1-1 By: Barrientos S.B. No. 864
1-2 (In the Senate - Filed March 1, 1995; March 2, 1995, read
1-3 first time and referred to Committee on Intergovernmental
1-4 Relations; March 16, 1995, reported favorably, as amended, by the
1-5 following vote: Yeas 8, Nays 0; March 16, 1995, sent to printer.)
1-6 COMMITTEE AMENDMENT NO. 1 By: Leedom
1-7 Amend S.B. No. 864 as follows:
1-8 (1) Amend SECTION 1 to change Section 1.02(4) to insert "of"
1-9 after "average" on page 1, line 15 (Committee printing page 1, line
1-10 50).
1-11 (2) Amend SECTION 1 to change Section 1.02(6) to delete
1-12 "and" after "system" on page 2, line 24 (Committee printing page 2,
1-13 line 15) and insert a comma there, delete "except that those months
1-14 are included within the meaning of creditable service if the
1-15 member" on page 2, lines 26-27 (Committee printing page 2, lines
1-16 17-18), and insert "and" after the comma on page 2, line 26
1-17 (Committee printing page 2, line 17).
1-18 (3) Amend SECTION 5 to change Section 5.02(a)(5) to delete
1-19 "or surviving spouse" after "member" on page 10, line 14 (Committee
1-20 printing page 5, line 9).
1-21 (4) Amend SECTION 5 to change Section 5.03(a)(3) to delete
1-22 "or surviving spouse" before "one" on page 12, line 4 (Committee
1-23 printing page 5, line 53).
1-24 (5) Amend SECTION 5 to change Section 5.03(c) to delete "not
1-25 later than" after "is" on page 12, line 14 (Committee printing page
1-26 5, line 63).
1-27 (6) Amend SECTION 6 to change Section 6.01(e)(1) to delete
1-28 "figure" after "amount" on page 18, line 20 (Committee printing
1-29 page 8, line 18) and delete the comma after "appropriate" on page
1-30 18, line 23 (Committee printing page 8, line 21).
1-31 (7) Amend SECTION 17 to change Section 11.01(i) to insert
1-32 "shall" after "city" on page 34, line 5 (Committee printing page
1-33 14, line 13) and after "subsection," on page 34, line 9 (Committee
1-34 printing page 14, line 17).
1-35 A BILL TO BE ENTITLED
1-36 AN ACT
1-37 relating to participation in and benefits and administration of
1-38 retirement systems for police officers in certain municipalities.
1-39 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-40 SECTION 1. Subdivisions (2), (4), (6), (18), (24), and (25),
1-41 Section 1.02, Chapter 452, Acts of the 72nd Legislature, Regular
1-42 Session, 1991 (Article 6243n-1, Vernon's Texas Civil Statutes), are
1-43 amended to read as follows:
1-44 (2) "Actuarial equivalent" means any benefit of equal
1-45 present value to a standard benefit when computed as specified by
1-46 <on the basis of actuarial tables adopted by the police board in
1-47 the proper administration of the police retirement system
1-48 established under> this Act.
1-49 (4) "Average final compensation" means the monthly
1-50 average basic hourly earnings <compensation, pay, or salary,
1-51 exclusive> of <overtime and terminal pay, earned by> a member
1-52 during, as applicable:
1-53 (A) if the member has 120 months or more of
1-54 service during which the member made contributions to the police
1-55 system or the predecessor system, the 36 months which yielded the
1-56 highest average during the last 120 months of membership service
1-57 during which the member contributed to the police system or the
1-58 predecessor system;
1-59 (B) if the member has less than 120 months of
1-60 membership service during which the member contributed to the
1-61 police system or the predecessor system, but has at least 36 months
1-62 of membership service during which the member made contributions to
1-63 the police system or the predecessor system, <then> the average of
1-64 the 36 months which yielded the highest average; or
1-65 (C) if the member does not have 36 months of
1-66 membership service during which the member contributed to the
1-67 police system or the predecessor system, <then> the average of the
1-68 member's months of membership service during which the member made
2-1 contributions to the police system or the predecessor system.
2-2 (6) "Creditable service" means the number of months
2-3 <period of time> during which a member pays into and keeps on
2-4 deposit the amounts of money prescribed by this Act to be paid by
2-5 the member into the system or into the predecessor system,
2-6 including certain military service and certain probationary service
2-7 in excess of six months for which a member has purchased creditable
2-8 service in accordance with <the provisions of> Article V of this
2-9 Act, and excluding a month in which service amounted to fewer than
2-10 15 days. The months<; provided, that the period> beyond attained
2-11 age 62 are <may be> included within the meaning of creditable
2-12 service, regardless of payments into this system or into the
2-13 predecessor system if the police officer<:>
2-14 <(A)> is otherwise eligible for membership in
2-15 the system and<;>
2-16 <(B)> is an active police officer employed by
2-17 the city, except that those months are included within the meaning
2-18 of creditable service if the member did not contribute for the
2-19 months only if they occurred before September 1, 1995<; and>
2-20 <(C) has contributed into the system or into the
2-21 predecessor system for not less than 120 months>.
2-22 (18) "Normal retirement date" means the last <first>
2-23 day of the <month following the> earliest month in which the
2-24 member:
2-25 (A) <the member> has attained the age of 55 and
2-26 completed at least 20 years of creditable service;
2-27 (B) <the member has attained the age of 50 and
2-28 completed at least 25 years of creditable service;>
2-29 <(C) the member> has completed 25 <30> years of
2-30 creditable service at any age; or
2-31 (C) <(D) the member> has reached the age of 62.
2-32 (24) "Retirement" means separation <withdrawal> of a
2-33 member from active service in order to receive an annuity in
2-34 accordance with the provisions of the police retirement system
2-35 under this Act.
2-36 (25) "Retirement date" means the last <first> day of
2-37 the month of <next succeeding> the retirement of the member.
2-38 SECTION 2. Subsection (c), Section 4.01, Chapter 452, Acts
2-39 of the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
2-40 Vernon's Texas Civil Statutes), is amended to read as follows:
2-41 (c) Any person who becomes an employee of the city or
2-42 becomes a member of the police system's administrative staff after
2-43 the date of establishment of the police retirement system, if
2-44 eligible for membership, shall become a member as a condition of
2-45 employment and shall make the required deposits commencing with the
2-46 first pay period following a probationary period of six continuous
2-47 months from date of employment or eligibility, if later. <The
2-48 member shall remain a member of the system until the member is
2-49 entitled to service retirement and withdrawal benefits under the
2-50 provisions of Article VI of this Act or is entitled to disability
2-51 retirement benefits under the provisions of Article VII of this
2-52 Act.>
2-53 SECTION 3. Subdivision (1), Subsection (e), Section 4.01,
2-54 Chapter 452, Acts of the 72nd Legislature, Regular Session, 1991
2-55 (Article 6243n-1, Vernon's Texas Civil Statutes), is amended to
2-56 read as follows:
2-57 (1) Membership in the police retirement system shall
2-58 consist of the following groups:
2-59 (A) Active--Contributory: the member who is in
2-60 a status which allows payroll contributions to the police
2-61 retirement system (75 percent of a normal work week or more per
2-62 week, permanent position, having completed a continuous period of
2-63 six months initially, to attain membership).
2-64 (B) Active--Noncontributory <I>: the member
2-65 whose current employment status does not allow contributions to the
2-66 police system and is thereby deactivated with the privilege of
2-67 immediate reentry, on appropriate change of status, to a period for
2-68 which the member will again be given creditable service, with
2-69 contributions resumed at time of status change.
