1     
PUBLIC SAFETY AND FIREFIGHTER TIER II

2     
RETIREMENT ENHANCEMENTS

3     
2020 GENERAL SESSION

4     
STATE OF UTAH

5     
Chief Sponsor: Wayne A. Harper

6     
House Sponsor: Lee B. Perry

7     

8     LONG TITLE
9     General Description:
10          This bill modifies provisions relating to the New Public Safety and Firefighter Tier II
11     Contributory Retirement System by amending certain retirement and death benefits.
12     Highlighted Provisions:
13          This bill:
14          ▸     creates the New Public Safety and Firefighter Tier II Retirement Benefits Restricted
15     Account;
16          ▸     provides that a portion of the revenues collected from the tax on the admitted
17     insurers shall be deposited in the New Public Safety and Firefighter Tier II
18     Retirement Benefits Restricted Account;
19          ▸     provides that funds in the New Public Safety and Firefighter Tier II Retirement
20     Benefits Restricted Account shall be used to fund state agency costs associated with
21     the employer pick up for employees that are members of the New Public Safety and
22     Firefighter Tier II Retirement System and the Public Safety and Firefighter Tier II
23     Hybrid Retirement System;
24          ▸     requires a participating employer to make an additional nonelective contribution to
25     an employee that is a member of the Public Safety and Firefighter Tier II Defined
26     Contribution Plan, if the participating employer elects to pay the required member
27     contribution as an employer pick up for employees that are members of the Public
28     Safety and Firefighter Tier II Hybrid Retirement System;

29          ▸     amends the line-of-duty death benefits payable to the surviving spouse of an active
30     member of the New Public Safety and Firefighter Tier II Contributory Retirement
31     System; and
32          ▸     makes technical changes.
33     Money Appropriated in this Bill:
34          None
35     Other Special Clauses:
36          This bill provides a special effective date.
37     Utah Code Sections Affected:
38     AMENDS:
39          49-23-301 (Effective 07/01/20), as last amended by Laws of Utah 2019, Chapter 484
40          49-23-401 (Effective 07/01/20), as last amended by Laws of Utah 2019, Chapter 484
41          49-23-503, as last amended by Laws of Utah 2016, Chapter 84
42     ENACTS:
43          49-11-904, Utah Code Annotated 1953
44     

45     Be it enacted by the Legislature of the state of Utah:
46          Section 1. Section 49-11-904 is enacted to read:
47          49-11-904. New Public Safety and Firefighter Tier II Retirement Benefits
48     Restricted Account -- Insurance premium tax revenues -- Distribution.
49          (1) As used in this section, "account" means the New Public Safety and Firefighter Tier
50     II Retirement Benefits Restricted Account created in this section.
51          (2) There is created in the General Fund a restricted account known as the "New Public
52     Safety and Firefighter Tier II Retirement Benefits Restricted Account."
53          (3) The account shall be funded by:
54          (a) insurance premium tax revenues deposited into the account in accordance with this
55     section; and

56          (b) interest and earnings on account money.
57          (4) (a) Subject to Subsection (6), and in accordance with this section for a fiscal year
58     beginning on or after July 1, 2021, an amount equal to the growth in the amount of net revenue
59     deposited in the General Fund in the current fiscal year from the annual tax levied, assessed,
60     and collected under Title 59, Chapter 9, Taxation of Admitted Insurers, after all transfers
61     required by state statute have been made, that exceeds the amount of net revenue deposited in
62     the General Fund in the 2015-16 fiscal year from the annual tax levied, assessed, and collected
63     under Title 59, Chapter 9, Taxation of Admitted Insurers, after all transfers required by state
64     statute have been made, shall be deposited into the account.
65          (b) The amount described in Subsection (4)(a) shall be deposited annually.
66          (5) The Legislature may appropriate money in the account to fund:
67          (a) the contributions that state agencies make on behalf of members as an employer
68     pick up under Subsection 49-23-301(2)(c); and
69          (b) nonelective contributions that state agencies make under Subsection
70     49-23-401(1)(b).
71          (6) The amount deposited into the account under Subsection (4) may not exceed the
72     amount required to cover the contributions described in Subsection (5).
73          Section 2. Section 49-23-301 (Effective 07/01/20) is amended to read:
74          49-23-301 (Effective 07/01/20). Contributions.
75          (1) Participating employers and members shall pay the certified contribution rates to
76     the office to maintain the defined benefit portion of this system on a financially and actuarially
77     sound basis in accordance with Subsection (2).
78          (2) (a) A participating employer shall pay up to 14% of compensation toward the
79     certified contribution rate to the office for the defined benefit portion of this system.
80          (b) [A] Except as provided in Subsection (2)(c), a member shall [only] pay to the office
81     the amount, if any, of the certified contribution rate for the defined benefit portion of this
82     system that exceeds the percent of compensation paid by the participating employer under

