BILL ANALYSIS
H.B. 2168
By: Kuempel (Turner)
Intergovernmental Relations
05-10-95
Senate Committee Report (Amended)
BACKGROUND
The Texas Municipal Retirement System is the statewide system which
administers retirement, disability, and death benefits for
employees of Texas cities which voluntarily elect to participate in
the system.
Each of the 657 participating cities is separately funded. Funding
is provided by employee contributions at a rate of compensation
selected by the city, and by employer contributions actuarily
determined as necessary to provide the level of benefits selected.
PURPOSE
As proposed, H.B. 2168 sets forth provisions relating to the
participation and credit in, contributions to, and benefits and
administration of the Texas Municipal Retirement System.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 851.001(6), Government Code, to redefine
"compensation."
SECTION 2. Amends Section 852.004(c), Government Code, to authorize
the board of trustees of the Texas Municipal Retirement System
(board) to allow participation in the fund by those municipal
employees who are in good health on the effective date of
participation and exclude those municipal employees who are not in
good health at that time.
SECTION 3. Amends Section 852.108, Government Code, as follows:
Sec. 852.108. New heading: RESUMPTION OF SERVICE WITH SAME
EMPLOYER BY RETIREE. (a) Provides that a person's
reemploying municipality is the municipality for which the
person was performing creditable service at the time of the
person's retirement under this subtitle, in this section and
Section 852.109.
(b) Provides that a person who has retired with a service
retirement benefit under this subtitle and later becomes an
employee of the person's reemploying municipality also
becomes a member of the Texas Municipal Retirement System
(system) on the date of employment, but credits and benefits
allowable to the person under this subtitle are limited as
provided by this section. Deletes a provision prohibiting
a retiree from being paid a service retirement benefit in
which the retiree is regularly employed by any participating
municipality.
(c) Requires the system to discontinue and suspend payments
of each service retirement annuity that is allowed because
of the person's previous service with the reemploying
municipality beginning with the month the system determines
that the person has again become an employee of the
reemploying municipality. Prohibits the system from making
payments of the annuity for any month during which the
person remains an employee of the reemploying municipality,
after the suspension. Provides that the suspension of a
benefit under this section does not suspend payment of a
benefit to an alternate payee under a qualified domestic
relations order. Deletes a provision stating that a retiree
is not considered regularly employed by a participating
municipality if the retiree is employed for 700 hours or
less during any calendar year.
(d) Requires member contributions to be made on all
compensation paid to the employee by the reemploying
municipality at the same rate as is required of other
employees of the recognized division performing a
governmental or propriety function of a municipality
(department). Requires the system to deposit the
contributions on receipt in an individual account for the
member in the employees saving fund and to credit the
account with interest annually at the same rate and manner
as the accounts of other members are credited. Requires the
compensation paid to the employee by the reemploying
municipality to be included in computing the monthly
contributions the municipality makes to the municipality
accumulation fund. Redesignates existing Subsection (c).
(e) Provides that a person described by Subsection (b) is
entitled to receive future payments of the suspended
annuity, as provided by Subsection (f), and to the
additional benefits as provided by Subsections (g), (h), and
(i), after termination of employment with the reemploying
municipality and after filing of an application for
resumption of retirement with the board of trustees.
Redesignates existing Subsection (d).
(f) Requires monthly payments of a suspended annuity to be
resumed in the month following the month in which employment
is terminated with the reemploying municipality, without
change in the amount, with an exception. Prohibits payment
of the resumed benefit from being made for any month during
which the payment was suspended under this section.
(g) Authorizes a person's beneficiary or the executor or
administrator of a person's estate to elect payment as
provided by Section 854.105(c), if a person with credited
service under this section dies before a payment under
Subsection (i) is made.
(h) Provides that the additional service retirement benefit
allowable to a person to whom this section applies is, at
the option of that person, either a refund of accumulated
contributions made since reemployment plus interest, or a
benefit consisting of a basic annuity or a greater amount
authorized by the municipality under Section 855.501.
(i) Provides that the additional benefit described by
Subsection (h) is payable as a standard service retirement
benefit or, at the election of the member, any optional
benefit authorized under this subtitle that is the actuarial
equivalent of the standard retirement benefit. Sets forth
the first benefit payment date. Prohibits the first payment
from being made if the person has resumed employment with
the reemploying municipality in a position that would make
the person an employee.
