1-1 By: Kuempel (Senate Sponsor - Montford) H.B. No. 1765
1-2 (In the Senate - Received from the House May 5, 1993;
1-3 May 5, 1993, read first time and referred to Committee on
1-4 Intergovernmental Relations; May 5, 1993, reported favorably by the
1-5 following vote: Yeas 7, Nays 0; May 5, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Armbrister x
1-9 Leedom x
1-10 Carriker x
1-11 Henderson x
1-12 Madla x
1-13 Moncrief x
1-14 Patterson x
1-15 Rosson x
1-16 Shapiro x
1-17 Wentworth x
1-18 Whitmire x
1-19 A BILL TO BE ENTITLED
1-20 AN ACT
1-21 relating to participation and credit in, contributions to, and
1-22 benefits and administration of the Texas County and District
1-23 Retirement System.
1-24 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-25 SECTION 1. Section 842.005, Government Code, is amended by
1-26 amending Subsection (e) and adding Subsection (g) to read as
1-27 follows:
1-28 (e) Second priority shall be given to prior service credit,
1-29 prior service annuities, multiple matching credit, and multiple
1-30 matching annuities, without differentiation. If the ratio of the
1-31 sum of the available tangible assets for this priority group and
1-32 the available actuarial present value of future subdivision
1-33 contributions in excess of normal costs, if any, to the actuarial
1-34 present value of benefits is less than 1.00, then the annuities and
1-35 credits will have to all be proportionally reduced. If the ratio
1-36 is greater than 1.00, then the annuities and credits will all have
1-37 to be proportionally increased. The ratio will be redetermined
1-38 annually and adjustments made as needed, except as limited by
1-39 Subsection (g).
1-40 (g) If the participating subdivision continues in existence
1-41 or is succeeded by an organization, the annuities and credits
1-42 described by Subsection (e) may not be increased to a level that
1-43 exceeds the greater of the level in effect at the time Subsection
1-44 (e) became applicable or the level in effect on December 31, 1992.
1-45 If the board of trustees determines, on the basis of computations
1-46 made by the actuary, that the available tangible assets are
1-47 materially in excess of the actuarial present value of benefits
1-48 described by Subsection (e), the board may direct that a portion of
1-49 the excess be paid to the subdivision or its successor. When the
1-50 participating subdivision or its successor has no employees who are
1-51 members of the retirement system and has no present or potential
1-52 liabilities resulting from the participation of former employees,
1-53 the subdivision's participation in the retirement system ceases,
1-54 and the system shall repay to the subdivision or its successor the
1-55 amount in the subdivision accumulation fund that is credited to the
1-56 subdivision.
1-57 SECTION 2. Subchapter A, Chapter 842, Government Code, is
1-58 amended by adding Section 842.007 to read as follows:
1-59 Sec. 842.007. SUBDIVISION NOT AGENT OF SYSTEM. Neither a
1-60 subdivision that participates in the retirement system nor any
1-61 employee or officer of a participating subdivision has authority to
1-62 act as an agent of the retirement system. An action or inaction on
1-63 the part of a participating subdivision or its employee or officer
1-64 is not binding on the retirement system.
1-65 SECTION 3. Section 842.103, Government Code, is amended to
1-66 read as follows:
1-67 Sec. 842.103. Credit for Person Who Elects to Become Member.
1-68 A person who becomes a member of the retirement system under
2-1 Section 842.102 may not receive credit for service performed before
2-2 membership except as provided by Section 843.102(a)(2) or 843.204.
2-3 SECTION 4. Section 842.108, Government Code, is amended to
2-4 read as follows:
2-5 Sec. 842.108. Withdrawal of Contributions. (a) A person
2-6 who is not an employee of any participating subdivision and who has
2-7 not retired may, after application, withdraw all of the accumulated
2-8 contributions credited to the person's individual account in the
2-9 employees saving fund, and the retirement system shall close the
2-10 account.
2-11 (b) If a person to whom a withdrawal would be paid under
2-12 this section or Section 844.401 elects to have all or a portion of
2-13 the accumulated contributions paid directly to an eligible
2-14 retirement plan and specifies the eligible retirement plan to which
2-15 the contributions are to be paid on forms approved for that purpose
2-16 by the board of trustees, the retirement system shall make the
2-17 payment in the form of a direct trustee-to-trustee transfer but is
2-18 under no obligation to determine whether the other plan in fact is
2-19 an eligible retirement plan for that purpose.
2-20 SECTION 5. Section 842.110, Government Code, is amended to
2-21 read as follows:
2-22 Sec. 842.110. Resumption of Service by Retiree. (a) A
2-23 person who has retired with a service retirement benefit under this
2-24 subtitle shall, if the person later becomes an employee of any
2-25 participating subdivision, become a member of the system on the
2-26 date of employment, but credits and benefits allowable to the
2-27 person under this subtitle are limited as provided by this section.
2-28 (b) The retirement system shall discontinue and suspend
2-29 payments of each service retirement annuity allowed because of the
2-30 person's previous service beginning with the month following the
2-31 month in which the person again becomes a member under Subsection
2-32 (a). The retirement system may not make payments of the annuity
2-33 for any month during which the person remains an employee of a
2-34 participating subdivision.
