Understanding the Pension Contribution Rate and How it Impacts Your Tier 2 Hybrid Benefit
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To ensure your retirement security, each year we carefully calculate the percentage of your salary required to fund your pension benefit.
We call this the pension contribution rate. It’s calculated based on several dynamic factors, including actuarily projected future returns and cost assumptions. These assumptions are regularly updated to reflect new information, changing demographic and payroll patterns, and changing knowledge.
If you choose the Hybrid Option, the pension contribution rate directly impacts the benefit you get. If it’s lower than the set amount your employer contributes, you receive the difference in an employer-paid 401(k) contribution. If the pension contribution rate is higher than the employer contribution, you may have to contribute from your paycheck to fund your benefit.
Tier 2 Public Employee System
Your employer contributes an amount equal to 10% of your salary to fund this benefit.
If the pension contribution rate is under 10%, you receive the difference in the form of a 401(k) contribution. If the contribution rate exceeds 10%, you may have to contribute from your paycheck to fund your benefit.
Effective July 2024, the pension contribution rate will increase into the range to require an employee contribution equal to 0.7% of your salary. This means you will have to pay a small amount from your paycheck to fund your benefit.
Several factors contribute to rising contribution rates in recent years. Utah’s public sector has experienced very significant wage growth in the past few years. This wage growth will result in larger than previously anticipated future benefits for members. Accordingly, larger contributions are required to fund the increased cost of the retirement system. Other smaller factors have also contributed to some of the increased costs to the system.
Rate History (Public Employee System)
| Year | Contribution Rate (varies year-to-year) |
Required Employer Contribution | Employer contribution to your 401(k) (percentage of your salary) |
What you must pay to fund your benefit |
| 2024/25 | 10.70% | 10% | 0 | 0.70% |
| 2023/24 | 9.82% | 10% | 0.18% | 0 |
| 2022/23 | 9.82% | 10% | 0.18% | 0 |
| 2021/22 | 9.32% | 10% | 0.68% | 0 |
| 2020/21 | 9.11% | 10% | 0.89% | 0 |
| 2019/20 | 8.97% | 10% | 1.03% | 0 |
| 2018/19 | 8.85% | 10% | 1.15% | 0 |
| 2017/18 | 8.42% | 10% | 1.58% | 0 |
| 2016/17 | 8.22% | 10% | 1.78% | 0 |
| 2015/16 | 8.22% | 10% | 1.78% | 0 |
| 2014/15 | 8.22% | 10% | 1.78% | 0 |
| 2013/14 | 8.41% | 10% | 1.59% | 0 |
| 2012/13 | 8.41% | 10% | 1.59% | 0 |
| 2011/12 | 7.59% | 10% | 2.41% | 0 |
Tier 2 Public Safety & Firefighter System
In this system, the pension contribution rate (18.73% in 2024-25) currently exceeds the 14% that employers are required to pay to fund the benefit. If you choose the Hybrid Option, you may have to pay the costs beyond the 14%, unless your employer chooses to pick up the employee costs.
Rate History (Public Safety & Firefighter System)
| Year | Contribution Rate (varies year-to-year) |
Required Employer Contribution |
Employer contribution to your 401(k) (percentage of your salary) |
Percentage of your salary you must pay to fund your benefit |
| 2024/25 | 18.73% | 14% | 0 | 4.73%** |
| 2023/24 | 16.59% | 14% | 0 | 2.59%** |
| 2022/23 | 16.59% | 14% | 0 | 2.59%** |
| 2021/22 | 16.27% | 14% | 0 | 2.27%** |
| 2020/21* | 16.27% | 14% | 0 | 2.27%** |
| 2019/20 | 11.30% | 12% | 0.70% | 0 |
| 2018/19 | 11.26% | 12% | 0.74% | 0 |
| 2017/18 | 10.74% | 12% | 1.26% | 0 |
| 2016/17 | 10.67% | 12% | 1.33% | 0 |
| 2015/16 | 10.67% | 12% | 1.33% | 0 |
| 2014/15 | 10.67% | 12% | 1.28% | 0 |
| 2013/14 | 10.91% | 12% | 1.09% | 0 |
| 2012/13 | 10.91% | 12% | 1.09% | 0 |
| 2011/12 | 10.45% | 12% | 1.55% | 0 |
*In 2020/21, by legislative act, the Tier 2 Public Safety and Firefighter System benefits were enhanced to increase the pension multiplier from 1.5% to 2% and the employer contribution increased from 12% to 14%.
**Your employer may pick-up these costs on your behalf.
To Learn More
URS's consulting actuary performs regular studies that include a thorough review of assumptions and plan experience for both demographic and economic assumptions. This is the data that drives contribution rate changes. These reports are always publically available here.
