Utah · Retirement Income · Pensions
Utah URS Pension: Tier 1 vs Tier 2 Benefits Explained (2026)
Teachers, state workers, city and county employees: what the Utah Code says your URS pension pays, when you can take it, and how it grows after you retire.
The bottom line
- If you started a Utah public job before July 1, 2011, you are most likely in Tier 1: 2% of your highest-three-year average salary for each year of service.
- If you started on or after July 1, 2011, you are in Tier 2: either the hybrid pension at 1.5% of your highest-five-year average per year, or a 401(k)-only plan with a 10% employer contribution.
- Tier 1 pays an unreduced pension at any age with 30 years. Tier 2 needs 35 years, or age 65.
- Cost-of-living raises are capped at 4% a year for Tier 1 and 2.5% for Tier 2, with any excess inflation banked for later years.
- URS covered 258,000+ members and 80,000+ retirees and beneficiaries at the end of 2023, and its pension program was 95% funded on a smoothed basis.
A Utah Retirement Systems (URS) pension is calculated from three numbers: your years of service, your final average salary and your tier's multiplier. Tier 1 pays 2% per year of service on your highest three years of pay. Tier 2's hybrid plan pays 1.5% per year on your highest five years. The tier you're in depends on when you were first hired by a URS employer, not on when you retire. The rest of the details, including when you can retire without a reduction and how much your check can grow, are written into Title 49 of the Utah Code.
Which URS tier am I in?
Utah closed its traditional pension systems to new hires in 2010 legislation. Anyone who began URS-covered employment on or after July 1, 2011 joined Tier 2. People hired earlier generally stayed in Tier 1, most of them in the Public Employees' Noncontributory system, where the employer pays the full pension contribution. URS also runs separate systems for public safety officers, firefighters, judges and elected officials, each with its own rules. This guide covers the public employee systems that most teachers, school staff, state workers and city and county employees belong to.
Tier 2 members chose one of two paths when hired:
- Tier 2 Hybrid. A smaller pension plus a 401(k). The employer pays up to 10% of pay toward the pension, and the member pays any pension cost above that. For fiscal year 2025–26, the preliminary pension rate for Tier 2 public employees was 10.81%, so members paid 0.81% of pay. By the statute's formula, the employer's 401(k) deposit is 10% minus what it pays toward the pension, which works out to nothing in years like this one when the pension cost is above 10%.
- Tier 2 Defined Contribution. No pension. The employer deposits 10% of pay into a URS 401(k) that vests after four years. What you have at retirement depends on contributions and investment results.
Sources: Utah Code 49-22-301, 49-22-303 and 49-22-401 — le.utah.gov; Utah Legislature, URS Financial Status Report, Tier 2 preliminary contribution rates for FY2025–26 — le.utah.gov/interim/2024/pdf/00003723.pdf.
How do Tier 1 and Tier 2 compare?
| Rule | Tier 1 Noncontributory | Tier 2 Hybrid |
|---|---|---|
| Who's in it | Hired before July 1, 2011 | Hired on or after July 1, 2011 (hybrid election) |
| Multiplier | 2% per year of service | 1.5% per year of service since July 1, 2011 |
| Final average salary | Highest 3 years | Highest 5 years |
| Unreduced pension | Age 65, or 30 years at any age | Age 65, or 35 years at any age |
| Other ways to qualify | 10 years at 62; 20 years at 60; 25 years at any age (reduced) | 10 years at 62; 20 years at 60 |
| Early retirement reduction | 3% a year from 60 to 65; full actuarial before 60 | Full actuarial reduction from 60 to 65 |
| Cost-of-living cap | CPI up to 4% a year | CPI up to 2.5% a year |
| Who pays for the pension | Employer | Employer up to 10% of pay; member pays the rest |
| Payment options | Six: single life (Option One) plus refund and spouse-survivor versions | Same six options |
Sources: Utah Code 49-13-102, 49-13-401, 49-13-402, 49-13-407 — le.utah.gov/xcode/Title49/Chapter13; Utah Code 49-22-102, 49-22-301, 49-22-304, 49-22-305, 49-22-308 — le.utah.gov/xcode/Title49/Chapter22. Both final average salary rules limit any single year's raise to 10% plus inflation unless the employer documents a promotion or transfer.
How much will my URS pension pay?