2-35 (c) Member contributions under Section 845.403 shall be made
2-36 on all compensation paid to the employee by the subdivision at the
2-37 same rate as required of other employees of the subdivision. The
2-38 contributions shall be deposited by the retirement system on
2-39 receipt in an individual account for the member in the employees
2-40 saving fund and shall be credited with interest annually at the
2-41 same rate and manner as are the accounts of other members. The
2-42 compensation paid to the employee by the subdivision shall be
2-43 included in computing the monthly contributions the subdivision
2-44 makes to the subdivision accumulation fund.
2-45 (d) After termination of employment with all participating
2-46 subdivisions and after filing of an application for resumption of
2-47 retirement with the board of trustees, a person described by
2-48 Subsection (a) is entitled to receive future payments of the
2-49 suspended annuity, as provided by Subsection (e), and to the
2-50 additional benefits as provided by Subsections (f) and (g).
2-51 (e) Monthly payments of the suspended annuity shall be
2-52 resumed in the month following the month in which employment is
2-53 terminated with all participating subdivisions, without change in
2-54 the amount except for any increase allowed under Section 844.208 or
2-55 the duration of or other condition pertaining to the suspended
2-56 benefit. Payment of the resumed benefit may not be made for any
2-57 month during which the payment was suspended under this section.
2-58 (f) If a person with credited service under this section
2-59 dies before a payment under Subsection (g) is made, the person's
2-60 beneficiary, or if there is no beneficiary surviving, the executor
2-61 or administrator of the person's estate, may elect payment as
2-62 provided by Section 844.105(c).
2-63 (g) The additional service retirement benefit allowable to a
2-64 person to whom this section applies is, at the option of that
2-65 person, either a refund of accumulated contributions made since
2-66 reemployment plus any accrued interest on the accumulated
2-67 contributions allowed by the retirement system or a benefit
2-68 consisting of a basic annuity actuarially determined from the sum
2-69 of the member's deposits made and accumulated since the date of
2-70 last becoming a member and current service credit computed on the
3-1 amount of the deposits and a supplemental annuity actuarially
3-2 determined from the multiple matching credit applicable to the
3-3 amount of contributions made and accumulated with interest in the
3-4 person's individual account since last becoming a member. The
3-5 additional benefit is payable as a standard service retirement
3-6 benefit or, at the election of the member, any optional benefit
3-7 authorized under this subtitle that is the actuarial equivalent of
3-8 the standard retirement benefit. The first benefit payment date
3-9 under this section is the end of the month following the last month
3-10 of employment if the person files an application not less than 60
3-11 days before the payment date and has not resumed employment with
3-12 any participating subdivision in a position that would make the
3-13 person an employee.
3-14 (h) If a person becomes an employee of any participating
3-15 subdivision within one calendar month after that person's effective
3-16 date of retirement, the person is considered not to have retired,
3-17 and the person's membership shall be restored. The retirement
3-18 system shall deduct the sum of one-half of the basic annuity
3-19 payments made before the membership is restored from the person's
3-20 individual account in the employees saving fund and shall transfer
3-21 that amount to the current service annuity reserve fund. The
3-22 retirement system shall reduce the person's maximum prior service
3-23 credit by an amount equal to the sum of the prior service annuity
3-24 payments made before the membership is restored, divided by the
3-25 product of the subdivision's allocated prior service credit
3-26 percentage multiplied by the interest factor for interest from the
3-27 subdivision's participation date to the person's effective
3-28 retirement date, both of which were used in computing the amount of
3-29 the prior service annuity. <A person who has retired under this
3-30 subtitle because of service may not rejoin the retirement system or
3-31 earn additional retirement benefits by reason of subsequent
3-32 employment.>
3-33 SECTION 6. Section 843.203, Government Code, is amended to
3-34 read as follows:
3-35 Sec. 843.203. Adjustment of Obligations Between Successive
3-36 Employers. (a) The governing body of a subdivision that has taken
3-37 over the facilities of a hospital, utility, or other public
3-38 facility formerly operated by another participating subdivision may
3-39 assume in whole or in part the obligations that the former employer
3-40 had undertaken under this subtitle by reason of service performed
3-41 by members of the system who become employees of the subdivision
3-42 seeking to participate in the system. A subdivision participating
3-43 in the system that could have assumed the obligations of another
3-44 subdivision had this section been in effect at time of
3-45 participation may assume in whole or in part the obligations that
3-46 the subdivision that was the first employer had undertaken by
3-47 reason of service rendered by members who became employees of the
3-48 subdivision that is the second employer. Assumptions under this
3-49 section shall be by written agreement between the affected
3-50 subdivisions and are subject to approval of the board of trustees.
3-51 (b) If the board of trustees determines, on the basis of
3-52 computations made by the actuary, that the tangible assets made
3-53 available by the successor subdivision to assume the obligations
3-54 that the first employer had undertaken are materially in excess of
3-55 the assumed obligation, the board may direct that a portion of the
3-56 excess be transferred from the account of the first employer in the
3-57 subdivision accumulation fund to the account of the successor
3-58 subdivision in that fund.
3-59 SECTION 7. Subchapter C, Chapter 843, Government Code, is
3-60 amended by adding Section 843.204 to read as follows:
3-61 Sec. 843.204. PREMEMBERSHIP CREDIT FOR OVERAGE EMPLOYEES.
