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S.B. 19

             1     

ENHANCED PUBLIC SAFETY RETIREMENT

             2     
SYSTEMS COLA OPTION

             3     
2008 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Carlene M. Walker

             6     
House Sponsor: John Dougall

             7     
             8      LONG TITLE
             9      Committee Note:
             10          The Retirement and Independent Entities Interim Committee recommended this bill.
             11      General Description:
             12          This bill modifies the Utah State Retirement and Insurance Benefit Act by allowing
             13      participating employers to provide an enhanced maximum annual cost-of-living
             14      adjustment for certain public safety retirees.
             15      Highlighted Provisions:
             16          This bill:
             17          .    repeals the Public Safety Retirees' Cost-of-Living Increase Restricted Account and
             18      deposits its balance and future revenue into the public safety trust funds to fund a
             19      portion of the increase in the maximum annual cost-of-living adjustment for public
             20      safety retirees;
             21          .    for purposes of determining contribution rates, provides for additional subdivisions
             22      of the Public Safety Contributory Retirement System and the Public Safety
             23      Noncontributory Retirement System to allow for different maximum annual
             24      cost-of-living adjustments;
             25          .    provides a maximum annual cost-of-living adjustment of 4% for state agency public
             26      safety members and retirees in lieu of the current 2.5%;
             27          .    allows other participating employers the option to offer a maximum annual


             28      cost-of-living adjustment of 4% for public safety members and retirees in lieu of the current
             29      2.5%;
             30          .    allows a participating employer to make a one-time election to offer the enhanced
             31      cost-of-living adjustment, if made within a certain period of time;
             32          .    provides certain eligibility requirements for covered employees and retirees to
             33      receive the increased benefit;
             34          .    provides for procedures and rules to make the election and have the enhanced
             35      cost-of-living adjustment to become effective;
             36          .    provides that the enhanced cost-of-living adjustment may not be applied to a
             37      retirement allowance already received; and
             38          .    makes technical changes.
             39      Monies Appropriated in this Bill:
             40          None
             41      Other Special Clauses:
             42          This bill takes effect on July 1, 2008.
             43      Utah Code Sections Affected:
             44      AMENDS:
             45          49-11-902, as enacted by Laws of Utah 2004, Chapter 262
             46          49-14-301, as last amended by Laws of Utah 2004, Chapter 118
             47          49-14-403, as renumbered and amended by Laws of Utah 2002, Chapter 250
             48          49-15-301, as last amended by Laws of Utah 2004, Chapter 118
             49          49-15-403, as renumbered and amended by Laws of Utah 2002, Chapter 250
             50      REPEALS:
             51          49-11-901, as enacted by Laws of Utah 2004, Chapter 262
             52      Uncodified Material Affected:
             53      ENACTS UNCODIFIED MATERIAL
             54     
             55      Be it enacted by the Legislature of the state of Utah:
             56          Section 1. Section 49-11-902 is amended to read:
             57           49-11-902. Premium tax revenues -- Formula -- Deposits.
             58          (1) (a) If the premium tax revenue received by the office under Subsection


