By Greenberg 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 72 Legislature, Regular
1-6 Session, 1991 (Article 6243n, Vernon's Texas Civil Statutes), is
1-7 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 <board which is>
2-4 retirement board from time to time upon the advice of the
2-5 retirement board's actuary and credited as of December 31 to
2-6 amounts standing to the credit of the member on January 1 of the
2-7 same calendar year.
2-8 (2) "Actual retirement date" means the last day of the
2-9 month during which a member retires.
2-10 (3) "Actuarial equivalent" means any benefit of equal
2-11 present value when computed on the basis of actuarial tables
2-12 adopted by the <board in the proper administration of the
2-13 retirement system.> retirement board from time to time upon the
2-14 advice of the retirement board's actuary. The actuarial tables
2-15 adopted for this purpose shall be clearly identified by resolution
2-16 adopted by the retirement board.
2-17 (4) "Actuary" means the technical advisor of the
2-18 retirement board regarding the operations which are based on
2-19 mortality, service, and compensation experience.
2-20 (5) "Agency of the Municipality" means any agency or
2-21 instrumentality of the city, or governmental or publicly owned
2-22 legal entity created by the municipality, subsequent to the
2-23 effective date of this Act, to perform or provide a public service
2-24 or function and which entity is not a hospital authority and
2-25 employs one or more employees to provide services and/or accomplish
3-1 its public purpose.
3-2 (6) "Approved medical leave of absence" means any
3-3 absence authorized in writing by the member's employer for the
3-4 purpose of enabling the member to obtain medical care or treatment
3-5 or to recover from any sickness or injury.
3-6 (7) <(5)> "Authorized leave of absence" means military
3-7 leave of absence, including a period of not more than <the 90th
3-8 day> 90 days after the date of release from active military duty,
3-9 or any other leave of absence during which a member is otherwise
3-10 authorized by law to continue making contributions to the system.
3-11 The term does not include an approved medical leave of absence.
3-12 (8) <(6)> "Average final compensation" means the
3-13 average monthly compensation, <pay, or salary, exclusive of>as
3-14 defined and limited by section 2 (12) of this act, less overtime,
3-15 incentive, and terminal pay,<that is $16,666 or less and> plus, (i)
3-16 amounts picked up by the employer pursuant to Section 10(e) of this
3-17 Act, (ii) amounts not otherwise included in the member's taxable
3-18 income by reason of either an election under a "cafeteria"plan as
3-19 described in Code Section 125 or deferrals under a plan of deferred
3-20 compensation within the scope of Code Section 457, to the extent
3-21 not in excess of $12,500 for persons who first become members after
3-22 1995 that is earned by a member during, as 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 <any person, trust, or
4-10 estate properly designated by a member to receive benefits from the
4-11 system> the member's designated beneficiary. 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<,
4-14 the member's beneficiary is> (or dies on or as a result of the same
4-15 event that caused the member's death and does not survive the
4-16 member by 48 hours), the member's spouse or, if the member does not
4-17 have 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.
4-20 (11) "Code" means the United States Internal Revenue
4-21 Code of 1986 (26 U.S.C. Section 1 et seq.) and its successors.
4-22 (12) "Compensation" means, with respect to any member,
4-23 such member's wages, within the meaning of Section 3401(a) of the
4-24 Code (for purposes of income tax withholding at the source) but
4-25 determined without regard to any rules that limit the remuneration
5-1 included in wages based on the nature or location of the employment
5-2 or the services performed (such as the exception for agricultural
5-3 labor in Section 3401(a)(2) of the Code). Compensation in excess
5-4 of $12,500 per month for any employee who first becomes a member in
5-5 a year commencing after 1995 shall be disregarded. The $12,500
5-6 limitation shall be adjusted for cost of living increases as
5-7 provided under Section 401(a)(17) of the Code. In applying the
5-8 limitations, the family group of a highly compensated employee who
5-9 is one of the ten employees of the employer paid the highest
5-10 compensation during the year, shall be treated as a single
5-11 employee, except that, for this purpose, family members shall
5-12 include only the affected highly compensated employee's spouse and
5-13 lineal descendants who have not attained age nineteen (19) before
5-14 the close of the year. If, as a result of the application of such
5-15 rules, the adjusted $12,500 limitation is exceeded, the limitation
5-16 shall be prorated among the affected family members' compensation
5-17 prior to the application of the limitation or the limitation shall
5-18 be adjusted in accordance with any other method permitted by
5-19 Internal Revenue Service guidelines.
5-20 (13) "Consumer price index" means the Consumer Price
5-21 Index for Urban Wage Earners and Clerical Workers (United States
5-22 City average-all items) published monthly by the Bureau of Labor
5-23 Statistics, United States Department of Labor or its successor in
5-24 function.
5-25 (14) <(8)> "Creditable service" means the total of
6-1 prior service and membership service.
6-2 (15) <(9)> "Current service annuity" means a series of
6-3 equal monthly payments payable for the member's life after
6-4 retirement for membership service from funds of the retirement
6-5 system equal to one-twelfth of the product of <2.2> 2.3 percent of
6-6 a member's average final compensation multiplied by the number of
6-7 months of membership service. However, if payments commence before
6-8 the member's normal retirement date, the amount of the monthly
6-9 payments to which the member would otherwise be entitled shall be
6-10 reduced as provided by Section 7(e) of this Act.
6-11 (16)<(10)> "Deposits" means the amounts required to be
6-12 paid by members in accordance with the provisions of this Act.
6-13 (17) "Designated beneficiary" means any person, trust,
6-14 or estate properly designated in writing by a member to receive
6-15 benefits from the system in the event of the member's death. If
6-16 the member is married an individual other than the member's spouse
6-17 may be the designated beneficiary only if the spouse consents to
6-18 such designation in the form and manner prescribed by the
6-19 retirement board.
6-20 (18)<(11)> "Disability retirement" means the
6-21 termination of employment of a member because of disability with a
6-22 disability retirement allowance as provided in Section 8 of this
6-23 Act.
6-24 (19) "Employer" means the city or municipality
6-25 described in Section 1 of this Act, a hospital authority as defined
7-1 in Section 2(24) of this Act or the retirement board defined in
7-2 Section 2(42) of this Act, or an agency of the municipality as
7-3 defined in Section 2(5) of this Act.
7-4 (20)<(12)> "Fund" means the trust fund containing the
7-5 aggregate of the assets of Fund No. 1 and Fund No. 2.
7-6 (21)<(13)> "Fund No. 1" means the fund in which shall
7-7 be kept all accumulated deposits of members who have not withdrawn
7-8 from the system.
7-9 (22)<(14)> "Fund No. 2" means the fund in which shall
7-10 be kept all money contributed by the city on behalf of city
7-11 employees, all money contributed by a hospital authority on behalf
7-12 of hospital authority employees, and all money contributed by the
7-13 retirement board on behalf of retirement board employees, interest
7-14 earned thereon, and all accumulations and earnings of the system.
7-15 (23) "Governing Body" means the City Council of the
7-16 municipality described in Section 1, and its successors as
7-17 constituted from time to time.
7-18 (24)<(15)> "Hospital authority" means a municipal
7-19 hospital authority created after September 1, 1992, under Chapter
7-20 262, Health and Safety Code, and its subsequent amendments, by a
7-21 city governed by this Act.
7-22 (25)<(16)> "Investment consultant" means the person or
7-23 entity that monitors the investment performance of the system and
7-24 provides such other services as requested by the retirement board.
7-25 (26)<(17)> "Investment manager" means the <person>
8-1 persons or <entity> entities that <has> have the power to manage,
8-2 acquire, or dispose of assets of Fund No. 1 or Fund No. 2 on behalf
8-3 of the retirement system and < acknowledges> that acknowledge
8-4 fiduciary responsibility to the system in writing. <The> An
8-5 investment manager must be a person, firm, or corporation
8-6 registered as an investment adviser under the Investment Advisers
8-7 Act of 1940, a bank, or an insurance company qualified to manage,
8-8 acquire or dispose of assets under the laws of more than one state
8-9 including the State of Texas and must otherwise meet the
8-10 requirements of Section 802.204, Government Code, and its
8-11 subsequent amendments.
8-12 (27)<(18)> "Life annuity" means a series of equal
8-13 monthly payments, payable after retirement for a member's life,
8-14 consisting of a combination of prior service pension and current
8-15 service annuity to which the member is entitled.
8-16 (28)<(19)> "Life annuity (modified cash refund)" means
8-17 a life annuity providing that, in the event of death of the retired
8-18 member before that member has received payments under the life
8-19 annuity <totalling> totaling the amount of that member's
8-20 accumulated deposits at the date of retirement, the excess of such
8-21 accumulated deposits over the payments made shall be paid in one
8-22 lump sum to the member's designated beneficiary.
8-23 (29) "Malfeasance" means (A) willful misconduct or (B)
8-24 the knowingly improper performance of any act, duty or
8-25 responsibility under this Act, including non-performance; which
9-1 interrupts or interferes with the administration, operation and
9-2 management of the retirement system or any person's duties under
9-3 this Act.
9-4 (30)<(20)> "Member" means any:
9-5 (A) regular full <time employee who has
9-6 completed six continuous months of employment with the city, a
9-7 hospital authority, or the board and who has been removed from the
9-8 employee's initial probationary status;>- time employee of an
9-9 employer; and
9-10 (B) former regular full-time employee who has
9-11 not withdrawn the member's accumulated deposits from the system.
9-12 In any case of doubt regarding the eligibility of any
9-13 employee to become or remain a member of the retirement system, the
9-14 decision of the retirement board is final.
9-15 (31)<(21)> "Membership service" means the period of
9-16 time on or after January 1, 1941, during which a person is or was
9-17 employed as a regular full-time employee or is or was on an
9-18 authorized leave of absence and who is eligible for participation
9-19 in the system and pays into and keeps on deposit the amounts of
9-20 money prescribed to be paid by the member into the system. The
9-21 term includes redeemed membership service.
9-22 (32)<(22)> "Normal retirement age" means attainment of
9-23 age 62.
9-24 (33)<(23)> "Normal retirement date" means the earlier
9-25 of the date on which the member has completed 25 years of
10-1 creditable service or has reached <the age of 62> normal retirement
10-2 age.
10-3 (34)<(24)> "Prior service" means service as an
10-4 employee of the city rendered prior to January 1, 1941, for which a
10-5 pension credit is allowable under prior law governing the
10-6 retirement system of that city and includes redeemed prior service.
10-7 (35)<(25)> "Prior service pension" means a series of
10-8 equal monthly payments payable from funds of the retirement system
10-9 for a member's life after retirement for prior service equal to
10-10 one-twelfth of the product of <2.2> 2.3 percent of the member's
10-11 average monthly earnings during a period of five years preceding
10-12 January 1, 1941, multiplied by the number of months of prior
10-13 service. On retirement at an age other than normal retirement
10-14 age, the monthly prior service pension herein prescribed shall be
10-15 the actuarial equivalent thereof at the member's <service pension
10-16 herein prescribed shall be the actuarial equivalent thereof at the
10-17 member's> actual retirement date, based on the schedule or
10-18 schedules of payments approved by the actuary and adopted by the
10-19 retirement board and in effect on the member's actual retirement
10-20 date.
10-21 (36)<(26)> "Qualified domestic relations order" has
10-22 the meaning assigned by Section 804.001, Government Code, and its
10-23 subsequent amendments.
10-24 (37)<(27)> "Redeemed membership service" means
10-25 membership service reinstated in accordance with Section 5(e) of
11-1 this Act.
11-2 (38)<(28)> "Redeemed prior service" means prior
11-3 service reinstated in accordance with Section 5(e) of this Act.
11-4 (39)<(29)> "Regular full-time employee" means an
11-5 individual who is employed by the city, a hospital authority, or
11-6 the board,: who is not a commissioned civil service police officer
11-7 or fire fighter, the mayor, or a member of the <city council, whose
11-8 position> governing body; who is classified in the annual <city,
11-9 board, or hospital authority> budget of an employer for employment
11-10 for the full calendar year<, whose position is classified in the
11-11 annual city, board, or hospital authority budget to continue from
11-12 year to year,>; and who works 30 hours or more in a normal 40-hour
11-13 work week. The term does not include an individual whose position
11-14 is classified as seasonal or temporary by the <city, a hospital
11-15 authority, or the board> employer, even if the individual works 30
11-16 hours or more in a normal 40-hour work week in which the individual
11-17 is employed.