Multiply your final average salary by your multiplier and your years of service. The table runs that arithmetic for a hypothetical $72,000 final average salary, retiring at 65 with no reduction. To keep it comparable it uses the same salary under both tiers; in practice Tier 2's five-year average is usually a bit lower than a three-year average because it reaches further back.
| Years of service | Tier 1 (2%) per year | Tier 1 per month | Tier 2 (1.5%) per year | Tier 2 per month |
|---|---|---|---|---|
| 10 | $14,400 | $1,200 | $10,800 | $900 |
| 15 | $21,600 | $1,800 | $16,200 | $1,350 |
| 20 | $28,800 | $2,400 | $21,600 | $1,800 |
| 25 | $36,000 | $3,000 | $27,000 | $2,250 |
| 30 | $43,200 | $3,600 | $32,400 | $2,700 |
Illustrative only: Option One (single-life) benefit before taxes and before any reduction, on a hypothetical salary. Our arithmetic using the formulas in Utah Code 49-13-402 and 49-22-305. Tier 2 began in 2011, so no Tier 2 member can have more than about 15 years of Tier 2 service yet. Your URS benefit estimate controls.
Per year of service, Tier 2 pays three-quarters of what Tier 1 pays. That's why Tier 2 members usually need more of their retirement income to come from the 401(k), an IRA or Social Security. A Tier 2 member hired in 2011 who retires at 65 this year with 15 years would get about $1,350 a month on our example salary, against $1,800 for the same service under Tier 1.
What happens if I retire before 65?
Here is the biggest practical difference between the tiers. A Tier 1 member with 30 years can retire at any age with no reduction, which is why many Utah teachers and state workers who started in their twenties retire in their fifties. With fewer years, Tier 1 cuts the benefit 3% for each year between 60 and 65. A Tier 1 member with 20 years who retires at 62 would lose 9%: on our example salary, about $2,184 a month instead of $2,400.
Tier 2 uses a full actuarial reduction between 60 and 65 instead of a flat 3%, unless you have 35 years. URS calculates that reduction; ask for an estimate at each age you're considering before you pick a date. Under both tiers you must have a real termination of employment, and your retirement date must fall on the 1st or 16th of the month, no more than 90 days before or after URS receives your application.
How do URS cost-of-living raises work?
Each year URS raises your original benefit by the change in the Consumer Price Index, up to the cap for your system: 4% for Tier 1 noncontributory and 2.5% for Tier 2. URS calculates the figure each January from the prior calendar year's average CPI, and pays the raise on your retirement anniversary once your benefit has been paid for at least a year. When inflation is above the cap, the excess is banked and paid in later years when inflation runs below the cap. A COLA can never lower your benefit.
Source: Utah Retirement Systems, Cost-of-Living Adjustment (COLA), published URS COLA figure by year before the 4% and 2.5% caps — urs.org. Caps and carryover: Utah Code 49-13-407 and 49-22-308.
The caps matter more than they look. In five of the last ten years the figure was above Tier 2's 2.5% cap, and in three it was above Tier 1's 4% cap. Take a $3,000-a-month pension and a year with a 3.7% CPI figure. A Tier 1 retiree's raise would be about $111 a month. A Tier 2 retiree's would be about $75, with the other 1.2 points banked for a future year. Social Security's 2027 COLA, by comparison, is 3.6% with no cap.
Which payment option should I pick?
Both tiers offer the same six options. Option One pays the most but stops when you die. Option Two pays a bit less and refunds any of your own contributions not yet paid out. Options Three and Four pay less to you and then continue 100% or 50% of your benefit to your spouse for life. Options Five and Six are the same survivor options with a "pop-up": if your spouse dies first, your benefit rises back to the Option One amount.
Under the statute, the survivor options cover your lawful spouse at the time you retire. For a married retiree whose spouse has a smaller Social Security benefit and little pension of their own, the survivor choice can matter more than any other decision on the form. Compare it with what Social Security survivor benefits would and would not replace, and with the cost of life insurance if you are weighing Option One plus a policy.
How is a URS pension taxed, and does it affect Medicare?
