S.B. No. 593
AN ACT
1-1 relating to participation and credit in, contributions to, and
1-2 benefits and administration of the Texas Municipal Retirement
1-3 System.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subdivision (15), Section 851.001, Government
1-6 Code, is amended to read as follows:
1-7 (15) "Amortization period" means, as to a particular
1-8 municipality, the time ending with the later <latest> of:
1-9 (A) the expiration of 25 years after the
1-10 effective date of the municipality's participation in the
1-11 retirement system<, after the effective date of the most recent
1-12 annuity increases allowed by the municipality under Section
1-13 854.203, or after the effective date of the most recent updated
1-14 service credits allowed by the municipality under Section 853.401>;
1-15 or
1-16 (B) the expiration of 25 <20> years after the
1-17 most recent actuarial valuation date for the municipality <date the
1-18 municipality allowed any special prior service credits or
1-19 antecedent service credits>.
1-20 SECTION 2. Subsection (a), Section 852.006, Government Code,
1-21 is amended to read as follows:
1-22 (a) Except as provided by this section, a municipality may
1-23 not terminate participation in the retirement system <or in the
1-24 supplemental disability benefits fund> if the municipality has
2-1 employees who are members of the system <or who participate in the
2-2 fund>, but the municipality may elect to discontinue the
2-3 participation in the system <or the fund> of persons employed or
2-4 reemployed after the date of an election to discontinue.
2-5 SECTION 3. Subchapter A, Chapter 852, Government Code, is
2-6 amended by adding Section 852.007 to read as follows:
2-7 Sec. 852.007. MUNICIPALITY NOT AGENT OF SYSTEM. Neither a
2-8 municipality that participates in the retirement system nor any
2-9 employee or officer of a participating municipality has authority
2-10 to act as an agent of the retirement system. An action of or
2-11 inaction on the part of a participating municipality or its
2-12 employee or officer is not binding on the retirement system.
2-13 SECTION 4. Section 852.103, Government Code, is amended to
2-14 read as follows:
2-15 Sec. 852.103. WITHDRAWAL OF CONTRIBUTIONS. (a) A living
2-16 person who is not an employee of a participating department and who
2-17 has not retired may, after application, withdraw all of the
2-18 accumulated contributions credited to the person's individual
2-19 account in the employees saving fund, and the retirement system
2-20 shall close the account.
2-21 (b) If a person to whom a withdrawal would be paid under
2-22 this section elects to have all or a portion of the accumulated
2-23 contributions paid directly to an eligible retirement plan and
2-24 specifies the eligible retirement plan to which the contributions
2-25 are to be paid, on forms approved for that purpose by the board of
2-26 trustees, the retirement system shall make the payment in the form
2-27 of a direct trustee-to-trustee transfer but is under no obligation
3-1 to determine whether or not the other plan in fact is an eligible
3-2 retirement plan for that purpose.
3-3 SECTION 5. Subsections (a) and (c), Section 853.305,
3-4 Government Code, are amended to read as follows:
3-5 (a) The governing body of a participating municipality by
3-6 ordinance may authorize the granting of restricted prior service
3-7 credit to an employee who is a member of the retirement system for
3-8 service previously performed as an employee of any incorporated
3-9 city or town in the United States or of any council of governments
3-10 in this state and for which the person has not otherwise received
3-11 credited service in this system, including combined service credit
3-12 under Chapter 803.
3-13 (c) A member seeking to establish restricted prior service
3-14 credit under this section must obtain from the clerk or secretary
3-15 of the city or town, or from the similar official of a council of
3-16 governments, for which the previous service was performed a
3-17 detailed statement of the service, verified by that official, and
3-18 file the statement with the clerk or secretary of the participating
3-19 municipality by which the member is employed.
3-20 SECTION 6. The section heading to Section 853.305,
3-21 Government Code, is amended to read as follows:
3-22 Sec. 853.305. CREDIT FOR SERVICE WITH NONPARTICIPATING
3-23 MUNICIPALITY OR WITH COUNCIL OF GOVERNMENTS.
3-24 SECTION 7. Subsections (a), (d), and (e), Section 853.401,
3-25 Government Code, are amended to read as follows:
3-26 (a) Except as provided by Subsection (b), the governing body
3-27 of a participating municipality by ordinance may authorize the
4-1 crediting in the retirement system of updated service credits for
4-2 service performed for the municipality by members. An updated
4-3 service credit authorized under this section replaces any updated
4-4 service credit or<,> prior service credit<, special prior service
4-5 credit, or antecedent service credit> previously authorized for
4-6 part of the same service.
