First Substitute H.B. 94

Representative LaWanna Lou Shurtliff proposes the following substitute bill:

1 PUBLIC EMPLOYEES' RETIREMENT -
2 SPOUSAL ELECTION
3 2008 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: LaWanna Lou Shurtliff
6 Senate Sponsor: Jon J. Greiner
7
8 LONG TITLE
9 General Description:
10 This bill modifies provisions of the Public Employee's Contributory Retirement Act and
11 the Public Employee's Nocontributory Retirement Act by amending election of
12 retirement option provisions.
13 Highlighted Provisions:
14 This bill:
15 . requires a person who is selecting a retirement allowance option under the Public
16 Employee's Contributory or Noncontributory Retirement Act to obtain written
17 consent for the selected option from the person's spouse, as applicable with certain
18 exceptions.
19 Monies Appropriated in this Bill:
20 None
21 Other Special Clauses:
22 None
23 Utah Code Sections Affected:
24 AMENDS:
25 49-12-402, as last amended by Laws of Utah 2007, Chapters 130 and 306

26 49-13-402, as last amended by Laws of Utah 2007, Chapter 130
27
28 Be it enacted by the Legislature of the state of Utah:
29 Section 1. Section 49-12-402 is amended to read:
30 49-12-402. Service retirement plans -- Calculation of retirement allowance --
31 Social Security limitations -- Second election window.
32 (1) (a) Except as provided under Section 49-12-701 , retirees of this system may choose
33 from the six retirement options described in this section.
34 (b) If the retiree is married at the time of the election, the election must be approved, in
35 writing, by the retiree's spouse, unless the retiree's spouse is incapacitated as defined under
36 Section 75-1-201 .
37 [(b)] (c) Options Two, Three, Four, Five, and Six are modifications of the Option One
38 calculation.
39 (2) The Option One benefit is an annual allowance calculated as follows:
40 (a) If the retiree is at least 65 years of age or has accrued at least 30 years of service
41 credit, the allowance is:
42 (i) an amount equal to 1.25% of the retiree's final average monthly salary multiplied by
43 the number of years of service credit accrued prior to July 1, 1975; plus
44 (ii) an amount equal to 2% of the retiree's final average monthly salary multiplied by
45 the number of years of service credit accrued on and after July 1, 1975.
46 (b) If the retiree is less than 65 years of age, the allowance shall be reduced 3% for
47 each year of retirement from age 60 to age 65, unless the member has 30 or more years of
48 accrued credit in which event no reduction is made to the allowance.
49 (c) (i) Years of service includes any fractions of years of service to which the retiree
50 may be entitled.
51 (ii) At the time of retirement, if a retiree's combined years of actual, not purchased,
52 service credit is within 1/10 of one year of the total years of service credit required for
53 retirement, the retiree shall be considered to have the total years of service credit required for
54 retirement.
55 (d) An Option One allowance is only payable to the member during the member's
56 lifetime.

57 (3) The allowance payable under Options Two, Three, Four, Five, and Six is calculated
58 by reducing an Option One benefit based on actuarial computations to provide the following:
59 (a) Option Two is a reduced allowance paid to and throughout the lifetime of the
60 retiree, and, if the retiree receives less in annuity payments than the amount of the retiree's
61 member contributions, the remaining balance of the retiree's member contributions shall be
62 paid in accordance with Sections 49-11-609 and 49-11-610 .
63 (b) Option Three is a reduced allowance paid to and throughout the lifetime of the
64 retiree, and, upon the death of the retiree, the same reduced allowance paid to and throughout
65 the lifetime of the retiree's lawful spouse at the time of retirement.
66 (c) Option Four is a reduced allowance paid to and throughout the lifetime of the
67 retiree, and upon the death of the retiree, an amount equal to 1/2 of the retiree's allowance paid
68 to and throughout the lifetime of the retiree's lawful spouse at the time of retirement.
69 (d) Option Five is a modification of Option Three so that if the lawful spouse at the
70 time of retirement predeceases the retiree, an allowance equivalent to the amount payable at the
71 time of initial retirement under Option One shall be paid to the retiree for the remainder of the
72 retiree's life, beginning on the last day of the month following the month in which the lawful
73 spouse dies.
74 (e) Option Six is a modification of Option Four so that if the lawful spouse at the time
75 of retirement predeceases the retiree, an allowance equivalent to the amount payable at the time
76 of initial retirement under Option One shall be paid to the retiree for the remainder of the
77 retiree's life, beginning on the last day of the month following the month in which the lawful
78 spouse dies.
79 (4) (a) (i) The final average salary is limited in the computation of that part of an
80 allowance based on service rendered prior to July 1, 1967, during a period when the retiree
81 received employer contributions on a portion of compensation from an educational institution
82 toward the payment of the premium required on a retirement annuity contract with the
83 Teachers' Insurance and Annuity Association of America or with any other public or private
84 system, organization, or company to $4,800.
85 (ii) This limitation is not applicable to retirees who elected to continue in this system
86 by July 1, 1967.
87 (b) Periods of employment which are exempt from this system under Subsection