11-18 (40)<(30)> "Retirement" means the termination of
11-19 employment of a member after the member becomes entitled to receive
11-20 a retirement allowance in accordance with the provisions of this
11-21 Act.
11-22 (41)<(31)> "Retirement allowance" means the life
11-23 annuity (modified cash refund) to which a member may be entitled
11-24 under this Act, including annuities payable on disability
11-25 retirement or on early retirement.
12-1 (42)<(32)> "Retirement board" <or "board"> means the
12-2 board of trustees of the retirement and pensioning system herein
12-3 created for the purpose of administering the retirement system.
12-4 (43)<(33)> "Retirement system," "retirement and
12-5 pensioning system," "pension system," or "system" means the
12-6 retirement and pensioning system created by this Act for a city
12-7 governed by this Act.
12-8 (44)<(34)> "Year of creditable service" means a
12-9 12-month period of creditable service determined in accordance with
12-10 uniform and nondiscriminatory rules established by the retirement
12-11 board.
12-12 Sec. 3. Establishment and applicability. (a) Except as
12-13 provided by <Subsection> subsection (b) of this section and subject
12-14 to the authority granted the retirement board in Section
12-15 7(d)<(2)(D)> of this Act, members who retired prior to September 1,
12-16 1993, shall continue to receive the same retirement allowances they
12-17 were receiving prior to that date, together with any cost of living
12-18 adjustments authorized and paid in accordance with this Act.
12-19 (b) Members who retired during the calendar years 1962 and
12-20 1963 shall continue to receive a benefit in accordance with their
12-21 election, if any, and the retirement allowances computed in the
12-22 manner prescribed by an applicable city ordinance in effect as of
12-23 January 1, 1962, or in the manner in which said allowances would
12-24 have been computed under applicable city ordinances existing
12-25 immediately prior to the enactments of January 1, 1962, together
13-1 with any cost of living adjustments authorized and paid in
13-2 accordance with this Act.
13-3 Sec. 4. Administration. (a) There is hereby created a
13-4 retirement board of the retirement and pensioning system, in which
13-5 retirement board is hereby vested the power and responsibility for
13-6 the proper and effective general administration, management, and
13-7 operation of the retirement system. The retirement board shall be
13-8 organized immediately after its members have qualified and taken
13-9 the oath of office.
13-10 (b) The retirement board shall be composed of 11 members as
13-11 follows:
13-12 (1) place one: one <city council> member of the
13-13 governing body, designated by the <city council> governing body,
13-14 who may be removed and replaced or redesignated by the <city
13-15 council> governing body at any time;
13-16 (2) place two: the city manager of the city or his or
13-17 her designee;
13-18 (3) <place three: the director of finance of the city
13-19 or his or her designee;>
13-20 <(4)> places <four> three through <six:> five: three
13-21 qualified voters of the city who have been city residents for the
13-22 preceding five years and who are not <city> employees, former
13-23 employees, or officers<;> of an employer;
13-24 (4) <(5)> places <seven> six through <10:> nine: fou
13-25 active-contributory members elected by the active-contributory
14-1 members; and
14-2 (5) <(6) place 11: a retired member who will be>
14-3 places ten and eleven: two retired members elected by the retired
14-4 members.
14-5 (c)(1) The place one retirement board member serves at the
14-6 pleasure of the <city council> governing body and until the
14-7 <council redesignated> governing body redesignates the place one
14-8 member, or until the member is no longer able to serve because of
14-9 death, resignation, termination of position as a <city council>
14-10 member of the governing body, or disability. The <city council>
14-11 governing body shall appoint a person to fill a vacancy in place
14-12 one not later than the 90th day after the first date of the
14-13 vacancy.
14-14 (2) In December of every second even-numbered year,
14-15 the <city council> governing body shall appoint, to place <four>
14-16 three, one person meeting the qualifications for place <four>
14-17 three. In December of every second odd-numbered year, the <city
14-18 council> governing body shall appoint, to place <five> four, one
14-19 person meeting the qualifications for place <five> four. In
14-20 December of every second odd-numbered year, the retirement board
14-21 shall appoint, to place <six> five, one person meeting the
14-22 qualifications for place <six. Board> five. Retirement board
14-23 members holding places <four> three through <six> five each serve a
14-24 four-year term beginning on January 1 of the year after their
14-25 appointment, unless service is earlier terminated by the death,
15-1 disability, resignation, or removal of that retirement board member
15-2 or the retirement board member ceases to meet the qualifications of
15-3 a citizen retirement board member as set forth in Section 4(b) of
15-4 this Act. The <city council> governing body shall fill a vacancy
15-5 in place three or four <or five> with a person meeting the
15-6 qualifications for that place not later than the 90th day after the
15-7 first date of the vacancy. If the <city council> governing body
15-8 fails to appoint an eligible person to fill a vacancy in place
15-9 <four> three or five within the 90-day period, the retirement board
15-10 may appoint a person meeting the qualifications for that place to
15-11 fill the vacancy for the remainder of the unexpired term. The
15-12 retirement board shall appoint a person meeting the qualifications
15-13 for place <six> five to fill a vacancy in place <six> five for the
15-14 remainder of the unexpired term.
15-15 (3) The places <seven> six through <10> nine
15-16 retirement board members each serve on the retirement board for a
15-17 four-year term, unless service is earlier terminated by the death,
15-18 resignation, termination of employment, disability, retirement, or
15-19 removal of <that> the retirement board member. The retirement
15-20 board shall appoint an active-contributory member to fill a vacancy
15-21 in each of places <seven> six through <10> nine for the remainder
15-22 of the unexpired term.
15-23 (4) The <place 11 board member serves for a
15-24 four->places ten and eleven retirement board members serve for a
15-25 four-year term, unless that service is earlier terminated by the
16-1 death, disability, resignation, or removal of the member. The
16-2 retirement board shall appoint a retired member to fill a vacancy
16-3 in <place 11> places ten or eleven for the remainder of the
16-4 unexpired term.
16-5 (d) Members for places <seven> six through <11> eleven shall
16-6 be elected in accordance with the following provisions:
16-7 (1) Only active-contributory members shall be eligible
16-8 for election for places <seven> six through <10> nine. Only
16-9 retired members shall be eligible for election for <place 11>
16-10 places ten and eleven. Not more than one active-contributory
16-11 member shall be eligible for election from any one city department.
16-12 (2) Members for places <seven> six through <10> nine
16-13 shall be elected to four-year staggered terms with the terms of two
16-14 of such retirement board members beginning January 1 of each
16-15 even-numbered year.
16-16 (3) <The board member for place 11 shall be elected in
16-17 an even-numbered year, with the term> Members for places ten and
16-18 eleven shall be elected to four-year staggered terms. One such
16-19 retirement board member shall be elected at an election held in
16-20 every other even numbered year with the term of such retirement
16-21 board member beginning on January 1 of the <next> following
16-22 odd-numbered year. The first election for place ten shall be held
16-23 in 1996 and the term of the retired member elected at that election
16-24 shall begin on January 1, 1997. The retirement board shall appoint
16-25 a retired member, to place ten, to serve until January 1, 1997.
17-1 The term of the retired member serving in place eleven shall expire
17-2 on December 31, 1998.
17-3 (4)(A) No later than the first day of October of each
17-4 odd-numbered year, the retirement board shall appoint a nominating
17-5 and election committee consisting of five committee members and two
17-6 alternates, all of whom are active-contributory members of the
17-7 retirement system. The nominating and election committee shall
17-8 make one or more nominations for each active-contributory member
17-9 vacancy and shall act as election judges. The nominating and
17-10 election committee shall determine and certify that each such
17-11 nominee and each candidate announcing for election is an
17-12 active-contributory member and prepare the ballot containing the
17-13 names of all certified active-contributory member candidates.
17-14 (B) No later than the first day of October of
17-15 every second even-numbered year, the retirement board shall appoint
17-16 a nominating and election committee consisting of five committee
17-17 members and five alternates, all of whom are retired members of the
17-18 retirement system. The nominating and election committee shall
17-19 make one or more nominations for the retired member vacancy and
17-20 shall act as election judges. The nominating and election
17-21 committee shall determine and certify that each such nominee and
17-22 each candidate announcing for election is a retired member and
17-23 prepare the ballot containing the names of all certified retired
17-24 member candidates.
17-25 (5) Each nominating and election committee shall
18-1 publish a notice at least two (2) weeks prior to the applicable
18-2 election date, informing all active-contributory members or retired
18-3 members, as applicable, of the names of the persons who have been
18-4 certified as candidates.
18-5 (6) Elections for places seven through 10 shall be
18-6 held on the first payday in December of each odd-numbered year.
18-7 Elections for place 11 shall be held in December of every second
18-8 even-numbered year. The candidates receiving the highest number of
18-9 eligible votes shall be deemed elected. In case of a tie vote,
18-10 selection shall be by lot drawn by an existing member of the
18-11 retirement board at a meeting of the retirement board held after
18-12 the election but before the first day of January of the year after
18-13 the election.
18-14 (7) The applicable nominating and election committee
18-15 shall canvass the returns, certify the results, and announce the
18-16 official results of the election.
18-17 (8) The retirement board shall approve written
18-18 procedures for the conduct of the election no later than August 1
18-19 of each year in which an election is held.
18-20 (e) Each member of the retirement board shall, within 30
18-21 days after appointment and election <shall>, take an oath of office
18-22 that <the board member> he or she will diligently and honestly
18-23 administer the affairs of the retirement system and will not
18-24 knowingly violate or willingly permit to be violated any law or
18-25 statute applicable to the retirement system. All members of the
19-1 retirement board serve without compensation. <At any time, the
19-2 board> The retirement board may, at any time after notice and
19-3 hearing, by a vote of six retirement board members<, may> remove a
19-4 retirement board member for malfeasance.
19-5 (f) In January of each year, the retirement board shall
19-6 elect from its membership a chairman and a vice-chairman to serve
19-7 one calendar year.
19-8 (g) The retirement board shall hire a pension officer as an
19-9 employee of the retirement board. The pension officer shall hire
19-10 and may fire or suspend necessary staff members, and those staff
19-11 members are employees of the retirement board. The pension officer
19-12 acting under the direction of the retirement board shall keep all
19-13 of the records of the retirement system and a record of the
19-14 proceedings of the retirement board. The pension officer and each
19-15 staff member shall receive such compensation as the retirement
19-16 board may fix in each annual budget of the retirement system, or
19-17 amendments to the budget, and that compensation shall be paid from
19-18 the fund.
19-19 (h) Subject to the limitations of this Act, the retirement
19-20 board shall from time to time establish rules and regulations for
19-21 the administration of the funds authorized to be created hereunder
19-22 and <or> for the transaction of the retirement board's business.
19-23 Each member of the retirement board is entitled to one vote <on the
19-24 board>. Six concurring votes are necessary for a decision by the
19-25 retirement board members at any meeting of the retirement board,
20-1 and six members constitute a quorum. Each member will be required
20-2 to serve on a committee of the retirement board. Any retirement
20-3 board member who is absent from four consecutive regular monthly
20-4 meetings of the retirement board shall be removed from the
20-5 retirement board and <the member shall be> replaced in accordance
20-6 with the provisions of this section.
20-7 (i)(1) The retirement board shall keep or cause to be kept
20-8 in convenient form such data as are necessary for actuarial
20-9 valuation of the fund of the retirement system and for checking the
20-10 mortality, service, compensation, and payment experience of the
20-11 system.
20-12 (2) The retirement board shall keep a record of all
20-13 its proceedings, which shall be open to public inspection except as
20-14 otherwise specifically provided or permitted by law, and shall
20-15 publish annually a report showing the fiscal transactions of the
20-16 retirement system for the preceding year, the amount of the
20-17 accumulated cash <and>, securities and other assets of the system,
20-18 and the last balance sheet showing the financial condition of the
20-19 system <is> as disclosed by the most recent actuarial valuation of
20-20 the assets and liabilities of the retirement system.
