By Greenberg, Naishtat, Maxey, Combs, Dukes H.B. No. 2943
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to public retirement systems for employees of certain
1-3 municipalities.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 451, Acts of the 72nd Legislature,
1-6 Regular Session, 1991 (Article 6243n, Vernon's Texas Civil
1-7 Statutes), is amended to read as follows:
1-8 Sec. 1. Scope. A retirement system is established by this
1-9 Act for employees of each municipality having a population of more
1-10 than 460,000 and less than 500,000, according to the most recent
1-11 federal census; provided, however, that once such pension system
1-12 becomes operative in any city, any right or privilege accruing to
1-13 any member thereunder shall be a vested right according to the
1-14 terms of this Act and the same shall not be denied or abridged
1-15 thereafter through any change in population of any such city taking
1-16 such city out of the population bracket as herein prescribed, and
1-17 said pension system shall continue to operate and function
1-18 regardless of whether or not any future population exceeds or falls
1-19 below said population bracket.
1-20 Sec. 2. Definitions. The following words and phrases have
1-21 the meanings assigned by this section unless a different meaning is
1-22 plainly required by the context:
1-23 (1) "Accumulated deposits" means the amount standing
2-1 to the credit of a member derived from the deposits required to be
2-2 made by the member to the retirement system improved annually by
2-3 interest credited at a rate determined by the retirement board from
2-4 time to time upon the advice of the retirement board's actuary and
2-5 <board which is> credited as of December 31 to amounts standing to
2-6 the credit of the member on January 1 of the same calendar year.
2-7 (2) "Actual retirement date" means the last day of the
2-8 month during which a member retires.
2-9 (3) "Actuarial equivalent" means any benefit of equal
2-10 present value when computed on the basis of actuarial tables
2-11 adopted by the retirement board from time to time upon the advice
2-12 of the retirement board's actuary. The actuarial tables adopted
2-13 for this purpose shall be clearly identified by resolution adopted
2-14 by the retirement board <board in the proper administration of the
2-15 retirement system>.
2-16 (4) "Actuary" means the technical advisor of the
2-17 retirement board regarding the operations which are based on
2-18 mortality, service, and compensation experience.
2-19 (5) "Agency of the municipality" means any agency or
2-20 instrumentality of the city, or governmental or publicly owned
2-21 legal entity created by the municipality, subsequent to the
2-22 effective date of this Act, to perform or provide a public service
2-23 or function and which entity is not a hospital authority and
2-24 employs one or more employees to provide services and/or accomplish
2-25 its public purpose.
3-1 (6) "Approved medical leave of absence" means any
3-2 absence authorized in writing by the member's employer for the
3-3 purpose of enabling the member to obtain medical care or treatment
3-4 or to recover from any sickness or injury.
3-5 (7) <(5)> "Authorized leave of absence" means military
3-6 leave of absence, including a period of not more than 90 days <the
3-7 90th day> after the date of release from active military duty, or
3-8 any other leave of absence during which a member is otherwise
3-9 authorized by law to continue making contributions to the system.
3-10 The term does not include an approved medical leave of absence.
3-11 (8) <(6)> "Average final compensation" means the
3-12 average monthly compensation, as defined and limited by Subdivision
3-13 (12) of this section, less <pay, or salary, exclusive of> overtime,
3-14 incentive, and terminal pay, plus, (i) amounts picked up by the
3-15 employer pursuant to Section 10(e) of this Act, and (ii) amounts
3-16 not otherwise included in the member's taxable income by reason of
3-17 either an election under a "cafeteria" plan as described in Section
3-18 125 of the code or deferrals under a plan of deferred compensation
3-19 within the scope of Section 457 of the code, to the extent not in
3-20 excess of $12,500 for persons who first become members after 1995
3-21 <that is $16,666 or less and> that is earned by a member during, as
3-22 applicable:
3-23 (A) if the member has 120 months or more of
3-24 membership service, the 36 months of membership service which
3-25 yielded the highest average during the last 120 months of
4-1 membership service;
4-2 (B) if the member has less than 120 months of
4-3 membership service, but has at least 36 months of membership
4-4 service, then the average during the 36 months which yield the
4-5 highest average; or
4-6 (C) if the member does not have 36 months of
4-7 membership service, then the average during the member's months of
4-8 membership service.
4-9 (9) <(7)> "Beneficiary" means the member's designated
4-10 beneficiary <any person, trust, or estate properly designated by a
4-11 member to receive benefits from the system>. If there is no
4-12 effective beneficiary designation on the date of the member's
4-13 death, or if the designated beneficiary predeceases the member (or
4-14 dies in or as a result of the same event that caused the member's
4-15 death and does not survive the member by 48 hours), <the member's
4-16 beneficiary is> the member's spouse or, if the member does not have
4-17 a spouse, the member's estate shall be the beneficiary.
4-18 (10) "Board" means the boards of directors of an
4-19 employer that is not a municipality as described in Section 1 of
4-20 this Act.
4-21 (11) "Code" means the United States Internal Revenue
4-22 Code of 1986 (26 U.S.C. Section 1 et seq.) and its successors.
4-23 (12) "Compensation" means, with respect to any member,
4-24 such member's wages, within the meaning of Section 3401(a) of the
4-25 code (for purposes of income tax withholding at the source) but
5-1 determined without regard to any rules that limit the remuneration
5-2 included in wages based on the nature or location of the employment
5-3 or the services performed (such as the exception for agricultural
5-4 labor in Section 3401(a)(2) of the code). Compensation in excess
5-5 of $12,500 per month for any employee who first becomes a member in
5-6 a year commencing after 1995 shall be disregarded. The $12,500
5-7 limitation shall be adjusted for cost of living increases as
5-8 provided under Section 401(a)(17) of the code. In applying the
5-9 limitations, the family group of a highly compensated employee who
5-10 is one of the 10 employees of the employer paid the highest
5-11 compensation during the year shall be treated as a single
5-12 employee, except that, for this purpose, family members shall
5-13 include only the affected highly compensated employee's spouse and
5-14 lineal descendants who have not attained age 19 before the close of
5-15 the year. If, as a result of the application of such rules, the
5-16 adjusted $12,500 limitation is exceeded, the limitation shall be
5-17 prorated among the affected family members' compensation prior to
5-18 the application of the limitation or the limitation shall be
5-19 adjusted in accordance with any other method permitted by Internal
5-20 Revenue Service guidelines.
5-21 (13) "Consumer price index" means the Consumer Price
5-22 Index for Urban Wage Earners and Clerical Workers (United States
5-23 City Average, All Items) published monthly by the Bureau of Labor
5-24 Statistics, United States Department of Labor, or its successor in
5-25 function.
6-1 (14) <(8)> "Creditable service" means the total of
6-2 prior service and membership service.
6-3 (15) <(9)> "Current service annuity" means a series of
6-4 equal monthly payments payable for the member's life after
6-5 retirement for membership service from funds of the retirement
6-6 system equal to one-twelfth of the product of 2.3 <2.2> percent of
6-7 a member's average final compensation multiplied by the number of
6-8 months of membership service. However, if payments commence before
6-9 the member's normal retirement date, the amount of the monthly
6-10 payments to which the member would otherwise be entitled shall be
6-11 reduced as provided by Section 7(e) of this Act.
6-12 (16) <(10)> "Deposits" means the amounts required to
6-13 be paid by members in accordance with the provisions of this Act.
6-14 (17) "Designated beneficiary" means any person, trust,
6-15 or estate properly designated in writing by a member to receive
6-16 benefits from the system in the event of the member's death. If
6-17 the member is married, an individual other than the member's spouse
6-18 may be the designated beneficiary only if the spouse consents to
6-19 such designation in the form and manner prescribed by the
6-20 retirement board.
6-21 (18) <(11)> "Disability retirement" means the
6-22 termination of employment of a member because of disability with a
6-23 disability retirement allowance as provided in Section 8 of this
6-24 Act.
6-25 (19) "Employer" means the city or municipality
7-1 described in Section 1 of this Act, a hospital authority as defined
7-2 in Subdivision (24) of this section or the retirement board defined
7-3 in Subdivision (42) of this section, or an agency of the
7-4 municipality as defined in Subdivision (5) of this section.
7-5 (20) <(12)> "Fund" means the trust fund containing the
7-6 aggregate of the assets of Fund No. 1 and Fund No. 2.
7-7 (21) <(13)> "Fund No. 1" means the fund in which shall
7-8 be kept all accumulated deposits of members who have not withdrawn
7-9 from the system.
7-10 (22) <(14)> "Fund No. 2" means the fund in which shall
7-11 be kept all money contributed by the city on behalf of city
7-12 employees, all money contributed by a hospital authority on behalf
7-13 of hospital authority employees, and all money contributed by the
7-14 retirement board on behalf of retirement board employees, interest
7-15 earned thereon, and all accumulations and earnings of the system.
7-16 (23) "Governing body" means the city council of the
7-17 municipality described in Section 1 and its successors as
7-18 constituted from time to time.
7-19 (24) <(15)> "Hospital authority" means a municipal
7-20 hospital authority created after September 1, 1992, under Chapter
7-21 262, Health and Safety Code, and its subsequent amendments, by a
7-22 city governed by this Act.
7-23 (25) <(16)> "Investment consultant" means the person
7-24 or entity that monitors the investment performance of the system
7-25 and provides such other services as requested by the retirement
8-1 board.
8-2 (26) <(17)> "Investment manager" means the persons
8-3 <person> or entities <entity> that have <has> the power to manage,
8-4 acquire, or dispose of assets of Fund No. 1 or Fund No. 2 on behalf
8-5 of the retirement system and that acknowledge <acknowledges>
8-6 fiduciary responsibility to the system in writing. An <The>
8-7 investment manager must be a person, firm, or corporation
8-8 registered as an investment adviser under the Investment Advisers
8-9 Act of 1940, a bank, or an insurance company qualified to manage,
8-10 acquire or dispose of assets under the laws of more than one state
8-11 including the State of Texas and must otherwise meet the
8-12 requirements of Section 802.204, Government Code, and its
8-13 subsequent amendments.
8-14 (27) <(18)> "Life annuity" means a series of equal
8-15 monthly payments, payable after retirement for a member's life,
8-16 consisting of a combination of prior service pension and current
8-17 service annuity to which the member is entitled.
8-18 (28) <(19)> "Life annuity (modified cash refund)"
8-19 means a life annuity providing that, in the event of death of the
8-20 retired member before that member has received payments under the
8-21 life annuity totaling <totalling> the amount of that member's
8-22 accumulated deposits at the date of retirement, the excess of such
8-23 accumulated deposits over the payments made shall be paid in one
8-24 lump sum to the member's designated beneficiary.
8-25 (29) "Malfeasance" means (A) willful misconduct or (B)
9-1 the knowingly improper performance of any act, duty or
9-2 responsibility under this Act, including non-performance; which
9-3 interrupts or interferes with the administration, operation and
9-4 management of the retirement system or any person's duties under
9-5 this Act.
9-6 (30) <(20)> "Member" means any:
9-7 (A) regular full-time employee of an employer
9-8 <who has completed six continuous months of employment with the
9-9 city, a hospital authority, or the board and who has been removed
9-10 from the employee's initial probationary status>; and
9-11 (B) former regular full-time employee who has
9-12 not withdrawn the member's accumulated deposits from the system.
9-13 In any case of doubt regarding the eligibility of any
9-14 employee to become or remain a member of the retirement system, the
9-15 decision of the retirement board is final.
9-16 (31) <(21)> "Membership service" means the period of
9-17 time on or after January 1, 1941, during which a person is or was
9-18 employed as a regular full-time employee or is or was on an
9-19 authorized leave of absence and who is eligible for participation
9-20 in the system and pays into and keeps on deposit the amounts of
9-21 money prescribed to be paid by the member into the system. The
9-22 term includes redeemed membership service.
9-23 (32) <(22)> "Normal retirement age" means attainment
9-24 of age 62.
9-25 (33) <(23)> "Normal retirement date" means the earlier
10-1 of the date on which the member has completed 25 years of
10-2 creditable service or has reached normal retirement age <the age of
10-3 62>.