83     Subsection (2)(a).
84          (c) A participating employer may elect to pay all or part of the required member
85     contribution under Subsection (2)(b) on behalf of the member as an employer pick up under 26
86     U.S.C. Sec. 414(h)(2), in addition to the required participating employer contribution under
87     Subsection (2)(a).
88          [(c)] (d) In addition to the percent specified under Subsection (2)(a), the participating
89     employer shall pay the corresponding Tier I system amortization rate of the employee's
90     compensation to the office to be applied to the employer's corresponding Tier I system liability.
91          [(3) A participating employer may elect to pay all or part of the required member
92     contributions under Subsection (2)(b), in addition to the required participating employer
93     contributions.]
94          [(4)] (3) (a) A member contribution is credited by the office to the account of the
95     individual member.
96          (b) This amount, together with refund interest, is held in trust for the payment of
97     benefits to the member or the member's beneficiaries.
98          (c) A member contribution is vested and nonforfeitable.
99          [(5)] (4) (a) Each member is considered to consent to payroll deductions of member
100     contributions.
101          (b) The payment of compensation less these payroll deductions is considered full
102     payment for services rendered by the member.
103          [(6)] (5) Except as provided under Subsection [(7)] (6), benefits provided under the
104     defined benefit portion of the Tier II hybrid retirement system created under this part:
105          (a) may not be increased unless the actuarial funded ratios of all systems under this title
106     reach 100%; and
107          (b) may be decreased only in accordance with the provisions of Section 49-23-309.
108          [(7)] (6) (a) The Legislature authorizes [an increase] increases to the death benefit
109     provided to a Tier II public safety service employee or firefighter member's surviving spouse

110     effective on May 12, 2015, and July 1, 2020, as provided in Section 49-23-503.
111          (b) (i) The Legislature authorizes an increase to the multiplier for the calculation of the
112     retirement allowance provided to a member of the New Public Safety and Firefighter Tier II
113     hybrid retirement system effective July 1, 2020, as provided in Section 49-23-304.
114          (ii) The requirements of Section 49-22-310 do not apply to the benefit adjustment
115     described in this Subsection [(7)] (6)(b).
116          Section 3. Section 49-23-401 (Effective 07/01/20) is amended to read:
117          49-23-401 (Effective 07/01/20). Contributions -- Rates.
118          (1) (a) Up to the amount allowed by federal law, the participating employer shall make
119     a nonelective contribution of 14% of the participant's compensation to a defined contribution
120     plan.
121          (b) In addition to the nonelective contribution described in Subsection (1)(a), if a
122     participating employer elects under Subsection 49-23-301(2)(c) to pay all or part of the
123     required member contribution on behalf of the participating employer's employees that are
124     members covered under Part 3, Tier II Hybrid Retirement System, the participating employer
125     shall make an additional nonelective contribution to an employee that is a member covered
126     under this part at the same percentage rate of the participant's compensation as the participating
127     employer's election to pay required member contributions on behalf of the participating
128     employer's employees that are members covered under Part 3, Tier II Hybrid Retirement
129     System.
130          (2) (a) The participating employer shall contribute the [14% nonelective contribution]
131     contributions described in Subsection (1) to a defined contribution plan qualified under Section
132     401(k) of the Internal Revenue Code which:
133          (i) is sponsored by the board; and
134          (ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
135          (b) The member may make voluntary deferrals to:
136          (i) the qualified 401(k) plan which receives the employer contribution described in this

137     Subsection (2); or
138          (ii) at the member's option, another defined contribution plan established by the
139     participating employer.
140          (c) In addition to the [percent] contributions specified under Subsection (2)(a), the
141     participating employer shall pay the corresponding Tier I system amortization rate of the
142     employee's compensation to the office to be applied to the employer's corresponding Tier I
143     system liability.
144          (3) (a) Except as provided under Subsection (3)(c), the total amount contributed by the
145     participating employer under Subsection (2)(a) vests to the member upon accruing four years of
146     service credit under this title.
147          (b) The total amount contributed by the member under Subsection (2)(b) vests to the
148     member's benefit immediately and is nonforfeitable.
149          (c) Upon filing a written request for exemption with the office, an eligible employee is
150     exempt from the vesting requirements of Subsection (3)(a) in accordance with Section
151     49-23-203.
152          (d) (i) Years of service credit under Subsection (3)(a) includes any fraction of a year to
153     which the member may be entitled.
154          (ii) At the time of vesting, if a member's years of service credit is within one-tenth of
155     one year of the total years required for vesting, the member shall be considered to have the total
156     years of service credit required for vesting.
157          (4) (a) Contributions made by a participating employer under Subsection (2)(a) shall be
158     invested in a default option selected by the board until the member is vested in accordance with
159     Subsection (3)(a).
160          (b) A member may direct the investment of contributions, including associated
161     investment gains and losses, made by a participating employer under Subsection (2)(a) only
162     after the contributions have vested in accordance with Subsection (3)(a).
163          (c) A member may direct the investment of contributions made by the member under