20-21 (3) The retirement board shall have charge of and
20-22 administer the fund as trustee of the fund and shall order payments
20-23 therefrom in pursuance of the provisions of this Act. <The city
20-24 and each hospital authority> Each employer shall provide to the
20-25 retirement board <all> the records necessary and useful to
21-1 administer the system and the fund. The retirement board shall
21-2 report annually to the members on the condition of the fund and the
21-3 receipts and disbursements on account of the fund. The retirement
21-4 board shall keep a complete <list> record of the retired members,
21-5 surviving spouses, and beneficiaries of the fund and the amounts
21-6 paid to them.
21-7 (4) Individual accounts shall be maintained for each
21-8 member of the retirement system, showing the amount of the member's
21-9 accumulated deposits. Annually a statement shall be given each
21-10 member showing the total amount of that member's accumulated
21-11 deposits. The accounts of the retirement board and the retirement
21-12 system shall be included in the annual independent audit of the
21-13 accounts of the system. <A> One copy of <this> the annual audit
21-14 shall be provided to the <city mayor> governing body and to the
21-15 board of each employer.
21-16 (5) The retirement board shall designate an actuary
21-17 who shall be the technical advisor of the retirement board
21-18 regarding the maintenance and operations of the fund authorized by
21-19 the provisions of this Act and shall perform such other duties as
21-20 may be required in connection therewith, but shall not be an
21-21 investment advisor or fiduciary with respect to any investments of
21-22 the fund. The actuary shall make periodic <evaluations> valuations
21-23 of the assets and liabilities of the funds and other <valuations>
21-24 evaluations as requested by the retirement board.
21-25 (6) From time to time on the advice of the actuary and
22-1 the direction of the retirement board, the actuary shall make an
22-2 actuarial investigation of the mortality, service, and compensation
22-3 experience of members, retired members, surviving spouses, and
22-4 beneficiaries of the retirement system and shall make a valuation
22-5 of the assets and liabilities of the funds of the system. Taking
22-6 into account the result of such investigation and valuation, the
22-7 retirement board shall adopt for the retirement system such
22-8 mortality, service, and other actuarial tables or rates as are
22-9 deemed necessary. On the basis of tables and rates adopted by the
22-10 retirement board, the actuary shall make a valuation at least once
22-11 every two years of the assets and liabilities of the funds of the
22-12 retirement system.
22-13 (7) The retirement board may retain the services of
22-14 one or more investment managers who shall have full authority to
22-15 invest and manage the assets of the retirement system and the fund,
22-16 as specified by contract in accordance with <Subchapter> subchapter
22-17 C, Chapter 802, Government Code, and its subsequent amendments.
22-18 (8) The retirement board may retain the services of
22-19 one or more investment consultants to monitor the investment
22-20 performance of the investment managers and provide other
22-21 investment-related services as requested by the retirement board.
22-22 (j) The retirement board may retain legal counsel <to
22-23 advise, assist, or represent the board in any legal matters
22-24 affecting> as necessary in the judgment of the board to advise,
22-25 consult, assist and represent the retirement board and the system
23-1 in and with respect to any legal matter, issue, cause or claim that
23-2 comes before the retirement board or that may affect the retirement
23-3 system <and> or the operation of the fund.
23-4 (k) Except as provided by <Subsection> subsection (l) of
23-5 this section, the retirement board may adopt rules, establish
23-6 regulations or procedures, correct any defect, supply any
23-7 information, or reconcile any inconsistency as the retirement board
23-8 considers necessary or advisable to carry out this Act. Further,
23-9 the retirement board is authorized to adopt any amendment that
23-10 modifies this Act to the extent necessary for the retirement system
23-11 to be a qualified plan.
23-12 (l) Any procedure, discretionary act, interpretation, or
23-13 construction by the retirement board must be done in a
23-14 nondiscriminatory manner based on uniform principles consistently
23-15 applied and must be consistent with this Act and with <26 U.S.C.>
23-16 Section 401(a) of the Code and its subsequent amendments.
23-17 (m) The retirement board is authorized to administer oaths
23-18 to any person providing testimony at any hearing or other
23-19 proceeding of the retirement board.
23-20 Sec. 5. Membership. (a) <Any regular full-time employee
23-21 who has completed six continuous months of employment as a regular
23-22 full-time employee before or after the date of establishment of the
23-23 retirement system and who has been removed from the employee's
23-24 initial probationary status,> Each regular full-time employee shall
23-25 become an active-contributory member as a condition of employment
24-1 and shall make the required deposits commencing with the first pay
24-2 period <following the later of the completion of six continuous
24-3 months of employment as a regular full-time employee or the date of
24-4 removal from the employee's initial probationary status> in which
24-5 the employee is compensated following the effective date of this
24-6 Act. Unless on approved medical leave of absence or <other
24-7 authorized leave> on leave to serve in the uniformed services, the
24-8 employee shall make the deposits as long as the employee remains a
24-9 regular full-time employee and shall remain a member of the system
24-10 until the employee or the employee's beneficiary ceases to be
24-11 entitled to any benefits from the retirement system. The
24-12 membership for all new regular full-time employees shall commence
24-13 on the date their employment commences and all current active
24-14 contributory members shall be deemed to have additional creditable
24-15 service equal to the time elapsed between the date their regular
24-16 full-time employment commenced and the date they became an active
24-17 contributory member, but not in excess of six (6) months.
24-18 (b) Membership in the retirement system consists of the
24-19 following groups:
24-20 (1) the active-contributory members group, which
24-21 consists of all members, other than those on authorized leave of
24-22 absence, who are making deposits;
24-23 (2) the active-noncontributory members group, which
24-24 consists of all employees on approved medical leave of absence and
24-25 all employees of <the city, a hospital authority, or the board> an
25-1 employer, other than inactive-contributory members, who <were> have
25-2 been active-contributory members but who are no longer so because
25-3 they are not regular full-time employees;
25-4 (3) the inactive-contributory members group, which
25-5 consists of all members who are on an authorized leave of absence
25-6 and who continue to make deposits into the retirement system during
25-7 <the employee's> their absence;
25-8 (4) the inactive-noncontributory members group, which
25-9 consists of all members whose status as an employee <with the city,
25-10 a hospital authority, or the board> has been terminated before
25-11 retirement or disability retirement <and> but who are still
25-12 entitled to, or whose beneficiary may become entitled to, benefits
25-13 from the retirement system; and
25-14 (5) the retired members group, which consists of all
25-15 members who have retired and who are receiving or who are entitled
25-16 to receive a retirement allowance.
25-17 (c) An active-noncontributory member becomes an
25-18 active-contributory member immediately on resuming employment as a
25-19 regular full-time employee or on returning from an approved medical
25-20 leave of absence, as applicable.
25-21 (d) It shall be the duty of the retirement board to
25-22 determine the membership group to which each person who becomes a
25-23 member of the retirement system properly belongs. It shall be the
25-24 duty of the <city manager> chief administrative officer of each
25-25 employer to submit to the retirement board a statement showing the
26-1 name, position, compensation, duties, date of birth, length of
26-2 employment, and other information regarding each employee of the
26-3 <city as> employer the retirement board may require. <The pension
26-4 officer shall submit to the board a statement showing the name,
26-5 position, compensation, duties, date of birth, length of
26-6 employment, and other information regarding each employee of the
26-7 board that the board requires. Each hospital authority board shall
26-8 submit to the retirement board a statement showing the name,
26-9 position, compensation, duties, date of birth, length of
26-10 employment, and other information regarding each employee of the
26-11 hospital authority that the retirement board requires.>
26-12 (e) Any person who has ceased to be a member and has
26-13 received a distribution of the person's accumulated deposits may
26-14 have the person's membership service or prior service reinstated if
26-15 the person is reemployed as a regular full-time employee for a
26-16 continuous period of 24 months and deposits into the system, within
26-17 a reasonable period established by the retirement board on a
26-18 uniform and nondiscriminatory basis, the accumulated deposits
26-19 withdrawn by that person, together with an interest payment equal
26-20 to the amount withdrawn multiplied by an interest factor. The
26-21 interest factor is equal to the annually compounded interest rate
26-22 assumed to have been earned by the fund beginning with the month
26-23 and year in which the person withdrew the person's accumulated
26-24 deposits and ending with the month and year in which the deposit
26-25 under this subsection is made. The interest rate assumed to have
27-1 been earned by the fund for any period is equal to the interest
27-2 rate credited for that period to the accumulated deposits of
27-3 members, divided by 0.75.
27-4 (f) A member on authorized leave of absence may make
27-5 deposits each <biweekly> pay period to the system while on
27-6 authorized leave of absence<,>. Each such deposit shall be in an
27-7 amount that is equal to the amount of the member's deposit for the
27-8 last complete <biweekly> pay period that the member was paid by the
27-9 <city, a hospital authority, or the board> employer. As long as
27-10 the member on authorized leave of absence makes the <biweekly
27-11 payments, the city> payments each pay period, the employee's
27-12 employer shall make contributions to the retirement fund, for such
27-13 member <on authorized leave of absence from the city each biweekly
27-14 pay>, each pay period in an amount equal to the contribution amount
27-15 the <city> employer would have made if the member's <biweekly> pay
27-16 had continued to be the <biweekly> pay the member received for the
27-17 last complete <biweekly> pay period that the member was paid by the
27-18 <city. Each hospital authority shall make contributions to the
27-19 retirement fund for a member on authorized leave of absence from
27-20 that hospital authority each pay period in an amount equal to the
27-21 contribution amount the hospital authority would have made if the
27-22 member's pay had continued to be the pay the member received for
27-23 the last complete pay period that the member was paid by the
27-24 hospital authority. The board shall make a contribution to the
27-25 retirement fund from system funds for a member on authorized leave
28-1 of absence from the board each biweekly pay period in an amount
28-2 equal to the contribution amount the board would have made if the
28-3 member's biweekly pay had continued to be the biweekly pay the
28-4 member received for the last complete biweekly pay period that the
28-5 member was paid by the board> employer. If the member does not
28-6 make those deposits while on authorized leave of absence, the
28-7 member may make a single payment, within five years after the
28-8 member has returned to employment with the <city, with the hospital
28-9 authority, or with the board> employer, equal to the deposits the
28-10 member would have made if the member had continued to be paid
28-11 during the authorized leave of absence at the same rate of pay the
28-12 member was receiving at the time the member's authorized leave of
28-13 absence began. <The city> In the event a member elects to make a
28-14 single payment, the member's employer shall make a single payment
28-15 for such member <employed by the city> which payment shall be equal
28-16 to the contributions <it> the employer would have made on the
28-17 member's behalf if the member had made deposits to the fund during
28-18 the period of the member's <behalf if the member had made deposits
28-19 to the fund during the period of the member's> authorized leave of
28-20 absence. <Each hospital authority shall make a single payment for
28-21 a member employed by the hospital authority equal to the
28-22 contributions it would have made on the member's behalf if the
28-23 member had made deposits to the fund during the period of the
28-24 member's> During an authorized leave of absence<. The board shall
28-25 make a single payment to the fund for a member employed by the
29-1 board equal to the contributions it would have made on the member's
29-2 behalf if the member had made deposits to the fund during the
29-3 period of the member's authorized leave of absence. As long as
29-4 deposits are made>, the member will continue to earn membership
29-5 service for the pay periods for which the member makes deposits in
29-6 accordance with this subsection<, the member will continue to earn
29-7 membership service during the period of the authorized leave of
29-8 absence.>. If a member makes the lump sum payment provided for in
29-9 this subsection the membership service will be credited at the time
29-10 of payment.
29-11 (g) From time to time the retirement board, subject to the
29-12 approval of the system's actuary, may elect to permit the
29-13 reinstatement of membership service forfeited in accordance with
29-14 the terms of this section.
29-15 Sec. 6. Creditable service. (a) The retirement allowance
29-16 of a member is based on the <amount of> member's creditable service
29-17 <rendered by the member> as of the member's actual retirement date.
29-18 (b) The retirement board shall determine by
29-19 nondiscriminatory rules and regulations consistently applied,
29-20 subject to the provisions of this Act, in case of absence, illness,
29-21 or other temporary interruption in service as a regular full-time
29-22 employee, the portion of each calendar year to be allowed as
29-23 creditable service. No credit shall be allowed as creditable
29-24 service for any period exceeding one month during which an employee
29-25 was absent continuously without pay, except for an authorized leave
30-1 of absence as provided in this Act. The retirement board shall
30-2 verify the records for creditable service claims filed by the
30-3 members of the retirement system, subject to the provisions of this
30-4 Act and in accordance with such administrative rules and
30-5 regulations as the retirement board may from time to time adopt.