2-70 (C) <Active--Noncontributory II: the member who
3-1 has completed 120 months of contributions at or beyond age 62 and
3-2 is no longer required to contribute as a condition of the member's
3-3 employment.>
3-4 <(D)> Inactive--Contributory: the member who is
3-5 on a leave of absence under Subsection (f) of this section, who is
3-6 allowed to make deposits to the police system during the member's
3-7 absence.
3-8 (D) <(E)> Vested--Noncontributory: the
3-9 terminated member who, being fully vested, retains the member's
3-10 contributions in the police system.
3-11 (E) <(F)> Retired: the member who is receiving
3-12 a retirement annuity.
3-13 SECTION 4. Subsection (f), Section 4.01, Chapter 452, Acts
3-14 of the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
3-15 Vernon's Texas Civil Statutes), is amended to read as follows:
3-16 (f)(1) A member shall cease to be a member of the police
3-17 retirement system and shall lose membership service if, through
3-18 death, dismissal, resignation, or from any other cause, the member
3-19 shall sever the member's service connection and withdraw the
3-20 member's accumulated deposits as provided under the withdrawal
3-21 allowance provisions of this Act; provided, however, that any
3-22 eligible member who has not previously received credit for one-half
3-23 of the member's previously forfeited membership service shall be
3-24 entitled to reinstatement of membership service if such eligible
3-25 member or eligible surviving spouse shall have deposited in the
3-26 system the accumulated deposits withdrawn and an interest charge
3-27 based on the amount withdrawn times an interest factor. The factor
3-28 is based on the compounded net annual rate of interest credited to
3-29 the member's accumulated contributions divided by 0.75, beginning
3-30 with the month and year in which the member withdrew the member's
3-31 contributions and ending with the month and year payment is made to
3-32 reinstate the service. The annual rate of interest applicable for
3-33 the year when payment is made is considered to be equal to the
3-34 prior year's rate of interest for the purpose of making the
3-35 determination.
3-36 (2) An eligible member is a police officer who has
3-37 been reemployed by the city or a staff member reemployed by the
3-38 police system, <and> has completed at least 24 consecutive months
3-39 of service as a member since the member was reemployed, and is not
3-40 separated from active service <at a time when the board permits
3-41 members to reinstate their previously forfeited membership
3-42 service>. For purposes of this subsection, an eligible surviving
3-43 spouse is the surviving spouse of an eligible member if the member
3-44 dies before making payment to the system of the amount required by
3-45 this subsection <A terminated member officer with a vested
3-46 retirement account is also eligible to reinstate previously
3-47 forfeited membership service at a time when the board permits such
3-48 reinstatement>.
3-49 (3) In order to be eligible to reinstate previously
3-50 forfeited membership service, an eligible member or eligible
3-51 surviving spouse must deposit the amount described in Subdivision
3-52 (1) of this subsection as a lump sum in the system <within the time
3-53 period prescribed by the board>. An eligible surviving spouse may
3-54 reinstate previously forfeited membership service not later than
3-55 the date that is six months after the date of the member's death
3-56 and only if the benefit described by Section 6.05(a) or 6.06(a)(3)
3-57 of this Act is not paid.
3-58 (4) Any such member who has previously received credit
3-59 for one-half of previously forfeited membership service shall be
3-60 entitled to reinstate the remaining one-half of the member's
3-61 previously forfeited membership service by payment of one-half of
3-62 the amount previously withdrawn and an interest charge as described
3-63 in Subdivision (1) of this subsection.
3-64 (5) The method of determining the amount of the
3-65 required payment described by Subdivision (1) of this subsection
3-66 may be changed if:
3-67 (A) the effect of the change is disclosed by the
3-68 board's actuary;
3-69 (B) the change is adopted by the board as a
3-70 board rule; and
4-1 (C) the change applies to all payments for
4-2 reinstating previously forfeited membership service under this
4-3 subsection made to the retirement system after the effective date
4-4 of the change <From time to time the board, subject to the approval
4-5 of the system's actuary, may elect to permit members to reinstate
4-6 their previously forfeited membership service in accordance with
4-7 the terms of this subsection>.
4-8 (6)(A) A member granted a leave of absence or
4-9 withdrawing from <the> service for a stated period of time, not to
4-10 exceed two years, who allows the member's contributions to the
4-11 police retirement system to remain in the fund, shall be eligible
4-12 for continued membership on reentering the service of the city or
4-13 the police system. During that period the employee shall not
4-14 receive service credit.
4-15 (B) Military leave of absence shall not be
4-16 included in the two-year period if the member returns to active
4-17 service with the city within 90 days after the expiration of the
4-18 military leave of absence. A member of the police system on
4-19 military leave of absence may make deposits to the police system
4-20 during military leave of absence, in an amount each biweekly pay
4-21 period that is equal to the amount of the member's deposit for the
4-22 last complete biweekly pay period that the member was paid by the
4-23 city or the police system. The city shall make a contribution to
4-24 the retirement fund for the member employed by the city each
4-25 biweekly pay period in an amount the city would have made if the
4-26 member's biweekly pay had continued to be the biweekly pay the
4-27 member received for the last complete biweekly pay period that the
4-28 member was paid by the city. If the member does not make deposits
4-29 during a military leave of absence, the member may make <a single>
4-30 payment within five years after the member has returned to the
4-31 employment of the city, equal to the deposits the member would have
4-32 made if the member had continued to be paid by the city during the
4-33 member's military leave of absence at the same rate of pay the
4-34 member was receiving at the time the member's leave of absence
4-35 began. The payment may be a single payment or may be in
4-36 installments as long as each individual installment is not less
4-37 than 20 percent of the total amount to be paid. A member who
4-38 otherwise would be eligible to make payment under this subdivision
4-39 but who has not made payment and for whom it has been more than
4-40 five years since the member returned to the employment of the city
4-41 may make payment during the period beginning October 1, 1995, and
4-42 ending September 30, 1996. The city will make a single
4-43 contribution for the member employed by the city equal to the
4-44 deposits it would have made on the member's behalf if the member
4-45 had made deposits to the fund during the period of the member's
4-46 military leave.
4-47 SECTION 5. Sections 5.02 and 5.03, Chapter 452, Acts of the
4-48 72nd Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
4-49 Texas Civil Statutes), are amended to read as follows:
4-50 Sec. 5.02. Military service credit. (a) An eligible member
4-51 or eligible surviving spouse may establish creditable service for
4-52 military service performed that is creditable as provided under
4-53 this section according to the following conditions, limitations,
4-54 and restrictions:
4-55 (1) Military service creditable in the retirement
4-56 system is active federal duty service in the Armed Forces of the
4-57 United States, other than as a student at a service academy, as a
4-58 member of the reserves, or any continuous active military service
4-59 lasting less than 90 days, and such military service must have been
4-60 performed prior to becoming a member of the police retirement
4-61 system or its predecessor system.
4-62 (2) An eligible <A> member <eligible to establish
4-63 military service credit> must:
4-64 (A) have been released from military duty under
4-65 conditions not dishonorable; and
4-66 (B) be a police officer employed by the city or
4-67 a staff member employed by the police system, who is not separated
4-68 from active police system service.
4-69 (3) An eligible <A> member or eligible surviving
4-70 spouse may not establish more than 24 months of creditable service
5-1 in the retirement system for military service.