4-7 (d) <An ordinance under this section also must require,
4-8 beginning on the effective date of the updated service credits,
4-9 that a member's monthly contributions for current service be based
4-10 on the member's total monthly compensation from the municipality,
4-11 if the requirement is not already in effect for employees of the
4-12 municipality.>
4-13 <(e)> A governing body that adopts an ordinance under this
4-14 section shall send it to the retirement system, and the system must
4-15 receive it before the effective date of the updated service credits
4-16 authorized in the ordinance.
4-17 SECTION 8. Subsection (d), Section 853.402, Government Code,
4-18 is amended to read as follows:
4-19 (d) The updated service credit of a member is an amount
4-20 equal to the greatest of the following:
4-21 (1) the percentage determined under Section
4-22 853.401(c), times the member's base updated service credit; or
4-23 (2) any updated service credit previously authorized
4-24 by the municipality and in effect for the member, accumulated at
4-25 interest as provided by Subsection (f) from the date it took effect
4-26 to the date prescribed by Subsection (e); or
4-27 (3) <the sum of any> prior service credit<, special
5-1 prior service credit, and antecedent service credit> previously
5-2 authorized by the municipality and in effect for the member,
5-3 accumulated at interest as provided by Subsection (f) from the date
5-4 the credit <dates the credits> took effect to the date prescribed
5-5 by Subsection (e).
5-6 SECTION 9. Section 854.003, Government Code, is amended by
5-7 amending Subsection (a) and adding Subsection (d) to read as
5-8 follows:
5-9 (a) Except as provided by Subsections (b) and (d), the <The>
5-10 effective date of a member's service retirement is the date the
5-11 member designates at the time the member applies for retirement
5-12 under Section 854.101, but the date must be the last day of a
5-13 calendar month and may not precede the date the member terminates
5-14 employment with all participating municipalities.
5-15 (d) If a person who has attained age 70-1/2 terminates
5-16 covered employment without applying for retirement, the retirement
5-17 system shall attempt to notify that person in writing and advise
5-18 the person that the person is required to retire. If, before the
5-19 91st day after the date the retirement system sends the notice, the
5-20 person has not filed an application with the board for retirement,
5-21 the person is considered to have retired on the last day of the
5-22 month in which the person terminated employment with all
5-23 participating municipalities and:
5-24 (1) to have elected to receive an annuity under
5-25 Section 854.103, if the person did not have a spouse on the date of
5-26 employment termination; or
5-27 (2) if the person had a spouse on the date of
6-1 employment termination, to have elected to receive an annuity under
6-2 Section 854.104(c)(1) and to have designated the person's spouse as
6-3 the beneficiary under the annuity.
6-4 SECTION 10. Section 854.006, Government Code, is amended by
6-5 amending Subsection (c) and adding Subsections (d) and (e) to read
6-6 as follows:
6-7 (c) Any selection and designation of beneficiary under
6-8 Subsection (a) or (b) <this section> must be in writing, on forms
6-9 prescribed by the board of trustees, and will become effective on
6-10 filing with the director.
6-11 (d) If a qualified domestic relations order, as that term is
6-12 defined by Section 804.001, so provides, the benefit payable to a
6-13 retiree who is receiving payments of an annuity for the retiree's
6-14 life with payments to continue after the retiree's death until the
6-15 death of another person under Option 1, 2, or 5A, as defined by
6-16 Section 123.3, Title 34, Texas Administrative Code, may be divided
6-17 by the retirement system into two annuities if:
6-18 (1) the person who was designated to receive the
6-19 continued payment after the retiree's death is the same person as
6-20 the alternate payee;
6-21 (2) the domestic relations order specifies that one of
6-22 the two annuities is payable over the remaining life of the
6-23 retiree, with no payments to be made under that annuity after the
6-24 death of the retiree;
6-25 (3) the domestic relations order specifies that the
6-26 annuity payable to the alternate payee is payable over the
6-27 remaining life of that person, with no payments to be made under
7-1 that annuity after the death of the alternate payee named in the
7-2 order; and
7-3 (4) the domestic relations order specifies that the
7-4 portion of the benefit payable to the alternate payee is stated as
7-5 a fixed percentage of the present benefit payable to the retiree,
7-6 which percentage may not exceed 50 percent of an Option 2 benefit
7-7 and may not exceed 66-2/3 percent of an Option 5A benefit.