30-6 (c) At any time before a member's actual retirement date, a
30-7 member may establish creditable service for military service
30-8 performed that is creditable as provided under this subsection
30-9 according to the following conditions, limitations, and
30-10 restrictions:
30-11 (1) Military service creditable in the retirement
30-12 system is any service required to be credited by the Uniformed
30-13 Services Employment and Reemployment Act of 1994, as amended and
30-14 certain active federal duty service in the armed forces of the
30-15 United States performed before the commencement of employment with
30-16 the employer, other than service as a student at a service academy,
30-17 as a member of the reserves, or any continuous active military
30-18 service lasting less than 90 days. To be creditable, the military
30-19 service must have been performed before the beginning of the
30-20 member's most recent period of membership in the retirement system
30-21 or its predecessor system.
30-22 (2) A member is not eligible to establish military
30-23 service credit unless the member was released from active military
30-24 duty under conditions other than dishonorable.
30-25 (3) A member may not establish creditable service in
31-1 the retirement system for military service for more than the
31-2 greater of the creditable service required under the Uniformed
31-3 Services Employment and Reemployment Act of 1994, as amended, or 24
31-4 months of creditable service in the retirement system for military
31-5 service under this subsection.
31-6 (4) A member may establish creditable service under
31-7 this subsection by contributing to the retirement system a single
31-8 payment equal to 25 percent of the estimated cost of the additional
31-9 projected retirement benefits the member will be entitled to
31-10 receive. The retirement board will determine the required
31-11 contribution based on a procedure recommended by the actuary and
31-12 approved by the retirement board, provided, however,
31-13 notwithstanding the amount determined under the preceeding
31-14 sentence, such contribution may not exceed the amount required
31-15 under the Uniformed Services Employment and Reemployment Act of
31-16 1994, as amended in the case of a member who makes such
31-17 contributions within the time prescribed by such act.
31-18 (5) After the member makes the deposit required by
31-19 this subsection, the retirement system shall grant the member one
31-20 month of creditable service for each month of creditable military
31-21 service established under this subsection.
31-22 Sec. 7. Service retirement benefits and withdrawal benefits.
31-23 (a) Except as provided by <Subsection> subsection (b) of this
31-24 section, a member who retires on or after the member's normal
31-25 retirement date and applies in writing for a retirement allowance
32-1 shall receive a life annuity (modified cash refund) beginning on
32-2 the last day of the month after the month in which the member
32-3 retired. Unless <Subsection> subsection (e) of this section or
32-4 <Section> section 8 of this Act applies, a member whose employment
32-5 by the <city, a hospital authority, or the board> employer
32-6 terminates before the member's normal retirement date is entitled
32-7 to a distribution of the member's accumulated deposits in a single
32-8 lump sum. On receiving that distribution, a member is not entitled
32-9 to any other benefit under this Act. If a member has at least five
32-10 years of creditable service and does not withdraw the member's
32-11 accumulated deposits, the member is entitled to a life annuity
32-12 (modified cash refund) beginning on the first day of the month
32-13 after the month in which the member's normal retirement date
32-14 occurs. If a member has at least 20 years of creditable service
32-15 and does not withdraw the member's accumulated deposits, the member
32-16 is also entitled to elect an early retirement benefit on attaining
32-17 age 55.
32-18 (b) A member who terminates employment with the <city, a
32-19 hospital authority, or the board> employer and who has less than
32-20 five years of creditable service is not entitled to a retirement
32-21 allowance.
32-22 (c) The amount of the retirement allowance and all other
32-23 benefits payable under this statute shall be subject at all times
32-24 to such adjustments as may be required to ensure actuarial
32-25 soundness as may be approved by the actuary and adopted by the
33-1 retirement board, except that annuities already <granted> accrued
33-2 may not be reduced <below the base figure granted at time of
33-3 retirement>.
33-4 (d)(1) Subject to the conditions, limitations, and
33-5 restrictions set forth in this subsection, as well as all other
33-6 pertinent conditions, limitations, and restrictions set forth
33-7 elsewhere in this Act, the retirement board shall have the power
33-8 once each year to authorize a cost of living adjustment
33-9 (hereinafter referred to as the "adjustment") payment of which,
33-10 once authorized, shall be added to the current monthly payment of
33-11 <al> all retirement annuities, pensions, or allowances of each and
33-12 every retired member ( or the retired <members' beneficiaries who
33-13 have> member's beneficiary) who has become entitled to benefits, on
33-14 or before December 31 of the year before the year in which the
33-15 adjustment goes into effect. Before December 31 of each year, the
33-16 retirement board shall make a separate determination as to whether
33-17 to authorize the payment of an adjustment and the amount of such
33-18 adjustment, if any. In determining whether to authorize an
33-19 adjustment, the retirement board may consider the changes in the
33-20 consumer price index over the preceding 12-month period, the
33-21 actuarial experience of the fund, the investment experience of the
33-22 fund, the amount of any prior adjustments, and other factors that
33-23 the retirement board and the actuary consider appropriate.
33-24 (2) In determining whether to authorize the payment
33-25 and the amount of any adjustment, the retirement board shall be
34-1 governed by the following conditions, considerations, limitations,
34-2 and restrictions:
34-3 (A) Any and all determinations to authorize the
34-4 payment of any adjustment amount must be based on the ability of
34-5 the fund to pay such an amount and shall not be based on the
34-6 individual needs of any particular retired members or
34-7 beneficiaries.
34-8 (B) Prior to the retirement board's authorizing
34-9 the payment of an adjustment, the actuary must <approve and>
34-10 recommend such an adjustment to the retirement board and certify in
34-11 writing <to the board> that, based on the sound application of
34-12 actuarial assumptions and methods consistent with sound actuarial
34-13 principles and standards, it is demonstrable that the fund has and
34-14 likely will continue to have the ability to pay such an amount out
34-15 of its realized income after all other obligations of the fund have
34-16 been paid.
34-17 (C) The amount of the adjustment for each
34-18 retired member or beneficiary shall be a uniform percentage of the
34-19 monthly payment being receiving by a member, or by a beneficiary by
34-20 reason of a member, who was retired at least one year before the
34-21 adjustment and may not exceed six percent of the monthly payment
34-22 due the retired member or beneficiary before the adjustment. For
34-23 members who retired during the year in which the adjustment is
34-24 authorized, the increase for the first year in which the adjustment
34-25 is being paid shall be prorated in the ratio that the number of
35-1 completed months after the member's retirement in the year of the
35-2 member's retirement bears to 12. After the first year the member
35-3 is entitled to the full amount of <the> any adjustment without
35-4 proration.
35-5 <(D) The board shall have the authority and the
35-6 duty on recommendation by the actuary, at any and all times and
35-7 without notice to anyone, to decrease the amount of adjustment
35-8 payment as much as is necessary to protect the continuity of the
35-9 retirement and pensioning system and to protect the corpus of the
35-10 system should the ability of the system to continue to pay the
35-11 adjustment be threatened by a change in the economic situation of
35-12 the United States, the State of Texas, the city, or the system
35-13 itself, such as would dictate that a prudent trustee should
35-14 authorize such a decrease, providing that, if the threatening
35-15 change should prove not to have had the predicted harmful effect on
35-16 the system, then the board shall have the authority, on
35-17 recommendation by the actuary, to reinstate the payment of all or
35-18 any portion of the amount of the previously decreased adjustment
35-19 payments.>
35-20 (3) Any adjustment payments shall be in addition to
35-21 the benefits to which a retired member <of> or beneficiary is
35-22 otherwise entitled under this Act<, and in no event shall a
35-23 reduction in the adjustment payments cause the retired member's or
35-24 beneficiary's benefits to be reduced below the actual base
35-25 retirement figure calculated under the provisions of this Act.>
36-1 <(4) The following terms and definitions shall be used
36-2 in construing the meaning of this section:>
36-3 <(A) "Base retirement figure" means that figure
36-4 calculated under the provisions of this Act at the time of actual
36-5 retirement to which, for the purposes of this subsection, a retired
36-6 member is entitled over a 12-month period.>
36-7 <(B) "Consumer price index" means the Consumer
36-8 Price Index (all items--United States City average) published
36-9 monthly by the Bureau of Labor Statistics, United States Department
36-10 of Labor or its successor in function.>
36-11 <(C) "Continuity of the fund" means the ability
36-12 of the retirement and pensioning system's fund to continue to meet
36-13 all of its purposes, to continue to thrive and grow along with the
36-14 economy of the United States, the State of Texas, and the city, or
36-15 to be able to sustain itself and its retired members and their
36-16 beneficiaries during and throughout the periods of deflation or
36-17 recession in those economies>.
36-18 (e) Any member shall be eligible for early retirement if the
36-19 member attains the age of 55 years and completes at least 20 years
36-20 of creditable service. Such member shall be entitled to a benefit
36-21 equal to a life annuity (modified cash refund) reduced at the rate
36-22 of five-twelfths of one percent for each month the member was
36-23 retired before the member's normal retirement date. A member who
36-24 takes early retirement shall begin receiving the benefits provided
36-25 by this subsection beginning on the last day of the month after the
37-1 month in which the member retired.
37-2 (f) A member may file a <duly acknowledged> written
37-3 designation, which, if approved by the retirement board, shall
37-4 entitle the member, on retirement, to receive the actuarial
37-5 equivalent of the life annuity in the form of one of the following
37-6 options:
37-7 (1) Option I. 100 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 the annuity shall be
37-10 continued throughout the life of and be paid to such person as the
37-11 member shall designate before the member's actual retirement date.
37-12 (2) Option II. 50 Percent Joint and Survivor Annuity.
37-13 This option is a reduced monthly annuity payable to the member but
37-14 with the provision that on the member's death one-half of the
37-15 annuity shall be continued throughout the life of and be paid to
37-16 such person as the member shall designate before the member's
37-17 actual retirement date.
37-18 (3) Option III. 66-2/3 Percent Joint and Survivor
37-19 Annuity. This option is a reduced monthly annuity payable to the
37-20 member but with the provision that on the member's death two-thirds
37-21 of the annuity shall be continued throughout the life of and be
37-22 paid to such person as the member shall designate before the
37-23 member's actual retirement date.
37-24 (4) Option IV. Joint and 66-2/3 Percent Last Survivor
37-25 Annuity. This option is a reduced monthly annuity payable to the
38-1 member but with the provision that two-thirds of the annuity to
38-2 which the member would be entitled shall be continued throughout
38-3 the life of and be paid to the survivor after the death of either
38-4 the member or such person as the member shall designate before the
38-5 member's actual retirement date.
38-6 (5) Option V. Level Income Option. If payment of a
38-7 retirement allowance commences prior to the earliest age at which
38-8 the member will become eligible for an old age insurance benefit
38-9 under the Social Security Act, the member may elect that the amount
38-10 of the monthly payments be adjusted so that an increased monthly
38-11 amount will be paid prior to such age and a reduced monthly amount,
38-12 if any, will be paid for life after such age. The purpose of this
38-13 adjustment is to enable the member to receive from this plan and
38-14 under the Social Security Act an aggregate income in approximately
38-15 a level amount for life.
38-16 (6) Option VI. 66-2/3 Percent Joint and Survivor/Level
38-17 Income Option. If payment of a retirement allowance commences
38-18 prior to the earliest age at which the member could become eligible
38-19 for an old age insurance benefit under the Social Security Act, the
38-20 member may elect that the amount of the monthly payments be
38-21 adjusted so that an increased monthly amount will be paid prior to
38-22 such age and a reduced monthly amount will be paid for life after
38-23 such age. The purpose of this adjustment is to enable the member
38-24 to receive from this plan and under the Social Security Act an
38-25 aggregate income in approximately a level amount for life. Option
39-1 VI provides that if the member's death occurs after age 62,
39-2 two-thirds of the monthly annuity the member was receiving at the
39-3 time of the member's death shall be continued throughout the life
39-4 of and be paid to such person as the member shall designate before
39-5 the member's actual retirement date. If the member's death occurs
39-6 before age 62, two-thirds of the monthly annuity the member was
39-7 receiving at the time of member's death shall be paid to such
39-8 person as the member shall designate before the member's actual
39-9 retirement date through the end of the month when the member would
39-10 have reached age 62. The monthly annuity being paid to such person
39-11 as the member shall designate before the member's actual retirement
39-12 date will be reduced at the end of the month following the month in
39-13 which the member would have reached age 62 to two-thirds of the
39-14 reduced benefit the member would have begun to receive at age 62.