SECTION 4. Amends Chapter 852B, Government Code, by adding Section
852.109, as follows:
Sec. 852.109. RESUMPTION OF SERVICE WITH DIFFERENT EMPLOYER
BY RETIREE. (a) Provides that a person again becomes a
member of the system and the person's retirement annuity is
not suspended, if a person becomes an employee of a
municipality after beginning to receive a retirement benefit,
and the municipality is not the person's reemploying
municipality.
(b) Requires member contributions under Section 855.402 to
be made on all compensation paid to the employee by the
municipality at the same rate as is required of other
employees of the department. Requires the system to deposit
the contributions on receipt in an individual account for
the member in the employees saving fund and to credit the
account with interest at the same rate and in the same
manner as the accounts of other members are credited.
Requires the compensation paid to the employee by the
municipality to be included in computing the monthly
contributions the municipality makes to the municipality
accumulation fund.
(c) Authorizes the executor or administrator of a person's
estate to select payment as provided by Section 854.105(c),
if a person with credited service under this section dies
before a payment under Subsection (e) is made.
(d) Provides that the additional service retirement benefit
allowable to a person to whom this section applies is, at
the option of that person, either a refund of accumulated
contributions plus accrued interest or a benefit consisting
of a basic annuity determined in a prescribed manner or a
greater amount authorized by the municipality under Section
855.501.
(e) Provides that the additional benefit described by
Subsection (d) is payable as a standard service retirement
benefit or, at the election of the member, any optional
benefit authorized under this subtitle that is the actuarial
equivalent of the standard retirement benefit. Sets forth
the first benefit payment date under this subsection.
Prohibits the first payment from being made if the person
has resumed employment that would result in suspension of a
benefit.
(f) Authorizes a person, on written application to the
system, to resume receiving a suspended annuity, if the
person became an employee of a municipality other than the
person's reemploying municipality after beginning to receive
a retirement benefit, and the person's service retirement
annuity was suspended under Section 852.108 as it existed at
the time of reemployment.
SECTION 5. Amends the heading to Section 853.305, Government Code,
as follows:
Sec. 853.305. CREDIT FOR SERVICE WITH NONPARTICIPATING
MUNICIPALITY, AIRPORT AUTHORITY, OR COUNCIL OF GOVERNMENTS, OR
CERTAIN SERVICE PREVIOUSLY CANCELED.
SECTION 6. Amends Sections 853.305(a), (c), and (e), Government
Code, as follows:
(a) Authorizes the governing body of a participating
municipality by ordinance to authorize the granting of
restricted prior service credit to an employee who is a member
of the system for service previously performed as an employee
of an airport board or authority governing an airport for two
cities having a combined population greater than 1,000,000, or
as an employee of the state or any branch, agency, or
subdivision of the state for which the person received
credited service under certain systems, and the credit for
which was canceled because of withdrawal of contributions and
has not been reinstated.
(c) Requires a member seeking to establish restricted prior
service credit under Subsection (a)(1) to obtain from the
clerk or secretary of the city or town, or from the similar
official of a council of governments or airport board or
authority, a detailed verified statement of service. Requires
a member seeking to establish restricted prior service credit
under Subsection (a)(2) to obtain from the public system in
which the canceled service was credited a detailed statement
of the service, verified by an official of that system, and
file that statement with the clerk or secretary of the
participating municipality by which the member is employed.
(e) Requires the system to enter credit in a member's records
on receipt of a certified copy of an approved claim, if
satisfied that credit for service claimed under Subsection
(a)(1) has not been previously granted the member, or that the
credit claimed under Subsection (a)(2) previously existed but
has been canceled and not reinstated.
SECTION 7. Amends Section 853.404(d), Government Code, to provide
that an ordinance under this section will cease to be in effect for
future years if the actuary cannot make that determination, but
shall again take effect for future years beginning January 1 of the
first year after the actuary can make that determination.
SECTION 8. Amends Section 854.003, Government Code, by amending
Subsections (a), (c), and (d), and adding Subsections (e), (f), and
(g), as follows:
(a) and (c) Make conforming changes.
(d) Requires the system to attempt to send to a person, who
has attained age 70-1/2 and who terminates or has terminated
covered employment without applying for retirement or a refund
of accumulated contributions, a written notice described by
Subsection (e) as soon as is practical after the last to occur
of certain dates. Deletes existing subsection.
(e) Requires the written notice to advise the person that the
person is required to retire. Provides that the person is
considered to have retired on the last day of the month
following the last to occur of the three dates listed in
Subsection (d) if the person has not filed an application for
refund or retirement with the board of trustees before the
91st day after the date the system sends the notice.
(f) Requires the person to be considered to have taken
certain actions if a person is considered by the system to
have retired as a result of Subsection (e).
