|
|
|
|
AN ACT
|
|
relating to the cash balance benefit under the Employees Retirement |
|
System of Texas. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
SECTION 1. Section 804.003, Government Code, is amended by |
|
amending Subsections (j) and (k) and adding Subsection (k-1) to |
|
read as follows: |
|
(j) Except as provided by Subsection (k-1), if [If] a |
|
domestic relations order is determined to be a qualified domestic |
|
relations order, then the public retirement system (or applicable |
|
carrier, if under the optional retirement program) shall pay the |
|
segregated amounts without interest to the person or persons |
|
entitled thereto and shall thereafter pay benefits pursuant to the |
|
order. |
|
(k) Except as provided by Subsection (k-1), if [If] a |
|
domestic relations order is determined not to be a qualified |
|
domestic relations order or if within 18 months of the date a |
|
domestic relations order is received by the public retirement |
|
system (or applicable carrier, if under the optional retirement |
|
program) the issue as to whether such order is a qualified domestic |
|
relations order is not resolved, then the public retirement system |
|
(or applicable carrier, if under the optional retirement program) |
|
shall pay the segregated amounts without interest and shall |
|
thereafter pay benefits to the person or persons who would have been |
|
entitled to such amounts if there had been no order. This |
|
subsection shall not be construed to limit or otherwise affect any |
|
liability, responsibility, or duty of a party with respect to any |
|
other party to the action out of which the order arose. |
|
(k-1) Payment of segregated amounts by a public retirement |
|
system, or applicable carrier if under the optional retirement |
|
program, under Subsections (j) and (k) related to a benefit payable |
|
with respect to a member or retiree subject to Chapter 820 must |
|
include annual interest provided by Section 820.102 and gain |
|
sharing interest provided by Section 820.103. |
|
SECTION 2. Section 813.0015, Government Code, is amended to |
|
read as follows: |
|
Sec. 813.0015. PROVISIONS APPLICABLE TO CASH BALANCE GROUP |
|
MEMBERS. The following provisions of this chapter do not apply to a |
|
cash balance group member: |
|
(1) Sections 813.102, 813.104, 813.106, 813.202, |
|
813.402, 813.403, 813.404, 813.502, 813.504, 813.505, [813.506,] |
|
813.509, 813.511, 813.513, and 813.514; and |
|
(2) Subchapter D. |
|
SECTION 3. Section 814.008(a), Government Code, is amended |
|
to read as follows: |
|
(a) A retiree receiving an optional service or disability |
|
retirement annuity approved by the board of trustees or described |
|
by Section 814.108(c)(1), (c)(2), or (c)(5) or receiving an |
|
optional cash balance annuity described by Section 820.0535(c)(1), |
|
(c)(2), or (c)(5) may change the designated beneficiary as provided |
|
by this section for the benefits payable after the retiree's death. |
|
SECTION 4. Chapter 820, Government Code, is amended by |
|
adding Subchapter A-1 to read as follows: |
|
SUBCHAPTER A-1. MILITARY SERVICE CREDIT |
|
Sec. 820.021. CREDITABLE MILITARY SERVICE. The board of |
|
trustees shall adopt rules to comply with the Uniformed Services |
|
Employment and Reemployment Rights Act of 1994 (38 U.S.C. Section |
|
4301 et seq.), including rules governing how a member subject to |
|
this chapter may establish military service credit under this |
|
subchapter. |
|
Sec. 820.022. STATE CONTRIBUTIONS FOR MILITARY SERVICE. |
|
(a) The state shall contribute for military service established |
|
under this subchapter an amount in the same ratio to the member's |
|
contribution for the service as the state's contribution bears to |
|
the contribution for current service required of a member of the |
|
employee class who is subject to this chapter at the time the |
|
service is established under this subchapter. |
|
(b) The state's contribution under Subsection (a) shall be |
|
paid from the fund from which the member receives compensation at |
|
the time the service is established or, if the member does not hold |
|
a position at the time the service is established, from the fund |
|
from which the member received compensation when the member most |
|
recently held a position. |
|
SECTION 5. Chapter 820, Government Code, is amended by |
|
adding Subchapter A-2 to read as follows: |
|
SUBCHAPTER A-2. REESTABLISHING PREVIOUSLY CANCELED SERVICE CREDIT |
|
Sec. 820.031. REESTABLISHING PREVIOUSLY CANCELED SERVICE |
|
CREDIT WITHOUT PURCHASE. (a) A cash balance group member who has |
|
withdrawn contributions and canceled service credit in a class of |
|
membership may reestablish the canceled service credit in the |
|
retirement system for the purposes described by Subsection (c) by |
|
submitting a request to the system in a form and manner prescribed |
|
by the system. |
|
(b) The retirement system shall grant the canceled service |
|
credit of a member who submits a request as provided by Subsection |
|