39-15 (7) Option VII. 15-Year Certain and Life Annuity.
39-16 This option is a reduced annuity payable to the member for life.
39-17 In the <even> event of the member's death before 180 monthly
39-18 payments have been made, the remainder of the 180 payments shall be
39-19 paid to the member's beneficiary or, if there is no beneficiary, to
39-20 the member's estate.
39-21 (8) Option VIII. Equivalent Benefit Plan. If a member
39-22 requests in writing, any other form of benefit or benefits may be
39-23 paid either to the member or to such person or persons as the
39-24 member shall designate before the member's actual retirement date,
39-25 provided that the benefit plan requested by the member is certified
40-1 by the actuary for the system to be the actuarial equivalent of the
40-2 life annuity with guaranteed refund of the retired member's
40-3 accumulated deposits. If, on the death of the member and all other
40-4 persons entitled to receive payments under an optional benefit, the
40-5 member's accumulated deposits as of the member's actual retirement
40-6 date exceed the sum of all payments made under that optional
40-7 benefit, that excess shall be paid in one lump sum to the member's
40-8 beneficiary.
40-9 (g)(1) For purposes of <Subsection> subsection (f) of this
40-10 section, the designation of a beneficiary must be made in writing
40-11 on a form and in the manner prescribed by the retirement board. If
40-12 a member has chosen Option I, II, III, IV, VI, or VIII, the
40-13 member's designation of a beneficiary may not be revoked after a
40-14 member retires, and any attempted revocation of a designation for
40-15 those options is void. Spousal consent shall not be required for a
40-16 member to select Option I, II, III, IV or VI. If the member is
40-17 married, spousal consent is required for the member to select an
40-18 optional benefit other than Option I, II, III, IV<,> or VI. At any
40-19 time before retirement, a member may file with the retirement board
40-20 a written statement designating one or more persons to be entitled
40-21 to receive as beneficiary the reduced annuity payable under one of
40-22 the optional benefits. If a married member designates as a
40-23 beneficiary any person other than the member's spouse, the member's
40-24 spouse must consent in writing to the beneficiary designation, and
40-25 the beneficiary designation may not be changed without spousal
41-1 consent, unless the consent of the spouse expressly permits
41-2 designations by the member without the requirement of further
41-3 consent by the spouse. The spouse's consent is irrevocable and
41-4 must acknowledge the effect of the designation and be witnessed by
41-5 a retirement board employee or notary public. Spousal consent is
41-6 not required if it is established to the satisfaction of the
41-7 retirement board that the required consent cannot be obtained
41-8 because there is no spouse, the spouse cannot be located, or other
41-9 circumstances exist as prescribed by United States Treasury
41-10 regulations. Notwithstanding other provisions of this subdivision,
41-11 the option election or beneficiary designation made by a member and
41-12 consented to by the member's spouse may be revoked by the member in
41-13 writing without consent of the spouse at any time before
41-14 retirement. The number of revocations is not limited. A former
41-15 spouse's waiver or consent is not binding on a new spouse. An
41-16 option selection becomes effective on the member's actual
41-17 retirement date. The member retains the right to change the option
41-18 selected or the beneficiary designated until the member's actual
41-19 retirement date, subject to this subsection.
41-20 (2) After filing the written statement selecting one
41-21 of the optional benefits, the member may continue in employment and
41-22 retire any time after the member becomes eligible by filing a
41-23 written application for retirement. If the member dies before
41-24 retirement but after becoming eligible for retirement, the
41-25 effective date of the member's retirement is the last day of the
42-1 calendar month of death, and the benefit is computed on the
42-2 optional benefit selected as if the member had retired on that
42-3 date.
42-4 (h) The amount of the annuity payment in Options I, II, III,
42-5 IV, V, VI, VII, and VIII shall be determined without considering
42-6 the minimum cumulative payment of the retired member's accumulated
42-7 deposits since that refund feature will stay in effect as indicated
42-8 herein.
42-9 (i) If a member who is eligible for retirement dies without
42-10 having filed a written selection of one of the enumerated options
42-11 and if the member leaves a surviving spouse, that spouse may select
42-12 the optional benefit in the same manner as if the member had made
42-13 the selection or may select a lump-sum payment equal to the
42-14 deceased member's accumulated deposits plus an equivalent amount
42-15 from Fund No. 2. If the member does not leave a surviving spouse,
42-16 the member's designated beneficiary is entitled to elect either
42-17 Option VII, to become effective at the beginning of the calendar
42-18 month after the month in which the death of the member occurs, or
42-19 the sum of a lump-sum payment equal to the deceased member's
42-20 accumulated deposits plus an equivalent amount from Fund No. 2.
42-21 If the surviving spouse dies before the spouse receives retirement
42-22 allowances equal to the amount of the member's accumulated deposits
42-23 on the date of the member's death, the excess of the accumulated
42-24 deposits over the retirement allowances paid shall be distributed
42-25 in one lump sum to the member's estate.
43-1 (j) In the event of death of a member who is ineligible for
43-2 retirement, the member's accumulated deposits and an equivalent
43-3 amount from Fund No. 2 shall be paid in a lump sum to the member's
43-4 beneficiary.
43-5 (k)(1) If a prior demand for withdrawal of accumulated
43-6 deposits has not been made within seven years after termination of
43-7 employment <with the city, a hospital authority, or the board of>
43-8 by a member with less than five years' of creditable service, the
43-9 member's accumulated deposits shall be returned to the member or
43-10 the member's beneficiary. Except as provided by <Subdivision>
43-11 subdivision (2) of this subsection, if the system is unable to
43-12 locate the member or the member's beneficiary, the member's
43-13 accumulated deposits shall thereafter be forfeited and become a
43-14 part of Fund No. 2.
43-15 (2) If the member or member's beneficiary later
43-16 appears and requests in writing the payment of the member's
43-17 accumulated deposits, the system shall:
43-18 (A) reinstate the account of the member;
43-19 (B) credit to that account an amount equal to
43-20 all of the accumulated deposits previously standing to the member's
43-21 credit plus interest that would have been earned on those
43-22 accumulated deposits if the funds had remained in Fund No. 1
43-23 between the date of forfeiture to Fund No. 2 and the date of
43-24 reinstatement of the member's account;
43-25 (C) fund the account from the monies in Fund No.
44-1 2; and
44-2 (D) make all necessary payments to the member or
44-3 member's beneficiary from the reinstated account.
44-4 (3) On payment of the accumulated deposits under this
44-5 subsection, plus any interest on those deposits to which the member
44-6 may be entitled <to>, to the member or member's beneficiary in
44-7 accordance with this subsection, the terminated employee ceases to
44-8 be a member of the system.
44-9 (l) In the event of the death of a member receiving a
44-10 retirement allowance, the sum of <$2,000> $10,000 shall be payable
44-11 in a lump sum to the member's beneficiary.
44-12 (m) When monthly survivor benefits are deemed payable as a
44-13 result of the death of a member before retirement, an additional
44-14 sum of <$2,000> $10,000 shall be payable as a death benefit to the
44-15 member's designated beneficiary.
44-16 (n) In the event of the death of the retired member then
44-17 receiving a retirement allowance under any retirement option and
44-18 the death of the beneficiary designated by the retired member, when
44-19 either Option I, Option II, Option III, Option IV, or Option VI is
44-20 in effect, before retirement allowances have been received that are
44-21 equal or greater than the retired member's accumulated deposits,
44-22 <then> the member's estate will receive the excess of the retired
44-23 member's accumulated deposits over the retirement allowances paid.
44-24 (o) Notwithstanding any contrary provision of this Act, the
44-25 distribution of a member's benefits, including benefits payable
45-1 after the member's death, made on or after January 1, 1985, shall
45-2 be made in accordance with the following requirements and shall
45-3 otherwise comply with <26 U.S.C.> Section 401(a)(9) <and its
45-4 subsequent amendments and> of the Code and related regulations,
45-5 including Regulation Section 1.401(a)(9)-2:
45-6 (1) A member's benefits shall be distributed to the
45-7 member, or the distribution of those benefits shall begin, not
45-8 later than April 1 of the calendar year after the calendar year in
45-9 which occurs the later of the date on which the member attains age
45-10 70-1/2 or the date on which the member's employment by the <city,
45-11 hospital authority, or the board> employer terminates.
45-12 (2) A member's benefits shall be distributed over a
45-13 period not exceeding the life of the member or the lives of the
45-14 member and the member's beneficiary or over a period not exceeding
45-15 the life expectancy of the member or the life expectancy of the
45-16 member and the member's beneficiary.
45-17 (3) If the distribution of a member's benefit has
45-18 begun and the member dies before the member's entire benefit is
45-19 distributed, the remaining portion of that benefit shall be
45-20 distributed at least as rapidly as under the form of benefit
45-21 selected as of the date of the member's death, adjusted as
45-22 necessary under this subsection.
45-23 (4) If a member dies before the distribution of the
45-24 member's benefit has begun, the member's death benefit shall be
45-25 distributed to the member's beneficiary within five years after the
46-1 date of the member's death. This five-year rule does not apply to
46-2 any portion of the deceased member's benefit that is payable to or
46-3 for the benefit of the member's surviving spouse. A benefit
46-4 payable to or for the benefit of the member's surviving spouse may
46-5 be distributed over the life of the spouse or over a period not
46-6 exceeding the life expectancy of the spouse, provided that payment
46-7 of the benefit begins not later than the date on which the deceased
46-8 member would have <attached> attained age 70-1/2. If the surviving
46-9 spouse dies before distributions to that spouse begin, the
46-10 five-year rule applies as if the spouse had been the member.
46-11 (5) The five-year rule does not apply to distributions
46-12 payable to a beneficiary over the life or life expectancy of the
46-13 beneficiary, provided that payment of the benefit begins not later
46-14 than the first anniversary of the date of the member's death.
46-15 (6) In applying the requirements of this subsection,
46-16 the life expectancy of the member and the member's beneficiary
46-17 shall be redetermined annually in accordance with regulations under
46-18 <26 U.S.C.> Section 401(a)(9) of the Code and its subsequent
46-19 amendments.
46-20 (p) <The board may adjust the terms of payment under any
46-21 form of benefit payment as long as the benefit as adjusted is the
46-22 actuarial equivalent of the benefit before adjustment.>
46-23 Forfeitures that may result from the termination of any right of a
46-24 member may not be used to increase benefits to remaining members.
46-25 This subsection shall not preclude an increase in benefits by
47-1 amendment to this Act or action of the retirement board in
47-2 accordance with subsection (d) of this section that is made
47-3 possible by forfeitures or for any other reason.
47-4 Sec. 8. Disability retirement. (a) Only
47-5 active-contributory members, inactive-contributory members, and
47-6 members on approved medical leave of absence are eligible for
47-7 consideration for disability retirement. Such members may apply
47-8 for disability retirement at any date prior to their normal
47-9 retirement date. Inactive-noncontributory members are not eligible
47-10 for consideration for disability retirement and may not receive any
47-11 benefits under this section.
47-12 (b) If a member who is eligible for consideration for
47-13 disability retirement <and who has less than 10 years of creditable
47-14 service> has become mentally or physically incapacitated for the
47-15 performance of all employment duties as a direct result of injuries
47-16 sustained in the performance of the member's employment duties
47-17 subsequent to the member's effective date of membership in the
47-18 retirement system, the member may apply for disability retirement.
47-19 Such application, made by or on behalf of the injured member, shall
47-20 show that the injury sustained:
47-21 (1) was by external and violent means;
47-22 (2) came as a direct and proximate result of the
47-23 performance of the member's employment duties with the <city, a
47-24 hospital authority, or the board;> employer; and
47-25 (3) is likely to be permanent.
48-1 (c) On recommendation of the physician or physicians
48-2 appointed or selected by the retirement board that <an> the
48-3 eligible member's incapacity is likely to be permanent and after
48-4 <considering> determining on that basis, or on the basis of any
48-5 additional evidence which the retirement board deems relevant, that
48-6 the member meets the requirements of subsection (b) of this
48-7 section, the retirement board shall award <the> such member a
48-8 disability retirement allowance. The decision of the retirement
48-9 board is final subject to the reexamination, discontinuance and
48-10 revocation rules at subsections (h) and (i) of this section.