3-62 (a) The governing body of a participating subdivision by order or
3-63 resolution may authorize the establishment of current service
3-64 credit in the retirement system for any member for service
3-65 performed for the subdivision before the date of the person's
3-66 membership if the person was employed by the subdivision before
3-67 September 1, 1987, and at the time of employment was older than the
3-68 maximum age for required membership. The member may deposit to the
3-69 member's individual account in the employees saving fund with the
3-70 retirement system for each month of premembership service for which
4-1 current service credit is authorized, an amount not exceeding the
4-2 deposit for that month that the person would have made had the
4-3 person then been a member of the system.
4-4 (b) The governing body of a subdivision may adopt the
4-5 provisions of this section:
4-6 (1) on the terms provided by Subchapter H of Chapter
4-7 844; or
4-8 (2) if the board of trustees determines that,
4-9 according to the computations of the actuary approved by the board
4-10 of trustees, the adoption would not impair the ability of the
4-11 subdivision to fund all obligations against its account in the
4-12 subdivision accumulation fund before the 25th anniversary of the
4-13 subdivision's most recent actuarial valuation date.
4-14 SECTION 8. Section 844.003, Government Code, is amended by
4-15 amending Subsections (a) and (c) and adding Subsection (d) to read
4-16 as follows:
4-17 (a) Except as provided by Subsections <Subsection> (b) and
4-18 (d), the effective date of a member's service retirement is the
4-19 date the member designates at the time the member applies for
4-20 retirement under Section 844.101, but the date must be the last day
4-21 of a calendar month and may not precede the date the member
4-22 terminates employment with all participating subdivisions.
4-23 (c) Except as provided by Subsections <Subsection> (b) and
4-24 (d), the effective date of a member's disability retirement is the
4-25 date designated on the application for retirement filed by or for
4-26 the member as provided by Section 844.301, but the date may not
4-27 precede the date the member terminates employment with all
4-28 participating subdivisions.
4-29 (d) If a person who has attained age 70-1/2 terminates
4-30 covered employment without applying for retirement, the retirement
4-31 system shall attempt to notify that person in writing and advise
4-32 the person that the person is required to retire. If, before the
4-33 91st day after the date the retirement system sends the notice, the
4-34 person has not filed an application with the board for retirement,
4-35 the person is considered to have retired on the last day of the
4-36 month in which the person terminated employment with all
4-37 participating subdivisions and:
4-38 (1) to have elected to receive an annuity under
4-39 Section 844.103, if the person did not have a spouse on the date of
4-40 employment termination; or
4-41 (2) if the person had a spouse on the date of
4-42 employment termination, to have elected to receive an annuity under
4-43 Section 844.104(c)(1) and to have designated the person's spouse as
4-44 the beneficiary under the annuity.
4-45 SECTION 9. Section 844.006, Government Code, is amended by
4-46 amending Subsections (a) and (c) and adding Subsections (d) and (e)
4-47 to read as follows:
4-48 (a) A retiree who is receiving payments of a standard
4-49 service or disability retirement annuity or of an annuity for the
4-50 retiree's life but with payments to continue after the retiree's
4-51 death until a determined number of payments have been made may<,
4-52 with the consent of the retiree's spouse if there is one,> revoke
4-53 any existing selection and designation of beneficiary nominated to
4-54 receive any <monthly> payments that may become due under the
4-55 annuity after the retiree's death and may select a new beneficiary
4-56 to whom <monthly> payments may be made.
4-57 (c) Any selection and designation of beneficiary under
4-58 Subsection (a) or (b) <this section> must be in writing on forms
4-59 prescribed by the board of trustees and becomes effective on filing
4-60 with the director.
4-61 (d) If a qualified domestic relations order, as that term is
4-62 defined by Section 804.001, so provides, the benefit payable to a
4-63 retiree who is receiving payments of an annuity for the retiree's
4-64 life with payments to continue after the retiree's death until the
4-65 death of another person under Option 1, 2, 4B, or 4C, as defined by
4-66 Section 103.2, Title 34, Texas Administrative Code, may be divided
4-67 by the retirement system into two annuities if:
4-68 (1) the person who was designated to receive the
4-69 continued payment after the retiree's death is the same person as
4-70 the alternate payee;
5-1 (2) the domestic relations order specifies that one of
5-2 the two annuities is payable over the remaining life of the
5-3 retiree, with no payments to be made under that annuity after the
5-4 death of the retiree;
5-5 (3) the domestic relations order specifies that the
5-6 annuity payable to the alternate payee is payable over the
5-7 remaining life of that person, with no payments to be made under
5-8 that annuity after the death of the alternate payee named in the
5-9 order; and
5-10 (4) the domestic relations order specifies that the
5-11 portion of the benefit payable to the alternate payee is stated as
5-12 a fixed percentage of the present benefit payable to the retiree,
5-13 which percentage may not exceed, as applicable:
5-14 (A) 25 percent of an Option 4B benefit;
5-15 (B) 50 percent of an Option 2 benefit; or
5-16 (C) 75 percent of an Option 4C benefit.
5-17 (e) The division of an annuity under Subsection (d) is
5-18 effective when the order is determined by the retirement system to
5-19 be a qualified domestic relations order, and the amount of each of
5-20 the two annuities shall be computed by the retirement system at
5-21 that time, based on tables that have been adopted by the retirement
5-22 system and in effect at that time, so that the two annuities are
5-23 actuarially equivalent at the time of division to the annuity being
5-24 divided.