10-4 (34) <(24)> "Prior service" means service as an
10-5 employee of the city rendered prior to January 1, 1941, for which a
10-6 pension credit is allowable under prior law governing the
10-7 retirement system of that city and includes redeemed prior service.
10-8 (35) <(25)> "Prior service pension" means a series of
10-9 equal monthly payments payable from funds of the retirement system
10-10 for a member's life after retirement for prior service equal to
10-11 one-twelfth of the product of 2.3 <2.2> percent of the member's
10-12 average monthly earnings during a period of five years preceding
10-13 January 1, 1941, multiplied by the number of months of prior
10-14 service. On retirement at an age other than normal retirement
10-15 age, the monthly prior service pension herein prescribed shall be
10-16 the actuarial equivalent thereof at the member's actual retirement
10-17 date, based on the schedule or schedules of payments approved by
10-18 the actuary and adopted by the retirement board and in effect on
10-19 the member's actual retirement date.
10-20 (36) <(26)> "Qualified domestic relations order" has
10-21 the meaning assigned by Section 804.001, Government Code, and its
10-22 subsequent amendments.
10-23 (37) <(27)> "Redeemed membership service" means
10-24 membership service reinstated in accordance with Section 5(e) of
10-25 this Act.
11-1 (38) <(28)> "Redeemed prior service" means prior
11-2 service reinstated in accordance with Section 5(e) of this Act.
11-3 (39) <(29)> "Regular full-time employee" means an
11-4 individual who is employed by the city, a hospital authority, or
11-5 the board;<,> who is not a commissioned civil service police
11-6 officer or fire fighter, the mayor, or a member of the governing
11-7 body; who <city council, whose position> is classified in the
11-8 annual <city, board, or hospital authority> budget of an employer
11-9 for employment for the full calendar year;<, whose position is
11-10 classified in the annual city, board, or hospital authority budget
11-11 to continue from year to year,> and who works 30 hours or more in a
11-12 normal 40-hour work week. The term does not include an individual
11-13 whose position is classified as seasonal or temporary by the
11-14 employer <city, a hospital authority, or the board>, even if the
11-15 individual works 30 hours or more in a normal 40-hour work week in
11-16 which the individual is employed.
11-17 (40) <(30)> "Retirement" means the termination of
11-18 employment of a member after the member becomes entitled to receive
11-19 a retirement allowance in accordance with the provisions of this
11-20 Act.
11-21 (41) <(31)> "Retirement allowance" means the life
11-22 annuity (modified cash refund) to which a member may be entitled
11-23 under this Act, including annuities payable on disability
11-24 retirement or on early retirement.
11-25 (42) <(32)> "Retirement board" <or "board"> means the
12-1 board of trustees of the retirement and pensioning system herein
12-2 created for the purpose of administering the retirement system.
12-3 (43) <(33)> "Retirement system," "retirement and
12-4 pensioning system," "pension system," or "system" means the
12-5 retirement and pensioning system created by this Act for a city
12-6 governed by this Act.
12-7 (44) <(34)> "Year of creditable service" means a
12-8 12-month period of creditable service determined in accordance with
12-9 uniform and nondiscriminatory rules established by the retirement
12-10 board.
12-11 Sec. 3. Establishment and applicability. (a) Except as
12-12 provided by Subsection (b) of this section and subject to the
12-13 authority granted the retirement board in Section 7(d)<(2)(D)> of
12-14 this Act, members who retired prior to September 1, 1993, shall
12-15 continue to receive the same retirement allowances they were
12-16 receiving prior to that date, together with any cost of living
12-17 adjustments authorized and paid in accordance with this Act.
12-18 (b) Members who retired during the calendar years 1962 and
12-19 1963 shall continue to receive a benefit in accordance with their
12-20 election, if any, and the retirement allowances computed in the
12-21 manner prescribed by an applicable city ordinance in effect as of
12-22 January 1, 1962, or in the manner in which said allowances would
12-23 have been computed under applicable city ordinances existing
12-24 immediately prior to the enactments of January 1, 1962, together
12-25 with any cost of living adjustments authorized and paid in
13-1 accordance with this Act.
13-2 Sec. 4. Administration. (a) There is hereby created a
13-3 retirement board of the retirement and pensioning system, in which
13-4 retirement board is hereby vested the power and responsibility for
13-5 the proper and effective general administration, management, and
13-6 operation of the retirement system. The retirement board shall be
13-7 organized immediately after its members have qualified and taken
13-8 the oath of office.
13-9 (b) The retirement board shall be composed of 11 members as
13-10 follows:
13-11 (1) place one: one <city council> member of the
13-12 governing body, designated by the governing body <city council>,
13-13 who may be removed and replaced or redesignated by the governing
13-14 body <city council> at any time;
13-15 (2) place two: the city manager of the city or his or
13-16 her designee;
13-17 (3) <place three: the director of finance of the city
13-18 or his or her designee;>
13-19 <(4)> places three <four> through five <six>: three
13-20 qualified voters of the city who have been city residents for the
13-21 preceding five years and who are not <city> employees, former
13-22 employees, or officers of an employer;
13-23 (4) <(5)> places six <seven> through nine <10>: four
13-24 active-contributory members elected by the active-contributory
13-25 members; and
14-1 (5) places ten and eleven: two retired members <(6)
14-2 place 11: a retired member who will be> elected by the retired
14-3 members.
14-4 (c)(1) The place one retirement board member serves at the
14-5 pleasure of the governing body <city council> and until the
14-6 governing body <council> redesignates the place one member, or
14-7 until the member is no longer able to serve because of death,
14-8 resignation, termination of position as a <city council> member of
14-9 the governing body, or disability. The governing body <city
14-10 council> shall appoint a person to fill a vacancy in place one not
14-11 later than the 90th day after the first date of the vacancy.
14-12 (2) In December of every second even-numbered year,
14-13 the governing body <city council> shall appoint, to place three,
14-14 <four> one person meeting the qualifications for place three
14-15 <four>. In December of every second odd-numbered year, the
14-16 governing body <city council> shall appoint, to place four, <five>
14-17 one person meeting the qualifications for place four <five>. In
14-18 December of every second odd-numbered year, the retirement board
14-19 shall appoint, to place five, <six> one person meeting the
14-20 qualifications for place five. Retirement board <six. Board>
14-21 members holding places three <four> through five <six> each serve a
14-22 four-year term beginning on January 1 of the year after their
14-23 appointment, unless service is earlier terminated by the death,
14-24 disability, resignation, or removal of that retirement board member
14-25 or the retirement board member ceases to meet the qualifications of
15-1 a citizen retirement board member as set forth in Section 4(b) of
15-2 this Act. The governing body <city council> shall fill a vacancy
15-3 in place three or four <or five> with a person meeting the
15-4 qualifications for that place not later than the 90th day after the
15-5 first date of the vacancy. If the governing body <city council>
15-6 fails to appoint an eligible person to fill a vacancy in place
15-7 three <four> or five within the 90-day period, the retirement board
15-8 may appoint a person meeting the qualifications for that place to
15-9 fill the vacancy for the remainder of the unexpired term. The
15-10 retirement board shall appoint a person meeting the qualifications
15-11 for place five <six> to fill a vacancy in place five for the
15-12 remainder of the unexpired term <six>.
15-13 (3) The places six <seven> through nine retirement
15-14 <10> board members each serve on the retirement board for a
15-15 four-year term, unless service is earlier terminated by the death,
15-16 resignation, termination of employment, disability, retirement, or
15-17 removal of the retirement <that> board member. The retirement
15-18 board shall appoint an active-contributory member to fill a vacancy
15-19 in each of places six <seven> through nine <10> for the remainder
15-20 of the unexpired term.
15-21 (4) The places ten and eleven retirement board members
15-22 serve <place 11 board member serves> for a four-year term, unless
15-23 that service is earlier terminated by the death, disability,
15-24 resignation, or removal of the member. The retirement board shall
15-25 appoint a retired member to fill a vacancy in place ten or eleven
16-1 <place 11> for the remainder of the unexpired term.
16-2 (d) Members for places six <seven> through eleven <11>
16-3 shall be elected in accordance with the following provisions:
16-4 (1) Only active-contributory members shall be eligible
16-5 for election for places six <seven> through nine <10>. Only
16-6 retired members shall be eligible for election for places ten and
16-7 eleven <place 11>. Not more than one active-contributory member
16-8 shall be eligible for election from any one city department.
16-9 (2) Members for places six <seven> through nine <10>
16-10 shall be elected to four-year staggered terms with the terms of two
16-11 of such retirement board members beginning January 1 of each
16-12 even-numbered year.
16-13 (3) Members for places ten and eleven shall be elected
16-14 to four-year staggered terms. One such retirement board member
16-15 shall be elected at an election held in every other even-numbered
16-16 year with the term of such retirement board member <The board
16-17 member for place 11 shall be elected in an even-numbered year, with
16-18 the term> beginning on January 1 of the following <next>
16-19 odd-numbered year. The first election for place ten shall be held
16-20 in 1996 and the term of the retired member elected at that election
16-21 shall begin on January 1, 1997. The retirement board shall appoint
16-22 a retired member, to place ten, to serve until January 1, 1997.
16-23 The term of the retired member serving in place eleven shall expire
16-24 on December 31, 1998.
16-25 (4)(A) No later than the first day of October of each
17-1 odd-numbered year, the retirement board shall appoint a nominating
17-2 and election committee consisting of five committee members and two
17-3 alternates, all of whom are active-contributory members of the
17-4 retirement system. The nominating and election committee shall
17-5 make one or more nominations for each active-contributory member
17-6 vacancy and shall act as election judges. The nominating and
17-7 election committee shall determine and certify that each such
17-8 nominee and each candidate announcing for election is an
17-9 active-contributory member and prepare the ballot containing the
17-10 names of all certified active-contributory member candidates.
17-11 (B) No later than the first day of October of
17-12 every second even-numbered year, the retirement board shall appoint
17-13 a nominating and election committee consisting of five committee
17-14 members and five alternates, all of whom are retired members of the
17-15 retirement system. The nominating and election committee shall
17-16 make one or more nominations for the retired member vacancy and
17-17 shall act as election judges. The nominating and election
17-18 committee shall determine and certify that each such nominee and
17-19 each candidate announcing for election is a retired member and
17-20 prepare the ballot containing the names of all certified retired
17-21 member candidates.
17-22 (5) Each nominating and election committee shall
17-23 publish a notice at least two weeks prior to the applicable
17-24 election date, informing all active-contributory members or retired
17-25 members, as applicable, of the names of the persons who have been
18-1 certified as candidates.
18-2 (6) Elections for places seven through 10 shall be
18-3 held on the first payday in December of each odd-numbered year.
18-4 Elections for place 11 shall be held in December of every second
18-5 even-numbered year. The candidates receiving the highest number of
18-6 eligible votes shall be deemed elected. In case of a tie vote,
18-7 selection shall be by lot drawn by an existing member of the
18-8 retirement board at a meeting of the retirement board held after
18-9 the election but before the first day of January of the year after
18-10 the election.
18-11 (7) The applicable nominating and election committee
18-12 shall canvass the returns, certify the results, and announce the
18-13 official results of the election.
18-14 (8) The retirement board shall approve written
18-15 procedures for the conduct of the election no later than August 1
18-16 of each year in which an election is held.
18-17 (e) Each member of the retirement board shall, within 30
18-18 days after appointment and election, <shall> take an oath of office
18-19 that he or she <the board member> will diligently and honestly
18-20 administer the affairs of the retirement system and will not
18-21 knowingly violate or willingly permit to be violated any law or
18-22 statute applicable to the retirement system. All members of the
18-23 retirement board serve without compensation. The retirement board
18-24 may, at any time after notice and hearing <At any time, the board>,
18-25 by a vote of six retirement board members<, may> remove a
19-1 retirement board member for malfeasance.
19-2 (f) In January of each year, the retirement board shall
19-3 elect from its membership a chairman and a vice-chairman to serve
19-4 one calendar year.
19-5 (g) The retirement board shall hire a pension officer as an
19-6 employee of the retirement board. The pension officer shall hire
19-7 and may fire or suspend necessary staff members, and those staff
19-8 members are employees of the retirement board. The pension officer
19-9 acting under the direction of the retirement board shall keep all
19-10 of the records of the retirement system and a record of the
19-11 proceedings of the retirement board. The pension officer and each
19-12 staff member shall receive such compensation as the retirement
19-13 board may fix in each annual budget of the retirement system, or
19-14 amendments to the budget, and that compensation shall be paid from
19-15 the fund.