48-11 (d) If a member who is eligible for consideration for
48-12 disability retirement, and who has more than 10 years of creditable
48-13 service, has become mentally or physically incapacitated for the
48-14 performance of all employment duties, <the> such member may apply
48-15 for disability retirement. The application made on behalf of the
48-16 disabled member shall show that the incapacity is likely to be
48-17 permanent. On recommendation of the physician or physicians
48-18 appointed or selected by the retirement board that the eligible
48-19 member's incapacity is likely to be permanent and after
48-20 <considering> determining on that basis, or on the basis of any
48-21 additional evidence which the retirement board deems relevant, that
48-22 the member meets the requirements of this subsection (d) of this
48-23 section, the retirement board shall award such member a disability
48-24 retirement allowance. The decision of the retirement board is
48-25 final subject to the reexamination, discontinuance and revocation
49-1 rules at subsections (h) and (i) of this section.
49-2 (e) On award of a disability retirement allowance, the
49-3 member shall receive a disability retirement allowance, beginning
49-4 on the last day of the month after the month in which the member
49-5 became disabled, which shall be computed in the same manner that a
49-6 retirement allowance would be computed at the member's normal
49-7 retirement date, based on compensation and creditable service at
49-8 the date of disability retirement, without reduction for early
49-9 retirement. The disabled member may choose to receive a life
49-10 annuity (modified cash refund) or a benefit as described by Section
49-11 7(f) of this Act as Option I, Option II, Option III, Option IV, or
49-12 Option VII.
49-13 (f) A member receiving a disability retirement allowance
49-14 will be required to file an annual report with the retirement board
49-15 concerning continued proof of disability. The report shall
49-16 include:
49-17 (1) a current statement of the member's physical or
49-18 mental condition, signed by the member's attending physician; and
49-19 (2) a statement of all employment activities pursued
49-20 in the preceding year.
49-21 (g) <The board may verify all information submitted in this
49-22 report.> Each calendar year, a disabled member shall file <an> the
49-23 annual report <not> required by subsection (f) of this section no
49-24 later than the 60th day after the anniversary date of the member's
49-25 disability retirement. The retirement board may verify all
50-1 information submitted in the report.
50-2 (h) The pension officer will be responsible for a yearly
50-3 report to the retirement board listing those disabled members who
50-4 should be examined. The retirement board shall have the right to
50-5 order an examination of any person on disability retirement once
50-6 each year until the member reaches the age of 62 years. If the
50-7 member refuses to submit to an examination by a physician or
50-8 physicians appointed by the retirement board or if the member
50-9 refuses to submit an annual report in accordance with <Subsection>
50-10 subsection (g) of this section concerning continued proof of
50-11 disability, the disability retirement allowance shall be
50-12 discontinued until such refusal is withdrawn and the member has
50-13 submitted to an examination <or> and has submitted an annual
50-14 report. Should such refusal continue for a period of one year, the
50-15 disability retirement allowance may be revoked by the retirement
50-16 board. If a member's disability retirement allowance has been
50-17 revoked, the retirement board may reinstate the member's disability
50-18 retirement allowance on a prospective basis only on the member's
50-19 full performance of and compliance with all requirements of this
50-20 section and the retirement board's determination that the member's
50-21 disability is continuing.
50-22 (i) If after investigation of the disabled member's
50-23 activities or if the annual medical examination shows that the
50-24 member is no longer physically or mentally incapacitated for the
50-25 purposes of the performance of employment duties or that such
51-1 member is engaged in or is able to engage in substantial gainful
51-2 occupation, as defined by Social Security disability income
51-3 guidelines, for which he or she is reasonably suited by education,
51-4 training, or experience, the retirement board <may continue> shall
51-5 discontinue the disability retirement allowance. If the disability
51-6 retirement allowance of a member who had less than 10 years of
51-7 creditable service is discontinued under this subsection <of
51-8 Subsection> or subsection (h) of this section and not reinstated,
51-9 and the member is not reemployed by the <city, a hospital
51-10 authority, or the board> employer, the member is entitled to any
51-11 amount by which the sum of the member's accumulated deposits as of
51-12 the date of disability retirement exceeds the sum of all disability
51-13 retirement benefits paid to the member by the system. If the
51-14 disability retirement allowance of a member <who had 10 years or
51-15 more of creditable service> is discontinued under this subsection
51-16 <of Subsection> or subsection (h) of this section<,> and not
51-17 reinstated, and the member is not reemployed by the <city, a
51-18 hospital authority, or the board> employer, the member may withdraw
51-19 any amount by which the sum of the member's accumulated deposits as
51-20 of the date of the disability retirement exceeds the sum of all
51-21 disability retirement benefits paid to the member by the system.
51-22 If <the member> a member who had 10 or more years of creditable
51-23 service does not withdraw the excess, the member is entitled to a
51-24 life annuity (modified cash refund) beginning on the first day of
51-25 the month after the month in which the member's normal retirement
52-1 date occurs.
52-2 (j) If a disabled member returns to active employment
52-3 service with the <city, a hospital authority, or the board>
52-4 employer, the disability retirement allowance shall cease. If the
52-5 person is reemployed as a regular full-time employee, the person
52-6 shall be reinstated as an active-contributory member of the system
52-7 and shall comply with all requirements of this Act. If reinstated
52-8 as an active-contributory member, membership service credits
52-9 accumulated prior to disability shall be restored to the full
52-10 amount standing to the member's credit as of the date the
52-11 retirement board found the member eligible for disability
52-12 retirement, and any prior service credit shall be restored in full.
52-13 The member is not required to reimburse the fund for any disability
52-14 retirement allowance amounts received by the member.
52-15 Sec. 9. LIMITATIONS ON BENEFITS. (a) Notwithstanding any
52-16 other provisions of this Act, the annual benefit provided with
52-17 respect to any member may not exceed the lesser of:
52-18 (1) $90,000; or
52-19 (2) 100 percent of the member's compensation averaged
52-20 over the three consecutive calendar years during which the member
52-21 had the greates aggregate compensation from the employer.
52-22 (b) Benefits provided to a member under this Act and under
52-23 any other qualified defined benefit plan or plans maintained by the
52-24 employer shall be aggregated for purposes of determining whether
52-25 the limitations in subsection (a) are met. If the aggregate
53-1 benefits otherwise payable to any member under this Act and any
53-2 other defined benefit plan or plans maintained by the employer
53-3 would otherwise exceed the limitations of subsection (a), the
53-4 reductions in benefits shall be made in the benefits provided under
53-5 this Act, to the extent necessary to enable each plan or plans to
53-6 satisfy those limitations, unless the retirement board is informed
53-7 by the administrator of the other plan that the reductions are
53-8 required to be made in the other plan.
53-9 (C) The maximum benefit otherwise permitted under subsection
53-10 (a) or (b) of this section is subject to the following adjustments:
53-11 (1) If the annual benefit begins before the member
53-12 attains age 62, the $90,000 limitation, as adjusted, shall be
53-13 reduced in a manner prescribed by the Secretary of the Treasury.
53-14 However, that adjustment may not reduce the member's annual benefit
53-15 below $75,000, if the member's benefit begins after age 55, or the
53-16 actuarial equivalent of $75,000 beginning at age 55 if benefits
53-17 begin before age 55.
53-18 (2) If the annual benefit begins after the member
53-19 attains age 65, the $90,000 limitation, as adjusted, will be
53-20 increased so that it is the actuarial equivalent of the $90,000
53-21 limitation at age 65.
53-22 (3) The portion of a member's benefit that is
53-23 attributable to the member's own after tax contributions is not
53-24 part of the annual benefit subject to the limitations of this
53-25 section. Instead, the amount of those contributions is treated as
54-1 an annual addition to a qualified defined contribution plan
54-2 maintained by the employer.
54-3 (d) The $90,000 limitation on annual benefits provided by
54-4 this section, but not the $75,000 limitation, shall be adjusted
54-5 annually as provided by Section 415(d) of the Code and the
54-6 regulations prescribed by the Secretary of the Treasury to reflect
54-7 cost of living adjustments. The adjusted limitation is effective
54-8 as of January 1 of each calendar year.
54-9 (e) The limitation provided by this section for a member who
54-10 has separated from service with a vested right to a pension shall
54-11 be adjusted annually as provided by Section 415(d) of the Code and
54-12 the regulations prescribed by the Secretary of the Treasury.
54-13 (f) The following interest rate assumptions shall be used in
54-14 computing the limitations under this section:
54-15 (1) For the purpose of determining the portion of the
54-16 annual benefit that is purchased with employee contributions, the
54-17 interest rate assumption is 120 percent of the federal mid-term
54-18 rate, as in effect under Section 1274 of the Code, compounded
54-19 annually.
54-20 (2) For the purpose of adjusting the annual benefit to
54-21 a straight life annuity, the interest rate assumption is five
54-22 percent, unless a different rate is required by the Secretary of
54-23 the Treasury.
54-24 (3) For the purpose of adjusting the $90,000
54-25 limitation after a member attains age 65, the interest rate
55-1 assumption is five percent, unless a different rate is required by
55-2 the Secretary of the Treasury, and the mortality decrement shall be
55-3 ignored to the extent that a forfeiture does not occur at death.
55-4 (g) For purposes of this section, an adjustment under
55-5 Section 415(d) of the Code may not be taken into account before the
55-6 year for which that adjustment first takes effect. No adjustment
55-7 is required for the value of qualified joint and survivor annuity
55-8 benefits, preretirement death benefits, post retirement medical
55-9 benefits, or post retirement cost-of-living increases made in
55-10 accordance with Section 415(d) of the Code and Section 1.415-3(c)
55-11 of the Income Tax Regulations.
55-12 (h) This plan may still pay an annual benefit to any member
55-13 in excess of the member's maximum annual benefit otherwise allowed
55-14 if:
55-15 (1) the annual benefit derived from the employer's
55-16 contributions under all qualified plans subject to the limitations
55-17 of Section 415 of the Code does not in the aggregate exceed $10,000
55-18 for the year or for any prior year; and
55-19 (2) the member has not at any time participated in a
55-20 defined contribution plan maintained by the employer.
55-21 For purposes of this subsection, member contributions under
55-22 the Act are not considered a separate defined contribution plan
55-23 maintained by the employer.
55-24 (i) If a member has less than ten years of creditable
55-25 service at the time the member begins to receive benefits under the
56-1 Act, the $90,000 limitation, as adjusted, shall be reduced by
56-2 multiplying the limitation by a fraction in which the numerator is
56-3 the number of years of creditable service and the denominator is
56-4 10; provided, however, that the fraction may not be less than
56-5 one-tenth. If the employee has less than 10 years of employment
56-6 with the employer, the 100 percent limitation of subsection (a)(2)
56-7 and the $10,000 limitation of this subsection (h) shall be reduced
56-8 in the same manner as provided in the preceding sentence, except
56-9 the numerator shall be the number of years of employment with the
56-10 employer rather than the number of years of creditable service.
56-11 (j) If a member is or has been a member in one or more
56-12 defined contribution plans maintained by the employer, the sum of
56-13 the defined benefit plan fraction and the defined contribution plan
56-14 fraction for any year may not exceed 1.0.
56-15 (k) For purposes of subsection (j). the defined benefit plan
56-16 fraction for any year is a fraction in which:
56-17 (1) the numerator is the projected annual benefit of a
56-18 member, determined as of the close of the year pursuant to Section
56-19 1.415-7(b)(3) of the Income Tax Regulations; and
56-20 (2) the denominator is the lesser of:
56-21 (A) the product of 1.25 and the maximum dollar
56-22 limitation provided by subsection (a)(1) of this section, as
56-23 adjusted, for the year; or
56-24 (B) the product of 1.4 and the amount that may
56-25 be taken into account under subsection (a)(2) of this section for
57-1 the year.
