Updated March 14, 2011: SB127: Post Retirement Employment Amendments, sponsored by Sen. Dan Liljenquist, passed the Senate without opposition. Described by the Senator as a “clean-up bill” to take care of problems associated with last year’s SB43, it allows for part-time employment after retirement. Under provisions of the bill, a school district employee can go back to work part time 60 days after retirement if they earn less than $15,000/yr. or 50% of the retirement allowance, whichever is less. They must also work in a non-benefited position. The requirement for a one year hard separation is still in effect if you want to go back to a full-time position. “I am sorry and I am fixing it,” Sen. Liljenquist said of his bill.
Another technical clean-up bill, SB308 (1st sub.): Amendments to Public Employee's Benefits and Insurance Program, clarifies that elected officials are able to serve in a part-time capacity without suspending their pension payments.
Changes Made During the 2010 Legislative Session:
Summary of 2010 changes to the Utah Retirement Systems (from the Utah Office of Legislative Research):
Improved Retirement Bills Pass in 2010
Updated March 12, 2010: Two major bills dealing with the Utah Retirement Systems passed during the 2010 General Legislative Session. SB43 (third substitute): Post-retirement Employment Amendments and SB63 (third substitute): New Public Employees’ Tier II Contributory Retirement Act passed the Legislature on March 1 and are awaiting the Governor’s signature. While the UEA still believes the state would have been better served by allowing a year to study these issues and develop alternative solutions, these bills are much improved from their original form.
The bills were improved, in large part, because of the hundreds of letters, e-mails and personal contacts with legislators. The UEA Legislative team extends its thanks to everyone who helped in sharing concerns with legislators, especially members of the newly-formed retirement coalition (UEA, Utah School Employees Association, Utah Public Employees’ Association, and Fraternal Order of Police), 4,000 of whom gathered on the steps of the Capitol February 6 to protest cuts to public employee retirement benefits.
Contacts with legislators also helped stop two additional bills that would negatively impact retirement benefits for current employees. SB42 would have extended the years of service required for retirement and SB94 would have eliminated the 1.5 percent employer 401(k) contribution state employees currently receive.
For those working in education, here’s what SB43 and SB63 will do:
Current Employees: All retirement benefits, including years-of-service requirements, three-year highest salary averaging and the 2 percent multiplier for each year of service, remain just as they are now for all employees hired prior to July 1, 2011.
Current Retirees: Neither bill affects pension payout, COLA increases or any other aspect of current retiree benefits. If you have retired from the URS and returned to work in an entity participating in the URS, the new law removes the requirement that an employer contribute to an employee 401(k). After July 1, 2010, employers may continue to contribute to the rehired employee’s 401(k), but only up to the “normal cost,” which will be 11.87 percent, about 2 percent less than the current contribution rate.
Retirees Who Return to Employment: SB43 applies to anyone who retires from the Utah Retirement Systems after July 1, 2010, and returns to work with any entity participating in the URS. It requires a retired employee to wait one full year before returning to employment with a state agency. A teacher who retired would have two options upon being rehired:
- Stop receiving a pension payment and earn another 2 percent towards retirement per year upon ultimate retirement.
- Receive a monthly pension payment after sitting out a full year before returning to work. There would be no replacement contribution to the employee’s 401(k) as is currently the practice.
New Employees: SB63 applies to public employees hired after July 1, 2011. Upon hiring, new employees will elect one of two retirement benefit options:
- Defined Contribution: 10 percent of the employee’s salary will be placed in a 401(k)-type defined contribution plan for the employee.
- Hybrid Defined Contribution/Defined Benefit: About 7.75 percent of the employee’s salary will fund a defined benefit plan paying 1.5 percent of salary for each year of service based on a 5-year final average salary. Employees would be required to have 35 years in the system or reach age 65 to qualify. An additional 2.25 percent of salary (for a maximum total of 10 percent) would be contributed to a 401(k) plan. Under the hybrid option, if the required defined benefit funding rate exceeds 7.75 percent, additional funding first comes off the 2.25 percent 401(k) contribution. If the amount exceeds 10 percent of salary, the employee pays the difference.