5-2 (4) An eligible <A> member or eligible surviving
5-3 spouse may establish creditable service under this section by
5-4 contributing to the retirement system a single payment equal to 25
5-5 percent of the estimated cost of the additional projected
5-6 retirement benefits the member or surviving spouse will be entitled
5-7 to receive. The system will determine the required contribution
5-8 based on a procedure recommended by the actuary and approved by the
5-9 board.
5-10 (5) After the eligible member or eligible surviving
5-11 spouse makes the deposit required by this section, the retirement
5-12 system shall grant the member or surviving spouse one month of
5-13 creditable service for each month of military service established
5-14 by this section.
5-15 (6) For purposes of this section, an eligible
5-16 surviving spouse is the surviving spouse of an eligible member if
5-17 the member dies before making payment to the system of the amount
5-18 required by this section. An eligible surviving spouse may
5-19 establish creditable service for military service not later than
5-20 the date that is six months after the date of the member's death
5-21 and only if the death benefit described by Section 6.05(a) or
5-22 6.06(a)(3) of this Act is not paid.
5-23 (b) The percent used to calculate the amount of the required
5-24 payment described by Subsection (a)(4) of this section may be
5-25 changed if:
5-26 (1) the effect of the change is disclosed by the
5-27 board's actuary;
5-28 (2) the change is adopted by the board of trustees as
5-29 a board rule; and
5-30 (3) the change applies to all payments for
5-31 establishing creditable service under this section made to the
5-32 retirement system after the effective date of the change.
5-33 Sec. 5.03. Probationary service credit. (a) An eligible
5-34 member or eligible surviving spouse may establish creditable
5-35 service for probationary service performed that is creditable as
5-36 provided under this section according to the following conditions,
5-37 limitations, and restrictions:
5-38 (1) Probationary service creditable in the retirement
5-39 system is any nonmembership service following commission date.
5-40 (2) An eligible <A> member or eligible surviving
5-41 spouse may establish creditable service under this section by
5-42 contributing to the retirement system a single payment equal to the
5-43 contribution the member would have made to the system for that
5-44 service at the time the service was performed and an interest
5-45 charge based on the contribution amount to be repaid times an
5-46 interest factor based on the compounded annual rates of interest
5-47 which are equal to the rates which have been credited to the
5-48 member's accumulated deposits divided by 0.75, beginning with the
5-49 month and year at the end of the probationary period for which
5-50 creditable service is being established <the member is establishing
5-51 service> to the later time <the member is making> payment is made
5-52 to the fund for the purpose of establishing said service.
5-53 (3) After the eligible member or eligible surviving
5-54 spouse makes the deposit required by Subdivision (2) of this
5-55 subsection <section>, the retirement system shall grant the member
5-56 or surviving spouse one month of creditable service for each month
5-57 of probationary service established under this section.
5-58 (b) For purposes of this section, an eligible member is a
5-59 police officer employed by the city who is not separated from
5-60 active service.
5-61 (c) For purposes of this section, an eligible surviving
5-62 spouse is the surviving spouse of an eligible member if the member
5-63 dies before making payment to the system of the amount required by
5-64 this section. An eligible surviving spouse may establish
5-65 creditable service for probationary service not later than the date
5-66 that is not later than six months after the date of the member's
5-67 death and only if the death benefit described by Section 6.05(a) or
5-68 6.06(a)(3) of this Act is not paid.
5-69 (d) Notwithstanding Subsection (c) of this section, if an
5-70 eligible member dies on or after December 1, 1994, but not later
6-1 than August 31, 1995, and has not made payment to the system of the
6-2 amount required by this section, an eligible surviving spouse may
6-3 establish creditable service for probationary service on or before
6-4 February 29, 1996.
6-5 (e) The method of determining the amount of the required
6-6 payment described by Subsection (a)(2) of this section may be
6-7 changed if:
6-8 (1) the effect of the change is disclosed by the
6-9 board's actuary;
6-10 (2) the change is adopted by the board of trustees as
6-11 a board rule; and
6-12 (3) the change applies to all payments for
6-13 establishing creditable service under this section made to the
6-14 retirement system after the effective date of the change.
6-15 SECTION 6. Section 6.01, Chapter 452, Acts of the 72nd
6-16 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
6-17 Civil Statutes), is amended by amending Subsections (a), (d), and
6-18 (e) and by adding Subsection (f) to read as follows:
6-19 (a) On retirement from service after having reached the
6-20 member's normal retirement date, members entitled thereto shall
6-21 receive a normal retirement benefit in the form of a life annuity
6-22 (modified cash refund). Each monthly payment of the life annuity
6-23 (modified cash refund) shall be equal to one-twelfth of the product
6-24 of 2.8 <2.3> percent of a member's average final compensation
6-25 multiplied by the number of months of creditable service. If
6-26 payments commence after the member becomes 62 years of age and
6-27 after completion of 120 months of contributions, the amount of
6-28 monthly payments shall be increased at the rate of five-twelfths of
6-29 one percent for each month after <the later of> age 62 for which
6-30 the member earned creditable service but made no contributions on
6-31 the basis of the law in effect before September 1, 1995 <or the
6-32 completion of 120 months of contributions at which the payments
6-33 commence>. The increased benefit shall not exceed 15 percent of
6-34 the amount which would otherwise have been paid if payments had
6-35 commenced at the member's retirement date. For a retirement date
6-36 after December 31, 1996, the amount of monthly payments may not be
6-37 increased for payments that commence after the member becomes 62
6-38 years of age. The retirement benefit percent specified by this
6-39 section to calculate the amount of the monthly payment of the life
6-40 annuity (modified cash refund) may be changed after 1995 if:
6-41 (1) the change is approved by the board's actuary;
6-42 (2) the change is adopted by the board of trustees as
6-43 a board rule;
6-44 (3) the change applies to all present members, all
6-45 retired members, and all who become members after the effective
6-46 date of the change in the retirement benefit percent;
6-47 (4) a member's vested accrued benefit as of the last
6-48 day of the month immediately preceding the effective date of the
6-49 change in the retirement benefit percent is not reduced; and
6-50 (5) a retirement annuity being paid by the police
6-51 retirement system to members or to the surviving spouses or
6-52 beneficiaries of members who retired before the effective date of
6-53 the change in the retirement benefit percent is changed as
6-54 prescribed by Subsection (d)(8) of this section, except that a
6-55 reduction in annuities may not cause the member's, surviving
6-56 spouse's, or beneficiary's annuity payment to be reduced below the
6-57 base retirement amount calculated under this Act.
6-58 (d) In determining whether to authorize the payment and the
6-59 amount of any annual adjustment, the board shall be governed by the
6-60 following conditions, considerations, limitations, and
6-61 restrictions:
6-62 (1) Any and all determinations to authorize the
6-63 payment of any amount must be based on the ability of the fund to
6-64 pay such an amount and shall not be based upon the individual needs
6-65 of any particular retired members, surviving spouses, or
6-66 beneficiaries.
6-67 (2) Prior to the board's authorizing the payment of an
6-68 annual adjustment, the actuary must approve and recommend such an
6-69 adjustment to the board and certify in writing to the board that
6-70 based on the sound application of actuarial assumptions and methods
7-1 consistent with sound actuarial principles and standards, it is
7-2 demonstrable that the fund has and will continue to have the
7-3 ability to pay such an amount out of its realized income after all
7-4 other obligations of the fund have been paid.