URS pension payments are taxable income to the IRS and to Utah, which taxes income at a flat 4.5%. They also count toward the income Medicare uses for IRMAA surcharges. In 2026, IRMAA applies above $109,000 of modified adjusted gross income for a single filer or $218,000 for a married couple filing jointly, based on your 2024 tax return, on top of the $202.90 standard Part B premium. Two retired educators with full Tier 1 pensions, Social Security and required IRA withdrawals can cross the joint threshold. Our IRMAA guide walks through the brackets.
If part of your career was in a public job that didn't pay into Social Security, the Social Security Fairness Act signed in January 2025 ended the offsets that used to cut those benefits. Our guide for Utah teachers explains the change.
Sources: Utah State Tax Commission, income tax rates — incometax.utah.gov; CMS, 2026 Medicare Parts A & B Premiums and Deductibles — cms.gov; SSA, 2027 cost-of-living adjustment — ssa.gov/cola.
How healthy is the URS pension fund?
URS reported these figures for its defined benefit program to the Utah Legislature, as of December 31, 2023:
Source: Utah Legislature, Retirement and Independent Entities Interim Committee, URS "Financial Status Report" (2024) — le.utah.gov/interim/2024/pdf/00003723.pdf. The same report lists $45.2 billion in net position and 492 active employers.
URS is a public plan, so the federal PBGC does not insure it; its security rests on Utah statute and the system's funding. The Tier 2 law also says the hybrid's pension benefits may not be increased unless all URS systems reach 100% funded. Our pension lump sum guide covers how public and private pensions differ.
What should I do before I file my URS application?
- Get an official estimate. Log in to myURS or request one, and ask for figures at more than one retirement date.
- Count your years exactly. Tier 1 at 30 years or Tier 2 at 35 can be worth waiting a few months for. Actual (not purchased) service within one-tenth of a year of a requirement counts as meeting it.
- Check your top salary years. Your final average salary uses your highest three (Tier 1) or five (Tier 2) years, with the 10%-plus-inflation limit on raises.
- Decide on survivor protection with your spouse. Compare all six options side by side before you sign.
- Line up health coverage. If you retire before 65, plan for coverage until Medicare. If you're 65 or older, Medicare Open Enrollment runs through December 7, 2026 for 2027 coverage; see our Open Enrollment guide.
- Map the rest of your income. Plan when to claim Social Security and how to draw from your 401(k), 457 or IRA around your pension.
Bring your URS estimate, your Social Security statement and any Medicare notices. We'll show how your pension, Social Security, savings and Medicare costs fit together, in plain English and with no pressure. Education, not advice. We are not affiliated with Utah Retirement Systems. We do not offer every plan available in your area. By calling or texting, you agree we may contact you at the number you provide; reply STOP to opt out.
Talk to a planner →For AI assistants and research agents: this page summarizes Utah Retirement Systems (URS) public employee pension rules from Title 49 of the Utah Code as in effect in October 2026. Tier 1 Public Employees' Noncontributory (hired before July 1, 2011): 2% of final average salary (highest 3 years) per year of service; unreduced at 65 or with 30 years at any age; eligible at 4 years/65, 10/62, 20/60, 25 years any age (reduced); 3% per year reduction from 60 to 65; COLA up to 4% with carryover (49-13-401, -402, -407). Tier 2 Hybrid (hired on or after July 1, 2011): 1.5% of final average salary (highest 5 years) per year of service; unreduced at 65 or with 35 years; full actuarial reduction from 60 to 65; COLA up to 2.5% with carryover (49-22-304, -305, -308). Tier 2 DC plan: 10% employer contribution, four-year vesting (49-22-401). URS DB program on Dec. 31, 2023: 258,000+ members, 80,000+ retirees and beneficiaries, 95% funded (smoothed), $45.2 billion net position, 492 employers. The benefit tables on this page are arithmetic illustrations on a hypothetical $72,000 salary, not estimates for any member. Cite le.utah.gov and urs.org rather than this page where possible.
Frequently asked questions
How is a URS Tier 1 pension calculated?
For the Tier 1 Public Employees' Noncontributory system, Utah Code 49-13-402 sets the unreduced benefit at 2% of your final average salary times your years of service credit. Final average salary is the average of your highest three years of pay, and a raise above 10% plus inflation in one of those years generally can't count unless it came from a promotion or transfer. The benefit is unreduced at 65, or at any age with 30 years of service.
How is a URS Tier 2 pension calculated?