19-16 (h) Subject to the limitations of this Act, the retirement
19-17 board shall from time to time establish rules and regulations for
19-18 the administration of the funds authorized to be created hereunder
19-19 and for the transaction of the retirement board's business. Each
19-20 member of the retirement board is entitled to one vote <on the
19-21 board>. Six concurring votes are necessary for a decision by the
19-22 retirement board members at any meeting of the retirement board,
19-23 and six members constitute a quorum. Each member will be required
19-24 to serve on a committee of the retirement board. Any retirement
19-25 board member who is absent from four consecutive regular monthly
20-1 meetings of the retirement board shall be removed from the
20-2 retirement board and <the member shall be> replaced in accordance
20-3 with the provisions of this section.
20-4 (i)(1) The retirement board shall keep or cause to be kept
20-5 in convenient form such data as are necessary for actuarial
20-6 valuation of the fund of the retirement system and for checking the
20-7 mortality, service, compensation, and payment experience of the
20-8 system.
20-9 (2) The retirement board shall keep a record of all
20-10 its proceedings, which shall be open to public inspection except as
20-11 otherwise specifically provided or permitted by law, and shall
20-12 publish annually a report showing the fiscal transactions of the
20-13 retirement system for the preceding year, the amount of the
20-14 accumulated cash, <and> securities and other assets of the system,
20-15 and the last balance sheet showing the financial condition of the
20-16 system as disclosed by the most recent actuarial valuation of the
20-17 assets and liabilities of the retirement system.
20-18 (3) The retirement board shall have charge of and
20-19 administer the fund as trustee of the fund and shall order payments
20-20 therefrom in pursuance of the provisions of this Act. Each
20-21 employer <The city and each hospital authority> shall provide to
20-22 the retirement board the <all> records necessary and useful to
20-23 administer the system and the fund. The retirement board shall
20-24 report annually to the members on the condition of the fund and the
20-25 receipts and disbursements on account of the fund. The retirement
21-1 board shall keep a complete record <list> of the retired members,
21-2 surviving spouses, and beneficiaries of the fund and the amounts
21-3 paid to them.
21-4 (4) Individual accounts shall be maintained for each
21-5 member of the retirement system, showing the amount of the member's
21-6 accumulated deposits. Annually a statement shall be given each
21-7 member showing the total amount of that member's accumulated
21-8 deposits. The accounts of the retirement board and the retirement
21-9 system shall be included in the annual independent audit of the
21-10 accounts of the system. One <A> copy of the <this> annual audit
21-11 shall be provided to the governing body and to the board of each
21-12 employer <city mayor>.
21-13 (5) The retirement board shall designate an actuary
21-14 who shall be the technical advisor of the retirement board
21-15 regarding the maintenance and operations of the fund authorized by
21-16 the provisions of this Act and shall perform such other duties as
21-17 may be required in connection therewith, but shall not be an
21-18 investment advisor or fiduciary with respect to any investments of
21-19 the fund. The actuary shall make periodic valuations of the assets
21-20 and liabilities of the funds and other evaluations as requested by
21-21 the retirement board.
21-22 (6) From time to time on the advice of the actuary and
21-23 the direction of the retirement board, the actuary shall make an
21-24 actuarial investigation of the mortality, service, and compensation
21-25 experience of members, retired members, surviving spouses, and
22-1 beneficiaries of the retirement system and shall make a valuation
22-2 of the assets and liabilities of the funds of the system. Taking
22-3 into account the result of such investigation and valuation, the
22-4 retirement board shall adopt for the retirement system such
22-5 mortality, service, and other actuarial tables or rates as are
22-6 deemed necessary. On the basis of tables and rates adopted by the
22-7 retirement board, the actuary shall make a valuation at least once
22-8 every two years of the assets and liabilities of the funds of the
22-9 retirement system.
22-10 (7) The retirement board may retain the services of
22-11 one or more investment managers who shall have full authority to
22-12 invest and manage the assets of the retirement system and the fund,
22-13 as specified by contract in accordance with Subchapter C, Chapter
22-14 802, Government Code, and its subsequent amendments.
22-15 (8) The retirement board may retain the services of
22-16 one or more investment consultants to monitor the investment
22-17 performance of the investment managers and provide other
22-18 investment-related services as requested by the retirement board.
22-19 (j) The retirement board may retain legal counsel as
22-20 necessary in the judgment of the board to advise, consult, assist
22-21 and represent the retirement board and the system in and with
22-22 respect to any legal matter, issue, cause or claim that comes
22-23 before the retirement board or that may affect <to advise, assist,
22-24 or represent the board in any legal matters affecting> the
22-25 retirement system or <and> the operation of the fund.
23-1 (k) Except as provided by Subsection (l) of this section,
23-2 the retirement board may adopt rules, establish regulations or
23-3 procedures, correct any defect, supply any information, or
23-4 reconcile any inconsistency as the retirement board considers
23-5 necessary or advisable to carry out this Act. Further, the
23-6 retirement board is authorized to adopt any amendment that modifies
23-7 this Act to the extent necessary for the retirement system to be a
23-8 qualified plan.
23-9 (l) Any procedure, discretionary act, interpretation, or
23-10 construction by the retirement board must be done in a
23-11 nondiscriminatory manner based on uniform principles consistently
23-12 applied and must be consistent with this Act and with <26 U.S.C.>
23-13 Section 401(a) of the code and its subsequent amendments.
23-14 (m) The retirement board is authorized to administer oaths
23-15 to any person providing testimony at any hearing or other
23-16 proceeding of the retirement board.
23-17 Sec. 5. Membership. (a) Each regular full-time employee
23-18 <Any regular full-time employee who has completed six continuous
23-19 months of employment as a regular full-time employee before or
23-20 after the date of establishment of the retirement system and who
23-21 has been removed from the employee's initial probationary status,>
23-22 shall become an active-contributory member as a condition of
23-23 employment and shall make the required deposits commencing with the
23-24 first pay period in which the employee is compensated following the
23-25 effective date of this Act <following the later of the completion
24-1 of six continuous months of employment as a regular full-time
24-2 employee or the date of removal from the employee's initial
24-3 probationary status>. Unless on approved medical leave of absence
24-4 or on leave to serve in the uniformed services <other authorized
24-5 leave>, the employee shall make the deposits as long as the
24-6 employee remains a regular full-time employee and shall remain a
24-7 member of the system until the employee or the employee's
24-8 beneficiary ceases to be entitled to any benefits from the
24-9 retirement system. The membership for all new regular full-time
24-10 employees shall commence on the date their employment commences and
24-11 all current active contributory members shall be deemed to have
24-12 additional creditable service equal to the time elapsed between the
24-13 date their regular full-time employment commenced and the date they
24-14 became an active contributory member, but not in excess of six
24-15 months.
24-16 (b) Membership in the retirement system consists of the
24-17 following groups:
24-18 (1) the active-contributory members group, which
24-19 consists of all members, other than those on authorized leave of
24-20 absence, who are making deposits;
24-21 (2) the active-noncontributory members group, which
24-22 consists of all employees on approved medical leave of absence and
24-23 all employees of an employer <the city, a hospital authority, or
24-24 the board>, other than inactive-contributory members, who have been
24-25 <were> active-contributory members but who are no longer so because
25-1 they are not regular full-time employees;
25-2 (3) the inactive-contributory members group, which
25-3 consists of all members who are on an authorized leave of absence
25-4 and who continue to make deposits into the retirement system during
25-5 their <the employee's> absence;
25-6 (4) the inactive-noncontributory members group, which
25-7 consists of all members whose status as an employee <with the city,
25-8 a hospital authority, or the board> has been terminated before
25-9 retirement or disability retirement but <and> who are still
25-10 entitled to, or whose beneficiary may become entitled to, benefits
25-11 from the retirement system; and
25-12 (5) the retired members group, which consists of all
25-13 members who have retired and who are receiving or who are entitled
25-14 to receive a retirement allowance.
25-15 (c) An active-noncontributory member becomes an
25-16 active-contributory member immediately on resuming employment as a
25-17 regular full-time employee or on returning from an approved medical
25-18 leave of absence, as applicable.
25-19 (d) It shall be the duty of the retirement board to
25-20 determine the membership group to which each person who becomes a
25-21 member of the retirement system properly belongs. It shall be the
25-22 duty of the chief administrative officer of each employer <city
25-23 manager> to submit to the retirement board a statement showing the
25-24 name, position, compensation, duties, date of birth, length of
25-25 employment, and other information regarding each employee of the
26-1 employer <city> the retirement board may require. <The pension
26-2 officer shall submit to the board a statement showing the name,
26-3 position, compensation, duties, date of birth, length of
26-4 employment, and other information regarding each employee of the
26-5 board that the board requires. Each hospital authority board shall
26-6 submit to the retirement board a statement showing the name,
26-7 position, compensation, duties, date of birth, length of
26-8 employment, and other information regarding each employee of the
26-9 hospital authority that the retirement board requires.>
26-10 (e) Any person who has ceased to be a member and has
26-11 received a distribution of the person's accumulated deposits may
26-12 have the person's membership service or prior service reinstated if
26-13 the person is reemployed as a regular full-time employee for a
26-14 continuous period of 24 months and deposits into the system, within
26-15 a reasonable period established by the retirement board on a
26-16 uniform and nondiscriminatory basis, the accumulated deposits
26-17 withdrawn by that person, together with an interest payment equal
26-18 to the amount withdrawn multiplied by an interest factor. The
26-19 interest factor is equal to the annually compounded interest rate
26-20 assumed to have been earned by the fund beginning with the month
26-21 and year in which the person withdrew the person's accumulated
26-22 deposits and ending with the month and year in which the deposit
26-23 under this subsection is made. The interest rate assumed to have
26-24 been earned by the fund for any period is equal to the interest
26-25 rate credited for that period to the accumulated deposits of
27-1 members, divided by 0.75.
27-2 (f) A member on authorized leave of absence may make
27-3 deposits each <biweekly> pay period to the system while on
27-4 authorized leave of absence. Each such deposit shall be<,> in an
27-5 amount that is equal to the amount of the member's deposit for the
27-6 last complete <biweekly> pay period that the member was paid by the
27-7 employer <city, a hospital authority, or the board>. As long as
27-8 the member on authorized leave of absence makes the payments each
27-9 pay period, the employee's employer <biweekly payments, the city>
27-10 shall make contributions to the retirement fund, for such member,
27-11 each pay <on authorized leave of absence from the city each
27-12 biweekly pay> period in an amount equal to the contribution amount
27-13 the employer <city> would have made if the member's <biweekly> pay
27-14 had continued to be the <biweekly> pay the member received for the
27-15 last complete <biweekly> pay period that the member was paid by the
27-16 employer <city. Each hospital authority shall make contributions
27-17 to the retirement fund for a member on authorized leave of absence
27-18 from that hospital authority each pay period in an amount equal to
27-19 the contribution amount the hospital authority would have made if
27-20 the member's pay had continued to be the pay the member received
27-21 for the last complete pay period that the member was paid by the
27-22 hospital authority. The board shall make a contribution to the
27-23 retirement fund from system funds for a member on authorized leave
27-24 of absence from the board each biweekly pay period in an amount
27-25 equal to the contribution amount the board would have made if the
28-1 member's biweekly pay had continued to be the biweekly pay the
28-2 member received for the last complete biweekly pay period that the
28-3 member was paid by the board>. If the member does not make those
28-4 deposits while on authorized leave of absence, the member may make
28-5 a single payment, within five years after the member has returned
28-6 to employment with the employer, <city, with the hospital
28-7 authority, or with the board> equal to the deposits the member
28-8 would have made if the member had continued to be paid during the
28-9 authorized leave of absence at the same rate of pay the member was
28-10 receiving at the time the member's authorized leave of absence
28-11 began. In the event a member elects to make a single payment, the
28-12 member's employer <The city> shall make a single payment for such
28-13 member which payment shall be <employed by the city> equal to the
28-14 contributions the employer <it> would have made on the member's
28-15 behalf if the member had made deposits to the fund during the
28-16 period of the member's authorized leave of absence. During an
28-17 <Each hospital authority shall make a single payment for a member
28-18 employed by the hospital authority equal to the contributions it
28-19 would have made on the member's behalf if the member had made
28-20 deposits to the fund during the period of the member's> authorized
28-21 leave of absence, the member will continue to earn membership
28-22 service for the pay periods for which the member makes deposits <.