5-25 SECTION 10. The section heading to Section 844.006,
5-26 Government Code, is amended to read as follows:
5-27 Sec. 844.006. CHANGE OF BENEFICIARY OR DIVISION OF BENEFIT
5-28 FOR CERTAIN PERSONS RECEIVING MONTHLY BENEFITS <OF GUARANTEED-TERM
5-29 ANNUITY>.
5-30 SECTION 11. Subchapter A, Chapter 844, Government Code, is
5-31 amended by adding Section 844.008 to read as follows:
5-32 Sec. 844.008. LIMITATION ON PAYMENT OF BENEFITS. (a) In
5-33 this section:
5-34 (1) "Annual benefit" means the total of all annuity
5-35 payments by the retirement system to an annuitant during a calendar
5-36 year, including any distributive benefit payments.
5-37 (2) "Compensation" has the meaning assigned by Section
5-38 415, Internal Revenue Code, and the regulations adopted under that
5-39 section, not to exceed the limitations provided by Section
5-40 401(a)(17) of that code, instead of the meaning assigned by
5-41 Section 841.001.
5-42 (3) "Highest average annual compensation" means the
5-43 average compensation for the three consecutive calendar years of
5-44 service that produces the highest average.
5-45 (4) "Internal Revenue Code" means the Internal Revenue
5-46 Code of 1986 (Title 26, United States Code).
5-47 (b) If the amount of any benefit payment under this subtitle
5-48 would exceed the limitations provided by this section, the
5-49 retirement system shall reduce the amount of the benefit in
5-50 accordance with this section.
5-51 (c) Except as otherwise provided by this section, a benefit
5-52 is adjusted to an actuarially equivalent straight life annuity for
5-53 the purpose of determining limitations under this section. An
5-54 actuarial adjustment to a benefit is not required for the value of
5-55 a qualified joint and survivor annuity and the value of
5-56 postretirement cost-of-living increases made in accordance with
5-57 Section 415, Internal Revenue Code.
5-58 (d) Except as provided by Subsections (f), (h), and (i), an
5-59 annual benefit payable by the retirement system may not exceed the
5-60 lesser of:
5-61 (1) $112,221, or another amount as adjusted each
5-62 January 1 by the secretary of the treasury under Section 415 of the
5-63 Internal Revenue Code for cost-of-living increases after January 1,
5-64 1992; or
5-65 (2) 100 percent of the former member's highest average
5-66 annual compensation.
5-67 (e) If payment of a benefit begins before a member attains
5-68 age 62, the dollar limitation is the actuarial equivalent of an
5-69 annual benefit beginning at age 62 as described by Subsection
5-70 (d)(1) for a person at age 62. A reduction under this subsection
6-1 may not reduce the dollar limitation below $75,000 if the benefit
6-2 begins at or after age 55 or, if the benefit begins before age 55,
6-3 the actuarial equivalent of a $75,000 limitation beginning at age
6-4 55.
6-5 (f) If payment of a benefit begins after the member attains
6-6 age 65, the dollar limitation is the actuarial equivalent of an
6-7 annual benefit beginning at age 65 as described by Subsection
6-8 (d)(1).
6-9 (g) To determine actuarial equivalence, the interest rate
6-10 assumption under Subsection (c) or (e) is the greater of the rate
6-11 specified by Section 845.314(a) or five percent, and the interest
6-12 rate assumption under Subsection (f) is the lesser of those rates.
6-13 (h) The limitations provided by Subsections (d), (e), and
6-14 (f) do not apply to any portion of an annual benefit payable by the
6-15 retirement system that is paid from the balance in the member's
6-16 individual account in the employees saving fund as of December 31,
6-17 1985, or from interest credited to the member's account after
6-18 December 31, 1985, as a result of deposits before that date.
6-19 (i) This section may not be applied to reduce the annual
6-20 benefit payable to any person who retired under the retirement
6-21 system before January 1, 1994, or to reduce the vested accrued
6-22 benefit as of December 31, 1993, of any person who was a member of
6-23 the retirement system on that date.
6-24 (j) If the Internal Revenue Code is amended in such a manner
6-25 that limitations similar to those provided by this section are not
6-26 required of governmental retirement plans to constitute qualified
6-27 plans, the board of trustees may by rule eliminate all or any
6-28 portion of the limitations provided by this section.
6-29 (k) An employer may not provide employee retirement or
6-30 deferred benefits to the extent that, when considered together with
6-31 the benefits authorized by this subtitle as required by the
6-32 Internal Revenue Code, would result in the failure of the
6-33 retirement system's plan to meet federal qualification standards as
6-34 applied to governmental retirement plans.
6-35 SECTION 12. Section 844.104, Government Code, is amended by
6-36 redesignating Subsections (d), (e), and (f) as Subsections (i),
6-37 (j), and (k), redesignating and amending Subsection (g) as
6-38 Subsection (l), and adding new Subsections (d)-(h) and (m)-(n) to
6-39 read as follows:
6-40 (d) If a person selects, or if a person's death before
6-41 retirement results in the payment of, an optional annuity providing
6-42 for payment of a fixed number of monthly payments to the person's
6-43 beneficiary or estate if the person dies before the total number of
6-44 payments has been completed, the option is limited as provided by
6-45 Subsections (e), (f), (g), and (h).