7-5 (3) The amount of the adjustment payment to the
7-6 retirement allowance for each retired member, surviving spouse, or
7-7 beneficiary shall be increased or decreased by an amount, not to
7-8 exceed six percent, determined by the board and the actuary based
7-9 on the consumer price index, actuarial experience of the fund,
7-10 investment experience of the fund, and cost-of-living increases
7-11 granted in the past. Such increases shall be prorated for a member
7-12 who retired during the year in the ratio that the number of the
7-13 member's completed months after the member's retirement in that
7-14 year bears to 12. The cost-of-living increase presented for
7-15 approval by the board must be approved by the fund's actuary.
7-16 (4) The board shall have the authority and the duty,
7-17 at any and all times and without notice to anyone, to decrease the
7-18 amount of the adjustment payment as much as is necessary to protect
7-19 the continuity of the police retirement system and to protect the
7-20 corpus of the fund should the ability of the fund to continue to
7-21 pay the adjustment be threatened by a change in the economic
7-22 situation of the United States, the State of Texas, the city, or
7-23 the fund itself such as would dictate that a prudent trustee should
7-24 authorize such a decrease; provided that if the threatened change
7-25 should prove not to have had the predicted harmful effect on the
7-26 fund, then the board shall have the authority to reinstate the
7-27 payment of all or any portion of the amount of the previously
7-28 decreased adjustment payments. If at any time the actuary in the
7-29 actuary's discretion shall deem the continuity of the fund to be
7-30 threatened by whatever cause, the actuary shall have the power and
7-31 authority to order the board to make no further adjustment payments
7-32 and the board shall have the power and authority to see to it that
7-33 no further adjustment payments are made unless and until the
7-34 actuary shall order either that the same adjustment payments which
7-35 were discontinued by the actuary's order be reinstated
7-36 retroactively, or that the adjustment payments (of the same amount
7-37 as those which were discontinued) be reinstated prospectively from
7-38 the date of the actuary's order to reinstate or the actuary may
7-39 recommend to the board that the adjustment payments be decreased by
7-40 whatever amount the actuary may deem to be sufficient to protect
7-41 the continuity of the fund. The board shall not have the power or
7-42 authority to authorize or permit the payment of any adjustment
7-43 payments in excess of that recommended by the actuary.
7-44 (5) All monthly retirement annuities being paid by the
7-45 system to members where payments began prior to January 1, 1980,
7-46 shall be increased retroactive to March 1, 1985, with the first
7-47 increased amounts being paid March 31, 1985, in accordance with the
7-48 following schedule:
7-49 Year of Percentage
7-50 Retirement Increase
7-51 1970 and earlier 160
7-52 1971 105
7-53 1972 100
7-54 1973 65
7-55 1974 55
7-56 1975 50
7-57 1976 45
7-58 1977 40
7-59 1978 35
7-60 1979 25
7-61 (6) Provided that the adjustment payments, if any,
7-62 shall be in addition to the benefits to which a retired member,
7-63 surviving spouse, or beneficiary is otherwise entitled under this
7-64 Act, and in no event shall a reduction in the adjustment payments
7-65 cause the retired member's, surviving spouse's, or beneficiary's
7-66 benefits to be reduced below the actual base retirement amount
7-67 <figure> calculated under the provisions of this Act.
7-68 (7) Retirement and disability annuities being paid by
7-69 the police retirement system to members or to the surviving spouses
7-70 or beneficiaries of members who retired before September 1, 1995,
8-1 are increased beginning with the payments due at the end of
8-2 September in 1995. The amount of the increase for a member or the
8-3 surviving spouse or beneficiary of the member is equal to a
8-4 percentage multiplied by the annuity payment otherwise due. The
8-5 percentage is equal to 2.8 percent divided by the retirement
8-6 benefit percentage in effect on the date of the member's
8-7 retirement, minus one, and multiplied by 100.
8-8 (8) Retirement and disability annuities being paid by
8-9 the police retirement system to members or to the surviving spouses
8-10 or beneficiaries of members who retire before the effective date of
8-11 any change in the retirement benefit percent under this section
8-12 that occurs after 1995 shall be changed beginning with the first
8-13 payment due after the effective date of the change in the
8-14 retirement benefit percent. The amount of the change for a member
8-15 or the surviving spouse or beneficiary of the member is equal to a
8-16 percentage multiplied by the annuity payment otherwise due. The
8-17 percentage is equal to the new retirement benefit percentage
8-18 divided by the retirement benefit percent in effect immediately
8-19 before the effective date of the new retirement benefit percent,
8-20 minus one, and multiplied by 100.
8-21 (e) The following terms and definitions shall be used in
8-22 construing the meaning of this section:
8-23 (1) "Base retirement amount <figure>" means that
8-24 monthly retirement amount figure calculated under <the provisions
8-25 of> this Act at the time of actual retirement, reduced for the
8-26 optional form selected under Section 6.03(a) of this Act, and
8-27 further reduced, if appropriate, for the optional form selected, if
8-28 the member or the member's designated beneficiary has died <to
8-29 which, for the purposes of this subsection, a retired member is
8-30 entitled over a 12-month period>.
8-31 (2) "Consumer price index" means the Consumer Price
8-32 Index for All Urban Consumers <annual average over a calendar year
8-33 of the consumer price index (all items, United States city
8-34 average)> published monthly by the Bureau of Labor Statistics,
8-35 United States Department of Labor, or its successor in function.
8-36 (3) <"Adjustment payment" means an annual
8-37 cost-of-living adjustment payment which is paid out in 12 equal
8-38 monthly installments which are added on to the current monthly
8-39 payment figure of retirement annuities, pensions, or allowances of
8-40 retired members, surviving spouses, or beneficiaries of the police
8-41 retirement system who have become entitled to benefits under this
8-42 Act.>
8-43 <(4) "Averaging or leveling" means a precedence
8-44 whereby the fluctuations in the consumer price index over a stated
8-45 period of time may be first averaged out for the entire period to
8-46 determine the average amount over that period that may be paid out
8-47 as an annual adjustment payment; provided that in no event shall
8-48 such an averaging or leveling principle be used to justify an
8-49 annual increase in the annual adjustment payment which is equal to
8-50 more than six percent of the current annual retirement figure.>
8-51 <(5) "Base period" means the six years immediately
8-52 preceding the year for which the annual adjustment payment is
8-53 computed.>
8-54 <(6)> "Fund" means for the purposes of this subsection
8-55 a combination of both Fund No. 1 and Fund No. 2 as defined in this
8-56 Act unless otherwise indicated.
8-57 (4) <(7)> "Continuity of the fund" means the ability
8-58 of the police retirement system's fund to continue to meet all of
8-59 its purposes, to continue to thrive and grow along with the economy
8-60 of the United States, the State of Texas, and the city, or to be
8-61 able to sustain itself and its beneficiaries during and throughout
8-62 periods of deflation or recession in that economy.
8-63 (f) For purposes of this section, compensation of each
8-64 noneligible member taken into account under the plan may not exceed
8-65 $150,000 per calendar year, indexed pursuant to Section 401(a)(17)
8-66 of the Internal Revenue Code of 1986 (26 U.S.C. Section 401). The
8-67 $150,000 limit does not apply to an eligible member. For purposes
8-68 of this subsection, an eligible member is any individual who first
8-69 became a member before January 1, 1996. For purposes of this
8-70 subsection, a noneligible member is any other member. For
9-1 purposes of this subsection, in determining the compensation of a
9-2 member Section 414(q)(6) of the Internal Revenue Code of 1986 (26
9-3 U.S.C. Section 414) applies, except the term "family member"
9-4 includes only the spouse of the member and any lineal descendants
9-5 of the member who have not attained the age of 19 before the close
9-6 of the year. Compensation in excess of the limit shall be prorated
9-7 among the family members in accordance with Section 401(a)(17) of
9-8 the Internal Revenue Code of 1986 (26 U.S.C. Section 401).