(g) Requires the system to attempt to send to a person, who
has less than 10 years of creditable service and who has
attained age 70-1/2 and has terminated covered employment
without applying for a refund of accumulated contributions and
is not eligible to retire without additional service or age,
written notice in accordance with this subsection as soon as
is practical after the person has been absent from covered
employment for five consecutive years. Requires the written
notice to advise the person that the person is required to
receive a refund of accumulated contributions in order to
avoid a tax penalty according to the Internal Revenue Code of
1986. Makes a conforming change.
SECTION 9. Amends Section 854.004, Government Code, as follows:
Sec. 854.004. New heading: WHEN ANNUITY IS PAYABLE; CHANGES
BEFORE FIRST PAYMENT. (a) Authorizes a retiree to change the
retiree's choice of retirement annuity payment plans or the
designation of beneficiary after the retiree's effective date
of retirement by filing written notice with the board of
trustees before the later of the date on which the system
makes the first payment or the date the first annuity payment
becomes due. Prohibits a retiree from changing the annuity
payment plan selected and from changing the designated
beneficiary except under Section 854.006, after the first
payment has been made by the system or has become due.
(b) Defines "makes payment."
(c) Makes no changes.
SECTION 10. Amends Section 854.005(a), Government Code, to
authorize an annuitant by written request to authorize the system
to cease the annuitant's monthly payment or reduce the annuitant's
monthly payment to an amount specified in the request. Authorizes
the annuitant to subsequently request the system to reinitiate or
increase the annuitant's monthly payment at or to any specified
amount that does not exceed the amount originally payable.
SECTION 11. Amends Section 854.007(a)(1), Government Code, to
redefine "annual benefit."
SECTION 12. Amends Section 854.007(d), Government Code, to
prohibit an annual benefit payable by the system from exceeding, in
addition to other amounts, the lesser of 100 percent of the former
member's highest average annual compensation, including annual
cost-of-living increases after separation from service, with
exception. Makes a conforming change.
SECTION 13. Amends Section 854.007, Government Code, by adding
Subsections (l) and (m), as follows:
(l) Authorizes the annual benefit payable by the system that
is otherwise limited by Subsection (d) to be increased each
year in accordance with cost-of-living adjustments by the
secretary of the treasury of the dollar limitation or the
compensation limitation, as long as the benefit does not
exceed the amount that would be payable without the limitation
of Section 415 of the Internal Revenue Code of 1986.
(m) Prohibits the limitations provided by this section from
being applied to reduce the benefit of any person whose
retirement benefits payable under this and all other defined
benefit plans of the member's employer do not exceed $10,000,
plus the benefit provided under Subsection (h), for the plan
year or for any previous plan year and who has not at any time
participated in a defined contribution plan maintained by the
person's employer.
SECTION 14. Amends Chapter 854B, Government Code, by adding
Section 854.106, as follows:
Sec. 854.106. NO SURVIVING SPOUSE, EXECUTOR, OR
ADMINISTRATOR. (a) Authorizes the heirs of a deceased member
to make an election if no surviving spouse exists, no petition
for the appointment of a personal representative of the member
is pending or has been granted, 30 days have elapsed since the
death of the member, the value of the entire assets of the
member's estate does not exceed $50,000, there are not more
than three heirs, and on file with the system is a certified
copy of a small estates affidavit that has been approved and
filed in accordance with Section 137, Texas Probate Code, or
an original affidavit as described by Subsection (b).
(b) Authorizes the system to accept instead an affidavit
sworn to by two disinterested witnesses, by the heirs who
have legal capacity, and, if the facts warrant, by the
natural guardian or next of kin of any minor or incompetent
who is also an heir, if no affidavit has been filed with the
clerk of the court having jurisdiction and venue as provided
by Section 137 of the Texas Probate Code. Requires the
affidavit to include the names and addresses of the heirs
and witnesses, establish the facts listed in Subsection (a),
include a list of the assets and liabilities of the estate,
show the facts that constitute the basis for the right of
the heirs to receive the estate, and show the fractional
interests of the heirs in the estate as a result of those
facts.
(c) Provides that the heirs can make an election if each
heir agrees to the election, if the system, acting through
the director or a person designated by the director,
approves the affidavit.
(d) Defines "heirs."
SECTION 15. Amends Chapter 854F, Government Code, by adding
Section 854.503, as follows:
Sec. 854.503. TRUST AS BENEFICIARY. (a) Authorizes a member
or retiree to designate a trust as beneficiary for the payment
of benefits from the system, except as provided by Subsection
(b). Provides that the beneficiary of the trust is considered
the designated beneficiary for the purpose of determining
eligibility for and the amount and duration of benefits, if a
trust is designated beneficiary. Provides that the trustee is
entitled to exercise any rights to elect benefit options and
name subsequent beneficiaries.
