Rep. Norm Thurston — Voting Record

Bill

Number

S.B. 56 First Substitute (2020GS)

Sponsor

Sen. Harper, W.

Final action

Governor Signed 3/31/2020

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• creates the New Public Safety and Firefighter Tier II Retirement Benefits Restricted Account;
• provides that a portion of the revenues collected from the tax on the admitted insurers shall be deposited in the New Public Safety and Firefighter Tier II Retirement Benefits Restricted Account;
• provides that funds in the New Public Safety and Firefighter Tier II Retirement Benefits Restricted Account shall be used to fund state agency costs associated with the employer pick up for employees that are members of the New Public Safety and Firefighter Tier II Retirement System and the Public Safety and Firefighter Tier II Hybrid Retirement System;
• requires a participating employer to make an additional nonelective contribution to an employee that is a member of the Public Safety and Firefighter Tier II Defined Contribution Plan, if the participating employer elects to pay the required member contribution as an employer pick up for employees that are members of the Public Safety and Firefighter Tier II Hybrid Retirement System;
• amends the line-of-duty death benefits payable to the surviving spouse of an active member of the New Public Safety and Firefighter Tier II Contributory Retirement System; and
• makes technical changes.

Every vote on this bill

Bill text

PUBLIC SAFETY AND FIREFIGHTER TIER II
RETIREMENT ENHANCEMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Wayne A. Harper
House Sponsor: 
Lee B. Perry
LONG TITLE
General Description:
This bill modifies provisions relating to the New Public Safety and Firefighter Tier II
Contributory Retirement System by amending certain retirement and death benefits.
Highlighted Provisions:
This bill:
▸ creates the New Public Safety and Firefighter Tier II Retirement Benefits Restricted
Account;
▸ provides that a portion of the revenues collected from the tax on the admitted
insurers shall be deposited in the New Public Safety and Firefighter Tier II
Retirement Benefits Restricted Account;
▸ provides that funds in the New Public Safety and Firefighter Tier II Retirement
Benefits Restricted Account shall be used to fund state agency costs associated with
the employer pick up for employees that are members of the New Public Safety and
Firefighter Tier II Retirement System and the Public Safety and Firefighter Tier II
Hybrid Retirement System;
▸ requires a participating employer to make an additional nonelective contribution to
an employee that is a member of the Public Safety and Firefighter Tier II Defined
Contribution Plan, if the participating employer elects to pay the required member
contribution as an employer pick up for employees that are members of the Public
Safety and Firefighter Tier II Hybrid Retirement System;
▸ amends the line-of-duty death benefits payable to the surviving spouse of an active
member of the New Public Safety and Firefighter Tier II Contributory Retirement
System; and
▸ makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides a special effective date.
Utah Code Sections Affected:
AMENDS:
49-23-301
 (Effective 07/01/20)
, as last amended by Laws of Utah 2019, Chapter 484
49-23-401
 (Effective 07/01/20)
, as last amended by Laws of Utah 2019, Chapter 484
49-23-503
, as last amended by Laws of Utah 2016, Chapter 84
ENACTS:
49-11-904
, Utah Code Annotated 1953
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
49-11-904
 is enacted to read:
 49-11-904.
New Public Safety and Firefighter Tier II Retirement Benefits
Restricted Account -- Insurance premium tax revenues -- Distribution.
(1) As used in this section, "account" means the New Public Safety and Firefighter Tier
II Retirement Benefits Restricted Account created in this section.
(2) There is created in the General Fund a restricted account known as the "New Public
Safety and Firefighter Tier II Retirement Benefits Restricted Account."
(3) The account shall be funded by:
(a) insurance premium tax revenues deposited into the account in accordance with this
section; and
(b) interest and earnings on account money.
(4) (a) Subject to Subsection (6), and in accordance with this section for a fiscal year
beginning on or after July 1, 2021, an amount equal to the growth in the amount of net revenue
deposited in the General Fund in the current fiscal year from the annual tax levied, assessed,
and collected under Title 59, Chapter 9, Taxation of Admitted Insurers, after all transfers
required by state statute have been made, that exceeds the amount of net revenue deposited in
the General Fund in the 2015-16 fiscal year from the annual tax levied, assessed, and collected
under Title 59, Chapter 9, Taxation of Admitted Insurers, after all transfers required by state
statute have been made, shall be deposited into the account.
(b) The amount described in Subsection (4)(a) shall be deposited annually.
(5) The Legislature may appropriate money in the account to fund:
(a) the contributions that state agencies make on behalf of members as an employer
pick up under Subsection 
49-23-301
(2)(c); and
(b) nonelective contributions that state agencies make under Subsection
49-23-401
(1)(b).
(6) The amount deposited into the account under Subsection (4) may not exceed the
amount required to cover the contributions described in Subsection (5).
Section 2. Section 
49-23-301 (Effective 07/01/20)