9-9 SECTION 7. Section 6.02, Chapter 452, Acts of the 72nd
9-10 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
9-11 Civil Statutes), is amended to read as follows:
9-12 Sec. 6.02. Eligibility for retirement. (a) Any member
9-13 shall be eligible for normal retirement if the member has <shall
9-14 have: (i)> attained the age of 55 years and completed at least 20
9-15 years of creditable service with the city,<; (ii) attained the age
9-16 of 50 and completed at least 25 years of creditable service with
9-17 the city; (iii)> completed 25 <30> years of creditable service,<;>
9-18 or <(iv)> attained age 62.
9-19 (b) Any member, irrespective of the number of years of
9-20 creditable service, shall be eligible for retirement at age 62.
9-21 After<; after> age 62, the member may continue in the employment of
9-22 the city as a police officer <but shall no longer contribute to the
9-23 police system except as provided in Subsection (g), Section 4.01 of
9-24 this Act>. No member shall be paid any benefits by the police
9-25 system so long as the member is permanently employed by the city as
9-26 a police officer.
9-27 <(c) Any member shall be eligible for an early retirement
9-28 benefit if the member elects early retirement from service after
9-29 having completed at least 25 years of creditable service but prior
9-30 to attaining the age of 50. The member's early retirement benefit
9-31 is reduced to be the actuarial equivalent of what the normal
9-32 retirement benefit would have been based on pay and service at the
9-33 member's early retirement date.>
9-34 SECTION 8. Section 6.03, Chapter 452, Acts of the 72nd
9-35 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
9-36 Civil Statutes), is amended by adding Subsection (c) to read as
9-37 follows:
9-38 (c) In computing the actuarial equivalent for optional forms
9-39 of annuity payment for retirement and death benefits under this
9-40 section, the UP-1984 Table shall be used with no age setback for
9-41 members and an age setback of seven years for beneficiaries, and
9-42 interest shall be computed at a rate of 8.5 percent.
9-43 SECTION 9. Section 6.04, Chapter 452, Acts of the 72nd
9-44 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
9-45 Civil Statutes), is amended to read as follows:
9-46 Sec. 6.04. Termination prior to retirement; treatment of
9-47 accumulated deposits. (a) On separation from service by
9-48 resignation or dismissal before retirement, the member shall
9-49 receive the amount of the accumulated deposits standing to the
9-50 member's credit in one lump sum, except that<. But> if such member
9-51 has had at least 10 years of creditable service at the time the
9-52 employee's service is terminated, the member shall have a vested
9-53 right to elect to leave the member's accumulated deposits with the
9-54 police retirement system until such time as the member shall have
9-55 applied in writing for benefit payments and shall have attained an
9-56 age at which the member shall have become entitled to receive
9-57 monthly retirement benefit payments under this Act, at which time
9-58 the member shall be entitled to a retirement allowance equal to
9-59 that which the member would have received if the member had
9-60 attained the age at the time of termination of the member's service
9-61 which the member had attained at the time of making such
9-62 application.
9-63 (b) If a member who has attained age 70-1/2 separates or has
9-64 separated from service without applying for retirement or a refund
9-65 of accumulated deposits, the police retirement system shall attempt
9-66 to send to that member a written notice as soon as practical after
9-67 the later of the date the member attains age 70-1/2 or the date the
9-68 member separates from service. The written notice must advise the
9-69 member of the requirement under Section 401(a)(9) of the Internal
9-70 Revenue Code of 1986 (26 U.S.C. Section 401) to retire and begin
10-1 receiving a monthly retirement benefit. If, before the 91st day
10-2 after the date the police retirement system sends the notice, the
10-3 member has not filed an application for retirement or a refund, the
10-4 member is considered to have retired on the last day of the third
10-5 month following the later of the two dates specified by this
10-6 subsection. If applicable, the retirement option shall be
10-7 determined in accordance with the member's written selection of
10-8 optional benefit and designation of beneficiary under Section
10-9 6.06(a)(1) of this Act. Otherwise, the member shall receive the
10-10 life annuity under Section 6.01 of this Act.
10-11 SECTION 10. Subsection (c), Section 6.05, Chapter 452, Acts
10-12 of the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
10-13 Vernon's Texas Civil Statutes), is amended to read as follows:
10-14 (c) In the event of death of a member receiving a retirement
10-15 allowance, the sum of $5,000 <$2,000> shall be payable in a lump
10-16 sum to the member's beneficiary or, if no beneficiary, to the
10-17 member's estate, unless the member shall have directed otherwise in
10-18 writing, duly acknowledged and filed with the board.
10-19 SECTION 11. Subdivisions (3) and (4), Subsection (a),
10-20 Section 6.06, Chapter 452, Acts of the 72nd Legislature, Regular
10-21 Session, 1991 (Article 6243n-1, Vernon's Texas Civil Statutes), are
10-22 amended to read as follows:
10-23 (3) In the event a member who is eligible for
10-24 retirement dies without making a written selection of one of the
10-25 options listed in Section 6.03 of this Act and if the member leaves
10-26 a lawfully married spouse surviving, then the surviving spouse of
10-27 such member may select the optional annuity in the same manner as
10-28 if the member had made the selection or may select a lump-sum
10-29 payment equal to the accumulated deposits standing to the member's
10-30 credit in Fund No. 1 plus an equivalent amount from Fund No. 2. If
10-31 the member leaves no lawfully married spouse surviving, then the
10-32 member's designated beneficiary, or if no beneficiary exists, the
10-33 executor or administrator of the estate of the member, is entitled
10-34 to elect either Option VII (15-Year Certain and Life Annuity),
10-35 effective the last day <at the beginning> of the calendar month
10-36 <succeeding that> in which the death of the member occurs or a
10-37 lump-sum payment equal to the accumulated deposits standing to the
10-38 member's credit in Fund No. 1 plus an equivalent amount from Fund
10-39 No. 2. In the event of the death of the lawfully married surviving
10-40 spouse before having received retirement allowances equal to the
10-41 amount of the member's accumulated deposits at date of the member's
10-42 death, the excess of such accumulated deposits over the retirement
10-43 allowances paid shall be refunded in one sum to the member's
10-44 estate.
10-45 (4) When monthly survivor benefits are <deemed>
10-46 payable as a result of the death of a member before retirement, an
10-47 additional sum of $5,000 <$2,000> shall be payable as a death
10-48 benefit to the member's designated beneficiary or, if no
10-49 beneficiary exists, to the member's estate.
10-50 SECTION 12. Subsections (b) and (c), Section 7.01, Chapter
10-51 452, Acts of the 72nd Legislature, Regular Session, 1991 (Article
10-52 6243n-1, Vernon's Texas Civil Statutes), are amended to read as
10-53 follows:
10-54 (b)(1) If a member with less than 10 years of creditable
10-55 service has become mentally or physically incapacitated for the
10-56 performance of the member's former employment duties as a direct
10-57 result of injuries sustained subsequent to the member's effective
10-58 date of membership in the police retirement system, the member may
10-59 apply for disability retirement. Such application made for or on
10-60 behalf of the injured member shall show that the injury sustained
10-61 was as a direct or proximate result of the performance of the
10-62 member's employment duties with the city and that it is likely to
10-63 result in the member's inability to perform the duties of a
10-64 position offered to the member in the police department or any
10-65 other department in the city that pays as much or more than the
10-66 current pay of the position the member was holding on the date of
10-67 the member's disability.
