H.B. 320

1

PUBLIC EMPLOYEES RETIREMENT
2 2006 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Neil A. Hansen
5 Senate Sponsor: ____________
6
7 LONG TITLE
8 General Description:
9 This bill modifies the Utah State Retirement and Insurance Benefit Act by decreasing
10 the years of service required to qualify for an unreduced retirement allowance for
11 members of the Public Employees' Noncontributory Retirement System.
12 Highlighted Provisions:
13 This bill:
14 . decreases the years of service required to qualify for an unreduced retirement
15 allowance from 30 to 25 for members of the Public Employees' Noncontributory
16 Retirement System; and
17 . makes technical corrections.
18 Monies Appropriated in this Bill:
19 None
20 Other Special Clauses:
21 This bill takes effect on July 1, 2006.
22 Utah Code Sections Affected:
23 AMENDS:
24 49-13-401, as renumbered and amended by Chapter 250, Laws of Utah 2002
25 49-13-402, as last amended by Chapter 116, Laws of Utah 2005
26
27 Be it enacted by the Legislature of the state of Utah:

28 Section 1. Section 49-13-401 is amended to read:
29 49-13-401. Eligibility for an allowance -- Date of retirement -- Qualifications.
30 (1) A member is qualified to receive an allowance from this system when:
31 (a) the member ceases actual work for a participating employer in this system before
32 the member's retirement date and provides evidence of the termination;
33 (b) the member has submitted to the office a notarized retirement application form that
34 states the member's proposed retirement date; and
35 (c) one of the following conditions is met as of the member's retirement date:
36 (i) the member has accrued at least four years of service credit and has attained an age
37 of 65 years;
38 (ii) the member has accrued at least ten years of service credit and has attained an age
39 of 62 years;
40 (iii) the member has accrued at least 20 years of service credit and has attained an age
41 of 60 years; or
42 (iv) the member has accrued at least [30] 25 years of service credit[; or].
43 [(v) the member has accrued at least 25 years of service credit, in which case the
44 member shall be subject to the reduction under Subsection 49-13-402 (2)(b).]
45 (2) (a) The member's retirement date shall be the 1st or the 16th day of the month, as
46 selected by the member, but the retirement date must be on or after the date of termination.
47 (b) The retirement date may not be more than 90 days before or after the date the
48 application is received by the office.
49 Section 2. Section 49-13-402 is amended to read:
50 49-13-402. Service retirement plans -- Calculation of retirement allowance --
51 Social Security limitations.
52 (1) (a) Except as provided under Section 49-13-701 , retirees of this system may choose
53 from the six retirement options described in this section.
54 (b) Options Two, Three, Four, Five, and Six are modifications of the Option One
55 calculation.
56 (2) The Option One benefit is an allowance calculated as follows:
57 (a) If the retiree is at least 65 years of age or has accrued at least [30] 25 years of
58 service credit, the allowance is an amount equal to 2% of the retiree's final average monthly

59 salary multiplied by the number of years of service credit accrued.
60 (b) If the retiree is less than 65 years of age, the allowance shall be reduced 3% for
61 each year of retirement from age 60 to age 65, plus a full actuarial reduction for each year of
62 retirement prior to age 60, unless the member has [30] 25 or more years of accrued credit, in
63 which event no reduction is made to the allowance.
64 (c) (i) Years of service include any fractions of years of service to which the retiree
65 may be entitled.
66 (ii) At the time of retirement, if a retiree's combined years of actual, not purchased,
67 service credit is within 1/10 of one year of the total years of service credit required for
68 retirement, the retiree shall be considered to have the total years of service credit required for
69 retirement.
70 (3) The allowance payable under Options Two, Three, Four, Five, and Six is calculated
71 by reducing an Option One benefit based on actuarial computations to provide the following:
72 (a) Option Two is a reduced allowance paid to and throughout the lifetime of the
73 retiree, and, if the retiree receives less in annuity payments than the amount of the retiree's
74 member contributions, the remaining balance of the retiree's member contributions shall be
75 paid in accordance with Sections 49-11-609 and 49-11-610 .
76 (b) Option Three is a reduced allowance paid to and throughout the lifetime of the
77 retiree, and, upon the death of the retiree, the same reduced allowance paid to and throughout
78 the lifetime of the retiree's lawful spouse at the time of retirement.
79 (c) Option Four is a reduced allowance paid to and throughout the lifetime of the
80 retiree, and upon the death of the retiree, an amount equal to 1/2 of the retiree's allowance paid
81 to and throughout the lifetime of the retiree's lawful spouse at the time of retirement.
82 (d) Option Five is a modification of Option Three so that if the lawful spouse at the
83 time of retirement predeceases the retiree, an allowance equivalent to the amount payable at the
84 time of initial retirement under Option One shall be paid to the retiree for the remainder of the
85 retiree's life, beginning on the last day of the month following the month in which the lawful
86 spouse dies.
87 (e) Option Six is a modification of Option Four so that if the lawful spouse at the time
88 of retirement predeceases the retiree, an allowance equivalent to the amount payable at the time
89 of initial retirement under Option One shall be paid to the retiree for the remainder of the

90 retiree's life, beginning on the last day of the month following the month in which the lawful
91 spouse dies.
92 (4) (a) (i) The final average salary is limited in the computation of that part of an
93 allowance based on service rendered prior to July 1, 1967, during a period when the retiree
94 received employer contributions on a portion of compensation from an educational institution
95 toward the payment of the premium required on a retirement annuity contract with the
96 Teachers' Insurance and Annuity Association of America or with any other public or private
97 system, organization, or company to $4,800.
98 (ii) This limitation is not applicable to retirees who elected to continue in the Public
99 Employees' Contributory Retirement System by July 1, 1967.
100 (b) Periods of employment which are exempt from this system as permitted under
101 Subsection 49-13-203 (1)(b) may be purchased by the member for the purpose of retirement
102 only if all benefits from the Teachers' Insurance and Annuity Association of America or any
103 other public or private system or organization based on this period of employment are forfeited.
104 (5) (a) If a retiree under Option One dies within 90 days after the retiree's retirement
105 date, the retirement is canceled and the death shall be considered as that of a member before
106 retirement.
107 (b) Any payments made to the retiree shall be deducted from the amounts due to the
108 beneficiary.
109 (6) If a retiree retires under either Option Five or Six and subsequently divorces, the
110 retiree may elect to convert the benefit to an Option One benefit at the time of divorce, if there
111 is no court order filed in the matter.
112 Section 3. Effective date.
113 This bill takes effect on July 1, 2006.




Legislative Review Note
as of 1-23-06 9:53 AM

Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.

Office of Legislative Research and General Counsel