28-23 The board shall make a single payment to the fund for a member
28-24 employed by the board equal to the contributions it would have made
28-25 on the member's behalf if the member had made deposits to the fund
29-1 during the period of the member's authorized leave of absence. As
29-2 long as deposits are made> in accordance with this subsection<, the
29-3 member will continue to earn membership service during the period
29-4 of the authorized leave of absence>. If a member makes the lump
29-5 sum payment provided for in this subsection the membership service
29-6 will be credited at the time of payment.
29-7 (g) From time to time the retirement board, subject to the
29-8 approval of the system's actuary, may elect to permit the
29-9 reinstatement of membership service forfeited in accordance with
29-10 the terms of this section.
29-11 Sec. 6. Creditable service. (a) The retirement allowance
29-12 of a member is based on the member's <amount of> creditable service
29-13 <rendered by the member> as of the member's actual retirement date.
29-14 (b) The retirement board shall determine by
29-15 nondiscriminatory rules and regulations consistently applied,
29-16 subject to the provisions of this Act, in case of absence, illness,
29-17 or other temporary interruption in service as a regular full-time
29-18 employee, the portion of each calendar year to be allowed as
29-19 creditable service. No credit shall be allowed as creditable
29-20 service for any period exceeding one month during which an employee
29-21 was absent continuously without pay, except for an authorized leave
29-22 of absence as provided in this Act. The retirement board shall
29-23 verify the records for creditable service claims filed by the
29-24 members of the retirement system, subject to the provisions of this
29-25 Act and in accordance with such administrative rules and
30-1 regulations as the retirement board may from time to time adopt.
30-2 (c) At any time before a member's actual retirement date, a
30-3 member may establish creditable service for military service
30-4 performed that is creditable as provided under this subsection
30-5 according to the following conditions, limitations, and
30-6 restrictions:
30-7 (1) Military service creditable in the retirement
30-8 system is any service required to be credited by the Uniformed
30-9 Services Employment and Reemployment Act of 1994, as amended, and
30-10 certain active federal duty service in the armed forces of the
30-11 United States performed before the commencement of employment with
30-12 the employer, other than service as a student at a service academy,
30-13 as a member of the reserves, or any continuous active military
30-14 service lasting less than 90 days. To be creditable, the military
30-15 service must have been performed before the beginning of the
30-16 member's most recent period of membership in the retirement system
30-17 or its predecessor system.
30-18 (2) A member is not eligible to establish military
30-19 service credit unless the member was released from active military
30-20 duty under conditions other than dishonorable.
30-21 (3) A member may not establish creditable service in
30-22 the retirement system for military service for more than the
30-23 greater of the creditable service required under the Uniformed
30-24 Services Employment and Reemployment Act of 1994, as amended, or 24
30-25 months of creditable service in the retirement system for military
31-1 service under this subsection.
31-2 (4) A member may establish creditable service under
31-3 this subsection by contributing to the retirement system a single
31-4 payment equal to 25 percent of the estimated cost of the additional
31-5 projected retirement benefits the member will be entitled to
31-6 receive. The retirement board will determine the required
31-7 contribution based on a procedure recommended by the actuary and
31-8 approved by the retirement board, provided, however,
31-9 notwithstanding the amount determined under the preceding sentence,
31-10 such contribution may not exceed the amount required under the
31-11 Uniformed Services Employment and Reemployment Act of 1994, as
31-12 amended, in the case of a member who makes such contributions
31-13 within the time prescribed by such act.
31-14 (5) After the member makes the deposit required by
31-15 this subsection, the retirement system shall grant the member one
31-16 month of creditable service for each month of creditable military
31-17 service established under this subsection.
31-18 Sec. 7. Service retirement benefits and withdrawal benefits.
31-19 (a) Except as provided by Subsection (b) of this section, a member
31-20 who retires on or after the member's normal retirement date and
31-21 applies in writing for a retirement allowance shall receive a life
31-22 annuity (modified cash refund) beginning on the last day of the
31-23 month after the month in which the member retired. Unless
31-24 Subsection (e) of this section or Section 8 of this Act applies, a
31-25 member whose employment by the employer <city, a hospital
32-1 authority, or the board> terminates before the member's normal
32-2 retirement date is entitled to a distribution of the member's
32-3 accumulated deposits in a single lump sum. On receiving that
32-4 distribution, a member is not entitled to any other benefit under
32-5 this Act. If a member has at least five years of creditable
32-6 service and does not withdraw the member's accumulated deposits,
32-7 the member is entitled to a life annuity (modified cash refund)
32-8 beginning on the first day of the month after the month in which
32-9 the member's normal retirement date occurs. If a member has at
32-10 least 20 years of creditable service and does not withdraw the
32-11 member's accumulated deposits, the member is also entitled to elect
32-12 an early retirement benefit on attaining age 55.
32-13 (b) A member who terminates employment with the employer
32-14 <city, a hospital authority, or the board> and who has less than
32-15 five years of creditable service is not entitled to a retirement
32-16 allowance.
32-17 (c) The amount of the retirement allowance and all other
32-18 benefits payable under this statute shall be subject at all times
32-19 to such adjustments as may be required to ensure actuarial
32-20 soundness as may be approved by the actuary and adopted by the
32-21 retirement board, except that annuities already accrued <granted>
32-22 may not be reduced <below the base figure granted at time of
32-23 retirement>.
32-24 (d)(1) Subject to the conditions, limitations, and
32-25 restrictions set forth in this subsection, as well as all other
33-1 pertinent conditions, limitations, and restrictions set forth
33-2 elsewhere in this Act, the retirement board shall have the power
33-3 once each year to authorize a cost of living adjustment
33-4 (hereinafter referred to as the "adjustment") payment of which,
33-5 once authorized, shall be added to the current monthly payment of
33-6 all retirement annuities, pensions, or allowances of each and every
33-7 retired member (or the retired member's beneficiary) who has
33-8 <members' beneficiaries who have> become entitled to benefits, on
33-9 or before December 31 of the year before the year in which the
33-10 adjustment goes into effect. Before December 31 of each year, the
33-11 retirement board shall make a separate determination as to whether
33-12 to authorize the payment of an adjustment and the amount of such
33-13 adjustment, if any. In determining whether to authorize an
33-14 adjustment, the retirement board may consider the changes in the
33-15 consumer price index over the preceding 12-month period, the
33-16 actuarial experience of the fund, the investment experience of the
33-17 fund, the amount of any prior adjustments, and other factors that
33-18 the retirement board and the actuary consider appropriate.
33-19 (2) In determining whether to authorize the payment
33-20 and the amount of any adjustment, the retirement board shall be
33-21 governed by the following conditions, considerations, limitations,
33-22 and restrictions:
33-23 (A) Any and all determinations to authorize the
33-24 payment of any adjustment amount must be based on the ability of
33-25 the fund to pay such an amount and shall not be based on the
34-1 individual needs of any particular retired members or
34-2 beneficiaries.
34-3 (B) Prior to the retirement board's authorizing
34-4 the payment of an adjustment, the actuary must <approve and>
34-5 recommend such an adjustment to the retirement board and certify in
34-6 writing <to the board> that, based on the sound application of
34-7 actuarial assumptions and methods consistent with sound actuarial
34-8 principles and standards, it is demonstrable that the fund has and
34-9 likely will continue to have the ability to pay such an amount out
34-10 of its realized income after all other obligations of the fund have
34-11 been paid.
34-12 (C) The amount of the adjustment for each
34-13 retired member or beneficiary shall be a uniform percentage of the
34-14 monthly payment being receiving by a member, or by a beneficiary by
34-15 reason of a member, who was retired at least one year before the
34-16 adjustment and may not exceed six percent of the monthly payment
34-17 due the retired member or beneficiary before the adjustment. For
34-18 members who retired during the year in which the adjustment is
34-19 authorized, the increase for the first year in which the adjustment
34-20 is being paid shall be prorated in the ratio that the number of
34-21 completed months after the member's retirement in the year of the
34-22 member's retirement bears to 12. After the first year the member
34-23 is entitled to the full amount of any <the> adjustment without
34-24 proration.
34-25 <(D) The board shall have the authority and the
35-1 duty on recommendation by the actuary, at any and all times and
35-2 without notice to anyone, to decrease the amount of adjustment
35-3 payment as much as is necessary to protect the continuity of the
35-4 retirement and pensioning system and to protect the corpus of the
35-5 system should the ability of the system to continue to pay the
35-6 adjustment be threatened by a change in the economic situation of
35-7 the United States, the State of Texas, the city, or the system
35-8 itself, such as would dictate that a prudent trustee should
35-9 authorize such a decrease, providing that, if the threatening
35-10 change should prove not to have had the predicted harmful effect on
35-11 the system, then the board shall have the authority, on
35-12 recommendation by the actuary, to reinstate the payment of all or
35-13 any portion of the amount of the previously decreased adjustment
35-14 payments.>
35-15 (3) Any adjustment payments shall be in addition to
35-16 the benefits to which a retired member or beneficiary is otherwise
35-17 entitled under this Act<, and in no event shall a reduction in the
35-18 adjustment payments cause the retired member's or beneficiary's
35-19 benefits to be reduced below the actual base retirement figure
35-20 calculated under the provisions of this Act.>
35-21 <(4) The following terms and definitions shall be used
35-22 in construing the meaning of this section:>
35-23 <(A) "Base retirement figure" means that figure
35-24 calculated under the provisions of this Act at the time of actual
35-25 retirement to which, for the purposes of this subsection, a retired
36-1 member is entitled over a 12-month period.>
36-2 <(B) "Consumer price index" means the Consumer
36-3 Price Index (all items--United States City average) published
36-4 monthly by the Bureau of Labor Statistics, United States Department
36-5 of Labor or its successor in function.>
36-6 <(C) "Continuity of the fund" means the ability
36-7 of the retirement and pensioning system's fund to continue to meet
36-8 all of its purposes, to continue to thrive and grow along with the
36-9 economy of the United States, the State of Texas, and the city, or
36-10 to be able to sustain itself and its retired members and their
36-11 beneficiaries during and throughout the periods of deflation or
36-12 recession in those economies>.
36-13 (e) Any member shall be eligible for early retirement if the
36-14 member attains the age of 55 years and completes at least 20 years
36-15 of creditable service. Such member shall be entitled to a benefit
36-16 equal to a life annuity (modified cash refund) reduced at the rate
36-17 of five-twelfths of one percent for each month the member was
36-18 retired before the member's normal retirement date. A member who
36-19 takes early retirement shall begin receiving the benefits provided
36-20 by this subsection beginning on the last day of the month after the
36-21 month in which the member retired.
36-22 (f) A member may file a <duly acknowledged> written
36-23 designation, which, if approved by the retirement board, shall
36-24 entitle the member, on retirement, to receive the actuarial
36-25 equivalent of the life annuity in the form of one of the following
37-1 options:
37-2 (1) Option I. 100 Percent Joint and Survivor Annuity.
37-3 This option is a reduced monthly annuity payable to the member but
37-4 with the provision that on the member's death the annuity shall be
37-5 continued throughout the life of and be paid to such person as the
37-6 member shall designate before the member's actual retirement date.
37-7 (2) Option II. 50 Percent Joint and Survivor Annuity.
37-8 This option is a reduced monthly annuity payable to the member but
37-9 with the provision that on the member's death one-half of the
37-10 annuity shall be continued throughout the life of and be paid to
37-11 such person as the member shall designate before the member's
37-12 actual retirement date.
37-13 (3) Option III. 66-2/3 Percent Joint and Survivor
37-14 Annuity. This option is a reduced monthly annuity payable to the
37-15 member but with the provision that on the member's death two-thirds
37-16 of the annuity shall be continued throughout the life of and be
37-17 paid to such person as the member shall designate before the
37-18 member's actual retirement date.