10-68 (2) On recommendation of physicians or vocational
10-69 rehabilitation experts appointed or selected by the board that the
10-70 member's incapacity is likely to result in the member's inability
11-1 to perform the duties of a position offered to the member in the
11-2 police department or any other department in the city that pays as
11-3 much or more than the current pay of the position the member was
11-4 holding at the date of the member's disability and after
11-5 considering any additional evidence which the board deems relevant,
11-6 the board may award such member disability retirement benefits.
11-7 The decision of the board is final.
11-8 (c) If a member with more than 10 years of creditable
11-9 service has become mentally or physically incapacitated for the
11-10 performance of the member's former employment duties, the member
11-11 may apply for disability retirement. Such application made on
11-12 behalf of the disabled member shall show that the incapacity is
11-13 likely to result in the member's inability to perform the duties of
11-14 a position offered to such member in the police department or any
11-15 other department in the city that pays as much or more than the
11-16 current pay of the position the member was holding on the date of
11-17 the member's disability. On recommendation of physicians or
11-18 vocational rehabilitation experts appointed or selected by the
11-19 board that the member's incapacity is likely to result in the
11-20 member's inability to perform the duties of a position offered to
11-21 the member in the police department or any other department in the
11-22 city that pays as much or more than the current pay of the position
11-23 the member was holding on the date of the member's disability and
11-24 after considering any additional evidence which the board deems
11-25 relevant, the board may award such member disability retirement
11-26 benefits. The decision of the board is final.
11-27 SECTION 13. Section 7.02, Chapter 452, Acts of the 72nd
11-28 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
11-29 Civil Statutes), is amended to read as follows:
11-30 Sec. 7.02. Computation of disability benefit. (a) On award
11-31 of disability retirement benefits, the member shall receive a
11-32 disability retirement allowance computed in the same manner that a
11-33 retirement allowance would be computed at the member's normal
11-34 retirement date, based on compensation and service at date of
11-35 disability retirement without reduction for early retirement. If
11-36 the disability is a direct or proximate result of the performance
11-37 of the member's employment duties with the city, then the
11-38 disability retirement allowance will be subject to a minimum
11-39 benefit based on compensation at date of disability retirement and
11-40 20 years of service. The options allowed are life annuity or its
11-41 actuarial equivalent payable in the form described as Option I,
11-42 Option II, Option III, Option IV, or Option VII in Section 6.03 of
11-43 this Act. The disability benefits paid to the member will be paid
11-44 from Fund No. 1 until the amount received equals the member's
11-45 accumulated deposits; thereafter the benefits will be paid from
11-46 Fund No. 2.
11-47 (b) For purposes of this section, in computing the actuarial
11-48 equivalent for optional forms of annuity payment for disability
11-49 benefits under this section, 82.5 percent of the 1965 Railroad
11-50 Retirement Board Disabled Annuitants Mortality Table shall be used
11-51 for members, the UP-1984 Table with an age setback of six years
11-52 shall be used for beneficiaries, and interest shall be computed at
11-53 a rate of 8.5 percent.
11-54 SECTION 14. Subdivision (1), Subsection (c), Section 7.03,
11-55 Chapter 452, Acts of the 72nd Legislature, Regular Session, 1991
11-56 (Article 6243n-1, Vernon's Texas Civil Statutes), is amended to
11-57 read as follows:
11-58 (1) If during the first 2-1/2 years the annual
11-59 medical examination shows that the member is able to perform the
11-60 duties of a position offered to the member in the police department
11-61 or any other department in the city that pays as much or more than
11-62 the current pay of the position the member was holding on the date
11-63 of the member's disability, the board may discontinue the
11-64 disability retirement allowance. If after the disabled member has
11-65 received disability benefits from the fund for at least 2-1/2
11-66 years, the member is able to perform the duties of any occupation
11-67 for which the member is reasonably suited by education, training,
11-68 or experience, the board shall review and modify the disability
11-69 benefit according to the following provisions:
11-70 (A) if the member is able to earn at least as
12-1 much money in the member's new job as the member would have in the
12-2 member's former position with the police department, the board may
12-3 <shall> terminate the member's benefit;
12-4 (B) if the member is able to earn between
12-5 one-half as much money and as much money in the member's new job as
12-6 the member would have in the member's former position with the
12-7 police department, the board may <shall> reduce the monthly
12-8 disability benefit to one-half of its original amount; or
12-9 (C) if the member is not able to earn at least
12-10 one-half as much money in the member's new job as the member would
12-11 have in the member's former position with the police department,
12-12 the board may <shall> continue the benefit unchanged.
12-13 SECTION 15. Section 8.01, Chapter 452, Acts of the 72nd
12-14 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
12-15 Civil Statutes), is amended by amending Subsection (a) and by
12-16 adding Subsections (g), (h), and (i) to read as follows:
12-17 (a) Deposits by the members to the police retirement system
12-18 shall be made at a rate of at least <based on> six percent of the
12-19 basic hourly earnings of each member<, exclusive of overtime,
12-20 incentive, or terminal pay>. Deposits required to be made by
12-21 members shall be deducted from payroll. The Active--Contributory
12-22 members, by a majority vote in favor of an increase in
12-23 contributions above <the> six percent, shall increase each member's
12-24 contribution above six percent in whatever amount the board
12-25 recommends. If the deposit rate for members has been increased to
12-26 a rate above six percent, the rate may be decreased if the board
12-27 recommends the decrease, the board's actuary approves the decrease,
12-28 and the Active--Contributory members approve the decrease by
12-29 majority vote <No deposits shall be made beyond age 62 except as
12-30 provided in Subsection (g) of Section 4.01 of this Act>. The city
12-31 shall contribute amounts equal to a percentage, as specified by
12-32 this subsection, <12 percent> of the basic hourly earnings of each
12-33 member employed by the city<, exclusive of overtime, incentive, or
12-34 terminal pay>. That percentage shall be 14 percent for the fiscal
12-35 year ending in 1995, 16 percent for the fiscal year ending in 1996,
12-36 and 18 percent for each subsequent fiscal year. The city council
12-37 may authorize the city to make additional contributions to the
12-38 police retirement system in whatever amount the city council may
12-39 determine. Contributions by the city shall be made each pay
12-40 period.
12-41 (g) If the police retirement system is terminated, further
12-42 contributions may not be made by the city, and further deposits may
12-43 not be made by the members for service after the date of
12-44 termination. Members do not accrue any additional benefits after
12-45 the date of termination. The benefit accrued by each member on the
12-46 termination of the plan or the complete discontinuance of
12-47 contributions under the plan and the benefit of any affected member
12-48 on the partial termination of the plan, to the extent funded,
12-49 become nonforfeitable notwithstanding the length of a member's
12-50 service. The benefit accrued by a member also becomes
12-51 nonforfeitable, if not already nonforfeitable, at the normal
12-52 retirement date.
12-53 (h) A forfeiture from a member terminating employment and
12-54 withdrawing the member's accumulated deposits may not be applied to
12-55 increase the benefit that any other member would receive from the
12-56 system. The actuary shall anticipate the effect of forfeitures in
12-57 determining the costs under the system.