(a) after the system verifies that the member is a cash balance |
|
group member. |
|
(c) Service credit established under this section may be |
|
used only to determine whether the cash balance group member is |
|
eligible to retire and receive a cash balance annuity under this |
|
chapter. The service credit does not affect eligibility for any |
|
other purpose, including for purposes of determining eligibility to |
|
participate in the group benefits program established under Chapter |
|
1551, Insurance Code. |
|
Sec. 820.032. PURCHASE OF PREVIOUSLY CANCELED SERVICE |
|
CREDIT. (a) A cash balance group member who has withdrawn |
|
contributions and canceled service credit in a class of membership |
|
may purchase the canceled service credit in the retirement system |
|
for the purposes described by Subsection (c) by: |
|
(1) submitting a request to the system in a form and |
|
manner prescribed by the system; and |
|
(2) depositing with the retirement system in a lump |
|
sum the total amount of money withdrawn from a membership class not |
|
later than the first day of the 24th month after the month in which |
|
the person is reemployed or again holds office. |
|
(b) On receipt of the cash balance group member's deposit, |
|
the retirement system shall credit the member's individual account |
|
in the employees saving account with that amount and apply annual |
|
and gain sharing interest beginning the first day of the month |
|
following the date of the deposit, as provided by Sections 820.102 |
|
and 820.103. |
|
(c) Service credit purchased under this section may be used |
|
only: |
|
(1) to determine whether the cash balance group member |
|
is eligible to retire and receive a cash balance annuity; and |
|
(2) for purposes of determining eligibility to |
|
participate in the group benefits program established under Chapter |
|
1551, Insurance Code. |
|
(d) The retirement system may charge a reasonable |
|
administrative fee to purchase service credit under this section. |
|
SECTION 6. Section 820.052, Government Code, is amended to |
|
read as follows: |
|
Sec. 820.052. ELIGIBILITY FOR CASH BALANCE BENEFIT. A |
|
member: |
|
(1) who has service credit in the employee class of |
|
membership is eligible to retire and receive a cash balance annuity |
|
if the member: |
|
(A) is at least 65 years old and has five years of |
|
service credit in that class; or |
|
(B) has at least five years of service credit in |
|
that class and the sum of the member's age and amount of service |
|
credit in that class, including months of age and credit, equals or |
|
exceeds the number 80; |
|
(2) who: |
|
(A) has at least 20 years of service credit as a |
|
law enforcement or custodial officer is eligible to retire |
|
regardless of age and receive a cash balance annuity in an amount |
|
computed and funded as provided by this subchapter [Section |
|
820.053]; or |
|
(B) is at least 55 years old and has at least 10 |
|
years of service credit as a law enforcement or custodial officer is |
|
eligible to retire and receive a cash balance annuity in an amount |
|
computed and funded as provided by this subchapter [Section |
|
820.053], provided that the member is only entitled to the enhanced |
|
benefit described by Section 820.053(a)(2)(B) if the member has at |
|
least 20 years of service as a law enforcement or custodial officer; |
|
or |
|
(3) who has service credit in the elected class of |
|
membership is eligible to retire and receive a cash balance annuity |
|
if the member: |
|
(A) is at least 60 years old and has eight years |
|
of service credit in that class; or |
|
(B) is at least 50 years old and has 12 years of |
|
service credit in that class. |
|
SECTION 7. Subchapter B, Chapter 820, Government Code, is |
|
amended by adding Sections 820.0535, 820.0536, and 820.0537 to read |
|
as follows: |
|
Sec. 820.0535. OPTIONAL CASH BALANCE BENEFITS. (a) |
|
Instead of the standard cash balance annuity payable under Section |
|
820.053, a retiring member may elect to receive an optional cash |
|
balance annuity under this section. |
|
(b) A person who selects an optional lifetime cash balance |
|
annuity must designate, before the selection becomes effective, one |
|
beneficiary to receive the annuity on the death of the person making |
|
the selection. A person who selects an optional cash balance |
|
annuity payable for a guaranteed period may designate, before or |
|
after retirement, one or more beneficiaries to receive the annuity |
|
on the death of the person making the selection. |
|
(c) A person eligible to select an optional cash balance |
|
annuity under this section may select an option that provides that: |
|
(1) after the retiree's death, the reduced annuity is |
|
payable in the same amount throughout the life of the beneficiary |
|
designated by the retiree before retirement; |
|
(2) after the retiree's death, one-half of the reduced |
|
annuity is payable throughout the life of the beneficiary |
|
designated by the retiree before retirement; |
|
(3) if the retiree dies before 60 monthly annuity |