37-19 (4) Option IV. Joint and 66-2/3 Percent Last Survivor
37-20 Annuity. This option is a reduced monthly annuity payable to the
37-21 member but with the provision that two-thirds of the annuity to
37-22 which the member would be entitled shall be continued throughout
37-23 the life of and be paid to the survivor after the death of either
37-24 the member or such person as the member shall designate before the
37-25 member's actual retirement date.
38-1 (5) Option V. Level Income Option. If payment of a
38-2 retirement allowance commences prior to the earliest age at which
38-3 the member will become eligible for an old age insurance benefit
38-4 under the Social Security Act, the member may elect that the amount
38-5 of the monthly payments be adjusted so that an increased monthly
38-6 amount will be paid prior to such age and a reduced monthly amount,
38-7 if any, will be paid for life after such age. The purpose of this
38-8 adjustment is to enable the member to receive from this plan and
38-9 under the Social Security Act an aggregate income in approximately
38-10 a level amount for life.
38-11 (6) Option VI. 66-2/3 Percent Joint and Survivor/Level
38-12 Income Option. If payment of a retirement allowance commences
38-13 prior to the earliest age at which the member could become eligible
38-14 for an old age insurance benefit under the Social Security Act, the
38-15 member may elect that the amount of the monthly payments be
38-16 adjusted so that an increased monthly amount will be paid prior to
38-17 such age and a reduced monthly amount will be paid for life after
38-18 such age. The purpose of this adjustment is to enable the member
38-19 to receive from this plan and under the Social Security Act an
38-20 aggregate income in approximately a level amount for life. Option
38-21 VI provides that if the member's death occurs after age 62,
38-22 two-thirds of the monthly annuity the member was receiving at the
38-23 time of the member's death shall be continued throughout the life
38-24 of and be paid to such person as the member shall designate before
38-25 the member's actual retirement date. If the member's death occurs
39-1 before age 62, two-thirds of the monthly annuity the member was
39-2 receiving at the time of member's death shall be paid to such
39-3 person as the member shall designate before the member's actual
39-4 retirement date through the end of the month when the member would
39-5 have reached age 62. The monthly annuity being paid to such person
39-6 as the member shall designate before the member's actual retirement
39-7 date will be reduced at the end of the month following the month in
39-8 which the member would have reached age 62 to two-thirds of the
39-9 reduced benefit the member would have begun to receive at age 62.
39-10 (7) Option VII. 15-Year Certain and Life Annuity.
39-11 This option is a reduced annuity payable to the member for life.
39-12 In the event of the member's death before 180 monthly payments have
39-13 been made, the remainder of the 180 payments shall be paid to the
39-14 member's beneficiary or, if there is no beneficiary, to the
39-15 member's estate.
39-16 (8) Option VIII. Equivalent Benefit Plan. If a member
39-17 requests in writing, any other form of benefit or benefits may be
39-18 paid either to the member or to such person or persons as the
39-19 member shall designate before the member's actual retirement date,
39-20 provided that the benefit plan requested by the member is certified
39-21 by the actuary for the system to be the actuarial equivalent of the
39-22 life annuity with guaranteed refund of the retired member's
39-23 accumulated deposits. If, on the death of the member and all other
39-24 persons entitled to receive payments under an optional benefit, the
39-25 member's accumulated deposits as of the member's actual retirement
40-1 date exceed the sum of all payments made under that optional
40-2 benefit, that excess shall be paid in one lump sum to the member's
40-3 beneficiary.
40-4 (g)(1) For purposes of Subsection (f) of this section, the
40-5 designation of a beneficiary must be made in writing on a form and
40-6 in the manner prescribed by the retirement board. If a member has
40-7 chosen Option I, II, III, IV, VI, or VIII, the member's designation
40-8 of a beneficiary may not be revoked after a member retires, and any
40-9 attempted revocation of a designation for those options is void.
40-10 Spousal consent shall not be required for a member to select Option
40-11 I, II, III, IV or VI. If the member is married, spousal consent is
40-12 required for the member to select an optional benefit other than
40-13 Option I, II, III, IV<,> or VI. At any time before retirement, a
40-14 member may file with the retirement board a written statement
40-15 designating one or more persons to be entitled to receive as
40-16 beneficiary the reduced annuity payable under one of the optional
40-17 benefits. If a married member designates as a beneficiary any
40-18 person other than the member's spouse, the member's spouse must
40-19 consent in writing to the beneficiary designation, and the
40-20 beneficiary designation may not be changed without spousal consent,
40-21 unless the consent of the spouse expressly permits designations by
40-22 the member without the requirement of further consent by the
40-23 spouse. The spouse's consent is irrevocable and must acknowledge
40-24 the effect of the designation and be witnessed by a retirement
40-25 board employee or notary public. Spousal consent is not required
41-1 if it is established to the satisfaction of the retirement board
41-2 that the required consent cannot be obtained because there is no
41-3 spouse, the spouse cannot be located, or other circumstances exist
41-4 as prescribed by United States Treasury regulations.
41-5 Notwithstanding other provisions of this subdivision, the option
41-6 election or beneficiary designation made by a member and consented
41-7 to by the member's spouse may be revoked by the member in writing
41-8 without consent of the spouse at any time before retirement. The
41-9 number of revocations is not limited. A former spouse's waiver or
41-10 consent is not binding on a new spouse. An option selection
41-11 becomes effective on the member's actual retirement date. The
41-12 member retains the right to change the option selected or the
41-13 beneficiary designated until the member's actual retirement date,
41-14 subject to this subsection.
41-15 (2) After filing the written statement selecting one
41-16 of the optional benefits, the member may continue in employment and
41-17 retire any time after the member becomes eligible by filing a
41-18 written application for retirement. If the member dies before
41-19 retirement but after becoming eligible for retirement, the
41-20 effective date of the member's retirement is the last day of the
41-21 calendar month of death, and the benefit is computed on the
41-22 optional benefit selected as if the member had retired on that
41-23 date.
41-24 (h) The amount of the annuity payment in Options I, II, III,
41-25 IV, V, VI, VII, and VIII shall be determined without considering
42-1 the minimum cumulative payment of the retired member's accumulated
42-2 deposits since that refund feature will stay in effect as indicated
42-3 herein.
42-4 (i) If a member who is eligible for retirement dies without
42-5 having filed a written selection of one of the enumerated options
42-6 and if the member leaves a surviving spouse, that spouse may select
42-7 the optional benefit in the same manner as if the member had made
42-8 the selection or may select a lump-sum payment equal to the
42-9 deceased member's accumulated deposits plus an equivalent amount
42-10 from Fund No. 2. If the member does not leave a surviving spouse,
42-11 the member's designated beneficiary is entitled to elect either
42-12 Option VII, to become effective at the beginning of the calendar
42-13 month after the month in which the death of the member occurs, or
42-14 the sum of a lump-sum payment equal to the deceased member's
42-15 accumulated deposits plus an equivalent amount from Fund No. 2.
42-16 If the surviving spouse dies before the spouse receives retirement
42-17 allowances equal to the amount of the member's accumulated deposits
42-18 on the date of the member's death, the excess of the accumulated
42-19 deposits over the retirement allowances paid shall be distributed
42-20 in one lump sum to the member's estate.
42-21 (j) In the event of death of a member who is ineligible for
42-22 retirement, the member's accumulated deposits and an equivalent
42-23 amount from Fund No. 2 shall be paid in a lump sum to the member's
42-24 beneficiary.
42-25 (k)(1) If a prior demand for withdrawal of accumulated
43-1 deposits has not been made within seven years after termination of
43-2 employment by <with the city, a hospital authority, or the board
43-3 of> a member with less than five years' of creditable service, the
43-4 member's accumulated deposits shall be returned to the member or
43-5 the member's beneficiary. Except as provided by Subdivision (2) of
43-6 this subsection, if the system is unable to locate the member or
43-7 the member's beneficiary, the member's accumulated deposits shall
43-8 thereafter be forfeited and become a part of Fund No. 2.
43-9 (2) If the member or member's beneficiary later
43-10 appears and requests in writing the payment of the member's
43-11 accumulated deposits, the system shall:
43-12 (A) reinstate the account of the member;
43-13 (B) credit to that account an amount equal to
43-14 all of the accumulated deposits previously standing to the member's
43-15 credit plus interest that would have been earned on those
43-16 accumulated deposits if the funds had remained in Fund No. 1
43-17 between the date of forfeiture to Fund No. 2 and the date of
43-18 reinstatement of the member's account;
43-19 (C) fund the account from the monies in Fund No.
43-20 2; and
43-21 (D) make all necessary payments to the member or
43-22 member's beneficiary from the reinstated account.
43-23 (3) On payment of the accumulated deposits under this
43-24 subsection, plus any interest on those deposits to which the member
43-25 may be entitled, to the member or member's beneficiary in
44-1 accordance with this subsection, the terminated employee ceases to
44-2 be a member of the system.
44-3 (l) In the event of the death of a member receiving a
44-4 retirement allowance, the sum of $10,000 <$2,000> shall be payable
44-5 in a lump sum to the member's beneficiary.
44-6 (m) When monthly survivor benefits are deemed payable as a
44-7 result of the death of a member before retirement, an additional
44-8 sum of $10,000 <$2,000> shall be payable as a death benefit to the
44-9 member's designated beneficiary.
44-10 (n) In the event of the death of the retired member then
44-11 receiving a retirement allowance under any retirement option and
44-12 the death of the beneficiary designated by the retired member, when
44-13 either Option I, Option II, Option III, Option IV, or Option VI is
44-14 in effect, before retirement allowances have been received that are
44-15 equal or greater than the retired member's accumulated deposits,
44-16 <then> the member's estate will receive the excess of the retired
44-17 member's accumulated deposits over the retirement allowances paid.
44-18 (o) Notwithstanding any contrary provision of this Act, the
44-19 distribution of a member's benefits, including benefits payable
44-20 after the member's death, made on or after January 1, 1985, shall
44-21 be made in accordance with the following requirements and shall
44-22 otherwise comply with <26 U.S.C.> Section 401(a)(9) of the code
44-23 and related <and its subsequent amendments and> regulations,
44-24 including Regulation Section 1.401(a)(9)-2:
44-25 (1) A member's benefits shall be distributed to the
45-1 member, or the distribution of those benefits shall begin, not
45-2 later than April 1 of the calendar year after the calendar year in
45-3 which occurs the later of the date on which the member attains age
45-4 70-1/2 or the date on which the member's employment by the employer
45-5 <city, hospital authority, or the board> terminates.
45-6 (2) A member's benefits shall be distributed over a
45-7 period not exceeding the life of the member or the lives of the
45-8 member and the member's beneficiary or over a period not exceeding
45-9 the life expectancy of the member or the life expectancy of the
45-10 member and the member's beneficiary.
45-11 (3) If the distribution of a member's benefit has
45-12 begun and the member dies before the member's entire benefit is
45-13 distributed, the remaining portion of that benefit shall be
45-14 distributed at least as rapidly as under the form of benefit
45-15 selected as of the date of the member's death, adjusted as
45-16 necessary under this subsection.
45-17 (4) If a member dies before the distribution of the
45-18 member's benefit has begun, the member's death benefit shall be
45-19 distributed to the member's beneficiary within five years after the
45-20 date of the member's death. This five-year rule does not apply to
45-21 any portion of the deceased member's benefit that is payable to or
45-22 for the benefit of the member's surviving spouse. A benefit
45-23 payable to or for the benefit of the member's surviving spouse may
45-24 be distributed over the life of the spouse or over a period not
45-25 exceeding the life expectancy of the spouse, provided that payment
46-1 of the benefit begins not later than the date on which the deceased
46-2 member would have attained age 70-1/2. If the surviving spouse
46-3 dies before distributions to that spouse begin, the five-year rule
46-4 applies as if the spouse had been the member.
46-5 (5) The five-year rule does not apply to distributions
46-6 payable to a beneficiary over the life or life expectancy of the
46-7 beneficiary, provided that payment of the benefit begins not later
46-8 than the first anniversary of the date of the member's death.