12-58 (i) The assets of the police retirement system shall be held
12-59 in trust for the exclusive benefit of the members and their
12-60 beneficiaries. The corpus or income may not be used for or
12-61 diverted to a purpose other than the exclusive benefit of members
12-62 or their beneficiaries, whether by operation or natural termination
12-63 of the system, by power of revocation or amendment, by the
12-64 happening of a contingency, by collateral arrangement, or by other
12-65 means.
12-66 SECTION 16. Section 10.01, Chapter 452, Acts of the 72nd
12-67 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
12-68 Civil Statutes), is amended to read as follows:
12-69 Sec. 10.01. FALSE REPORT OR STATEMENT. Whoever with intent
12-70 to deceive shall make any statement or report required under this
13-1 Act which is untrue or shall falsify or permit to be falsified any
13-2 record or records of the police retirement system shall forfeit any
13-3 office or rights held by the person under the police system, and
13-4 such deception, falsification, or acquiescence in falsification
13-5 shall be deemed a misdemeanor and the violation thereof shall be
13-6 punishable by a fine not to exceed $1,000 <$200>.
13-7 SECTION 17. Chapter 452, Acts of the 72nd Legislature,
13-8 Regular Session, 1991 (Article 6243n-1, Vernon's Texas Civil
13-9 Statutes), is amended by adding Articles XI, XII, and XIII to read
13-10 as follows:
13-11 ARTICLE XI
13-12 Sec. 11.01. LIMITATION ON PAYMENT OF BENEFITS. (a) In this
13-13 section:
13-14 (1) "Annual benefit" means the total of all annuity
13-15 payments by the police retirement system on behalf of a retired
13-16 member during a calendar year.
13-17 (2) "Compensation" has the meaning assigned by Section
13-18 415 of the Internal Revenue Code of 1986 (26 U.S.C. Section 415),
13-19 and the regulations adopted under that section, not exceeding the
13-20 limitations prescribed by Section 401(a)(17) of that code.
13-21 (3) "Highest average annual compensation" means the
13-22 average compensation for the three consecutive calendar years of
13-23 service that produces the highest average.
13-24 (4) "Qualified joint and survivor annuity" means an
13-25 annuity for the life of a member with a survivor annuity for the
13-26 life of the member's spouse that is not less than 50 percent and
13-27 not more than 100 percent of the amount of the annuity payable
13-28 during the joint lives of the member and spouse and is the
13-29 actuarial equivalent of a life annuity for the member.
13-30 (b) If the amount of any benefit payment under this Act
13-31 would exceed the limitations provided by this section, the police
13-32 retirement system shall reduce the amount of the benefit in
13-33 accordance with this section.
13-34 (c) Except as otherwise provided by this section, a benefit
13-35 is adjusted to the actuarial equivalent of a life annuity for the
13-36 purpose of determining limitations under this section. An
13-37 actuarial adjustment to a benefit is not required to establish the
13-38 value of a qualified joint and survivor annuity and the value of
13-39 postretirement cost-of-living increases made in accordance with
13-40 Section 415 of the Internal Revenue Code of 1986 (26 U.S.C. Section
13-41 415).
13-42 (d) Except as provided by Subsections (f), (h), and (i) of
13-43 this section, an annual benefit payable by the retirement system
13-44 may not exceed the lesser of:
13-45 (1) $118,800, or another amount as adjusted each
13-46 January 1 by the secretary of the treasury under Section 415 of the
13-47 Internal Revenue Code of 1986 (26 U.S.C. Section 415) for
13-48 cost-of-living increases after January 1, 1994; or
13-49 (2) 100 percent of the former member's highest average
13-50 annual compensation, including annual cost-of-living increases
13-51 after separation from service.
13-52 (e) If payment of a benefit begins before a member attains
13-53 age 62, the dollar limitation is the actuarial equivalent of an
13-54 annual benefit beginning at age 62 as described by Subsection
13-55 (d)(1) of this section for a person at age 62. A reduction under
13-56 this subsection may not reduce the dollar limitation below $75,000
13-57 if the benefit begins at or after age 55 or, if the benefit begins
13-58 before age 55, the actuarial equivalent of a $75,000 limitation
13-59 beginning at age 55. A reduction under this section may not reduce
13-60 the dollar limitation of any qualified participant below $66,000 or
13-61 another amount as determined for the applicable calendar year by
13-62 the secretary of the treasury under Section 415 of the Internal
13-63 Revenue Code of 1986 (26 U.S.C. Section 415) for cost-of-living
13-64 increases after January 1, 1994. For purposes of this subsection,
13-65 a qualified participant is a member whose creditable service
13-66 includes at least 15 years of service as a full-time employee of
13-67 the police department of the city or as a member of the Armed
13-68 Forces of the United States.
13-69 (f) If payment of a benefit begins after the member attains
13-70 age 65, the dollar limitation is the actuarial equivalent of an
14-1 annual benefit beginning at age 65 as described by Subsection
14-2 (d)(1) of this section.
14-3 (g) For purposes of this section, actuarial equivalence
14-4 shall be computed in the manner prescribed by Section 6.03 or 7.02
14-5 of this Act except that the interest rate assumption under
14-6 Subsection (c) or (e) of this section is the greater of the rate
14-7 specified by Section 6.03 or 7.02 or five percent, and the interest
14-8 rate assumption under Subsection (f) of this section is the lesser
14-9 of those rates.
14-10 (h) The limitations prescribed by Subsections (d), (e), and
14-11 (f) of this section do not apply to any portion of an annual
14-12 benefit payable by the retirement system that is attributable to
14-13 the balance in the member's individual account in Fund No. 1 as of
14-14 December 31, 1985, or from interest credited to the member's
14-15 account after December 31, 1985, as a result of deposits before
14-16 that date.
14-17 (i) The limitations prescribed by this section apply to the
14-18 aggregate of the benefits attributable to city contributions under
14-19 the police retirement system and any other defined benefit plan
14-20 maintained by the city. All member contributions to the police
14-21 retirement system that are not picked up, within the meaning of
14-22 Section 414(h) of the Internal Revenue Code of 1986 (26 U.S.C.
14-23 Section 414), when aggregated with all other annual additions made
14-24 under any defined contribution plan maintained by the city satisfy
14-25 the limitations prescribed by Section 415(c) of the Internal
14-26 Revenue Code of 1986 (26 U.S.C. Section 415). All benefits
14-27 described by the first sentence of this subsection and all annual
14-28 additions, as described by the second sentence of this subsection,
14-29 satisfy the combined limitation prescribed by Section 415(e) of the
14-30 Internal Revenue Code of 1986 (26 U.S.C. Section 415).
14-31 (j) If the Internal Revenue Code of 1986 (Title 26, United
14-32 States Code) is amended in a manner that limitations similar to
14-33 those provided by this section are not required of governmental
14-34 retirement plans to remain qualified plans, the board by rule may
14-35 eliminate all or any portion of the limitations provided by this
14-36 section.
14-37 (k) The annual benefit payable by the police retirement
14-38 system that is otherwise limited by this section may be increased
14-39 each year in accordance with cost-of-living adjustments by the
14-40 secretary of the treasury as long as it does not exceed the amount
14-41 that would be payable without limitation under Section 415 of the
14-42 Internal Revenue Code of 1986 (26 U.S.C. Section 415).