 is amended to read:
49-23-301 (Effective 07/01/20).
Contributions.
(1) Participating employers and members shall pay the certified contribution rates to
the office to maintain the defined benefit portion of this system on a financially and actuarially
sound basis in accordance with Subsection (2).
(2) (a) A participating employer shall pay up to 14% of compensation toward the
certified contribution rate to the office for the defined benefit portion of this system.
(b) [
A
] 
Except as provided in Subsection (2)(c), a
 member shall [
only
] pay to the office
the amount, if any, of the certified contribution rate for the defined benefit portion of this
system that exceeds the percent of compensation paid by the participating employer under
Subsection (2)(a).
(c) A participating employer may elect to pay all or part of the required member
contribution under Subsection (2)(b) on behalf of the member as an employer pick up under 26
U.S.C. Sec. 414(h)(2), in addition to the required participating employer contribution under
Subsection (2)(a).
[
(c)
] 
(d)
 In addition to the percent specified under Subsection (2)(a), the participating
employer shall pay the corresponding Tier I system amortization rate of the employee's
compensation to the office to be applied to the employer's corresponding Tier I system liability.
[
(3) A participating employer may elect to pay all or part of the required member
contributions under Subsection (2)(b), in addition to the required participating employer
contributions.
]
[
(4)
] 
(3)
 (a) A member contribution is credited by the office to the account of the
individual member.
(b) This amount, together with refund interest, is held in trust for the payment of
benefits to the member or the member's beneficiaries.
(c) A member contribution is vested and nonforfeitable.
[
(5)
] 
(4)
 (a) Each member is considered to consent to payroll deductions of member
contributions.
(b) The payment of compensation less these payroll deductions is considered full
payment for services rendered by the member.
[
(6)
] 
(5)
 Except as provided under Subsection [
(7)
] 
(6)
, benefits provided under the
defined benefit portion of the Tier II hybrid retirement system created under this part:
(a) may not be increased unless the actuarial funded ratios of all systems under this title
reach 100%; and
(b) may be decreased only in accordance with the provisions of Section 
49-23-309
.
[
(7)
] 
(6)
 (a) The Legislature authorizes [
an increase
] 
increases
 to the death benefit
provided to a Tier II public safety service employee or firefighter member's surviving spouse
effective on May 12, 2015, 
and July 1, 2020,
 as provided in Section 
49-23-503
.
(b) (i) The Legislature authorizes an increase to the multiplier for the calculation of the
retirement allowance provided to a member of the New Public Safety and Firefighter Tier II
hybrid retirement system effective July 1, 2020, as provided in Section 
49-23-304
.
(ii) The requirements of Section 
49-22-310
 do not apply to the benefit adjustment
described in this Subsection [
(7)
] 
(6)
(b).
Section 3. Section 
49-23-401 (Effective 07/01/20)
 is amended to read:
49-23-401 (Effective 07/01/20).
Contributions -- Rates.
(1) 
(a)
 Up to the amount allowed by federal law, the participating employer shall make
a nonelective contribution of 14% of the participant's compensation to a defined contribution
plan.
(b) In addition to the nonelective contribution described in Subsection (1)(a), if a
participating employer elects under Subsection 
49-23-301
(2)(c) to pay all or part of the
required member contribution on behalf of the participating employer's employees that are
members covered under Part 3, Tier II Hybrid Retirement System, the participating employer
shall make an additional nonelective contribution to an employee that is a member covered
under this part at the same percentage rate of the participant's compensation as the participating
employer's election to pay required member contributions on behalf of the participating
employer's employees that are members covered under Part 3, Tier II Hybrid Retirement
System.
(2) (a) The participating employer shall contribute the [
14% nonelective contribution
]
contributions
 described in Subsection (1) to a defined contribution plan qualified under Section
401(k) of the Internal Revenue Code which:
(i) is sponsored by the board; and
(ii) has been grandfathered under Section 1116 of the Federal Tax Reform Act of 1986.
(b) The member may make voluntary deferrals to:
(i) the qualified 401(k) plan which receives the employer contribution described in this
Subsection (2); or
(ii) at the member's option, another defined contribution plan established by the
participating employer.
(c) In addition to the [
percent
] 
contributions
 specified under Subsection (2)(a), the
participating employer shall pay the corresponding Tier I system amortization rate of the
employee's compensation to the office to be applied to the employer's corresponding Tier I
system liability.
(3) (a) Except as provided under Subsection (3)(c), the total amount contributed by the
participating employer under Subsection (2)(a) vests to the member upon accruing four years of
service credit under this title.
(b) The total amount contributed by the member under Subsection (2)(b) vests to the
member's benefit immediately and is nonforfeitable.
(c) Upon filing a written request for exemption with the office, an eligible employee is