|
payments have been made, the remainder of the 60 payments are |
|
payable to one or more beneficiaries or, if one does not exist, to |
|
the retiree's estate; |
|
(4) if the retiree dies before 120 monthly annuity |
|
payments have been made, the remainder of the 120 payments are |
|
payable to one or more beneficiaries or, if one does not exist, to |
|
the retiree's estate; or |
|
(5) after the retiree's death, three-fourths of the |
|
reduced annuity is payable throughout the life of the beneficiary |
|
designated by the retiree before retirement. |
|
(d) If a beneficiary designated by a retiree under |
|
Subsection (b) predeceases the retiree and the retiree has elected |
|
an optional lifetime annuity, the reduced annuity shall be |
|
increased to the standard cash balance annuity that the retiree |
|
would have been entitled to receive if the retiree had not selected |
|
the optional annuity. The standard cash balance annuity shall be |
|
adjusted as appropriate for post-retirement increases in |
|
retirement benefits authorized by law since the date of retirement. |
|
(e) Any increase in an annuity under Subsection (d) begins |
|
with the payment for the month following the month in which the |
|
designated beneficiary dies, and the increased annuity is payable |
|
to the retiree for the remainder of the retiree's life. |
|
(f) The computation of an optional cash balance annuity must |
|
be made without regard to the gender of the annuitant or designated |
|
beneficiary. |
|
(g) Except as provided by Section 814.008 or 820.0536, a |
|
person who selected an optional cash balance annuity described by |
|
Subsection (c)(1), (c)(2), or (c)(5) of this section may not change |
|
or revoke a beneficiary designation after the person's effective |
|
date of retirement. |
|
(h) A beneficiary designation that names a former spouse as |
|
a beneficiary for a guaranteed optional cash balance annuity |
|
described by Subsection (c)(3) or (c)(4) is invalid unless the |
|
designation is made after the date of the divorce. |
|
(i) An optional retirement annuity provided by this section |
|
is available to a member eligible to receive an enhanced service |
|
retirement annuity described by Section 820.053(a)(2)(B), but the |
|
same optional plan and beneficiary must be selected for the portion |
|
of the annuity payable from the law enforcement and custodial |
|
officer supplemental retirement fund and the portion payable from |
|
the member's individual account in the employees saving account. |
|
Sec. 820.0536. CHANGE IN OPTIONAL CASH BALANCE ANNUITY |
|
SELECTION. (a) A person who retired and selected an optional cash |
|
balance annuity described by Section 820.0535(c)(1), (c)(2), or |
|
(c)(5) may change the optional annuity to a standard cash balance |
|
annuity only if: |
|
(1) pursuant to a divorce decree, a court orders the |
|
change in the annuity to a standard cash balance annuity; or |
|
(2) the retiree files with the retirement system a |
|
request to change the annuity and, in connection with a divorce |
|
between the retiree and the beneficiary designated by the retiree |
|
under Section 820.0535(b), the beneficiary has executed a written, |
|
notarized instrument that: |
|
(A) releases the system from any claim to the |
|
annuity by the beneficiary; and |
|
(B) transfers all of the beneficiary's interest |
|
in the annuity to the retiree. |
|
(b) If a retiree files a request as provided by Subsection |
|
(a), the retirement system shall recompute the annuity as a |
|
standard cash balance annuity. The increase in the annuity under |
|
this section begins with the monthly payment made to the retiree for |
|
the month following the month in which a request is filed as |
|
provided by Subsection (a). |
|
Sec. 820.0537. PARTIAL LUMP-SUM CASH BALANCE OPTION. (a) A |
|
member who is eligible for a cash balance annuity may select a |
|
standard cash balance annuity under Section 820.053 or an optional |
|
cash balance annuity under Section 820.0535, together with a |
|
partial lump-sum distribution. |
|
(b) The amount of the lump-sum distribution under this |
|
section may not exceed the sum of 36 months of a standard cash |
|
balance annuity computed without regard to this section. |
|
(c) The cash balance annuity selected by the member shall be |
|
actuarially reduced to reflect the lump-sum option selected by the |
|
member and shall be actuarially equivalent to a standard or |
|
optional cash balance annuity, as applicable, without the partial |
|
lump-sum distribution. The annuity and lump sum shall be computed |
|
to result in no actuarial loss to the retirement system. |
|
(d) The lump-sum distribution shall be made as a single |
|
payment payable at the time that the first monthly annuity payment |
|
is paid. |
|
(e) The amount of the lump-sum distribution shall be |
|
deducted from any amount otherwise payable under this chapter. |
|
(f) The partial lump-sum option under this section may be |
|
elected only once by a member and may not be elected by a retiree. A |