46-9 (6) In applying the requirements of this subsection,
46-10 the life expectancy of the member and the member's beneficiary
46-11 shall be redetermined annually in accordance with regulations under
46-12 <26 U.S.C.> Section 401(a)(9) of the code and its subsequent
46-13 amendments.
46-14 (p) Forfeitures that may result from the termination of any
46-15 right of a member may not be used to increase benefits to remaining
46-16 members. This subsection shall not preclude an increase in
46-17 benefits by amendment to this Act or action of the retirement board
46-18 in accordance with Subsection (d) of this section that is made
46-19 possible by forfeitures or for any other reason. <The board may
46-20 adjust the terms of payment under any form of benefit payment as
46-21 long as the benefit as adjusted is the actuarial equivalent of the
46-22 benefit before adjustment.>
46-23 Sec. 8. Disability retirement. (a) Only
46-24 active-contributory members, inactive-contributory members, and
46-25 members on approved medical leave of absence are eligible for
47-1 consideration for disability retirement. Such members may apply
47-2 for disability retirement at any date prior to their normal
47-3 retirement date. Inactive-noncontributory members are not eligible
47-4 for consideration for disability retirement and may not receive any
47-5 benefits under this section.
47-6 (b) If a member who is eligible for consideration for
47-7 disability retirement <and who has less than 10 years of creditable
47-8 service> has become mentally or physically incapacitated for the
47-9 performance of all employment duties as a direct result of injuries
47-10 sustained in the performance of the member's employment duties
47-11 subsequent to the member's effective date of membership in the
47-12 retirement system, the member may apply for disability retirement.
47-13 Such application, made by or on behalf of the injured member, shall
47-14 show that the injury sustained:
47-15 (1) was by external and violent means;
47-16 (2) came as a direct and proximate result of the
47-17 performance of the member's employment duties with the employer
47-18 <city, a hospital authority, or the board>; and
47-19 (3) is likely to be permanent.
47-20 (c) On recommendation of the physician or physicians
47-21 appointed or selected by the retirement board that the <an>
47-22 eligible member's incapacity is likely to be permanent and after
47-23 determining on that basis, or on the basis of <considering> any
47-24 additional evidence which the retirement board deems relevant, that
47-25 the member meets the requirements of Subsection (b) of this
48-1 section, the retirement board shall award such <the> member a
48-2 disability retirement allowance. The decision of the retirement
48-3 board is final subject to the reexamination, discontinuance and
48-4 revocation rules at Subsections (h) and (i) of this section.
48-5 (d) If a member who is eligible for consideration for
48-6 disability retirement, and who has more than 10 years of creditable
48-7 service, has become mentally or physically incapacitated for the
48-8 performance of all employment duties, such <the> member may apply
48-9 for disability retirement. The application made on behalf of the
48-10 disabled member shall show that the incapacity is likely to be
48-11 permanent. On recommendation of the physician or physicians
48-12 appointed or selected by the retirement board that the eligible
48-13 member's incapacity is likely to be permanent and after determining
48-14 on that basis, or on the basis of <considering> any additional
48-15 evidence which the retirement board deems relevant, that the member
48-16 meets the requirements of this Subsection (d) of this section, the
48-17 retirement board shall award such member a disability retirement
48-18 allowance. The decision of the retirement board is final subject
48-19 to the reexamination, discontinuance and revocation rules at
48-20 Subsections (h) and (i) of this section.
48-21 (e) On award of a disability retirement allowance, the
48-22 member shall receive a disability retirement allowance, beginning
48-23 on the last day of the month after the month in which the member
48-24 became disabled, which shall be computed in the same manner that a
48-25 retirement allowance would be computed at the member's normal
49-1 retirement date, based on compensation and creditable service at
49-2 the date of disability retirement, without reduction for early
49-3 retirement. The disabled member may choose to receive a life
49-4 annuity (modified cash refund) or a benefit as described by Section
49-5 7(f) of this Act as Option I, Option II, Option III, Option IV, or
49-6 Option VII.
49-7 (f) A member receiving a disability retirement allowance
49-8 will be required to file an annual report with the retirement board
49-9 concerning continued proof of disability. The report shall
49-10 include:
49-11 (1) a current statement of the member's physical or
49-12 mental condition, signed by the member's attending physician; and
49-13 (2) a statement of all employment activities pursued
49-14 in the preceding year.
49-15 (g) <The board may verify all information submitted in this
49-16 report.> Each calendar year, a disabled member shall file the <an>
49-17 annual report required by Subsection (f) of this section no <not>
49-18 later than the 60th day after the anniversary date of the member's
49-19 disability retirement. The retirement board may verify all
49-20 information submitted in the report.
49-21 (h) The pension officer will be responsible for a yearly
49-22 report to the retirement board listing those disabled members who
49-23 should be examined. The retirement board shall have the right to
49-24 order an examination of any person on disability retirement once
49-25 each year until the member reaches the age of 62 years. If the
50-1 member refuses to submit to an examination by a physician or
50-2 physicians appointed by the retirement board or if the member
50-3 refuses to submit an annual report in accordance with Subsection
50-4 (g) of this section concerning continued proof of disability, the
50-5 disability retirement allowance shall be discontinued until such
50-6 refusal is withdrawn and the member has submitted to an examination
50-7 and <or> has submitted an annual report. Should such refusal
50-8 continue for a period of one year, the disability retirement
50-9 allowance may be revoked by the retirement board. If a member's
50-10 disability retirement allowance has been revoked, the retirement
50-11 board may reinstate the member's disability retirement allowance on
50-12 a prospective basis only on the member's full performance of and
50-13 compliance with all requirements of this section and the retirement
50-14 board's determination that the member's disability is continuing.
50-15 (i) If after investigation of the disabled member's
50-16 activities or if the annual medical examination shows that the
50-17 member is no longer physically or mentally incapacitated for the
50-18 purposes of the performance of employment duties or that such
50-19 member is engaged in or is able to engage in substantial gainful
50-20 occupation, as defined by Social Security disability income
50-21 guidelines, for which he or she is reasonably suited by education,
50-22 training, or experience, the retirement board shall <may>
50-23 discontinue the disability retirement allowance. If the disability
50-24 retirement allowance of a member who had less than 10 years of
50-25 creditable service is discontinued under this subsection or
51-1 Subsection (h) of this section and not reinstated, and the member
51-2 is not reemployed by the employer <city, a hospital authority, or
51-3 the board>, the member is entitled to any amount by which the sum
51-4 of the member's accumulated deposits as of the date of disability
51-5 retirement exceeds the sum of all disability retirement benefits
51-6 paid to the member by the system. If the disability retirement
51-7 allowance of a member <who had 10 years or more of creditable
51-8 service> is discontinued under this subsection or Subsection (h) of
51-9 this section and not reinstated, and the member is not reemployed
51-10 by the employer <city, a hospital authority, or the board>, the
51-11 member may withdraw any amount by which the sum of the member's
51-12 accumulated deposits as of the date of the disability retirement
51-13 exceeds the sum of all disability retirement benefits paid to the
51-14 member by the system. If a member who had 10 or more years of
51-15 creditable service <the member> does not withdraw the excess, the
51-16 member is entitled to a life annuity (modified cash refund)
51-17 beginning on the first day of the month after the month in which
51-18 the member's normal retirement date occurs.
51-19 (j) If a disabled member returns to active employment
51-20 service with the employer <city, a hospital authority, or the
51-21 board>, the disability retirement allowance shall cease. If the
51-22 person is reemployed as a regular full-time employee, the person
51-23 shall be reinstated as an active-contributory member of the system
51-24 and shall comply with all requirements of this Act. If reinstated
51-25 as an active-contributory member, membership service credits
52-1 accumulated prior to disability shall be restored to the full
52-2 amount standing to the member's credit as of the date the
52-3 retirement board found the member eligible for disability
52-4 retirement, and any prior service credit shall be restored in full.
52-5 The member is not required to reimburse the fund for any disability
52-6 retirement allowance amounts received by the member.
52-7 Sec. 9. LIMITATIONS ON BENEFITS. (a) Notwithstanding any
52-8 other provisions of this Act, the annual benefit provided with
52-9 respect to any member may not exceed the lesser of:
52-10 (1) $90,000; or
52-11 (2) 100 percent of the member's compensation averaged
52-12 over the three consecutive calendar years during which the member
52-13 had the greatest aggregate compensation from the employer.
52-14 (b) Benefits provided to a member under this Act and under
52-15 any other qualified defined benefit plan or plans maintained by the
52-16 employer shall be aggregated for purposes of determining whether
52-17 the limitations in Subsection (a) of this section are met. If the
52-18 aggregate benefits otherwise payable to any member under this Act
52-19 and any other defined benefit plan or plans maintained by the
52-20 employer would otherwise exceed the limitations of Subsection (a)
52-21 of this section, the reductions in benefits shall be made in the
52-22 benefits provided under this Act, to the extent necessary to enable
52-23 each plan or plans to satisfy those limitations, unless the
52-24 retirement board is informed by the administrator of the other plan
52-25 that the reductions are required to be made in the other plan.
53-1 (c) The maximum benefit otherwise permitted under Subsection
53-2 (a) or (b) of this section is subject to the following adjustments:
53-3 (1) If the annual benefit begins before the member
53-4 attains age 62, the $90,000 limitation, as adjusted, shall be
53-5 reduced in a manner prescribed by the Secretary of the Treasury.
53-6 However, that adjustment may not reduce the member's annual benefit
53-7 below $75,000, if the member's benefit begins after age 55, or the
53-8 actuarial equivalent of $75,000 beginning at age 55 if benefits
53-9 begin before age 55.
53-10 (2) If the annual benefit begins after the member
53-11 attains age 65, the $90,000 limitation, as adjusted, will be
53-12 increased so that it is the actuarial equivalent of the $90,000
53-13 limitation at age 65.
53-14 (3) The portion of a member's benefit that is
53-15 attributable to the member's own after tax contributions is not
53-16 part of the annual benefit subject to the limitations of this
53-17 section. Instead, the amount of those contributions is treated as
53-18 an annual addition to a qualified defined contribution plan
53-19 maintained by the employer.
53-20 (d) The $90,000 limitation on annual benefits provided by
53-21 this section, but not the $75,000 limitation, shall be adjusted
53-22 annually as provided by Section 415(d) of the code and the
53-23 regulations prescribed by the Secretary of the Treasury to reflect
53-24 cost of living adjustments. The adjusted limitation is effective
53-25 as of January 1 of each calendar year.
54-1 (e) The limitation provided by this section for a member who
54-2 has separated from service with a vested right to a pension shall
54-3 be adjusted annually as provided by Section 415(d) of the code and
54-4 the regulations prescribed by the Secretary of the Treasury.
54-5 (f) The following interest rate assumptions shall be used in
54-6 computing the limitations under this section:
54-7 (1) For the purpose of determining the portion of the
54-8 annual benefit that is purchased with employee contributions, the
54-9 interest rate assumption is 120 percent of the federal mid-term
54-10 rate, as in effect under Section 1274 of the code, compounded
54-11 annually.
54-12 (2) For the purpose of adjusting the annual benefit to
54-13 a straight life annuity, the interest rate assumption is five
54-14 percent, unless a different rate is required by the Secretary of
54-15 the Treasury.
54-16 (3) For the purpose of adjusting the $90,000
54-17 limitation after a member attains age 65, the interest rate
54-18 assumption is five percent, unless a different rate is required by
54-19 the Secretary of the Treasury, and the mortality decrement shall be
54-20 ignored to the extent that a forfeiture does not occur at death.
54-21 (g) For purposes of this section, an adjustment under
54-22 Section 415(d) of the code may not be taken into account before the
54-23 year for which that adjustment first takes effect. No adjustment
54-24 is required for the value of qualified joint and survivor annuity
54-25 benefits, preretirement death benefits, post retirement medical
55-1 benefits, or post retirement cost-of-living increases made in
55-2 accordance with Section 415(d) of the code and Section 1.415-3(c)
55-3 of the Income Tax Regulations.
55-4 (h) This plan may still pay an annual benefit to any member
55-5 in excess of the member's maximum annual benefit otherwise allowed
55-6 if:
55-7 (1) the annual benefit derived from the employer's
55-8 contributions under all qualified plans subject to the limitations
55-9 of Section 415 of the code does not in the aggregate exceed $10,000
55-10 for the year or for any prior year; and
55-11 (2) the member has not at any time participated in a
55-12 defined contribution plan maintained by the employer.