             59      49-16-301 (6), when calculated as a percentage of the certified contribution rate for members in
             60      Division A and B, as defined under Section 49-16-301 , exceeds the percentage of the certified
             61      contribution rate paid to the Firefighters' Retirement Trust Fund in accordance with Subsection
             62      49-16-301 (6) on July 1, 2004, the office shall deposit the difference in the [Public Safety
             63      Retirees' Cost-of-Living Increase Restricted Account created under Section 49-11-901 ] Public
             64      Safety Contributory Trust Fund created under Section 49-14-104 and the Public Safety
             65      Noncontributory Retirement Trust Fund created under Section 49-15-104 .
             66          (b) If the premium tax revenue does not exceed the percentage of the certified
             67      contribution rate paid to the Firefighters' Retirement Trust Fund in accordance with Subsection
             68      49-16-301 (6) on July 1, 2004 as calculated under Subsection (1)(a), the board may not make a
             69      deposit under Subsection (1)(a).
             70          (2) The monies deposited under this section shall be used to fund an increase for
             71      retirees in the public safety retirement systems from a 2.5% maximum annual cost-of-living
             72      adjustment to a 4% maximum annual cost-of-living adjustment under Sections 49-14-403 and
             73      49-15-403 in the public safety retirement systems.
             74          [(2) The] (3) As required to implement this section, the office shall make the
             75      calculations[,] and deposits for the equitable apportionment of monies between:
             76          (a) Division [A and B,] A1 and B1; and [deposits required to implement this section.]
             77          (b) the contributory and noncontributory trust funds.
             78          Section 2. Section 49-14-301 is amended to read:
             79           49-14-301. Contributions -- Two divisions -- Election by employer to pay
             80      employee contributions -- Accounting for and vesting of member contributions --
             81      Deductions.
             82          (1) Participating employers and members shall jointly pay the certified contribution
             83      rates to the office to maintain this system on a financially and actuarially sound basis.
             84          (2) For purposes of determining contribution rates, this system is divided into two
             85      divisions according to Social Security coverage as follows:
             86          (a) members of this system with on-the-job Social Security coverage are in Division A;
             87      and
             88          (b) members of this system without on-the-job Social Security coverage are in Division
             89      B.


             90          (3) In addition to the divisions under Subsection (2) and for the purpose of determining
             91      contribution rates, each division under Subsection (2) is further divided as follows:
             92          (a) members of this system with a maximum annual cost-of-living adjustment under
             93      Subsection 49-14-403 (2)(b) are in Divisions A1 and B1; and
             94          (b) members of this system with a maximum annual cost-of-living adjustment under
             95      Subsection 49-14-403 (2)(a) are in Divisions A2 and B2.
             96          [(3)] (4) (a) A participating employer may elect to pay all or part of the required
             97      member contributions, in addition to the required participating employer contributions.
             98          (b) Any amount contributed by a participating employer under this section shall vest to
             99      the member's benefit as though the member had made the contribution.
             100          (c) The required member contributions shall be reduced by the amount that is paid by
             101      the participating employer.
             102          [(4)] (5) (a) All member contributions are credited by the office to the account of the
             103      individual member.
             104          (b) This amount, plus refund interest, is held in trust for the payment of benefits to the
             105      member or the member's beneficiaries.
             106          (c) All member contributions are vested and nonforfeitable.
             107          [(5)] (6) (a) Each member is considered to consent to payroll deductions of member
             108      contributions.
             109          (b) The payment of compensation less these payroll deductions is considered full
             110      payment for services rendered by the member.
             111          [(6)] (7) Contribution rates for a participating employer may be different than for other
             112      participating employers based on the participating employer's current funding status and
             113      actuarial experience.
             114          Section 3. Section 49-14-403 is amended to read:
             115           49-14-403. Annual cost-of-living adjustment.
             116          (1) The office shall make an annual cost-of-living adjustment to:
             117          (a) an original allowance paid under Section 49-14-402 and Part 5, Death Benefit, of
             118      this chapter if the allowance has been paid for at least one year; and
             119          (b) an original payment made to an alternate payee under a domestic relations order, if
             120      the payment is to be paid as a percentage of the allowance rather than a specific dollar amount.