|
member retiring under the proportionate retirement program under |
|
Chapter 803 is not eligible for the partial lump-sum option. |
|
(g) Before a retiring member selects a partial lump-sum |
|
distribution under this section: |
|
(1) the retirement system shall provide written notice |
|
to the member of the amount by which the member's annuity will be |
|
reduced because of the selection; and |
|
(2) the member must acknowledge receipt of the notice |
|
in writing. |
|
(h) The board of trustees may adopt rules for the |
|
implementation of this section and may authorize the option to be |
|
used for a death benefit annuity. This section does not apply to a |
|
disability retirement annuity. |
|
SECTION 8. Section 820.054(a), Government Code, is amended |
|
to read as follows: |
|
(a) Notwithstanding any other law, a member subject to this |
|
chapter, a retiree receiving a cash balance annuity under this |
|
chapter, or the beneficiary of a member or retiree described by this |
|
subsection, who qualifies for a death or survivor benefit annuity |
|
or a disability retirement annuity under Chapter 814 is entitled to |
|
a cash balance annuity under this subchapter [Section 820.053] |
|
instead of the annuity otherwise provided under Chapter 814. |
|
SECTION 9. Sections 820.103(a), (b), and (d), Government |
|
Code, are amended to read as follows: |
|
(a) Each fiscal year and subject to Subsection (b), the |
|
retirement system shall compute the gain sharing interest rate |
|
[applicable to the subsequent fiscal year] by: |
|
(1) determining the average return on the investment |
|
of the system's cash and securities during the preceding five |
|
fiscal years, expressed as a percentage rate; |
|
(2) subtracting four percentage points from the |
|
percentage rate determined under Subdivision (1); and |
|
(3) multiplying the resulting difference [sum |
|
determined] under Subdivision (2) by 50 percent. |
|
(b) Subject to Subsection (c), [in addition to the amount |
|
deposited under Section 820.102,] each fiscal year, the retirement |
|
system shall: |
|
(1) in addition to the amount deposited under Section |
|
820.102, deposit into each member's individual account in the |
|
employees saving account an amount equal to the gain sharing |
|
interest rate determined under Subsection (a) for the fiscal year |
|
multiplied by the member's accumulated account balance as of the |
|
end of the preceding fiscal year; and |
|
(2) recalculate the annuity payment of a retiree or |
|
annuitant under this chapter by: |
|
(A) multiplying the annuity payment amount as of |
|
the end of the preceding fiscal year by [an amount equal to] the |
|
gain sharing interest rate determined under Subsection (a); or |
|
(B) if the retiree or annuitant was not entitled |
|
to an annuity payment as of the end of the preceding fiscal year, |
|
multiplying the retiree's or annuitant's first annuity payment |
|
amount by the gain sharing interest rate determined under |
|
Subsection (a). |
|
(d) Subsection (b) applies only to a retiree or annuitant |
|
who is receiving a cash balance annuity under Section 820.053 or |
|
820.0535, including an alternate payee under Section 804.005. |
|
SECTION 10. Section 804.003, Government Code, as amended by |
|
this Act, applies only to a domestic relations order entered on or |
|
after the effective date of this Act. A domestic relations order |
|
entered before the effective date of this Act is governed by the law |
|
in effect on the date the order was entered, and the former law is |
|
continued in effect for that purpose. |
|
SECTION 11. Notwithstanding Section 820.032, Government |
|
Code, as added by this Act, a person who is a cash balance group |
|
member on the effective date of this Act may purchase canceled |
|
service credit under that section not later than the first day of |
|
the 24th month after the month in which this Act takes effect. |
|
SECTION 12. This Act takes effect immediately if it |
|
receives a vote of two-thirds of all the members elected to each |
|
house, as provided by Section 39, Article III, Texas Constitution. |
|
If this Act does not receive the vote necessary for immediate |
|
effect, this Act takes effect September 1, 2023. |
|
|
|
|
|
|
|
|
______________________________ |
______________________________ |
|
President of the Senate |
Speaker of the House |
|
|
I hereby certify that S.B. No. 729 passed the Senate on |
|
April 3, 2023, by the following vote: Yeas 31, Nays 0; and that |
|
the Senate concurred in House amendment on May 9, 2023, by the |
|
following vote: Yeas 31, Nays 0. |
|
|
|
|
______________________________ |
|
Secretary of the Senate |
|
|
I hereby certify that S.B. No. 729 passed the House, with |
|
amendment, on May 2, 2023, by the following vote: Yeas 142, |
|
Nays 0, one present not voting. |
|
|
|
|
______________________________ |
|
Chief Clerk of the House |
|
|
|
|
|
Approved: |
|
|
|
______________________________ |
|
Date |
|
|
|
|
|
______________________________ |
|
Governor |