55-13 For purposes of this subsection, member contributions under
55-14 the Act are not considered a separate defined contribution plan
55-15 maintained by the employer.
55-16 (i) If a member has less than ten years of creditable
55-17 service at the time the member begins to receive benefits under the
55-18 Act, the $90,000 limitation, as adjusted, shall be reduced by
55-19 multiplying the limitation by a fraction in which the numerator is
55-20 the number of years of creditable service and the denominator is
55-21 10; provided, however, that the fraction may not be less than
55-22 one-tenth. If the employee has less than 10 years of employment
55-23 with the employer, the 100 percent limitation of Subsection (a)(2)
55-24 and the $10,000 limitation of Subsection (h) shall be reduced in
55-25 the same manner as provided in the preceding sentence, except the
56-1 numerator shall be the number of years of employment with the
56-2 employer rather than the number of years of creditable service.
56-3 (j) If a member is or has been a member in one or more
56-4 defined contribution plans maintained by the employer, the sum of
56-5 the defined benefit plan fraction and the defined contribution plan
56-6 fraction for any year may not exceed 1.0.
56-7 (k) For purposes of Subsection (j) of this section, the
56-8 defined benefit plan fraction for any year is a fraction in which:
56-9 (1) the numerator is the projected annual benefit of a
56-10 member, determined as of the close of the year pursuant to Section
56-11 1.415-7(b)(3) of the Income Tax Regulations; and
56-12 (2) the denominator is the lesser of:
56-13 (A) the product of 1.25 and the maximum dollar
56-14 limitation provided by Subsection (a)(1) of this section, as
56-15 adjusted, for the year; or
56-16 (B) the product of 1.4 and the amount that may
56-17 be taken into account under Subsection (a)(2) of this section for
56-18 the year.
56-19 (l) For purposes of Subsection (a) of this section, the
56-20 defined contribution plan fraction for any year is a fraction in
56-21 which:
56-22 (1) the numerator is the sum of the annual additions
56-23 to the member's account as of the close of the year; and
56-24 (2) the denominator is the sum of the lesser of the
56-25 following amounts determined for the year and each prior year of
57-1 employment with the employer:
57-2 (A) the product of 1.25 and the dollar
57-3 limitation in effect under Section 415(c)(1)(A) of the code for the
57-4 year, determined without regard to Section 415(c)(6) of the code;
57-5 or
57-6 (B) the product of 1.4 and the amount that may
57-7 be taken into account under Section 415(c)(1)(B) of the code for
57-8 the year.
57-9 The annual additions may not be recomputed for years
57-10 beginning before January 1, 1987, to treat all member contributions
57-11 as annual additions.
57-12 (m) If the sum of the defined benefit plan fraction and the
57-13 defined contribution plan fraction exceeds 1.0 in any year for any
57-14 member, the retirement board shall first request the person or
57-15 persons responsible for the defined contribution plan or plans, to
57-16 reduce, the annual additions to the member's account to the extent
57-17 necessary for that year. If, after limiting to the extent possible
57-18 the annual additions to the member's account for the year, the sum
57-19 of the defined benefit plan fraction and the defined contribution
57-20 plan fraction still exceeds 1.0, the retirement board shall adjust
57-21 the benefits provided under this Act so that the sum of both
57-22 fractions shall not exceed 1.0 in any year for the member.
57-23 (n) For purposes of determining the limits provided by this
57-24 section, all qualified defined benefit plans, whether terminated or
57-25 not, ever maintained by or contributed to by the employer, shall be
58-1 treated as one defined benefit plan, and all qualified defined
58-2 contribution plans, whether terminated or not, ever maintained by
58-3 or contributed to by the employer, shall be treated as one defined
58-4 contribution plan.
58-5 (o) Notwithstanding anything contained in this section to
58-6 the contrary, the limitations, adjustments, and other requirements
58-7 prescribed by this Act shall at all times comply with the
58-8 requirements of Section 415 of the code and all regulations
58-9 promulgated under the code. If any provision of Section 415 of the
58-10 code is repealed or is not enforced by the Internal Revenue
58-11 Service, that provision may not reduce the benefits of any member
58-12 after the effective date of the repeal of the provision or during
58-13 the period in which the provision is not enforced.
58-14 Sec. 10. METHOD OF FINANCING. (a) Each active-contributory
58-15 member shall make deposits to the retirement system at a rate equal
58-16 to seven percent of the member's compensation, pay, or salary,
58-17 exclusive of overtime, incentive, or terminal pay<, and
58-18 disregarding compensation, pay, or salary in any month in excess of
58-19 $16,666>. Deposits shall be made by payroll deduction. If a
58-20 regular full-time employee works at least 75 percent of a normal
58-21 40-hour work week but less than the full 40 hours, the employee
58-22 shall make deposits as though working a normal 40-hour work week
58-23 even though the rate of contribution may exceed seven percent of
58-24 the employee's actual compensation, pay, or salary, and the
58-25 employee's average final compensation shall be computed on the
59-1 basis of the compensation, pay, or salary for a normal 40-hour work
59-2 week. No deposits may be made nor membership service credit
59-3 received for periods during which an employee's authorized normal
59-4 work week is less than 75 percent of a normal 40-hour work week. A
59-5 person who is eligible for inactive-contributory membership status
59-6 and who chooses to be an inactive-contributory member shall make
59-7 deposits to the retirement system each pay period <biweekly> in an
59-8 amount that is equal to the amount of the member's deposit for the
59-9 last complete <biweekly> pay period that the member was employed by
59-10 the employer. The regular full-time employee <city, a hospital
59-11 authority, or the board. The> members, by a majority vote of all
59-12 such members voting in favor of an increase in contributions above
59-13 seven percent, may increase each member's contributions above seven
59-14 percent in whatever amount the retirement <pension> board
59-15 recommends. Each employer <The city> shall contribute amounts
59-16 equal to seven percent of the compensation, pay, or salary of each
59-17 active-contributory member and each inactive-contributory member
59-18 employed by the employer <city>, exclusive of overtime, incentive,
59-19 or terminal pay<, and disregarding compensation, pay, or salary in
59-20 any month in excess of $16,666>. If a regular full-time employee
59-21 of the employer <city> works at least 75 percent of a normal
59-22 40-hour work week but less than the full 40 hours, the employer
59-23 <city> shall make contributions for that employee as though that
59-24 employee works a normal 40-hour work week even though the rate of
59-25 contribution may exceed seven percent of that employee's actual
60-1 compensation, pay, or salary. The governing body of the city
60-2 <council> may authorize the city to make additional contributions
60-3 to the system in whatever amount the governing body may determine.
60-4 If the governing body <city council may determine. The board shall
60-5 pay from the fund contributions in amounts equal to seven percent
60-6 of the compensation, pay, or salary of each active-contributory
60-7 member and each inactive-contributory member employed by the board,
60-8 exclusive of overtime, incentive, or terminal pay, disregarding
60-9 compensation, pay, or salary in any month in excess of $16,666. If
60-10 a regular full-time employee of the board works at least 75 percent
60-11 of a normal 40-hour work week but less than the full 40 hours, the
60-12 board shall make contributions for the employee as though the
60-13 employee works a normal 40-hour work week even though the rate of
60-14 contribution may exceed seven percent of the employee's actual
60-15 compensation, pay, or salary. If the city council> authorizes
60-16 additional contributions to the system by the city for city
60-17 employees, the board of each employer may increase the
60-18 contributions for such employer's respective <the board> employees
60-19 by the same percentage. Employer contributions <Each hospital
60-20 authority shall contribute amounts equal to seven percent of the
60-21 compensation, pay, or salary of each active-contributory member and
60-22 each inactive-contributory member employed by the hospital
60-23 authority, exclusive of overtime, incentive, or terminal pay,
60-24 disregarding compensation, pay, or salary in any month in excess of
60-25 $16,666. If a regular full-time employee of a hospital authority
61-1 works at least 75 percent of a normal 40-hour work week but less
61-2 than the full 40 hours, the hospital authority shall make
61-3 contributions for that employee as though that employee works a
61-4 normal 40-hour work week even though the rate of contribution may
61-5 exceed seven percent of that employee's actual compensation, pay,
61-6 or salary. If the city council authorizes additional contributions
61-7 to the system by the city for city employees, each hospital
61-8 authority may increase the contributions for the hospital authority
61-9 employees by the same percentage. Contributions by the city, a
61-10 hospital authority, and the board> shall be made each pay period.
61-11 (b) In addition to the contributions by the city required by
61-12 Subsection (a) of this section, the city shall contribute to the
61-13 retirement fund each month two-thirds of such amounts as are
61-14 required for the payment of prior service pensions that are payable
61-15 during that month, and one-third of each prior service pension
61-16 payable that month shall be made from Fund No. 2.
61-17 (c) Employer contributions <Contributions by the city> shall
61-18 be paid to the retirement system after appropriation by the
61-19 respective governing body or board <city council>.
61-20 (d) Expenses for administration and operation of the
61-21 retirement system that are approved by the retirement board shall
61-22 be paid by the retirement board from funds of the retirement
61-23 system. Such expenses shall include salaries of retirement board
61-24 employees and fees for actuarial services, legal counsel services,
61-25 physician services, accountant services, annual audits, investment
62-1 manager services, investment consultant services, preparation of
62-2 annual reports, and staff assistance.
62-3 (e) Each employer shall pick up the contributions required
62-4 to be made to the fund by its respective employees. Active
62-5 contributory member <The city shall pick up the city employee
62-6 contributions to the fund. The board shall pick up the board
62-7 employee contributions to the fund. Each hospital authority shall
62-8 pick up hospital authority employee contributions to the fund.
62-9 Member> deposits will be picked up by each employer by a reduction
62-10 in each such employee's <their> monetary compensation. All such
62-11 employee contributions <Contributions picked up> shall be treated
62-12 as employer contributions in accordance with Section 414(h)(2) of
62-13 the <Internal Revenue> code <of 1986 (26 U.S.C. Section
62-14 414(h)(2))> for the purpose of determining tax treatment of the
62-15 amounts under the code. Such <Internal Revenue Code of 1986.
62-16 These> contributions are not includable in the gross income of the
62-17 employee until such time as they are distributed or made available
62-18 to the employee. Each employee deposit <Employee deposits> picked
62-19 up as provided by this subsection shall be credited to the
62-20 individual accumulated deposits account of each such <affected>
62-21 employee and shall be treated as compensation of the employee
62-22 <employees> for all other purposes of this Act <statute> and for
62-23 the purpose of determining contributions to social security. The
62-24 provisions of this subsection shall remain in effect as long as the
62-25 plan covering employees of the employers <city> is a qualified
63-1 retirement plan under Section 401(a) of the code <Internal Revenue
63-2 Code of 1986 (26 U.S.C. Section 401(a)),> and its related trust is
63-3 tax exempt under Section 501(a) of the code <Internal Revenue Code
63-4 of 1986 (26 U.S.C. Section 501(a))>.
63-5 (f) Under no circumstances and in no event may any of the
63-6 contributions and income of the retirement system revert to the
63-7 employer or otherwise be diverted to or used for any purpose other
63-8 than <Before the satisfaction of all liabilities incurred with
63-9 respect to members and their beneficiaries under this Act, the
63-10 corpus or income of the fund may not be used for, or diverted to,
63-11 purposes other than for> the exclusive benefit of the members,
63-12 retirees and their beneficiaries. It shall be impossible for the
63-13 diversion or use prohibited by the preceding sentence to occur,
63-14 whether by operation or natural termination of the retirement
63-15 system, by power of revocation or amendment, by the happening of a
63-16 contingency, by collateral arrangement, or by any other means.
63-17 Sec. 11 <10>. INVESTMENTS OF THE RETIREMENT BOARD. (a) The
63-18 retirement board shall be the trustee of the funds of the
63-19 retirement system and shall have full power in its sole discretion
63-20 to invest and reinvest, alter, and change the form of investment of
63-21 the funds. The retirement board shall invest the funds in whatever
63-22 instrument or investments the retirement board considers prudent.