             121          (2) (a) [The] Unless Subsection (2)(b) applies, the original allowance shall be increased
             122      by the annual increase in the Consumer Price Index up to a maximum of 2.5%.
             123          (b) If the participating employer has made an election under Subsection (5), and in lieu
             124      of the annual increase under Subsection (2)(a), the original allowance shall be increased by the
             125      annual increase in the Consumer Price Index up to a maximum of 4%.
             126          [(b)] (c) Annual increases in the Consumer Price Index in excess of [2.5%] the
             127      applicable maximum annual increase under this Subsection (2), shall be accumulated and used
             128      in subsequent adjustments when the annual increase in the Consumer Price Index is less than
             129      [2.5%] the applicable maximum annual increase under this Subsection (2).
             130          (3) The Consumer Price Index used in calculating adjustments shall be a United States
             131      Bureau of Labor Statistics Consumer Price Index average as determined by the board.
             132          (4) The cost-of-living adjustment made under this section may not decrease the
             133      allowance.
             134          (5) (a) A participating employer may make a one-time election to provide the annual
             135      cost-of-living adjustment under Subsection (2)(b), in lieu of the annual cost-of-living
             136      adjustment under Subsection (2)(a), for the participating employer's current and future retirees.
             137          (b) A participating employer shall make the election under this Subsection (5), prior to
             138      December 1, 2009.
             139          (c) The participating employer shall indicate whether or not it elects to participate in
             140      this benefit by enacting a resolution or ordinance to that effect and making an application to the
             141      office.
             142          (d) The effective date for the annual cost-of-living adjustment under Subsection (2)(b)
             143      is January 1 of the year following an election under Subsection (5)(a).
             144          (e) Notwithstanding the election provided under this section, the state, as a
             145      participating employer, shall provide the annual cost-of-living adjustment under Subsection
             146      (2)(b) to its eligible employees and retirees effective on January 1, 2009.
             147          (6) (a) To be eligible for the annual cost-of-living adjustment under Subsection (2)(b),
             148      a retiring employee shall earn the final 72 months of service credit prior to initial retirement:
             149          (i) as an employee of a participating employer who:
             150          (A) has made the election under Subsection (5)(a); or
             151          (B) is included under Subsection (5)(e); and


             152          (ii) in a covered position under Title 49, Chapter 14, Public Safety Contributory
             153      Retirement System Act or under Title 49, Chapter 15, Public Safety Noncontributory
             154      Retirement System Act.
             155          (b) The eligibility requirements under Subsection (6)(a)(i), do not apply to a person
             156      who retires prior to July 1, 2008.
             157          (c) The annual cost-of-living adjustment under Subsection (2)(b) may not be paid to a
             158      retiree who is not eligible under this Subsection (6).
             159          (7) An allowance adjustment made under Subsections (2)(b) and (5) may not be paid
             160      prior to the effective date of the enhanced cost-of-living adjustment for the participating
             161      employer.
             162          (8) The board may adopt rules for:
             163          (a) the administration of the election provided under Subsection (5); and
             164          (b) the effective date of the enhanced cost-of-living adjustment for participating
             165      employers.
             166          Section 4. Section 49-15-301 is amended to read:
             167           49-15-301. Contributions -- Two divisions.
             168          (1) Participating employers shall pay the certified contribution rates to the office to
             169      maintain this system on a financially and actuarially sound basis.
             170          (2) For purposes of determining contribution rates, this system is divided into two
             171      divisions according to Social Security coverage[.]:
             172          (a) members of this system with on-the-job Social Security coverage are Division A[.];
             173      and
             174          (b) members of this system without on-the-job Social Security coverage are in Division
             175      B.
             176          (3) In addition to the divisions under Subsection (2) and for the purposes of
             177      determining contribution rates, each division under Subsection (2) is further divided as follows:
             178          (a) members of this system with an annual cost-of-living adjustment under Subsection
             179      49-15-403 (2)(b) are in Divisions A1 and B1; and
             180          (b) members of this system with an annual cost-of-living adjustment under Subsection
             181      49-15-403 (2)(a) are in Divisions A2 and B2.
             182          [(3)] (4) Contribution rates for a participating employer may be different than for other


