance paid to and throughout the lifetime of the
122 retiree, and upon the death of the retiree, an amount equal to 1/2 of the retiree's allowance paid
123 to and throughout the lifetime of the retiree's lawful spouse at the time of retirement.
124 (d) Option Five is a modification of Option Three so that if the lawful spouse at the
125 time of retirement predeceases the retiree, an allowance equivalent to the amount payable at the
126 time of initial retirement under Option One shall be paid to the retiree for the remainder of the
127 retiree's life, beginning on the last day of the month following the month in which the lawful
128 spouse dies.
129 (e) Option Six is a modification of Option Four so that if the lawful spouse at the time
130 of retirement predeceases the retiree, an allowance equivalent to the amount payable at the time
131 of initial retirement under Option One shall be paid to the retiree for the remainder of the
132 retiree's life, beginning on the last day of the month following the month in which the lawful
133 spouse dies.
134 (4) (a) (i) The final average salary is limited in the computation of that part of an
135 allowance based on service rendered prior to July 1, 1967, during a period when the retiree
136 received employer contributions on a portion of compensation from an educational institution
137 toward the payment of the premium required on a retirement annuity contract with the
138 Teachers' Insurance and Annuity Association of America or with any other public or private
139 system, organization, or company to $4,800.
140 (ii) This limitation is not applicable to retirees who elected to continue in the Public
141 Employees' Contributory Retirement System by July 1, 1967.
142 (b) Periods of employment which are exempt from this system as permitted under
143 Subsection 49-13-203 (1)(b) may be purchased by the member for the purpose of retirement
144 only if all benefits from the Teachers' Insurance and Annuity Association of America or any
145 other public or private system or organization based on this period of employment are forfeited.
146 (5) (a) If a retiree under Option One dies within 90 days after the retiree's retirement
147 date, the retirement is canceled and the death shall be considered as that of a member before
148 retirement.
149 (b) Any payments made to the retiree shall be deducted from the amounts due to the
150 beneficiary.
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Legislative Review Note
as of 10-7-05 10:02 AM
Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.