57-2 (l) For purposes of subsection (a) of this section the
57-3 defined contribution plan fraction for any year is a fraction in
57-4 which:
57-5 (1) the numerator is the sum of the annual additions
57-6 to the member's account as of the close of the year; and
57-7 (2) the denominator is the sum of the lesser of the
57-8 following amounts determined for the year and each prior year of
57-9 employment with the employer:
57-10 (A) the product of 1.25 and the dollar
57-11 limitation in effect under Section 415(c)(1)(A) of the Code for the
57-12 year, determined without regard to Section 415(c)(6) of the Code;
57-13 or
57-14 (B) the product of 1.4 and the amount that may
57-15 be taken into account under Section 415(c)(1)(B) of the Code for
57-16 the year.
57-17 The annual additions may not be recomputed for years
57-18 beginning before January 1, 1987 to treat all member contributions
57-19 as annual additions.
57-20 (m) If the sum of the defined benefit plan fraction and the
57-21 defined contribution plan fraction exceeds 1.0 in any year for any
57-22 member, the retirement board shall first request the person or
57-23 persons responsible for the defined contribution plan or plans, to
57-24 reduce, the annual additions to the member's account to the extent
57-25 necessary for that year. If, after limiting to the extent possible
58-1 the annual additions to the member's account for the year, the sum
58-2 of the defined benefit plan fraction and the defined contribution
58-3 plan fraction still exceeds 1.0, the retirement board shall adjust
58-4 the benefits provided under this Act so that the sum of both
58-5 fractions shall not exceed 1.0 in any year for the member.
58-6 (n) For purposes of determining the limits provided by this
58-7 section, all qualified defined benefit plans, whether terminated or
58-8 not, ever maintained by or contributed to by the employer, shall be
58-9 treated as one defined benefit plan, and all qualified defined
58-10 contribution plans, whether terminated or not, ever maintained by
58-11 or contributed to by the employer, shall be treated as one defined
58-12 contribution plan.
58-13 (o) Notwithstanding anything contained in this section to
58-14 the contrary, the limitations, adjustments, and other requirements
58-15 prescribed by this Act shall at all times comply with the
58-16 requirements of Section 415 of the Code and all Regulations
58-17 promulgated under the Code. If any provision of Section 415 of the
58-18 Code is repealed or is not enforced by the Internal Revenue
58-19 Service, that provision may not reduce the benefits of any member
58-20 after the effective date of the repeal of the provision or during
58-21 the period in which the provision is not enforced.
58-22 METHOD OF FINANCING
58-23 Sec. 10. <9> Method of financing. (a) Each
58-24 active-contributory member shall make deposits to the retirement
58-25 system at a rate equal to seven percent of the member's
59-1 compensation, pay, or salary, exclusive of overtime, incentive, or
59-2 terminal pay<, and disregarding compensation, pay, or salary in any
59-3 month in excess of $16,666>. Deposits shall be made by payroll
59-4 deduction. If a regular full-time employee works at least 75
59-5 percent of a normal 40-hour work week but less than the full 40
59-6 hours, the employee shall make deposits as though working a normal
59-7 40-hour work week even though the rate of contribution may exceed
59-8 seven percent of the employee's actual compensation, pay, or
59-9 salary, and the employee's average final compensation shall be
59-10 computed on the basis of the compensation, pay, or salary for a
59-11 normal 40-hour work week. No deposits may be made nor membership
59-12 service credit received for periods during which an employee's
59-13 authorized normal work week is less than <75> seventy-five percent
59-14 (75%) of a normal 40-hour work week. A person who is eligible for
59-15 inactive-contributory membership status and who chooses to be an
59-16 inactive-contributory member shall make deposits to the retirement
59-17 system <biweekly> each pay period in an amount that is equal to the
59-18 amount of the member's deposit for the last complete <biweekly> pay
59-19 period that the member was employed by the <city, a hospital
59-20 authority, or the board. The> employer. The regular full-time
59-21 employee members, by a majority vote of all such members voting in
59-22 favor of an increase in contributions above seven percent, may
59-23 increase each member's contributions above seven percent in
59-24 whatever amount the <pension> retirement board recommends. <The
59-25 city> Each employer shall contribute amounts equal to seven percent
60-1 of the compensation, pay, or salary of each active-contributory
60-2 member and each inactive-contributory member employed by the <city>
60-3 employer, exclusive of overtime, incentive, or terminal pay<, and
60-4 disregarding compensation, pay, or salary in any month in excess of
60-5 $16,666. If a regular full>. If a regular full-time employee of
60-6 the <city> employer works at least <75> seventy five percent (75%)
60-7 of a normal 40-hour work week but less than the full 40 hours, the
60-8 <city> employer shall make contributions for that employee as
60-9 though that employee works a normal 40-hour work week even though
60-10 the rate of contribution may exceed seven percent of that
60-11 employee's actual compensation, pay, or salary. The governing body
60-12 of the city <council> may authorize the city to make additional
60-13 contributions to the system in whatever amount the <city council
60-14 may determine. The board shall pay from the fund contributions in
60-15 amounts equal to seven percent of the compensation, pay, or salary
60-16 of each active-contributory member and each inactive-contributory
60-17 member employed by the board, exclusive of overtime, incentive, or
60-18 terminal pay, disregarding compensation, pay, or salary in any
60-19 month in excess of $16,666. If a regular full-time employee of the
60-20 board works at least 75 percent of a normal 40-hour work week but
60-21 less than the full 40 hours, the board shall make contributions for
60-22 the employee as though the employee works a normal 40-hour work
60-23 week even though the rate of contribution may exceed seven percent
60-24 of the employee's actual compensation, pay, or salary. If the city
60-25 council> governing body may determine. If the governing body
61-1 authorizes additional contributions to the system by the city for
61-2 city employees, the board of each employer may increase the
61-3 contributions for <the board> such employer's respective employees
61-4 by the same percentage. <Each hospital authority shall contribute
61-5 amounts equal to seven percent of the compensation, pay, or salary
61-6 of each active-contributory member and each inactive-contributory
61-7 member employed by the hospital authority, exclusive of overtime,
61-8 incentive, or terminal pay, disregarding compensation, pay, or
61-9 salary in any month in excess of $16,666. If a regular full-time
61-10 employee of a hospital authority works at least 75 percent of a
61-11 normal 40-hour work week but less than the full 40 hours, the
61-12 hospital authority shall make contributions for that employee as
61-13 though that employee works a normal 40-hour work week even though
61-14 the rate of contribution may exceed seven percent of that
61-15 employee's actual compensation, pay, or salary. If the city
61-16 council authorizes additional contributions to the system by the
61-17 city for city employees, each hospital authority may increase the
61-18 contributions for the hospital authority employees by the same
61-19 percentage. Contributions to the city, a hospital authority, and
61-20 the board> Employer contributions shall be made each pay period.
61-21 (b) In addition to the <contribution> contributions by the
61-22 city required by <Subsection> subsection (a) of this section, the
61-23 city shall contribute to the retirement fund each month two-thirds
61-24 of such amounts as are required for the payment of prior service
61-25 pensions that are payable during that month, and one-third of each
62-1 prior service pension payable that month shall be made from Fund
62-2 No. 2.
62-3 (c) <Contributions by the city> Employer contributions shall
62-4 be paid to the retirement system after appropriation by the <city
62-5 council> respective governing governing body or board.
62-6 (d) Expenses for administration and operation of the
62-7 retirement system that are approved by the retirement board shall
62-8 be paid by the retirement board from funds of the retirement
62-9 system. Such expenses shall include salaries of retirement board
62-10 employees and fees for actuarial services, legal counsel services,
62-11 physician services, accountant services, annual audits, investment
62-12 manager services, investment consultant services, preparation of
62-13 annual reports, and staff assistance.
62-14 (e) <The city shall pick up the city employee contributions
62-15 to the fund. The board shall pick up the board employee
62-16 contributions to the fund. Each hospital authority shall pick up
62-17 hospital authority employee contributions to the fund. Member>
62-18 Each employer shall pick up the contributions required to be made
62-19 to the fund by its respective employees. Active contributory
62-20 member deposits will be picked up by each employer by a reduction
62-21 in <their> each such employee's monetary compensation.
62-22 <Contributions picked up> All such employee contributions shall be
62-23 treated as employer contributions in accordance with Section
62-24 414(h)(2) of the <Internal Revenue> Code <of 1986 (26 U.S.C.
62-25 Section 414(h)(2)> for the purpose of determining tax treatment of
63-1 the amounts under the <Internal Revenue Code of 1986. These> Code.
63-2 Such contributions are not includable in the gross income of the
63-3 employee until such time as they are distributed or made available
63-4 to the employee. <Employee deposits> Each employee deposit picked
63-5 up as provided by this subsection shall be credited to the
63-6 individual accumulated deposits account of each <affected> such
63-7 employee and shall be treated as compensation of <employees> the
63-8 employee for all other purposes of this <statute> Act and for the
63-9 purpose of determining contributions to social security. The
63-10 provisions of this subsection shall remain in effect as long as the
63-11 plan covering employees of the <city> employers is a qualified
63-12 retirement plan under Section 401(a) of the <Internal Revenue> Code
63-13 <of 1986 (26 U.S.C. Section 401(a)),> and its related trust is tax
63-14 exempt under Section 501(a) of the <Internal Revenue Code of 1986
63-15 (26 U.S.C. Section 501(a)).> Code.
63-16 (f) <Before the satisfaction of all liabilities incurred
63-17 with respect to members and their beneficiaries under this Act, the
63-18 corpus or income of the fund may not be used for, or diverted to,
63-19 purposes other than for> Under no circumstances and in no event may
63-20 any of the contributions and income of the retirement system revert
63-21 to the employer or otherwise be diverted to or used for any purpose
63-22 other than the exclusive benefit of the members, retirees and their
63-23 beneficiaries. It shall be impossible for the diversion or use
63-24 prohibited by the preceding sentence to occur, whether by operation
63-25 or natural termination of the retirement system, by power of
64-1 revocation or amendment, by the happening of a contingency, by
64-2 collateral arrangement, or by any other means.
64-3 Sec. 11. <10.> INVESTMENTS OF THE RETIREMENT BOARD.
64-4 (a) The retirement board shall be the trustee of the funds of the
64-5 retirement system and shall have full power in its sole discretion
64-6 to invest and reinvest, alter, and change the form of investment of
64-7 the funds. The retirement board shall invest the funds in whatever
64-8 instrument or investments the retirement board considers prudent.
64-9 In making investments for the funds, the retirement board shall
64-10 discharge its duties:
64-11 (1) for the exclusive purposes of:
64-12 (A) providing benefits to members and their
64-13 beneficiaries; and
64-14 (B) defraying reasonable expenses of
64-15 administering the funds;
64-16 (2) with the care, skill, prudence, and diligence
64-17 under the circumstances then prevailing that a prudent person
64-18 acting in a like capacity and familiar with such matters would use
64-19 in the conduct of an enterprise of a like character and with like
64-20 aims;
64-21 (3) by diversifying the investments of the funds to
64-22 minimize the risk of large losses, unless under the circumstances
64-23 it is clearly prudent not to do so; and
64-24 (4) in accordance with the laws, documents, and
64-25 instruments governing the funds.
65-1 (b) A member of the retirement board is not liable for any
65-2 losses incurred in the investment of the fund in accordance with
65-3 this section.
65-4 (c) No member of the retirement board and no employee of the
65-5 retirement board, except as herein provided, shall have any
65-6 interest, directly or indirectly, in the funds or receive any pay
65-7 or emolument for his or her services. No member of the retirement
65-8 board or employee thereof shall, directly or indirectly, for
65-9 himself or herself or as an agent, in any manner use the funds or
65-10 deposits of the retirement system except to make such current and
65-11 necessary payments as are authorized by the retirement board, nor
65-12 shall any member or employee of the retirement board become an
65-13 endorser or surety or in any manner an <obligator> obligor for
65-14 money loaned by or borrowed from the <board> retirement system.
65-15 (d) Subject to the exceptions provided by this subsection,
65-16 the funds or money mentioned in this Act are not assignable and are
65-17 not subject to execution, levy, attachment, garnishment, the
65-18 operation of bankruptcy or insolvency law, or any other process of
65-19 law whatsoever. This subsection does not apply to a qualified
65-20 domestic relations order. The retirement board shall establish <a>
65-21 written <procedure> procedures to determine the qualified status of
65-22 domestic relations orders and to administer distributions under
65-23 those orders. To the extent necessary to authorize distributions
65-24 pursuant to a qualified domestic relations order, a former spouse
65-25 of a member will be treated as the spouse or surviving spouse of
66-1 the member.