88 49-12-203 (1)(b), may be purchased by the member for the purpose of retirement only if all
89 benefits from the Teachers' Insurance and Annuity Association of America or any other public
90 or private system or organization based on this period of employment are forfeited.
91 (5) (a) If a retiree under Option One dies within 90 days after the retiree's retirement
92 date, the retirement is canceled and the death shall be considered as that of a member before
93 retirement.
94 (b) Any payments made to the retiree shall be deducted from the amounts due to the
95 beneficiary.
96 (6) If a retiree retires under either Option Five or Six and subsequently divorces, the
97 retiree may elect to convert the benefit to a Option One benefit at the time of divorce, if there is
98 no court order filed in the matter.
99 Section 2. Section 49-13-402 is amended to read:
100 49-13-402. Service retirement plans -- Calculation of retirement allowance --
101 Social Security limitations.
102 (1) (a) Except as provided under Section 49-13-701 , retirees of this system may choose
103 from the six retirement options described in this section.
104 (b) If the retiree is married at the time of the election, the election must be approved, in
105 writing, by the retiree's spouse, unless the retiree's spouse is incapacitated as defined under
106 Section 75-1-201 .
107 [(b)] (c) Options Two, Three, Four, Five, and Six are modifications of the Option One
108 calculation.
109 (2) The Option One benefit is an allowance calculated as follows:
110 (a) If the retiree is at least 65 years of age or has accrued at least 30 years of service
111 credit, the allowance is an amount equal to 2% of the retiree's final average monthly salary
112 multiplied by the number of years of service credit accrued.
113 (b) If the retiree is less than 65 years of age, the allowance shall be reduced 3% for
114 each year of retirement from age 60 to age 65, plus a full actuarial reduction for each year of
115 retirement prior to age 60, unless the member has 30 or more years of accrued credit, in which
116 event no reduction is made to the allowance.
117 (c) (i) Years of service include any fractions of years of service to which the retiree
118 may be entitled.

119 (ii) At the time of retirement, if a retiree's combined years of actual, not purchased,
120 service credit is within 1/10 of one year of the total years of service credit required for
121 retirement, the retiree shall be considered to have the total years of service credit required for
122 retirement.
123 (d) An Option One allowance is only payable to the member during the member's
124 lifetime.
125 (3) The allowance payable under Options Two, Three, Four, Five, and Six is calculated
126 by reducing an Option One benefit based on actuarial computations to provide the following:
127 (a) Option Two is a reduced allowance paid to and throughout the lifetime of the
128 retiree, and, if the retiree receives less in annuity payments than the amount of the retiree's
129 member contributions, the remaining balance of the retiree's member contributions shall be
130 paid in accordance with Sections 49-11-609 and 49-11-610 .
131 (b) Option Three is a reduced allowance paid to and throughout the lifetime of the
132 retiree, and, upon the death of the retiree, the same reduced allowance paid to and throughout
133 the lifetime of the retiree's lawful spouse at the time of retirement.
134 (c) Option Four is a reduced allowance paid to and throughout the lifetime of the
135 retiree, and upon the death of the retiree, an amount equal to 1/2 of the retiree's allowance paid
136 to and throughout the lifetime of the retiree's lawful spouse at the time of retirement.
137 (d) Option Five is a modification of Option Three so that if the lawful spouse at the
138 time of retirement predeceases the retiree, an allowance equivalent to the amount payable at the
139 time of initial retirement under Option One shall be paid to the retiree for the remainder of the
140 retiree's life, beginning on the last day of the month following the month in which the lawful
141 spouse dies.
142 (e) Option Six is a modification of Option Four so that if the lawful spouse at the time
143 of retirement predeceases the retiree, an allowance equivalent to the amount payable at the time
144 of initial retirement under Option One shall be paid to the retiree for the remainder of the
145 retiree's life, beginning on the last day of the month following the month in which the lawful
146 spouse dies.
147 (4) (a) (i) The final average salary is limited in the computation of that part of an
148 allowance based on service rendered prior to July 1, 1967, during a period when the retiree
149 received employer contributions on a portion of compensation from an educational institution

150 toward the payment of the premium required on a retirement annuity contract with the
151 Teachers' Insurance and Annuity Association of America or with any other public or private
152 system, organization, or company to $4,800.
153 (ii) This limitation is not applicable to retirees who elected to continue in the Public
154 Employees' Contributory Retirement System by July 1, 1967.
155 (b) Periods of employment which are exempt from this system as permitted under
156 Subsection 49-13-203 (1)(b) may be purchased by the member for the purpose of retirement
157 only if all benefits from the Teachers' Insurance and Annuity Association of America or any
158 other public or private system or organization based on this period of employment are forfeited.
159 (5) (a) If a retiree under Option One dies within 90 days after the retiree's retirement
160 date, the retirement is canceled and the death shall be considered as that of a member before
161 retirement.
162 (b) Any payments made to the retiree shall be deducted from the amounts due to the
163 beneficiary.
164 (6) If a retiree retires under either Option Five or Six and subsequently divorces, the
165 retiree may elect to convert the benefit to an Option One benefit at the time of divorce, if there
166 is no court order filed in the matter.