7-8 (e) The division of an annuity under Subsection (d) is
7-9 effective when the order is determined by the retirement system to
7-10 be a qualified domestic relations order, and the amount of each of
7-11 the two annuities shall be computed by the retirement system at
7-12 that time, based on tables that have been adopted by the retirement
7-13 system and in effect at that time, so that the two annuities are
7-14 actuarially equivalent at the time of division to the annuity being
7-15 divided.
7-16 SECTION 11. The section heading to Section 854.006,
7-17 Government Code, is amended to read as follows:
7-18 Sec. 854.006. CHANGE OF BENEFICIARY OR DIVISION OF BENEFIT
7-19 FOR CERTAIN PERSONS RECEIVING MONTHLY BENEFITS <OF GUARANTEED-TERM
7-20 ANNUITY>.
7-21 SECTION 12. Subchapter A, Chapter 854, Government Code, is
7-22 amended by adding Section 854.007 to read as follows:
7-23 Sec. 854.007. LIMITATION ON PAYMENT OF BENEFITS. (a) In
7-24 this section:
7-25 (1) "Annual benefit" means the total of all annuity
7-26 payments by the retirement system to an annuitant during a calendar
7-27 year, including any distributive benefit payments.
8-1 (2) "Compensation" has the meaning assigned by Section
8-2 415, Internal Revenue Code, and the regulations adopted under that
8-3 section, instead of the meaning assigned by Section 851.001.
8-4 (3) "Highest average annual compensation" means the
8-5 average compensation for the three consecutive calendar years of
8-6 service that produces the highest average.
8-7 (4) "Internal Revenue Code" means the Internal Revenue
8-8 Code of 1986 (Title 26, United States Code).
8-9 (b) If the amount of any benefit payment under this subtitle
8-10 would exceed the limitations provided by this section, the
8-11 retirement system shall reduce the amount of the benefit in
8-12 accordance with this section.
8-13 (c) Except as otherwise provided by this section, a benefit
8-14 is adjusted to an actuarially equivalent straight life annuity for
8-15 the purpose of determining limitations under this section. An
8-16 actuarial adjustment to a benefit is not required for the value of
8-17 a qualified joint and survivor annuity and the value of
8-18 postretirement cost-of-living increases made in accordance with
8-19 Section 415, Internal Revenue Code.
8-20 (d) Except as provided by Subsections (f), (h), and (i), an
8-21 annual benefit payable by the retirement system may not exceed the
8-22 lesser of:
8-23 (1) $115,641, or another amount as adjusted each
8-24 January 1 by the secretary of the treasury under Section 415 of the
8-25 Internal Revenue Code for cost-of-living increases after January 1,
8-26 1993; or
8-27 (2) 100 percent of the former member's highest average
9-1 annual compensation.
9-2 (e) If payment of a benefit begins before a member attains
9-3 age 62, the dollar limitation is the actuarial equivalent of an
9-4 annual benefit beginning at age 62 as described by Subsection
9-5 (d)(1) for a person at age 62. A reduction under this subsection
9-6 may not reduce the dollar limitation below $75,000 if the benefit
9-7 begins at or after age 55 or, if the benefit begins before age 55,
9-8 the actuarial equivalent of a $75,000 limitation beginning at age
9-9 55.
9-10 (f) If payment of a benefit begins after the member attains
9-11 age 65, the dollar limitation is the actuarial equivalent of an
9-12 annual benefit beginning at age 65 as described by Subsection
9-13 (d)(1).
9-14 (g) To determine actuarial equivalence, the interest rate
9-15 assumption under Subsection (c) or (e) is the greater of the rate
9-16 specified by Section 855.316(a) or five percent, and the interest
9-17 rate assumption under Subsection (f) is the lesser of those rates.
9-18 (h) The limitations provided by Subsections (d), (e), and
9-19 (f) do not apply to any portion of an annual benefit payable by the
9-20 retirement system that is paid from the balance in the member's
9-21 individual account in the employees saving fund as of December 31,
9-22 1983, or from interest credited to the member's account after
9-23 December 31, 1983, as a result of deposits before that date.
9-24 (i) This section may not be applied to reduce the annual
9-25 benefit payable to any person who retired under the retirement
9-26 system before January 1, 1994, or to reduce the vested accrued
9-27 benefit as of December 31, 1993, of any person who was a member of
10-1 the retirement system on that date.
10-2 (j) If the Internal Revenue Code is amended in such a manner
10-3 that limitations similar to those provided by this section are not
10-4 required of governmental retirement plans to constitute qualified
10-5 plans, the board of trustees may by rule eliminate all or any
10-6 portion of the limitations provided by this section.