66-2 (e) Subject to the exceptions provided by this subsection,
66-3 the right of a member to a pension, an annuity, a disability
66-4 retirement allowance, or a retirement allowance, to the return of
66-5 accumulated deposits, the pension, annuity, or retirement allowance
66-6 itself, any optional benefit or death benefits, any other right
66-7 accrued or accruing to any person under the provisions of this Act
66-8 <are> is unassignable and <are> is not subject to execution, levy,
66-9 attachment, garnishment, the operation of bankruptcy or insolvency
66-10 law, or any other process of law whatsoever. This subsection does
66-11 not apply to a qualified domestic relations order.
66-12 (f) If the retirement board makes an election to have
66-13 Subchapters A and C of Chapter 804, Government <Code,1> Code, and
66-14 their subsequent amendments, apply to the system, the death of an
66-15 alternate payee, as defined by Section 804.001, Government Code,
66-16 and its subsequent amendments, or the death of a member's spouse
66-17 terminates any interest of the alternate payee or spouse that would
66-18 otherwise exist under this Act, except an interest accrued by that
66-19 person as a member.
66-20 Sec. 12. <11> Miscellaneous. (a) A person who with intent
66-21 to deceive makes any statement or report required under this Act
66-22 which is untrue or falsifies or knowingly permits to be falsified
66-23 any record or records of the retirement system shall forfeit any
66-24 office or rights held by the person under the system, and such
66-25 deception, falsification, or acquiescence in falsification is
67-1 deemed a Class B misdemeanor.
67-2 (b) If any change or error in the records of the retirement
67-3 system is discovered or results in any member, surviving spouse, or
67-4 beneficiary receiving from the retirement system more or less than
67-5 the member, surviving spouse, or beneficiary would have been
67-6 entitled to receive had the records been correct, the retirement
67-7 board shall have the power to correct such error and as far as
67-8 possible to adjust the payments in such a manner that the actuarial
67-9 equivalent of the benefits to which the member, surviving spouse,
67-10 or beneficiary was correctly entitled shall be paid.
67-11 (c) On the full or partial termination of the retirement and
67-12 pensioning system, or on the complete discontinuance of
67-13 contributions by <the city, all hospital authorities, and the
67-14 board> all employers under this Act, the retirement allowance of
67-15 <a> each affected member who is employed by <the city, a hospital
67-16 authority, or the board> an employer on the date of termination is
67-17 determined by reference to the member's average final compensation
67-18 and creditable service determined as of the date of termination or
67-19 partial termination of the system or the date of discontinuance of
67-20 deposits as if the member had attained normal retirement age on
67-21 that date, and such amount shall become nonforfeitable to the
67-22 extent then funded. This subsection does not accelerate the date
67-23 on which the payment of that benefit would otherwise begin.
67-24 (d) <A member who is entitled to a benefit, including a
67-25 benefit consisting solely of a distribution of the member's
68-1 accumulated deposits, from the system may instruct the system to
68-2 pay the single lump-sum> Any other provision in this Act to the
68-3 contrary, in the event of a termination of the retirement and
68-4 pensioning system, the benefit of any highly compensated employee
68-5 or former employee is limited to a benefit that is
68-6 nondiscriminatory under Section 401(a)(4) of the Code. Benefits
68-7 distributed to any of the twenty five (25) most highly compensated
68-8 active and former highly compensated employees are restricted such
68-9 that the annual payments are no greater than an amount equal to the
68-10 payment that would be made on behalf of an employee under a single
68-11 life annuity that is the actuarial equivalent of <that benefit
68-12 directly to>:
68-13 <(1) another trust forming part of a pension,
68-14 profit-sharing, or stock bonus plan maintained by that member's new
68-15 employer and represented by that employer in writing as meeting the
68-16 requirements of 26 U.S.C. Section 401(a) and its subsequent
68-17 amendments, subject to the acceptance by the trust to which those
68-18 transfers are made of those transfers; or>
68-19 <(2) an eligible transferee plan in accordance with the
68-20 federal Unemployment Compensation Amendments of 1992 (Pub. L. No.
68-21 102-318) and its subsequent amendments governing direct rollovers
68-22 of eligible rollover distributions from qualified retirement plans.>
68-23 <(e) This Act does not grant a contract of employment between
68-24 a member and the city, a hospital authority, or the board.
68-25 Severability> the sum of the employee's accrued benefit and the
69-1 employee's other benefits under the plan. The preceding sentence
69-2 shall not apply if: (1) after payment of the benefit to an employee
69-3 described in that sentence, the value of plan assets equals or
69-4 exceeds 110% of the value of the current liabilities, as defined in
69-5 Section 412(l)(7) of the Code, or (2) the value of the benefits for
69-6 an employee described in that paragraph is less than one percent
69-7 (1%) of the value of current liabilities. For purposes of this
69-8 subsection, benefit includes loans in excess of the amount set
69-9 forth in Section 72(p)(2)(A) of the Code, any periodic income, any
69-10 withdrawal values payable to a living employee and any death
69-11 benefits not provided for by insurance on the employee's life.
69-12 (e) Notwithstanding any provision of this Act to the
69-13 contrary that would otherwise limit a distributee's election, a
69-14 distributee may elect, at the time and in the manner prescribed by
69-15 the retirement board, to have any portion of an eligible rollover
69-16 distribution paid directly to an eligible retirement plan specified
69-17 by the distributee in a direct rollover.
69-18 For purposes of this subsection (e) of this Section:
69-19 (1) An eligible rollover distribution is any
69-20 distribution of all or any portion of the balance to the credit of
69-21 the distributee, except that an eligible rollover distribution does
69-22 not include: (1) any distribution that is one of a series of
69-23 substantially equal periodic payments (not less frequently than
69-24 annually) made over the life (or life expectancy) of the
69-25 distributee or the joint lives (or joint life expectancies) of the
70-1 distributee and the distributee's designated beneficiary; (2) any
70-2 series of payments for a specified period of ten years or more; (3)
70-3 any distribution to the extent such distribution is required under
70-4 Section 401(a)(9) of the Code; or (4) the portion of any
70-5 distribution that is not includible in gross income (determined
70-6 without regard to the exclusion for net unrealized appreciation
70-7 with respect to employer securities).
70-8 (2) An "eligible retirement plan" is an individual
70-9 retirement account described in Section 408(a) of the Code, an
70-10 individual retirement annuity described in Section 408(b) of the
70-11 Code, an annuity plan described in Section 403(a) of the Code, or a
70-12 qualified trust described in Section 401(a) of the Code, that
70-13 accepts the distributee's eligible rollover distribution. However,
70-14 in the case of an eligible rollover distribution to the surviving
70-15 spouse, an eligible retirement plan is an individual retirement
70-16 account or individual retirement annuity only.
70-17 (3) A "distributee" includes an employee or former
70-18 employee. In addition, the employee's or former employee's
70-19 surviving spouse and the employee's or former employee's spouse or
70-20 former spouse who is the alternate payee under a qualified domestic
70-21 relations order, as defined in Section 414(p) of the Code, are
70-22 distributees with regard to the interest of the spouse or the
70-23 former spouse.
70-24 (4) A "direct rollover" is a payment by the retirement
70-25 system to the eligible retirement plan specified by the
71-1 distributee.
71-2 (f) <SECTION 11. (a)> (1) Retirement allowances being paid
71-3 by the retirement and pensioning system created by Chapter 451,
71-4 Acts of the 72nd Legislature, Regular Session, 1991 (Article 6243n,
71-5 Vernon's Texas Civil Statutes), to members of the retirement
71-6 system, or to the beneficiaries of those members, who retired
71-7 before the effective date of this Act <December 1, 1989,> are
71-8 increased beginning with the payments due at the end of October
71-9 1995 <September in 1993>.
71-10 (2) The amount of the increase for a member, or the
71-11 beneficiary of the member, is by a percentage equal to:
71-12 A. <(1)> 2.3 <2.2> percent divided by the
71-13 retirement formula in effect on the date of the member's
71-14 retirement;
71-15 B. <(2)> minus one; and
71-16 C. <(3)> multiplied by 100.
71-17 (g) <SECTION 12. (a)> (1) The changes in law made by H.B.
71-18 2799, Acts of the 73rd Legislature, Regular Session, 1993, <this
71-19 Act> to Section 5(e), Chapter 451, Acts of the 72nd Legislature,
71-20 Regular Session, 1991 (Article 6243n, Vernon's Texas Civil
71-21 Statutes), <as redesignated by this Act,> permit a member who,
71-22 before July 1, 1993, reinstated any portion of the member's
71-23 membership service or prior service under a city ordinance that was
71-24 in effect before July 1, 1993, to reinstate any membership service
71-25 or prior service to which the member was not entitled to reinstate
72-1 under that city ordinance.
72-2 (2) <(b)> The changes in law made by H.B. 2799, Acts
72-3 of the 73rd Legislature, Regular Session, 1993, <this Act> to
72-4 Section 7, Chapter 451, Acts of the 72nd Legislature, Regular
72-5 Session, 1991 (Article 6243n, Vernon's Texas Civil Statutes), apply
72-6 only to an option election or beneficiary designation made on or
72-7 after July 1, 1993 <the effective date of this Act> is governed by
72-8 the law in effect at the time the election or designation was made,
72-9 and that law is continued in effect for this purpose only.
72-10 Sec. 13. CONFIDENTIALITY. (a) Information contained in
72-11 records that are in the custody of the retirement board or the
72-12 system concerning an individual member, retiree, annuitant,
72-13 beneficiary, or alternate payee is confidential under this section
72-14 14 and may not be disclosed in a form indentifiable with a specific
72-15 individual unless:
72-16 (1) the information is disclosed to:
72-17 (A) the individual or the individual's attorney,
72-18 guardian, executor, administrator, conservator, or other person who
72-19 the pension officer determines is acting in the interest of the
72-20 individual or the individual's estate;
72-21 (B) a spouse or former spouse of the individual
72-22 if the pension officer determines that the information is relevant
72-23 to the spouse's or former spouse's interest in member accounts,
72-24 benefits, or other amounts payable by the retirement system;
72-25 (C) a governmental official or employee if the
73-1 pension officer determines that disclosure of the information
73-2 requested is reasonably necessary to the performance of the duties
73-3 of the official or employee;
73-4 (D) the individual's employer as defined in this
73-5 Act; or
73-6 (E) a person authorized by the individual in
73-7 writing to receive the information; or
73-8 (2) the information is disclosed pursuant to a
73-9 subpoena and the pension officer determines that the individual
73-10 will have a reasonable opportunity to contest the subpoena.
73-11 (b) This section does not prevent the disclosure of the
73-12 status or identity of an individual as a member, former member,
73-13 retiree, deceased member or retiree, beneficiary, or alternate
73-14 payee of the retirement system.
73-15 (c) The pension officer may designate other employees of the
73-16 retirement system to make the necessary determinations under
73-17 Subsection (a).
73-18 (d) A determination and disclosure under Subsection (a) may
73-19 be made without notice to the individual member, retiree,
73-20 annuitant, beneficiary, or alternate payee.
73-21 Sec. 14. <12> Severability. If any provision, section,
73-22 part, subsection, sentence, clause, phrase, or paragraph of this
73-23 Act is declared invalid or unconstitutional, the same shall not
73-24 affect any other portion or provision hereof and all other
73-25 provisions shall remain valid and unaffected by any invalid
74-1 portion, if any.
74-2 Sec. 15. <13> Savings clause. The provisions of this Act
74-3 shall be cumulative of and in addition to all laws relating to
74-4 pensions, which laws are hereby preserved and continued in full
74-5 force and effect, provided that in the event of conflict, expressly
74-6 excluding any statutes relating to federal tax exemption, the
74-7 provisions of this Act control, and employee pensions in a city
74-8 covered by this Act shall be administered in accordance with this
74-9 Act.
74-10 SECTION 2. This Act takes effect October 1, 1995, unless
74-11 otherwise provided in Section 3.
74-12 SECTION 3. The importance of this legislation and the
74-13 crowded condition of the calendars in both houses create an
74-14 emergency and an imperative public necessity that the
74-15 constitutional rule requiring bills to be read on three several
74-16 days in each house be suspended, and this rule is hereby suspended,
74-17 and that this Act take effect and be in force according to its
74-18 terms, and it is so enacted.