6-46 (e) If the joint life expectancy of the person making the
6-47 selection and of the designated beneficiary, according to mortality
6-48 tables adopted by the Internal Revenue Service, at the time of the
6-49 person's retirement is less than the minimum period that monthly
6-50 payments would be required under the option selected, the person
6-51 must select another option so that the minimum period that monthly
6-52 payments would be required does not exceed the joint life
6-53 expectancy of the person making the selection and of the designated
6-54 beneficiary.
6-55 (f) If the life expectancy according to mortality tables
6-56 adopted by the Internal Revenue Service of a person to whom a
6-57 benefit will be paid as the result of a member's death before
6-58 retirement is less at the time of the member's death than the
6-59 minimum period that monthly payments would be required under the
6-60 option selected, the retirement system shall adjust the minimum
6-61 period that monthly payments will be required to a period that is
6-62 not less than 60 months and that is the greatest multiple of 12
6-63 months that does not exceed the life expectancy of the person to
6-64 whom the benefit will be paid. The amount of the monthly payment
6-65 shall be adjusted to the actuarial equivalent of the payments that
6-66 would be made for the greater number of months.
6-67 (g) If the person making the selection designates the
6-68 person's estate as beneficiary and if the life expectancy according
6-69 to mortality tables adopted by the Internal Revenue Service of that
6-70 person is less than the minimum period that monthly payments would
7-1 be required under the option selected, the person must select
7-2 another option so that the minimum period that monthly payments
7-3 would be required does not exceed the person's life expectancy at
7-4 the time of the person's retirement.
7-5 (h) If an estate will be paid monthly benefits as the result
7-6 of a member's death before retirement for a period that would
7-7 exceed 60 months, the period for which the payments will be made
7-8 shall be reduced to 60 months, and the amount of the monthly
7-9 payment to the estate is the actuarial equivalent of the payments
7-10 that would have been made for the greater number of months.
7-11 (i) To select an optional service retirement annuity, a
7-12 member or retiree must make the selection and designate a
7-13 beneficiary on a form prescribed by and filed with the board of
7-14 trustees before the 31st day after the effective date of
7-15 retirement.
7-16 (j) <(e)> A retiree who dies before the 31st day after the
7-17 effective date of service retirement and who did not select an
7-18 optional service retirement annuity before death is considered to
7-19 have selected an optional annuity under Subsection (c)(4).
7-20 Alternatively, the decedent's beneficiary may elect to receive a
7-21 refund of the decedent's accumulated contributions under Section
7-22 844.401, in which case the decedent will be considered to have been
7-23 a contributing member at the time of death.
7-24 (k) <(f)> If monthly payments of an optional service
7-25 retirement annuity cease before the sum of all of the monthly
7-26 payments equals or exceeds the amount of accumulated contributions
7-27 in the individual account in the employees saving fund at the time
7-28 of retirement of the member on whose service the annuity was based,
7-29 a lump-sum benefit equal to the amount by which the accumulated
7-30 contributions exceed the sum of all monthly payments made under the
7-31 annuity is payable:
7-32 (1) to the designated beneficiary, if living, or if
7-33 not living, to the estate of the designated beneficiary, if the
7-34 designated beneficiary survived the retiree; or
7-35 (2) to the estate of the retiree, if the designated
7-36 beneficiary predeceased the retiree.
7-37 (l) <(g)> The benefit provided by Subsection (k) <(f)> is
7-38 payable from the current service annuity reserve fund and the
7-39 subdivision accumulation fund in the ratio described by Section
7-40 844.402(c).
7-41 (m) If a retiring member selects an optional annuity under
7-42 Subsection (c) that is payable after the retiree's death throughout
7-43 the life of a beneficiary who is not the retiree's spouse, payments
7-44 to the beneficiary after the retiree's death may not exceed the
7-45 applicable percentage of the annuity payment that would have been
7-46 payable to the retiree using the following table:
7-47 Excess of age of retiree Applicable
7-48 over age of beneficiary: percentage:
7-49 less than 11 years 100 percent
7-50 at least 11 years but less than 20 years 75 percent
7-51 20 years or more 50 percent
7-52 (n) Unless the retiree's spouse is the designated
7-53 beneficiary of an optional annuity under Subsection (c) that
7-54 guarantees a fixed number of monthly payments, the guaranteed
7-55 number of payments may not exceed the applicable period using the
7-56 following table:
7-57 Maximum number
7-58 of guaranteed
7-59 Age of retiree: monthly payments:
7-60 less than 84 180
7-61 at least 84 but less than 91 120
7-62 91 or more 60
7-63 SECTION 13. Section 844.209, Government Code, is amended by
7-64 amending Subsection (b) and adding Subsection (e) to read as
7-65 follows:
7-66 (b) If a member who has sufficient credited service
7-67 performed for subdivisions that have adopted or are subject to this
7-68 section to entitle the member to withdraw from service, to leave on
7-69 deposit with the retirement system the member's accumulated
7-70 contributions, and, on attainment of an age prescribed by this
8-1 subtitle, to retire with a service retirement benefit dies before
8-2 becoming eligible for deferred service retirement and leaves
8-3 surviving a person whom the member has designated as beneficiary
8-4 entitled to payment of the member's accumulated contributions if
8-5 the member dies before retirement, the surviving beneficiary may by
8-6 written notice filed with the board elect to <leave the accumulated
8-7 deposits with the retirement system subject to this section. If
8-8 the accumulated deposits have not been withdrawn before the time
8-9 the member, if living, would have become entitled to service
8-10 retirement, the surviving beneficiary may elect to> receive, in
8-11 lieu of the accumulated deposits, an annuity payable during the
8-12 lifetime of the surviving beneficiary in the amount that would have
8-13 been payable to the surviving beneficiary had the member <lived
8-14 and> retired on the last day of the month preceding the month in
8-15 which death occurred <at that date> under an optional annuity
8-16 described by Section 844.104(c)(1).
