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Show I Built-in Tax Increase Seen By I Foundation in Retirement Plan continue with V'r Increases at two-year intervals until the rate reaches 5' on July 1, 1975. Each Increase obviously will require a larger contribution of tax monies. In case of school employees, the employer's employ-er's contribution will come from the uniform school fund, which by law is balanced by a state-wide property tax levy as required. Critics therefore charge that the new retirement retire-ment legislation carries a "hidden" and "automatic" property tax Increase which will be operative over the next eight years. It is estimated that the additional ad-ditional cost to state and local lo-cal government in the initial (1907-69) biennium will be at s Many controversial ques-J ques-J tions remain unanswered as S Utah's 1907 public retirement act becomes effective on July 1. The new law, which 5 achieves the long-sought ob- jective of combining Utah's two largest public retirement j systems, Is analyzed in a re- port of Utah Foundation re- leased this week. ; Critics of Senate Bill 205, i the new legislation which combines the former Public Employees' and School Employees' Em-ployees' Retirement Systems, charge that it contains "built in" tax increases for the? future, fu-ture, and that it leaves out numerous other independent public retirement plans witli varying contribution rates, benefit schedules, and solvency solven-cy status, it is noted by the Foundation, a private nonprofit non-profit research organization. Under terms of the legislation, legisla-tion, the contribution to the retirement fund of employer (state and local government) will be 4',; each of total salaries sal-aries of covered employees, and each employee will make a like contribution. In two years the rate will rise to 4Vi'r, and the escalation will least $2.4 million, and correspondingly corres-pondingly higher under' the escalating schedule of contributions. contri-butions. Under existing retirement retire-ment legislation, the employer's employ-er's contribution is 4 of salary sal-ary up to a $6,000-a-year limit lim-it for public employees, and 3.59J of salaries up to a $1,-800-a-year limit in the case of school employees. Benefits to retirants are increased in-creased under the new combined com-bined system, and one of the most-criticized features of the 1967 legislation is the provision provi-sion which raises the pension of Utah legislators from $5 a month to $10 a month for each year of legislative service. A legislator retiring with ten years of service will be entitled enti-tled to a lifetime pension of $100 a month, which is 240 of the compensation provided for active service in the legislature. legis-lature. A number of states provide pro-vide larger amounts than Utah in legislative pensions, but it appears that none provide pro-vide pensions as large in comparison com-parison with compensation for active legislative service, the Foundation reports. Critics also assert that the new retirement program is inequitably in-equitably weighed in favor of prior service at the expense of new employees. This, they claim, will work against the goal of attracting and retaining retain-ing qualified career employees in government service in Utah. The new system has staunch defenders as well as critics, including the leadership of both houses of the 1967 Legislature, Legis-lature, the Foundation report points out. Supporters of SB 205 hail it as a major step forward in the history of public pub-lic retirement in Utah, and cite a recent report of the consulting con-sulting actuary that the program pro-gram is actuaritly sound "in the long run." Although the two largest retirement re-tirement programs have been consolidated, it is noted that no action was taken by the 1967 Legislature towards consolidation con-solidation of other public retirement re-tirement programs in Utah, including in-cluding the Judges Retirement, Highway Patrol, and Firemen's Fire-men's Pension systems (all state-administered) and the locally-adminstered police retirement re-tirement programs. Size of the public retirement operation in Utah is reflected by the $80 million State Retirement Re-tirement Fund, which has grown 14 in the 12 months preceding December 31, 1966, and more than two and one-half one-half times (165 increase) since 1961, the Foundation reports. re-ports. Average yield on the fund's investment is now 4.57. |