164     Subsection (3)(b).
165          (5) No loans shall be available from contributions made by a participating employer
166     under Subsection (2)(a).
167          (6) No hardship distributions shall be available from contributions made by a
168     participating employer under Subsection (2)(a).
169          (7) (a) Except as provided in Subsection (7)(b), if a member terminates employment
170     with a participating employer prior to the vesting period described in Subsection (3)(a), all
171     contributions made by a participating employer on behalf of the member under Subsection
172     (2)(a), including associated investment gains and losses are subject to forfeiture.
173          (b) If a member who terminates employment with a participating employer prior to the
174     vesting period described in Subsection (3)(a) subsequently enters employment with the same or
175     another participating employer within 10 years of the termination date of the previous
176     employment:
177          (i) all contributions made by the previous participating employer on behalf of the
178     member, including associated investment gains and losses, shall be reinstated upon the
179     member's employment as a regular full-time employee; and
180          (ii) the length of time that the member worked with the previous employer shall be
181     included in determining whether the member has completed the vesting period under
182     Subsection (3)(a).
183          (c) The office shall establish a forfeiture account and shall specify the uses of the
184     forfeiture account, which may include an offset against administrative costs of employer
185     contributions made under this section.
186          (8) The office may request from any other qualified 401(k) plan under Subsection (2)
187     any relevant information pertaining to the maintenance of its tax qualification under the
188     Internal Revenue Code.
189          (9) The office may take any action which in its judgment is necessary to maintain the
190     tax-qualified status of its 401(k) defined contribution plan under federal law.

191          Section 4. Section 49-23-503 is amended to read:
192          49-23-503. Death of active member in line of duty -- Payment of benefits.
193          If an active member of this system dies, benefits are payable as follows:
194          (1) If the death is classified by the office as a line-of-duty death, benefits are payable as
195     follows:
196          (a) If the member has accrued less than 20 years of public safety service or firefighter
197     service credit, the surviving spouse shall receive:
198          (i) a lump sum equal to six months of the active member's final average salary; and
199          (ii) the greater of:
200          (A) an allowance equal to 30% of the member's final average monthly salary[.]; or
201          (B) an allowance equal to 2% of the member's final average monthly salary multiplied
202     by the years of service credit accrued by the member.
203          (b) If the member has accrued 20 or more years of public safety service or firefighter
204     service credit, the member shall be considered to have retired with an Option One allowance
205     calculated without an actuarial reduction under Section 49-23-304 and the surviving spouse
206     shall receive the allowance that would have been payable to the member.
207          (2) (a) A volunteer firefighter is eligible for a line-of-duty death benefit under this
208     section if the death results from external force, violence, or disease directly resulting from
209     firefighter service.
210          (b) The lowest monthly compensation of firefighters of a city of the first class in this
211     state at the time of death shall be considered to be the final average monthly salary of a
212     volunteer firefighter for purposes of computing these benefits.
213          (c) Each volunteer fire department shall maintain a current roll of all volunteer
214     firefighters which meet the requirements of Subsection 49-23-102(13) to determine the
215     eligibility for this benefit.
216          (3) (a) If the death is classified as a line-of-duty death by the office, death benefits are
217     payable under this section and the surviving spouse is not eligible for benefits under Section

218     49-23-502.
219          (b) If the death is not classified as a line-of-duty death by the office, benefits are
220     payable in accordance with Section 49-23-502.
221          (4) (a) A surviving spouse who qualifies for a monthly benefit under this section shall
222     apply in writing to the office.
223          (b) The allowance shall begin on the first day of the month following the month in
224     which the:
225          (i) member or participant died, if the application is received by the office within 90
226     days of the date of death of the member or participant; or
227          (ii) application is received by the office, if the application is received by the office
228     more than 90 days after the date of death of the member or participant.
229          Section 5. Effective date.
230          This bill takes effect on July 1, 2020.