             183      participating employers based on the participating employer's current funding status and
             184      actuarial experience.
             185          Section 5. Section 49-15-403 is amended to read:
             186           49-15-403. Annual cost-of-living adjustment.
             187          (1) The office shall make an annual cost-of-living adjustment to:
             188          (a) an original allowance paid under Section 49-15-402 and Part 5, Death Benefit, of
             189      this chapter if the allowance has been paid for at least one year; and
             190          (b) an original payment made to an alternate payee under a domestic relations order if
             191      the payment is to be paid as a percentage of the allowance rather than a specific dollar amount.
             192          (2) (a) [The] Unless Subsection (2)(b) applies, the original allowance shall be increased
             193      by the annual increase in the Consumer Price Index up to a maximum of 2.5%.
             194          (b) If the participating employer has made an election under Subsection (5), and in lieu
             195      of the annual increase under Subsection (2)(a), the original allowance shall be increased by the
             196      annual increase in the Consumer Price Index up to a maximum of 4%.
             197          [(b)] (c) Annual increases in the Consumer Price Index in excess of [2.5%] the
             198      applicable maximum annual increase under this Subsection (2), shall be accumulated and used
             199      in subsequent adjustments when the annual increase in the Consumer Price Index is less than
             200      [2.5%] the applicable maximum annual increase under this Subsection (2).
             201          (3) The Consumer Price Index used in calculating adjustments shall be a United States
             202      Bureau of Labor Statistics Consumer Price Index average as determined by the board.
             203          (4) The cost-of-living adjustment made under this section may not decrease the
             204      allowance.
             205          (5) (a) A participating employer may make a one-time election to provide the annual
             206      cost-of-living adjustment under Subsection (2)(b), in lieu of the annual cost-of-living
             207      adjustment under Subsection (2)(a), for the participating employer's current and future retirees.
             208          (b) A participating employer shall make the election under this Subsection (5), prior to
             209      December 1, 2009.
             210          (c) The participating employer shall indicate whether or not it elects to participate in
             211      this benefit by enacting a resolution or ordinance to that effect and making an application to the
             212      office.
             213          (d) The effective date for the annual cost-of-living adjustment under Subsection (2)(b)


             214      is January 1 of the year following an election under Subsection (5)(a).
             215          (e) Notwithstanding the election provided under this section, the state, as a
             216      participating employer, shall provide the annual cost-of-living adjustment under Subsection
             217      (2)(b) to its eligible employees and retirees effective on January 1, 2009.
             218          (6) (a) To be eligible for the annual cost-of-living adjustment under Subsection (2)(b),
             219      a retiring employee shall earn the final 72 months of service credit prior to initial retirement
             220      effective on January 1, 2009:
             221          (i) as an employee of a participating employer who:
             222          (A) has made the election under Subsection (5)(a); or
             223          (B) is included under Subsection (5)(e); and
             224          (ii) in a covered position under Title 49, Chapter 14, Public Safety Contributory
             225      Retirement System Act or under Title 49, Chapter 15, Public Safety Noncontributory
             226      Retirement System Act.
             227          (b) The eligibility requirements under Subsection (6)(a)(i), do not apply to a person
             228      who retires prior to July 1, 2008.
             229          (c) The annual cost-of-living adjustment under Subsection (2)(b) may not be paid to a
             230      retiree who is not eligible under this Subsection (6).
             231          (7) An allowance adjustment made under Subsections (2)(b) and (5) may not be paid
             232      prior to the effective date of the enhanced cost-of-living adjustment for the participating
             233      employer.
             234          (8) The board may adopt rules for:
             235          (a) the administration of the election provided under Subsection (5); and
             236          (b) the effective date of the enhanced cost-of-living adjustment for participating
             237      employers.
             238          Section 6. Deposit of remaining account balance.
             239          Any balance remaining in the Public Safety Retirees' Cost-of-Living Increase Restricted
             240      Account created under the former Section 49-11-901 on June 30, 2008, shall be deposited as
             241      provided under Section 49-11-902 on July 1, 2008.
             242          Section 7. Repealer.
             243          This bill repeals:
             244          Section 49-11-901, Public Safety Retirees' Cost-of-Living Increase Restricted


             245      Account.
             246          Section 8. Effective date.
             247          This bill takes effect on July 1, 2008.




Legislative Review Note
    as of 11-14-07 12:53 PM


Office of Legislative Research and General Counsel


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