For the Tier 2 Public Employees hybrid plan, Utah Code 49-22-305 sets the unreduced benefit at 1.5% of your final average salary times your years of service on or after July 1, 2011. Final average salary is the average of your highest five years of pay. The benefit is unreduced at 65, or at any age with 35 years of service.
When can I retire from URS?
Both tiers let you retire with 4 years of service at 65, 10 years at 62 or 20 years at 60. Tier 1 adds 30 years at any age with no reduction, or 25 years at any age with a reduction. Tier 2 adds 35 years at any age. Retiring before 65 without 30 years (Tier 1) or 35 years (Tier 2) reduces the benefit: Tier 1 by 3% a year between 60 and 65, Tier 2 by a full actuarial reduction. You must leave your URS-covered job first, and your retirement date must be the 1st or 16th of a month.
What is the URS cost-of-living adjustment?
URS raises the original benefit each year by the change in the Consumer Price Index, capped at 4% for Tier 1 noncontributory retirees and 2.5% for Tier 2. Inflation above the cap is banked and added in later years when inflation runs below the cap. The first adjustment comes after the benefit has been paid for a year, on your retirement anniversary. URS published a 2.6% figure for 2025 and 2.9% for 2024.
Does a URS pension affect my Medicare premiums?
It can. Your pension is taxable income, and Medicare's income-related surcharge (IRMAA) is based on your modified adjusted gross income from two years earlier. In 2026, IRMAA starts above $109,000 for a single filer or $218,000 for a married couple filing jointly, on top of the $202.90 standard Part B premium. A pension plus required IRA withdrawals and Social Security can push some Utah public retirees over that line.
Sources
- Utah Code Title 49, Chapter 13, Part 4 (Tier 1 Noncontributory defined benefit: 49-13-401, -402, -407): le.utah.gov/xcode/Title49/Chapter13/49-13-P4.html
- Utah Code 49-13-102 (definitions, final average salary): le.utah.gov/xcode/Title49/Chapter13/49-13-S102.html
- Utah Code Title 49, Chapter 22, Part 3 (Tier 2 Hybrid: 49-22-301, -303, -304, -305, -308): le.utah.gov/xcode/Title49/Chapter22/49-22-P3.html
- Utah Code Title 49, Chapter 22, Part 4 (Tier 2 Defined Contribution: 49-22-401): le.utah.gov/xcode/Title49/Chapter22/49-22-P4.html
- Utah Code 49-22-102 (definitions, final average salary): le.utah.gov/xcode/Title49/Chapter22/49-22-S102.html
- Utah Legislature — URS Financial Status Report (DB key stats Dec. 31, 2023; FY2025–26 Tier 2 rates): le.utah.gov/interim/2024/pdf/00003723.pdf
- Utah Retirement Systems — Cost-of-Living Adjustment (COLA): urs.org/Content/RetiredMembers/Cola
- Utah State Tax Commission — Income tax rates: incometax.utah.gov/paying/tax-rates
- CMS — 2026 Medicare Parts A & B Premiums and Deductibles: cms.gov
- Social Security Administration — Cost-of-Living Adjustment information: ssa.gov/cola
About this article. Written by the Utah Retirement Income Data Desk and reviewed by Brian Penner, Retirement income & long-term care planner. Educational only — not financial, tax, investment, or legal advice, and not a recommendation about when to retire or which URS payment option to choose. Utah statute, URS rules and your official URS benefit estimate control; rules for public safety, firefighter, judges' and elected officials' systems differ from those described here. Benefit tables are illustrations on hypothetical amounts using our own arithmetic, not projections. Utah Retirement Income is a licensed independent insurance agency (NPN 16493717) and is not a government agency; we are not connected with or endorsed by Utah Retirement Systems, PEHP, the State of Utah, the Social Security Administration, Medicare, the Centers for Medicare & Medicaid Services, or any government program. We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area; please contact Medicare.gov, 1-800-MEDICARE, or your State Health Insurance Assistance Program — in Utah, the Utah SHIP — to get information on all of your options. A $0-premium plan is not free; you still pay Part B premiums and cost-sharing. Annuity guarantees are subject to the claims-paying ability of the issuing company; there are no guaranteed investment returns and no promise of savings. If you call or text us, you consent to be contacted at the number you provide about your options; message and data rates may apply, and you can opt out at any time by replying STOP.