8-17 (e) The benefit payable under Subsection (b) is payable as
8-18 if the member had retired on the later of December 31, 1993, or the
8-19 last day of the month preceding the month in which death occurred.
8-20 Any benefit payments under this section must begin within one year
8-21 after the later of December 31, 1993, or the last day of the month
8-22 preceding the month in which death occurred. A benefit payable
8-23 under Subsection (b) because of the death of a person who died
8-24 before January 1, 1994, is computed based on the benefit that would
8-25 have been payable if the death had occurred on January 1, 1994.
8-26 SECTION 14. Section 844.305, Government Code, is amended by
8-27 redesignating Subsections (d), (e), (f), and (g) as Subsections
8-28 (g), (h), (i), and (j), redesignating and amending Subsection (h)
8-29 as Subsection (k), and adding new Subsections (d)-(f) and (l)-(m)
8-30 to read as follows:
8-31 (d) If a person selects an optional annuity providing for
8-32 payment of a fixed number of monthly annuity payments to the
8-33 person's beneficiary or estate if the person dies before the total
8-34 number of payments has been completed, the option is limited as
8-35 provided by Subsections (e) and (f).
8-36 (e) If the joint life expectancy of the person making the
8-37 selection and of the designated beneficiary according to mortality
8-38 tables adopted by the Internal Revenue Service at the time of the
8-39 person's retirement is less than the minimum period that monthly
8-40 payments would be required under the option selected, the person
8-41 must select another option so that the minimum period that monthly
8-42 payments would be required does not exceed the joint life
8-43 expectancy of the person making the selection and of the designated
8-44 beneficiary.
8-45 (f) If the person making the selection designates the
8-46 person's estate as beneficiary and if the life expectancy according
8-47 to mortality tables adopted by the Internal Revenue Service of that
8-48 person is less than the minimum period that monthly payments would
8-49 be required under the option selected, the person must select
8-50 another option so that the minimum period that monthly payments
8-51 would be required does not exceed the person's life expectancy at
8-52 the time of the person's retirement.
8-53 (g) To select an optional disability retirement annuity, a
8-54 member or retiree must make the selection and designate a
8-55 beneficiary on a form prescribed by and filed with the board of
8-56 trustees before the 31st day after the effective date of
8-57 retirement.
8-58 (h) <(e)> A retiree who dies before the 31st day after the
8-59 effective date of disability retirement and who did not select an
8-60 optional disability retirement annuity before death is considered
8-61 to have selected an optional annuity under Subsection (c)(4).
8-62 Alternatively, the decedent's beneficiary may elect to receive a
8-63 refund of the decedent's accumulated contributions under Section
8-64 844.401, in which case the decedent will be considered to have been
8-65 a contributing member at the time of death.
8-66 (i) <(f)> If a person's disability retirement annuity is
8-67 discontinued under Section 844.307 or 844.308, the person's
8-68 selection of any optional annuity under this section becomes void.
8-69 (j) <(g)> If monthly payments of an optional disability
8-70 retirement annuity cease before the sum of all of the monthly
9-1 payments equals or exceeds the amount of accumulated contributions
9-2 in the individual account in the employees saving fund at the time
9-3 of retirement of the member on whose service the annuity was based,
9-4 a lump-sum benefit equal to the amount by which the accumulated
9-5 contributions exceed the sum of all monthly payments made under the
9-6 annuity is payable:
9-7 (1) to the designated beneficiary, if living, or if
9-8 not living, to the estate of the designated beneficiary, if the
9-9 designated beneficiary survived the retiree; or
9-10 (2) to the estate of the retiree, if the designated
9-11 beneficiary predeceased the retiree.
9-12 (k) <(h)> The benefit provided by Subsection (j) <(g) of
9-13 this section> is payable from the current service annuity reserve
9-14 fund and the subdivision accumulation fund in the ratio described
9-15 by Section 844.402(c).
