BILL ANALYSIS
C.S.H.B. 1216
By: Hochberg
April 18, 1995
Committee Report (Substituted)
BACKGROUND
Currently, a person who retires under the Teacher Retirement System
(TRS) and chooses one of two optional retirement annuity plans can
never make a change in beneficiary after the retiree's annuity
payments have begun. Some retirees would like to have the option of
changing the designated beneficiary. Two conditions must be met in
order to make such a change without affecting the actuarial
assumptions on which the benefit was originally calculated. First,
there must be a way to prevent a change of beneficiary motivated by
a decline in the health of the original beneficiary. Second, the
new beneficiary must not be eligible for benefits beyond the
predicted lifespan of the original beneficiary. If TRS allowed a
retiree to change the beneficiary with the understanding that the
annuity payments would not be recomputed to reflect the age and
life expectancy of the new beneficiary, the costs to TRS are
minimized.
PURPOSE
The bill allows a retiree who retired under TRS and selected an
optional retirement annuity plan to change the beneficiary
designated at the time of retirement after annuity payments have
begun.
RULEMAKING AUTHORITY
Rulemaking authority is granted to the Teacher Retirement System in
SECTION 2, Subchapter B, Chapter 824 Government Code, Section
824.1011, Subsection (d).
SECTION BY SECTION ANALYSIS
SECTION 1: Amends Section 824.101(c), Government Code, to allow a
change of beneficiaries as provided under 824.1011.
SECTION 2: Amends Subchapter B, Chapter 824, Government Code, by
adding Section 824.1011:
(a) defines "new beneficiary" and "old beneficiary."
(b) allows for an annuitant to change a beneficiary of an
optional retirement annuity at any time after retirement using the
same age and life expectancy as the original designated
beneficiary.
(c) states that a change of beneficiary does not take effect
until two years after the date that the retiree requests a change
of beneficiary with the retirement system.
(d) states the procedure to be used by the Teacher Retirement
System when recomputing the annuity for a change of beneficiary and
grants rulemaking authority to TRS to provide for the recovery of
the actuarial value of the differences between payments, if any.
(e) states that if a retiree changes beneficiaries under the
provisions of this section and dies before the change in
beneficiary can take effect, the annuity is payable to the old
beneficiary until the effective date of the change. If the
beneficiary designated at the time of retirement dies before the
change in beneficiary takes effect, the change of beneficiary has
no effect.
(f) states that a change of beneficiary is independent of and
subordinate to a qualified domestic relations orders.
SECTION 3: Effective date
SECTION 4: Emergency clause
COMPARISON OF ORIGINAL TO SUBSTITUTE
The substitute adds the definition of "new" and "old" beneficiary.
The substitute adds specifications for the recomputation of the
annuity based on the change in beneficiary and grants rulemaking
authority to TRS to provide for the recovery of the actuarial value
of the differences between payments, if any.
Adds clarifying language stating that the change in beneficiary is
independent and subordinate to a qualified domestic relations
order.
SUMMARY OF COMMITTEE ACTION
HB 1216 was considered by the committee in a public hearing on
April 3, 1995.
Rep. Scott Hochberg testified as the bill's author.
Randy Mercer representing the Teacher Retirement System testified
neutrally on the bill.
The bill was referred to a subcommittee consisting of
Representatives Rangel, Haggerty and Johnson.
After being recalled from subcommittee, the bill was considered by
the committee in a public hearing on April 12, 1995.
The committee considered a complete substitute for the bill. The
substitute was adopted without objection.
The bill was reported favorably as substituted with the
recommendation that it do pass and be printed, by a record vote of
5 ayes, 0 nays, 0 pnv and 4 absent.