Hansen v. Public Employees Retirement System Board of Administration

246 P.2d 591, 122 Utah 44, 1952 Utah LEXIS 180
CourtUtah Supreme Court
DecidedJune 3, 1952
Docket7843
StatusPublished
Cited by29 cases

This text of 246 P.2d 591 (Hansen v. Public Employees Retirement System Board of Administration) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hansen v. Public Employees Retirement System Board of Administration, 246 P.2d 591, 122 Utah 44, 1952 Utah LEXIS 180 (Utah 1952).

Opinions

CROCKETT, Justice.

John Hansen and his employer, Salt Lake County, joined as plaintiffs herein to challenge the validity of Chapter 21, Laws of Utah 1951, Special Session. The purpose of that act, stated generally, was to repeal the laws relating to the State Retirement System, liquidate it, and transfer public employees to coverage under the Federal Social Security Act as permitted by the Social Security Act Amendments of 1950, 42 U. S. C. A. § 301 et seq.

The plaintiffs assert that the Repeal Act is invalid because:

(1) It attempts to abrogate vested rights of Hansen;

(2) It is unreasonably discriminatory;

(3) It arbitrarily imposes onerous and undeterminable obligations on Salt Lake County without providing any means to meet them;

(4) The act is so vague and uncertain that it is not susceptible of interpretation and administration and is therefore inoperative.

The state retirement system was created originally by Ch. 131, Laws of Utah 1947. State officers and employees (certain exceptions not material here) were to pay into the retirement fund 3 % of their salaries, not to exceed $9 per month which the state was to match. Pensions were set up, varying according to years of service, age at retirement and salary. The minimum years of service at which one could retire was 20 and the maximum pension was $100. The above mentioned act was revised and practically rewritten as Ch. 90, Laws of Utah 1949. The changes [49]*49significant to our consideration were that it reduced the years of service required for retirement at age 65 from 20 to 15 years and permitted other public employing units to join the system. A new section 15.1 provided:

“Any county, city, town or other employing agency * * * of the state of Utah, by resolution * * * and the affirmative vote of at least fifty percent (50%) of its full time employees may participate in and become a part of the retirement system in this act provided.”

Under this section, Salt Lake County and its employees, including John Hansen, became participants in and contributors to the public employees retirement system. The act was again amended by Ch. 115, Laws of Utah 1951, increasing the contributions of participants in the fund from 3% to 5% of the salary, but not to exceed $15 per month.

Meanwhile, our national Congress had enacted the Social Security Act Amendments of 1950, Public Law 734, 81st Congress, greatly expanding the coverage permitted under the system. Section 218 was added to Title II of the Social Security Act, 42 U. S. C. A. § 418, providing that the Federal Security Administrator:

“* * * shall, at the request of any State, enter into an agreement with such State for the purpose of extending the insurance system established by this title to services performed by individuals as employees of such State or any political subdivision thereof. * *

for which the State is required to pay to the Secretary of the Treasury taxes as specified to contribute its share of the expenses for participation in that system.

This act also provided that state contracts so concluded before January 1, 1953 could be made retroactive to Jan-, uary 1, 1951, which is the new starting date for the computation of benefits. It seemed desirable for a number of reasons to get the public employees under the protection [50]*50of the federal security system and to do so soon enough to take advantage of this retroactive feature assuring employees the maximum benefits obtainable.

Coverage under the federal act, in addition to retirement benefits, provides protection for surviving widows and minor children. It also makes possible the continuous retirement coverage of the employee whether in government service or private industry, whereas the State system provides for retirement benefits only. Upon death before retirement, the only benefit to heirs is repayment of contributions without interest. The State system did provide for a disability compensation and also for a maximum pension of $100 a month, which in some instances would provide a single person, having no dependents, the maximum, or $100 a month, as against the maximum of $80 a'month for such person under the federal system. However, under the federal system, if the employee were married, his wife at age 65 would also receive one-half his primary benefits, or $40 a month, making a total of $120 a month, with additional benefits payable for dependent children up to a maximum of $150 a month. Further, if a covered worker dies and leaves a widow and minor children, they can draw monthly payments up to a maximum of $150 a month, plus a death benefit payment of three times the monthly benefit. Under the federal system the cost to the employee and to the State is 1%% of the employee’s salary to each, as compared to 5% under the State system.

It was for the express purpose of obtaining this coverage for public employees in our State and taking timely advantage of the federal offer for retroactive coverage above referred to, that the Utah legislature in its 1951 regular session enacted Ch. 90, S. L. U. 1951, hereinafter referred to as “the Enabling Act.” It, sec. 8 designates the finance commission as the state agency to be known as the Utah State Social Security Agency with authority to administer the act; and, sec. 3 with the approval of the Governor, to contract with the federal security administrator, [51]*51to make payments equal to social security taxes to the Secretary of the Treasury; it requires, sec. 4 covered employees to pay social security taxes to be collected by way of payroll deductions, and sec. 5 makes detailed provision for the optional participation of political subdivisions and their employees in the federal social security system. The constitutionality of similar enabling legislation has been upheld including the granting of permission to the United States to tax the state for this purpose. State ex rel. Patteson v. Sims, W. Va. 1951, 65 S. E. 2d 730.

The State itself in some of our counties were already under the state public employees retirement system and therefore could not qualify for inclusion in the federal system because of sec. 218(d) of the Social Security Act, which provides that:

“No agreement with any State may be made applicable (either in the original agreement or by any modification thereof) to any service performed by employees as members of any coverage group in positions covered by a, retirement system on the date such agreement is made applicable to such coverage group.” (Emphasis added.)

which has been given the following administrative interpretation :

“1. If the State or political subdivision has had a retirement system, it will no longer be considered to have such a system for the purpose of Section 218(d) of the Social Security Act if (a) the system has been fully liquidated and provision has been legally made for the settlement of previously accrued rights by means of refund of contributions, or purchase of annuities, or statutory segregation of accumulated equities, and (b) any benefits based on accumulated equities do not depend on future employment.
*****
“3.

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Bluebook (online)
246 P.2d 591, 122 Utah 44, 1952 Utah LEXIS 180, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hansen-v-public-employees-retirement-system-board-of-administration-utah-1952.