10-7 (k) An employer may not provide employee retirement or
10-8 deferred benefits to the extent that, when considered together with
10-9 the benefits authorized by this subtitle as required by the
10-10 Internal Revenue Code, would result in the failure of the
10-11 retirement system's plan to meet federal qualification standards as
10-12 applied to governmental retirement plans.
10-13 SECTION 13. Section 854.104, Government Code, is amended by
10-14 adding Subsection (f) to read as follows:
10-15 (f) Notwithstanding any other provision of this subtitle,
10-16 each distribution to any person or estate under this subtitle must
10-17 be made in accordance with Section 401(a)(9) of the Internal
10-18 Revenue Code of 1986 (26 U.S.C. Section 401(a)(9)).
10-19 SECTION 14. Subsection (b), Section 854.408, Government
10-20 Code, is amended to read as follows:
10-21 (b) During any month in which a retiree who is less than 60
10-22 years old receives earned income subject to taxation under the
10-23 Federal Insurance Contributions Act or that would be subject to
10-24 those taxes if the employer were not an exempt organization, the
10-25 standard occupational disability retirement annuity may not exceed
10-26 the greater of the following amounts:
10-27 (1) the amount that is required to be added to the
11-1 retiree's earned income for the month to equal the highest average
11-2 compensation on which the retiree made membership contributions to
11-3 the retirement system during any <the> 12 consecutive months during
11-4 the three calendar years immediately preceding the year in which
11-5 the retiree retired for disability <disability retirement>; or
11-6 (2) the monthly annuity attributable to the retiree's
11-7 accumulated contributions at the time of the person's retirement.
11-8 SECTION 15. Section 854.604, Government Code, is amended to
11-9 read as follows:
11-10 Sec. 854.604. Retiree Supplemental Death Benefit. If a
11-11 retiree dies whose most recent employment as a member of the
11-12 retirement system was with a municipality that has elected to
11-13 provide, and continues to provide, postretirement supplemental
11-14 death benefits, a lump-sum supplemental death benefit is payable
11-15 from the fund in the amount of $5,000 <$2,500>.
11-16 SECTION 16. Section 855.008, Government Code, is amended to
11-17 read as follows:
11-18 Sec. 855.008. Compensation; Expenses. Each trustee serves
11-19 without compensation but is entitled to:
11-20 (1) reimbursement for reasonable traveling expenses
11-21 incurred in attending board meetings and authorized committee and
11-22 association meetings or incurred in the performance of other
11-23 official board duties; and
11-24 (2) payment of an amount equal to any compensation
11-25 withheld by the trustee's employing municipality because of the
11-26 trustee's attendance at board meetings.
11-27 SECTION 17. Section 855.109, Government Code, is amended to
12-1 read as follows:
12-2 Sec. 855.109. Depositories. The board of trustees shall
12-3 designate financial institutions to qualify and serve the
12-4 retirement system as depositories <in accordance with Subchapter C
12-5 of Chapter 404>.
12-6 SECTION 18. Section 855.407, Government Code, is amended by
12-7 amending Subsections (c) and (e) and adding Subsection (f) to read
12-8 as follows:
12-9 (c) A reduction in the member contribution rate for
12-10 employees of a participating municipality or in the municipality's
12-11 matching rate does not reduce the maximum rate of contribution of
12-12 the municipality.
12-13 (e) If the combined rates of a municipality's normal
12-14 contributions and prior service contributions exceed the rate
12-15 prescribed by Subsection (a), the rate for prior service
12-16 contributions shall be reduced to the rate that equals the
12-17 difference between the maximum rate prescribed by Subsection (a)
12-18 and under Section 855.501, if applicable, and the normal
12-19 contribution rate for the municipality.
12-20 (f) The governing body of a municipality that is determined
12-21 by the actuary to be unable to finance all obligations charged
12-22 against its account in the municipality accumulation fund within 25
12-23 years after its most recent actuarial valuation date may elect to
12-24 have the municipality contribute to its account in the municipality
12-25 accumulation fund at a rate that does not exceed in any year the
12-26 sum of two percent and the maximum contribution rate specified by
12-27 Subsection (a) and by Section 855.501, if applicable, and that the
13-1 actuary annually may determine as necessary to finance the existing
13-2 levels of benefits before the expiration of 25 years after the most
13-3 recent actuarial valuation date.
13-4 SECTION 19. This Act takes effect January 1, 1994.
13-5 SECTION 20. The importance of this legislation and the
13-6 crowded condition of the calendars in both houses create an
13-7 emergency and an imperative public necessity that the
13-8 constitutional rule requiring bills to be read on three several
13-9 days in each house be suspended, and this rule is hereby suspended.