exempt from the vesting requirements of Subsection (3)(a) in accordance with Section
49-23-203
.
(d) (i) Years of service credit under Subsection (3)(a) includes any fraction of a year to
which the member may be entitled.
(ii) At the time of vesting, if a member's years of service credit is within one-tenth of
one year of the total years required for vesting, the member shall be considered to have the total
years of service credit required for vesting.
(4) (a) Contributions made by a participating employer under Subsection (2)(a) shall be
invested in a default option selected by the board until the member is vested in accordance with
Subsection (3)(a).
(b) A member may direct the investment of contributions, including associated
investment gains and losses, made by a participating employer under Subsection (2)(a) only
after the contributions have vested in accordance with Subsection (3)(a).
(c) A member may direct the investment of contributions made by the member under
Subsection (3)(b).
(5) No loans shall be available from contributions made by a participating employer
under Subsection (2)(a).
(6) No hardship distributions shall be available from contributions made by a
participating employer under Subsection (2)(a).
(7) (a) Except as provided in Subsection (7)(b), if a member terminates employment
with a participating employer prior to the vesting period described in Subsection (3)(a), all
contributions made by a participating employer on behalf of the member under Subsection
(2)(a), including associated investment gains and losses are subject to forfeiture.
(b) If a member who terminates employment with a participating employer prior to the
vesting period described in Subsection (3)(a) subsequently enters employment with the same or
another participating employer within 10 years of the termination date of the previous
employment:
(i) all contributions made by the previous participating employer on behalf of the
member, including associated investment gains and losses, shall be reinstated upon the
member's employment as a regular full-time employee; and
(ii) the length of time that the member worked with the previous employer shall be
included in determining whether the member has completed the vesting period under
Subsection (3)(a).
(c) The office shall establish a forfeiture account and shall specify the uses of the
forfeiture account, which may include an offset against administrative costs of employer
contributions made under this section.
(8) The office may request from any other qualified 401(k) plan under Subsection (2)
any relevant information pertaining to the maintenance of its tax qualification under the
Internal Revenue Code.
(9) The office may take any action which in its judgment is necessary to maintain the
tax-qualified status of its 401(k) defined contribution plan under federal law.
Section 4. Section 
49-23-503
 is amended to read:
49-23-503.
Death of active member in line of duty -- Payment of benefits.
If an active member of this system dies, benefits are payable as follows:
(1) If the death is classified by the office as a line-of-duty death, benefits are payable as
follows:
(a) If the member has accrued less than 20 years of public safety service or firefighter
service credit, the surviving spouse shall receive
:
(i)
 a lump sum equal to six months of the active member's final average salary
;
 and
(ii) the greater of:
(A)
 an allowance equal to 30% of the member's final average monthly salary[
.
]
; or
(B) an allowance equal to 2% of the member's final average monthly salary multiplied
by the years of service credit accrued by the member.
(b) If the member has accrued 20 or more years of public safety service or firefighter
service credit, the member shall be considered to have retired with an Option One allowance
calculated without an actuarial reduction under Section 
49-23-304
 and the surviving spouse
shall receive the allowance that would have been payable to the member.
(2) (a) A volunteer firefighter is eligible for a line-of-duty death benefit under this
section if the death results from external force, violence, or disease directly resulting from
firefighter service.
(b) The lowest monthly compensation of firefighters of a city of the first class in this
state at the time of death shall be considered to be the final average monthly salary of a
volunteer firefighter for purposes of computing these benefits.
(c) Each volunteer fire department shall maintain a current roll of all volunteer
firefighters which meet the requirements of Subsection 
49-23-102
(13) to determine the
eligibility for this benefit.
(3) (a) If the death is classified as a line-of-duty death by the office, death benefits are
payable under this section and the surviving spouse is not eligible for benefits under Section
49-23-502
.
(b) If the death is not classified as a line-of-duty death by the office, benefits are
payable in accordance with Section 
49-23-502
.
(4) (a) A surviving spouse who qualifies for a monthly benefit under this section shall
apply in writing to the office.
(b) The allowance shall begin on the first day of the month following the month in
which the:
(i) member or participant died, if the application is received by the office within 90
days of the date of death of the member or participant; or
(ii) application is received by the office, if the application is received by the office
more than 90 days after the date of death of the member or participant.
Section 5. 
Effective date.
This bill takes effect on July 1, 2020.