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A BILL TO BE ENTITLED
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AN ACT
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relating to a study by the Employees Retirement System of Texas of |
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certain state retirement system reforms. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. INTERIM STUDY. (a) The Employees Retirement |
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System of Texas shall conduct a study to evaluate potential reforms |
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designed to improve the financial health of the retirement system, |
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including the feasibility and anticipated financial impact of |
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implementing the following reforms: |
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(1) transitioning from providing retirement benefits |
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to members of the system under a defined benefit plan to providing |
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those benefits under: |
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(A) a defined contribution plan; |
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(B) a hybrid pension plan that combines elements |
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of a defined contribution plan and a defined benefit plan; |
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(C) a cash balance pension plan that provides |
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individual accounts for plan members; and |
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(D) another retirement plan commonly used by |
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other states; |
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(2) adopting changes to the existing defined benefit |
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plan that are designed to reduce the unfunded actuarial accrued |
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liabilities of the system and achieve actuarial soundness, |
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including: |
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(A) increasing the state contribution rate; |
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(B) changing the minimum age at which members are |
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eligible to retire; |
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(C) changing the formula used to calculate |
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annuities provided under the plan; and |
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(D) reducing the amount of benefits provided |
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under the plan, including the potential of offering members the |
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option to receive partial lump sum payments in lieu of a portion of |
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the member's annuity in a manner that ensures the amount of the lump |
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sum payment is less than the actuarial present value of the portion |
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of the annuity forfeited by the member; and |
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(3) implementing a pension revenue enhancement plan |
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under which a life insurance policy or other financial product or |
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benefit is purchased under the plan for members and annuitants of |
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the Employees Retirement System of Texas who are eligible for and |
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elect to enroll in the plan. |
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(b) In conducting the study required by this section, the |
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Employees Retirement System of Texas shall review and evaluate the |
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retirement plans and systems established in other states for best |
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practices and financial outcomes, taking into consideration: |
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(1) the overall performance of other states' plans |
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based on the unfunded liability balances, if any, of those plans; |
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and |
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(2) the strengths and weaknesses of other states' |
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plans in attracting and maintaining a competitive workforce. |
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(c) The Employees Retirement System of Texas may consult |
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with anyone the system determines appropriate to conduct the study |
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and prepare the report required by this section, including outside |
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experts and other state agencies, including the State Pension |
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Review Board, the Legislative Budget Board, and the Texas |
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Department of Insurance. |
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SECTION 2. FINDINGS AND RECOMMENDATIONS. Not later than |
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September 1, 2022, the Employees Retirement System of Texas shall |
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report the system's findings and recommendations to the governor, |
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the lieutenant governor, the speaker of the house of |
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representatives, and each member of the legislature. The system |
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shall include in its recommendations specific statutory and |
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regulatory changes that the system determines necessary or |
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appropriate to implement its recommendations. |
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SECTION 3. EXPIRATION OF ACT. This Act expires September |
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15, 2022. |
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SECTION 4. EFFECTIVE DATE. This Act takes effect |
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immediately if it receives a vote of two-thirds of all the members |
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elected to each house, as provided by Section 39, Article III, Texas |
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Constitution. If this Act does not receive the vote necessary for |
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immediate effect, this Act takes effect September 1, 2021. |