9-16 (l) If a retiring member selects an optional annuity under
9-17 Subsection (c) that is payable after the retiree's death throughout
9-18 the life of a beneficiary who is not the retiree's spouse, payments
9-19 to the beneficiary after the retiree's death may not exceed the
9-20 applicable percentage of the annuity payment that would have been
9-21 payable to the retiree using the following table:
9-22 Excess of age of retiree Applicable
9-23 over age of beneficiary: percentage:
9-24 less than 11 years 100 percent
9-25 at least 11 but less than 20 years 75 percent
9-26 20 years or more 50 percent
9-27 (m) Unless the retiree's spouse is the designated
9-28 beneficiary of an optional annuity under Subsection (c) that
9-29 guarantees a fixed number of monthly payments, the guaranteed
9-30 number of payments may not exceed the applicable period using the
9-31 following table:
9-32 Maximum number
9-33 of guaranteed
9-34 Age of retiree: monthly payments:
9-35 less than 84 180
9-36 at least 84 but less than 91 120
9-37 91 or more 60
9-38 SECTION 15. Section 844.607, Government Code, is amended by
9-39 redesignating and amending Subsection (b) as Subsection (c) and
9-40 adding a new Subsection (b) to read as follows:
9-41 (b) If the governing body of the subdivision does not adopt
9-42 an order or resolution described by Subsection (c) effective on the
9-43 first day of the first calendar year that begins after the date of
9-44 the notice under Subsection (a), the actuary shall make new
9-45 determinations, provided for by Sections 844.601(b) and 844.606(b),
9-46 based on the most recent actuarial valuation. The actuary shall
9-47 give written notice of these determinations to the director, who
9-48 shall give a second written notice to the governing body of the
9-49 subdivision.
9-50 (c) The lower percentage to be used for multiple matching
9-51 credits of future member contributions as determined by the actuary
9-52 based on the most recent actuarial valuation and specified in the
9-53 second notice to the governing body becomes effective as to all
9-54 members who perform current service for the affected subdivision on
9-55 or after the first day of the second calendar year that begins
9-56 after the date of the notice under Subsection (a) and is not
9-57 earlier than January 1, 1993, unless before the effective date, the
9-58 governing body of the subdivision adopts an order or resolution,
9-59 approved by the board of trustees, authorizing additional
9-60 subdivision contributions under Section 844.605 or authorizing a
9-61 reduction in multiple matching credits under Section 844.606 or
9-62 authorizing both additional contributions and a reduction in
9-63 multiple matching credits.
9-64 SECTION 16. Section 844.702, Government Code, is amended to
9-65 read as follows:
9-66 Sec. 844.702. Member Contributions. The governing body of
9-67 the subdivision may designate the rate of member contributions for
9-68 employees of the subdivision to take effect beginning on the
9-69 effective date of adoption of the plan provisions of this
9-70 subchapter. The subdivision may elect a rate of four, five, six,
10-1 or seven percent of the current service compensation of its
10-2 employees. The governing body of the subdivision may thereafter
10-3 increase or decrease the contribution rate to take effect on the
10-4 next January 1 after the date of adoption of the increase or
10-5 decrease, <but may reduce the rate of member contributions only
10-6 after the existing rate has been in effect for five years,>
10-7 notwithstanding the provisions of Sections 845.402(c) and (d).
10-8 SECTION 17. Sections 844.703(b), (d), and (g), Government
10-9 Code, are amended to read as follows:
10-10 (b) Each subdivision adopting the plan provisions of this
10-11 subchapter shall pay to the subdivision accumulation fund, as its
10-12 prior service contribution, an amount equal to a percentage of the
10-13 compensation of members employed by the subdivision for that month.
10-14 The rate of contribution is the rate determined annually by the
10-15 actuary and approved by the board of trustees as being the rate
10-16 required to fund all unfunded obligations charged against the
10-17 subdivision's account in the subdivision accumulation fund within
10-18 the subdivision's amortization period without probable future
10-19 depletion of that account or, if there are no unfunded obligations,
10-20 the rate required to amortize any overfunded obligations in
10-21 perpetuity.
10-22 (d) The actuary annually shall determine the subdivision
10-23 normal contribution rate and the prior service contribution rate
10-24 for subdivisions adopting the plan provisions of this subchapter
10-25 from the most recent data available at the time of determination.
10-26 Before January 1 of each year, the board of trustees shall certify
10-27 the rates of each subdivision that has adopted the plan provisions
10-28 of this subchapter. If the combined rates of the subdivision's
10-29 normal contributions and prior service contributions under this
10-30 subchapter exceed the rate prescribed by Subsection (c), the rate
10-31 for prior service contributions must be reduced to the rate that
10-32 equals the difference between the maximum rate prescribed by
10-33 Subsection (c) and the normal contribution rate. If for any year
10-34 the combined rates of a subdivision's normal contribution rate and
10-35 its prior service contribution rate as determined under Subsections
10-36 (a) and (b) are less than the subdivision's employee contribution
10-37 rate, the governing body of the subdivision may elect that the
10-38 subdivision make normal contributions and prior service
10-39 contributions for that year at a combined rate equal to the
10-40 employee contribution rate for that year.
10-41 (g) If the combined rates of the subdivision's normal
10-42 contributions and prior service contributions under this subchapter
10-43 exceed the maximum rate prescribed by Subsection (c) before the
10-44 adjustment prescribed by Subsection (d), the actuary shall
10-45 determine what lower percentage for determining multiple matching
10-46 credits of future member contributions is necessary to make the
10-47 combined rates of the subdivision not exceed the maximum rate
10-48 prescribed by Subsection (c). The actuary shall give written
10-49 notice of the determination to the director, who shall give written
10-50 notice to the governing body of the subdivision. The lower
10-51 percentage determined by the actuary and specified in the notice to
10-52 the governing body becomes effective as to all members who perform
10-53 current service for the affected subdivision on or after the first
10-54 day of the first <second> calendar year that begins after the date
10-55 of the notice, unless before the effective date, the governing body
10-56 of the subdivision adopts an order or resolution, approved by the
10-57 board of trustees, authorizing a reduction in the percentage used
10-58 in determining multiple matching credits in accordance with Section
10-59 844.704(a).