Both plans would have a four-year vesting period, meaning the employee must work four years to get any benefit at all.
4,000 Rally to Ask Utah Legislature to ‘Proceed with Caution’ on Retirement
Legislature Urged to Form a Task Force
Holding signs encouraging legislators to “Proceed with Caution” and “Keep Utah Competitive,” more than 4,000 people gathered on the steps of Utah’s State Capitol Feb. 6 to ask the Utah Legislature to consider all options before cutting state retirement benefits. The rally included public employees, policemen, teachers, school staff and others concerned about legislative proposals to slash state employee compensation by reducing retirement benefits without carefully considering all the ramifications.
Speakers at the event stressed that Utah’s current retirement system is good for attracting and retaining quality employees, supports the economy, is cost-efficient for taxpayers and is one of the most financially sound systems in the country.
Kim Campbell, president of the Utah Education Association, expressed concern that few incentives are available to attract quality teachers to Utah classrooms. “If Utah really wants to attract and retain the best teachers, school staff, policemen and state employees, we cannot continue to cut their compensation,” she said. “We know that defined benefit retirement systems are an effective recruitment and retention tool.”
“Defined benefit pension plans play a vital role in our national, state and local economies,” said Roger Pate, president-elect of the Utah School Employees Association. He cited a National Institute on Retirement Security study showing defined benefit plans are a good investment for taxpayers. “In Utah, every dollar invested by taxpayers to Utah defined benefit plans supports over $6 in total state output.”
“The Pew Charitable Trust ranked (Utah’s) retirement system one of the top three nationally.” noted Utah Public Employees’ Association President Deb McBride. “Sound management and a continued commitment to public employees as assets, not liabilities, has helped the Utah Retirement Systems weather many storms.”
“As police officers, we see all too often the consequences of moving too quickly, and the outcome is disastrous,” said Chad Soffe, president of the Utah State Lodge of the Fraternal Order of Police. “Today we are asking the legislature to slow down...to create a task force to review the current status of the Utah Retirement Systems and study proposed changes or fixes in an effort to further strengthen a system that is already the strongest in the nation.”
“There is much more at stake than just employee retirement benefits,” said Campbell. “While some adjustments to the retirement system may be necessary and prudent, those changes cannot be made in haste, and certainly not without considerable exploration of the potential consequences. That’s why we implore the legislature to ‘proceed with caution’ and appoint a task force to carefully consider all sides of this critical issue before making any decisions.”
More than 180,000 individuals currently participate in the Utah Retirement Systems.
The rally was sponsored by:
- The Utah Education Association
- The Utah Public Employees’ Association
- The Utah School Employees Association
- The Fraternal Order of Police
National Institute on Retirement Security Reports
The National Institute on Retirement Security is a not-for-profit organization established to contribute to informed policymaking by fostering a deep understanding of the value of retirement security to employees, employers, and the economy through national research and education programs. These reports provide factual information and data on the important role that pensions play in our economy—for employee and retirees, public employers, and taxpayers alike:
- Pension Primer
- Public Pension Basics: Presents key facts about how pensions work—how benefits are earned, how pensions are funded and how investment decisions are made.
- Why Do Pensions Matter?: Discusses the characteristics of pension plans that make them attractive to employees, employers, taxpayers and the broader economy.
- Strong Public Pensions for Today and Tomorrow: Identifies practices that can enhance the long-term sustainability of public pension plan.
- Utah Pensionomics: Measures the economic benefits of Utah state and local pension plans.
Utah Retirement Systems Website »
2008 URS Summary Report to Members »
Defined-Contribution vs. Defined-Benefit Retirement Plans (also see information on the URS website) »
Retirement Interim Committee Homepage »
E-mail Addresses of Retirement Committee Members »