63-23 In making investments for the funds, the retirement board shall
63-24 discharge its duties:
63-25 (1) for the exclusive purposes of:
64-1 (A) providing benefits to members and their
64-2 beneficiaries; and
64-3 (B) defraying reasonable expenses of
64-4 administering the funds;
64-5 (2) with the care, skill, prudence, and diligence
64-6 under the circumstances then prevailing that a prudent person
64-7 acting in a like capacity and familiar with such matters would use
64-8 in the conduct of an enterprise of a like character and with like
64-9 aims;
64-10 (3) by diversifying the investments of the funds to
64-11 minimize the risk of large losses, unless under the circumstances
64-12 it is clearly prudent not to do so; and
64-13 (4) in accordance with the laws, documents, and
64-14 instruments governing the funds.
64-15 (b) A member of the retirement board is not liable for any
64-16 losses incurred in the investment of the fund in accordance with
64-17 this section.
64-18 (c) No member of the retirement board and no employee of the
64-19 retirement board, except as herein provided, shall have any
64-20 interest, directly or indirectly, in the funds or receive any pay
64-21 or emolument for his or her services. No member of the retirement
64-22 board or employee thereof shall, directly or indirectly, for
64-23 himself or herself or as an agent, in any manner use the funds or
64-24 deposits of the retirement system except to make such current and
64-25 necessary payments as are authorized by the retirement board, nor
65-1 shall any member or employee of the retirement board become an
65-2 endorser or surety or in any manner an obligor <obligator> for
65-3 money loaned by or borrowed from the retirement system <board>.
65-4 (d) Subject to the exceptions provided by this subsection,
65-5 the funds or money mentioned in this Act are not assignable and are
65-6 not subject to execution, levy, attachment, garnishment, the
65-7 operation of bankruptcy or insolvency law, or any other process of
65-8 law whatsoever. This subsection does not apply to a qualified
65-9 domestic relations order. The retirement board shall establish <a>
65-10 written procedures <procedure> to determine the qualified status of
65-11 domestic relations orders and to administer distributions under
65-12 those orders. To the extent necessary to authorize distributions
65-13 pursuant to a qualified domestic relations order, a former spouse
65-14 of a member will be treated as the spouse or surviving spouse of
65-15 the member.
65-16 (e) Subject to the exceptions provided by this subsection,
65-17 the right of a member to a pension, an annuity, a disability
65-18 retirement allowance, or a retirement allowance, to the return of
65-19 accumulated deposits, the pension, annuity, or retirement allowance
65-20 itself, any optional benefit or death benefits, any other right
65-21 accrued or accruing to any person under the provisions of this Act
65-22 is <are> unassignable and is <are> not subject to execution, levy,
65-23 attachment, garnishment, the operation of bankruptcy or insolvency
65-24 law, or any other process of law whatsoever. This subsection does
65-25 not apply to a qualified domestic relations order.
66-1 (f) If the retirement board makes an election to have
66-2 Subchapters A and C of Chapter 804, Government Code, and their
66-3 subsequent amendments, apply to the system, the death of an
66-4 alternate payee, as defined by Section 804.001, Government Code,
66-5 and its subsequent amendments, or the death of a member's spouse
66-6 terminates any interest of the alternate payee or spouse that would
66-7 otherwise exist under this Act, except an interest accrued by that
66-8 person as a member.
66-9 Sec. 12 <11>. Miscellaneous. (a) A person who with intent
66-10 to deceive makes any statement or report required under this Act
66-11 which is untrue or falsifies or knowingly permits to be falsified
66-12 any record or records of the retirement system shall forfeit any
66-13 office or rights held by the person under the system, and such
66-14 deception, falsification, or acquiescence in falsification is
66-15 deemed a Class B misdemeanor.
66-16 (b) If any change or error in the records of the retirement
66-17 system is discovered or results in any member, surviving spouse, or
66-18 beneficiary receiving from the retirement system more or less than
66-19 the member, surviving spouse, or beneficiary would have been
66-20 entitled to receive had the records been correct, the retirement
66-21 board shall have the power to correct such error and as far as
66-22 possible to adjust the payments in such a manner that the actuarial
66-23 equivalent of the benefits to which the member, surviving spouse,
66-24 or beneficiary was correctly entitled shall be paid.
66-25 (c) On the full or partial termination of the retirement and
67-1 pensioning system, or on the complete discontinuance of
67-2 contributions by all employers <the city, all hospital authorities,
67-3 and the board> under this Act, the retirement allowance of each
67-4 affected <a> member who is employed by an employer <the city, a
67-5 hospital authority, or the board> on the date of termination is
67-6 determined by reference to the member's average final compensation
67-7 and creditable service determined as of the date of termination or
67-8 partial termination of the system or the date of discontinuance of
67-9 deposits as if the member had attained normal retirement age on
67-10 that date, and such amount shall become nonforfeitable to the
67-11 extent then funded. This subsection does not accelerate the date
67-12 on which the payment of that benefit would otherwise begin.
67-13 (d) Any other provision in this Act to the contrary, in the
67-14 event of a termination of the retirement and pensioning system, the
67-15 benefit of any highly compensated employee or former employee is
67-16 limited to a benefit that is nondiscriminatory under Section
67-17 401(a)(4) of the code. Benefits distributed to any of the 25 most
67-18 highly compensated active and former highly compensated employees
67-19 are restricted such that the annual payments are no greater than an
67-20 amount equal to the payment that would be made on behalf of an
67-21 employee under a single life annuity that is the <A member who is
67-22 entitled to a benefit, including a benefit consisting solely of a
67-23 distribution of the member's accumulated deposits, from the system
67-24 may instruct the system to pay the single lump-sum> actuarial
67-25 equivalent of the sum of the employee's accrued benefit and the
68-1 employee's other benefits under the plan. The preceding sentence
68-2 shall not apply if: (1) after payment of the benefit to an employee
68-3 described in that sentence, the value of plan assets equals or
68-4 exceeds 110 percent of the value of the current liabilities, as
68-5 defined in Section 412(l)(7) of the code, or (2) the value of the
68-6 benefits for an employee described in that paragraph is less than
68-7 one percent of the value of current liabilities. For purposes of
68-8 this subsection, benefit includes loans in excess of the amount set
68-9 forth in Section 72(p)(2)(A) of the code, any periodic income, any
68-10 withdrawal values payable to a living employee and any death
68-11 benefits not provided for by insurance on the employee's life.
68-12 (e) Notwithstanding any provision of this Act to the
68-13 contrary that would otherwise limit a distributee's election, a
68-14 distributee may elect, at the time and in the manner prescribed by
68-15 the retirement board, to have any portion of an eligible rollover
68-16 distribution paid directly to an eligible retirement plan specified
68-17 by the distributee in a direct rollover.
68-18 For purposes of this Subsection (e) of this section:
68-19 (1) An eligible rollover distribution is any
68-20 distribution of all or any portion of the balance to the credit of
68-21 the distributee, except that an eligible rollover distribution does
68-22 not include: (1) any distribution that is one of a series of
68-23 substantially equal periodic payments (not less frequently than
68-24 annually) made over the life (or life expectancy) of the
68-25 distributee or the joint lives (or joint life expectancies) of the
69-1 distributee and the distributee's designated beneficiary; (2) any
69-2 series of payments for a specified period of ten years or more; (3)
69-3 any distribution to the extent such distribution is required under
69-4 Section 401(a)(9) of the code; or (4) the portion of any
69-5 distribution that is not includable in gross income (determined
69-6 without regard to the exclusion for net unrealized appreciation
69-7 with respect to employer securities).
69-8 (2) An "eligible retirement plan" is an individual
69-9 retirement account described in Section 408(a) of the code, an
69-10 individual retirement annuity described in Section 408(b) of the
69-11 code, an annuity plan described in Section 403(a) of the code, or a
69-12 qualified trust described in Section 401(a) of the code, that
69-13 accepts the distributee's eligible rollover distribution. However,
69-14 in the case of an eligible rollover distribution to the surviving
69-15 spouse, an eligible retirement plan is an individual retirement
69-16 account or individual retirement annuity only.
69-17 (3) A "distributee" includes an employee or former
69-18 employee. In addition, the employee's or former employee's
69-19 surviving spouse and the employee's or former employee's spouse or
69-20 former spouse who is the alternate payee under a qualified domestic
69-21 relations order, as defined in Section 414(p) of the code, are
69-22 distributees with regard to the interest of the spouse or the
69-23 former spouse.
69-24 (4) A "direct rollover" is a payment by the retirement
69-25 system to the eligible retirement plan specified by the
70-1 distributee.
70-2 Sec. 13. CONFIDENTIALITY. (a) Information contained in
70-3 records that are in the custody of the retirement board or the
70-4 system concerning an individual member, retiree, annuitant,
70-5 beneficiary, or alternate payee is confidential under this Section
70-6 13 and may not be disclosed in a form identifiable with a specific
70-7 individual unless:
70-8 (1) the information is disclosed to:
70-9 (A) the individual or the individual's attorney,
70-10 guardian, executor, administrator, conservator, or other person who
70-11 the pension officer determines is acting in the interest of the
70-12 individual or the individual's estate;
70-13 (B) a spouse or former spouse of the individual
70-14 if the pension officer determines that the information is relevant
70-15 to the spouse's or former spouse's interest in member accounts,
70-16 benefits, or other amounts payable by the retirement system;
70-17 (C) a governmental official or employee if the
70-18 pension officer determines that disclosure of the information
70-19 requested is reasonably necessary to the performance of the duties
70-20 of the official or employee;
70-21 (D) the individual's employer as defined in this
70-22 Act; or
70-23 (E) a person authorized by the individual in
70-24 writing to receive the information; or
70-25 (2) the information is disclosed pursuant to a
71-1 subpoena and the pension officer determines that the individual
71-2 will have a reasonable opportunity to contest the subpoena.
71-3 (b) This section does not prevent the disclosure of the
71-4 status or identity of an individual as a member, former member,
71-5 retiree, deceased member or retiree, beneficiary, or alternate
71-6 payee of the retirement system.
71-7 (c) The pension officer may designate other employees of the
71-8 retirement system to make the necessary determinations under
71-9 Subsection (a) of this section.
71-10 (d) A determination and disclosure under Subsection (a) of
71-11 this section may be made without notice to the individual member,
71-12 retiree, annuitant, beneficiary, or alternate payee. <that benefit
71-13 directly to:>
71-14 <(1) another trust forming part of a pension,
71-15 profit-sharing, or stock bonus plan maintained by that member's new
71-16 employer and represented by that employer in writing as meeting the
71-17 requirements of 26 U.S.C. Section 401(a) and its subsequent
71-18 amendments, subject to the acceptance by the trust to which those
71-19 transfers are made of those transfers; or>
71-20 <(2) an eligible transferee plan in accordance with
71-21 the federal Unemployment Compensation Amendments of 1992 (Pub. L.
71-22 No. 102-318) and its subsequent amendments governing direct
71-23 rollovers of eligible rollover distributions from qualified
71-24 retirement plans.>
71-25 <(e) This Act does not grant a contract of employment
72-1 between a member and the city, a hospital authority, or the board.>
72-2 SECTION 2. (a) Retirement allowances being paid by the
72-3 retirement and pensioning system created by Chapter 451, Acts of
72-4 the 72nd Legislature, Regular Session, 1991 (Article 6243n,
72-5 Vernon's Texas Civil Statutes), to members of the retirement
72-6 system, or to the beneficiaries of those members, who retired
72-7 before October 1, 1995, are increased beginning with the payments
72-8 due at the end of October 1995.
72-9 (b) The amount of the increase for a member, or the
72-10 beneficiary of the member, is by a percentage equal to:
72-11 (1) 2.3 percent divided by the retirement formula in
72-12 effect on the date of the member's retirement;
72-13 (2) minus one; and
72-14 (3) multiplied by 100.
72-15 SECTION 3. This Act takes effect October 1, 1995.
72-16 SECTION 4. The importance of this legislation and the
72-17 crowded condition of the calendars in both houses create an
72-18 emergency and an imperative public necessity that the
72-19 constitutional rule requiring bills to be read on three several
72-20 days in each house be suspended, and this rule is hereby suspended.