10-60 SECTION 18. Section 844.704(a), Government Code, is amended
10-61 to read as follows:
10-62 (a) On the adoption of the plan provisions of this
10-63 subchapter, the governing body of the subdivision shall select a
10-64 percentage for determining multiple matching credits under Section
10-65 843.403. The governing body shall select a percentage of 0, 25,
10-66 50, 75, 100, 125, or 150 percent, or it may select the multiple
10-67 matching percentage that the subdivision has in effect on the date
10-68 of its adoption of the plan provisions of this subchapter. If a
10-69 subdivision has a current service credit percentage in excess of
10-70 100 percent, the governing body of the subdivision may elect a
11-1 percentage under this section that, when added to the current
11-2 service credit percentage, is a multiple of 25 percent, except that
11-3 the combined percentages may not exceed 250 percent. The governing
11-4 body may thereafter increase the percentage used in determining
11-5 multiple matching credits under Section 843.403 to one of the
11-6 percentages specified in this subsection, to take effect on the
11-7 next January 1 after the date of the increase. However, the sum of
11-8 the percentage for current service credits under Section 843.403
11-9 and the percentage for multiple matching credits may not exceed 250
11-10 percent. The governing body also may thereafter reduce the
11-11 percentage used in determining multiple matching credits for
11-12 contributions made after the effective date of the reduction to one
11-13 of the percentages specified in this subsection, to take effect on
11-14 the next January 1 after the date of the reduction.
11-15 SECTION 19. Section 845.206(d), Government Code, is amended
11-16 to read as follows:
11-17 (d) On the basis of tables and rates adopted by the board,
11-18 the actuary shall:
11-19 (1) compute the current interest rate in accordance
11-20 with Section 845.314; and
11-21 (2) <certify the amount of each annuity and benefit
11-22 granted by the board; and>
11-23 <(3)> make an annual valuation of the assets and
11-24 liabilities of the funds of the retirement system.
11-25 SECTION 20. Section 845.301, Government Code, is amended to
11-26 read as follows:
11-27 Sec. 845.301. Investment of Assets. The board of trustees
11-28 shall invest and reinvest the assets of the retirement system
11-29 without distinction as to their source in:
11-30 (1) interest-bearing bonds or other evidences of
11-31 indebtedness of this state, a county, school district, city, or
11-32 other municipal corporation of this state, the United States, or an
11-33 authority or an agency of the United States;
11-34 (2) securities for which the United States or any
11-35 authority or agency of the United States guarantees the payment of
11-36 principal and interest;
11-37 (3) interest-bearing bonds, notes, or other evidences
11-38 of indebtedness that are issued by a company:
11-39 (A) incorporated in the United States and that
11-40 are rated "A" or better by one or more nationally recognized rating
11-41 agencies approved by the board; or
11-42 (B) in whose stock the retirement system may
11-43 invest as provided by Subdivision (4);
11-44 (4) common or preferred stocks of a company
11-45 incorporated in the United States that has paid cash dividends on
11-46 its common stock for 10 consecutive years immediately before the
11-47 date of purchase and, unless the stocks are bank or insurance
11-48 stocks, that is listed on an exchange registered with the
11-49 Securities and Exchange Commission or its successor; <or>
11-50 (5) obligations issued, assumed, or guaranteed by the
11-51 Inter-American Development Bank, the International Bank for
11-52 Reconstruction and Development (the World Bank), the African
11-53 Development Bank, the Asian Development Bank, and the International
11-54 Finance Corporation; or
11-55 (6) real estate mortgage investment conduit securities
11-56 (REMICs) or other participation certificates issued by the Federal
11-57 National Mortgage Corporation or by the Federal Home Loan Mortgage
11-58 Corporation, evidencing an undivided beneficial interest in pools
11-59 of real estate mortgage notes that are guaranteed as to payment of
11-60 principal and interest by the issuer, or by any agency, authority,
11-61 or instrumentality of the United States, and that are to be held in
11-62 trust by the issuer for the benefit of the certificate holder.
11-63 SECTION 21. This Act takes effect January 1, 1994.
11-64 SECTION 22. The importance of this legislation and the
11-65 crowded condition of the calendars in both houses create an
11-66 emergency and an imperative public necessity that the
11-67 constitutional rule requiring bills to be read on three several
11-68 days in each house be suspended, and this rule is hereby suspended.
11-69 * * * * *
11-70 Austin,
12-1 Texas
12-2 May 5, 1993
12-3 Hon. Bob Bullock
12-4 President of the Senate
12-5 Sir:
12-6 We, your Committee on Intergovernmental Relations to which was
12-7 referred H.B. No. 1765, have had the same under consideration, and
12-8 I am instructed to report it back to the Senate with the
12-9 recommendation that it do pass and be printed.
12-10 Armbrister,
12-11 Chairman
12-12 * * * * *
12-13 WITNESSES
12-14 No Witnesses appeared on H.B. No. 1765.