H.B. 387

1

POST-RETIREMENT BENEFITS
2 RESTRICTIONS
3 2007 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: John Dougall
6 Senate Sponsor: ____________
7
8 LONG TITLE
9 General Description:
10 This bill modifies the Utah State Retirement and Insurance Benefit Act by amending
11 reemployment restrictions for certain retirees.
12 Highlighted Provisions:
13 This bill:
14 . provides that employees that are reemployed prior to April 30, 2007 by a
15 participating employer may be given a defined contribution at the same percentage
16 of a retiree's salary that the participating employer would have been required to
17 contribute if the retiree were an active member;
18 . requires a participating employer that hires a retiree beginning April 30, 2007, to
19 contribute 1.5 percent of the retiree's salary to a retiree designated defined
20 contribution plan;
21 . prohibits a participating employer from providing health care coverage to the retiree
22 or the retiree's dependents during any period that the retiree is the primary covered
23 individual of a post-retirement health insurance plan;
24 . provides for certain exceptions; and
25 . makes technical changes.
26 Monies Appropriated in this Bill:
27 None

28 Other Special Clauses:
29 None
30 Utah Code Sections Affected:
31 AMENDS:
32 49-11-504, as last amended by Chapter 116, Laws of Utah 2005
33
34 Be it enacted by the Legislature of the state of Utah:
35 Section 1. Section 49-11-504 is amended to read:
36 49-11-504. Reemployment of a retiree -- Restrictions.
37 (1) A person who retires from a nonparticipating employer is not subject to any
38 postretirement restrictions under this title.
39 (2) A retiree of an agency who returns to work at a different agency is not subject to
40 any postretirement restrictions under this section and may not earn additional service credit.
41 (3) For the purposes of Subsections (4) and (5), "full-time" employment means
42 employment requiring 20 hours of work per week or more or at least a half-time teaching
43 contract.
44 (4) A retiree of an agency who is reemployed on a full-time basis by the same agency
45 within six months of the date of retirement is subject to the following:
46 (a) the agency shall immediately notify the office;
47 (b) the office shall cancel the retiree's allowance and reinstate the retiree to active
48 member status;
49 (c) the allowance cancellation and reinstatement to active member status is effective on
50 the first day of the month following the date of reemployment;
51 (d) the reinstated retiree may not retire again with a recalculated benefit for a two-year
52 period from the date of cancellation of the original allowance, and if the retiree retires again
53 within the two-year period, the original allowance shall be resumed; and
54 (e) a reinstated retiree retiring after the two-year period shall be credited with the
55 service credit in the retiree's account at the time of the first retirement and from that time shall
56 be treated as a member of a system, including the accrual of additional service credit, but
57 subject to recalculation of the allowance under Subsection [(9)] (10).
58 (5) A retiree of an agency who is reemployed by the same agency within six months of

59 retirement on a less than full-time basis by the same agency is subject to the following:
60 (a) the retiree may earn, without penalty, compensation from that position which is not
61 in excess of the exempt earnings permitted by Social Security;
62 (b) if a retiree receives compensation in a calendar year in excess of the Social Security
63 limitation, 25% of the allowance shall be suspended for the remainder of the six-month period;
64 (c) the effective date of a suspension and reinstatement of an allowance shall be set by
65 the office; and
66 (d) any suspension of a retiree's allowance under this Subsection (5) shall be applied
67 on a calendar year basis.
68 (6) For six months immediately following retirement, the retiree and participating
69 employer shall:
70 (a) maintain an accurate record of gross earnings in employment;
71 (b) report the gross earnings at least monthly to the office;
72 (c) immediately notify the office in writing of any postretirement earnings under
73 Subsection (4); and
74 (d) immediately notify the office in writing whether postretirement earnings equal or
75 exceed the exempt earnings under Subsection (5).
76 (7) A retiree of an agency who is reemployed by the same agency after six months from
77 the retirement date is not subject to any postretirement restrictions under this title and may not
78 earn additional service credit.
79 (8) [If] Until April 29, 2007, if a participating employer hires a nonexempt retiree who
80 retired from a system administered under this title and who may not earn additional service
81 credit under this section, the participating employer shall contribute the same percentage of a
82 retiree's salary that the participating employer would have been required to contribute if the
83 retiree were an active member, up to the amount allowed by federal law, to a retiree designated:
84 (a) defined contribution plan administered by the board, if the participating employer
85 participates in the defined contribution plan administered by the board; or
86 (b) defined contribution plan offered by the participating employer if the participating
87 employer does not participate in a defined contribution plan administered by the board.
88 (9) (a) Beginning April 30, 2007, if a participating employer hires a retiree of a system
89 administered under this title, and the retiree may not earn additional service credit under this

90 section, the following restrictions apply, subject to federal law:
91 (i) the participating employer shall contribute 1.5 percent of the retiree's salary to a
92 retiree designated:
93 (A) defined contribution plan administered by the board, if the participating employer
94 participates in the defined contribution plan administered by the board; or
95 (B) defined contribution plan offered by the participating employer if the participating
96 employer does not participate in a defined contribution plan administered by the board;
97 (ii) the participating employer may not provide health care coverage to the reemployed
98 retiree during any period that the retiree is the primary covered individual of a post-retirement
99 health insurance plan offered by a participating employer.
100 (b) The contribution limit under Subsection (9)(a)(i) does not apply to a person that:
101 (i) is exempt or excluded from coverage under a system under Section 49-12-203 ,
102 49-13-203 , 49-14-203 , 49-15-203 , or 49-16-203 ; and
103 (ii) does not receive a defined benefit from a system administered by the board.
104 (c) The restrictions under Subsection (9)(a) do not apply if the retiree's allowance is
105 canceled and the retiree is reinstated to active member status.
106 [(9)] (10) Notwithstanding any other provision of this section, a retiree who has
107 returned to work, accrued additional service credit, and again retires shall have the retiree's
108 allowance recalculated using:
109 (a) the formula in effect at the date of the retiree's original retirement for all service
110 credit accrued prior to that date; and
111 (b) the formula in effect at the date of the subsequent retirement for all service credit
112 accrued between the first and subsequent retirement dates.
113 [(10)] (11) This section does not apply to elected positions.
114 [(11)] (12) The board may make rules to implement this section.




Legislative Review Note
as of 1-29-07 1:57 PM

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