(b) Prohibits a trust having more than one beneficiary from
receiving benefits to which multiple designated
beneficiaries are not eligible under this chapter.
SECTION 16. Amends Chapter 854F, Government Code, by adding
Section 854.504, as follows:
Sec. 854.504. PERSON CAUSING DEATH OF MEMBER OR ANNUITANT.
(a) Prohibits a benefit payable on the death of a member or
annuitant to be paid to a person convicted of causing that
death but instead is payable to a person who would be entitled
to the benefit had the convicted person predeceased the
decedent. Provides that the benefit is payable to the
decedent's estate if no person would be entitled to the
benefit.
(b) Provides that the system is not required to pay a
benefit under Subsection (a) of this section unless it
receives actual notice of the conviction of the person who
would have been entitled to the benefits. Authorizes the
system to delay payment of a benefit payable on the death of
a member or annuitant pending the results of a criminal
investigation and of legal proceedings relating to the cause
of death.
(c) Requires the system to convert the remainder of any
annuity that would otherwise have been payable throughout
the life of the convicted person to an actuarily equivalent
annuity payable to the decedent's estate in 60 monthly
annuity payments. Provides that the time of the actuarial
equivalence is the earlier of the time the system receives
the notice of the conviction under Subsection (b) or the
time the system begins the delay in payment of a benefit
according to Subsection (b).
(d) Provides that a person has been convicted of causing
the death of a member or annuitant if the person has pleaded
guilty or nolo contendere to or has been guilty by a court
and has no appeal of the conviction pending and the time
provided for appeal has expired.
SECTION 17. Amends Chapter 854F, Government Code, by adding
Section 854.505, as follows:
Sec. 854.505. SIMULTANEOUS DEATH OF MEMBER AND BENEFICIARY.
Provides that a member or retiree is considered to have
survived the spouse or beneficiary for the purpose of
determining the rights to amounts payable under this subtitle
on the death of the member or retiree.
SECTION 18. Amends Section 854.602, Government Code, by adding
Subsection (f), to provide that the member will be considered to
have had the extended coverage if proof is furnished that the
member could have qualified for extended coverage if application
for the coverage had been made according to Subsections (b) and (c)
and that the death occurred within six months after the date the
coverage of the supplemental death benefit program was discontinued
under Section 854.601, if a member included in the coverage of the
supplemental death benefit program becomes eligible to apply for
the extended coverage but fails to comply with Subsections (b) and
(c) before the member's death.
SECTION 19. Amends Section 855.301, Government Code, as follows:
Sec. 855.301. INVESTMENT OF ASSETS. (a) Created from
existing text.
(b) Authorizes the assets of the system to be held in the
name of agents, nominees, depository trust companies, or
other entities designated by the board of trustees.
Requires the records and all relevant reports or accounts of
the system to show the ownership interests of the system in
these assets and the facts regarding the system's holdings.
SECTION 20. Amends Section 855.501, Government Code, by adding
Subsections (i) and (j), as follows:
(i) Sets forth certain rates at which a participating
municipality electing to provide an increased service annuity
reserve and electing a contribution rate of 150 percent for a
year, by ordinance, may agree to be liable for total
contributions.
(j) Sets forth certain rates at which a participating
municipality electing to provide an increased service annuity
reserve and electing a contribution rate of 200 percent for a
year, by ordinance, may agree to be liable for total
contributions.
SECTION 21. Amends Section 854.102, Government Code, by adding
Subsection (g), to provide that a member is eligible to retire and
receive a service retirement annuity if the member has at least 20
years of credited service in the retirement system performed for
one or more municipalities that have adopted a like provision under
Section 854.202(g).
SECTION 22. Amends Section 854.202, Government Code, by adding
Subsections (g), (h), and (i), as follows:
(g) Authorizes the governing body to authorize a member to
retire and receive a service retirement benefit if the member
has at least 20 years of credited service performed for one or
more municipalities that have authorized eligibility under
this subsection.
(h) Requires the governing body to prepare an actuarial
analysis of member retirement annuities at 20 years of service
and hold a public hearing, before a governing body may elect
to authorize a member to retire pursuant to Subsection (g).
(i) Requires the public hearing required under Subsection (h)
to be held pursuant to the notice provisions of Chapter 551,
Government Code (Open Meetings Act).
SECTION 23. Effective date: September 1, 1995.
SECTION 24. Emergency clause.