14-43 ARTICLE XII
14-44 Sec. 12.01. DISTRIBUTION RULES FOR RETIREMENT AND DEATH
14-45 ANNUITY PAYMENTS. (a) If a member selects, or if a member's death
14-46 before retirement results in the payment of, an optional annuity
14-47 providing for payment of a fixed number of monthly payments to the
14-48 member's beneficiary or estate if the member dies before the total
14-49 number of payments has been completed, the option is limited as
14-50 provided by Subsections (b), (c), (d), and (e) of this section.
14-51 (b) If, according to mortality tables adopted by the
14-52 Internal Revenue Service, at the time of the member's retirement
14-53 the joint life expectancy of the member making the selection and of
14-54 the designated beneficiary is less than the minimum period that
14-55 monthly payments would be required under the option selected, the
14-56 member must select another option so that the minimum period that
14-57 monthly payments would be required does not exceed the joint life
14-58 expectancy of the person making the selection and of the designated
14-59 beneficiary.
14-60 (c) If, according to mortality tables adopted by the
14-61 Internal Revenue Service, the life expectancy of a person to whom a
14-62 benefit will be paid as the result of a member's death before
14-63 retirement is less at the time of the member's death than the
14-64 minimum period that monthly payments would be required under the
14-65 option selected, the retirement system shall adjust the minimum
14-66 period that monthly payments will be required to a period that is
14-67 not less than 60 months and that is the greatest multiple of 12
14-68 months that does not exceed the life expectancy of the person to
14-69 whom the benefit will be paid. The amount of the monthly payment
14-70 shall be adjusted to the actuarial equivalent of the payments that
15-1 would be made for the greater number of months.
15-2 (d) If the member making the selection designates the
15-3 member's estate as beneficiary and if, according to mortality
15-4 tables adopted by the Internal Revenue Service, the life expectancy
15-5 of that member is less than the minimum period that monthly
15-6 payments would be required under the option selected, the member
15-7 must select another option so that the minimum period that monthly
15-8 payments would be required does not exceed the member's life
15-9 expectancy at the time of the member's retirement.
15-10 (e) If an estate will be paid monthly benefits as the result
15-11 of a member's death before retirement for a period that would
15-12 exceed 60 months, the period for which the payments will be made
15-13 shall be reduced to 60 months, and the amount of the monthly
15-14 payment to the estate is the actuarial equivalent of the payments
15-15 that would have been made for the greater number of months.
15-16 (f) If a member selects an optional annuity that is payable
15-17 after the retiree's death throughout the life of a beneficiary who
15-18 is not the retiree's spouse, payments to the beneficiary after the
15-19 retiree's death may not exceed the applicable percentage of the
15-20 annuity payment that would have been payable to the retiree using
15-21 the following table:
15-22 Excess of age of member Applicable
15-23 over age of beneficiary: percentage:
15-24 10 years or less 100 percent
15-25 more than 10 years but less than 25 years 67 percent
15-26 25 years or more 50 percent
15-27 (g) Unless the member's spouse is the designated beneficiary
15-28 of an optional annuity that guarantees a fixed number of monthly
15-29 payments, the guaranteed number of payments may not exceed the
15-30 applicable period using the following table:
15-31 Maximum number
15-32 of guaranteed
15-33 Age of member at retirement: monthly payments:
15-34 less than 84 180
15-35 at least 84 but less than 91 120
15-36 91 or more 60
15-37 Sec. 12.02. DISTRIBUTION RULES FOR DISABILITY ANNUITY
15-38 PAYMENTS. (a) If a member selects an optional annuity providing
15-39 for payment of a fixed number of monthly annuity payments to the
15-40 member's beneficiary or estate if the member dies before the total
15-41 number of payments has been completed, the option is limited as
15-42 provided by Subsections (b) and (c) of this section.
15-43 (b) If, according to mortality tables adopted by the
15-44 Internal Revenue Service, at the time of the member's retirement
15-45 the joint life expectancy of the member making the selection and of
15-46 the designated beneficiary is less than the minimum period that
15-47 monthly payments would be required under the option selected, the
15-48 member must select another option so that the minimum period that
15-49 monthly payments would be required does not exceed the joint life
15-50 expectancy of the person making the selection and of the designated
15-51 beneficiary.
15-52 (c) If the member making the selection designates the
15-53 member's estate as beneficiary and if, according to mortality
15-54 tables adopted by the Internal Revenue Service, the life expectancy
15-55 of that member is less than the minimum period that monthly
15-56 payments would be required under the option selected, the member
15-57 must select another option so that the minimum period that monthly
15-58 payments would be required does not exceed the member's life
15-59 expectancy at the time of the member's retirement.
15-60 (d) If a member selects an optional annuity that is payable
15-61 after the retiree's death throughout the life of a beneficiary who
15-62 is not the retiree's spouse, payments to the beneficiary after the
15-63 retiree's death may not exceed the applicable percentage of the
15-64 annuity payment that would have been payable to the retiree using
15-65 the following table:
15-66 Excess of age of member Applicable
15-67 over age of beneficiary: percentage:
15-68 10 years or less 100 percent
15-69 more than 10 but less than 25 years 67 percent
15-70 25 years or more 50 percent
16-1 (e) Unless the member's spouse is the designated beneficiary
16-2 of an optional annuity that guarantees a fixed number of monthly
16-3 payments, the guaranteed number of payments may not exceed the
16-4 applicable period using the following table:
16-5 Maximum number
16-6 of guaranteed
16-7 Age of member at retirement: monthly payments:
16-8 less than 84 180
16-9 at least 84 but less than 91 120
16-10 91 or more 60
16-11 ARTICLE XIII
16-12 Sec. 13.01. TRANSFER OF ELIGIBLE ROLLOVER DISTRIBUTIONS.
16-13 (a) This section applies to distributions made on or after
16-14 January 1, 1993. Notwithstanding any provision of the plan to the
16-15 contrary that would otherwise limit a distributee's election under
16-16 this section, a distributee may elect, at the time and in the
16-17 manner prescribed by the plan administrator, to have any portion of
16-18 an eligible rollover distribution paid directly to an eligible
16-19 retirement plan specified by the distributee in a direct rollover.
16-20 (b) In this section:
16-21 (1) "Eligible rollover distribution" means any
16-22 distribution of all or any portion of the balance to the credit of
16-23 the distributee, except that an eligible rollover distribution does
16-24 not include:
16-25 (A) any distribution that is one of a series of
16-26 substantially equal periodic payments made at least annually for
16-27 the life or life expectancy of the distributee or the joint lives
16-28 or joint life expectancies of the distributee and distributee's
16-29 designated beneficiary, or for a specified period of 10 years or
16-30 more;
16-31 (B) any distribution to the extent the
16-32 distribution is required under Section 401(a)(9) of the Internal
16-33 Revenue Code of 1986 (26 U.S.C. Section 401); or
16-34 (C) the portion of any distribution that is not
16-35 includible in gross income.
16-36 (2) "Eligible retirement plan" means:
16-37 (A) an individual retirement account described
16-38 by Section 408(a) of the Internal Revenue Code of 1986 (26 U.S.C.
16-39 Section 408), an individual retirement annuity described in Section
16-40 408(b) of the Internal Revenue Code of 1986 (26 U.S.C. Section
16-41 408), an annuity plan described in Section 403(a) of the Internal
16-42 Revenue Code of 1986 (26 U.S.C. Section 403), or a qualified trust
16-43 described in Section 401(a) of the Internal Revenue Code of 1986
16-44 (26 U.S.C. Section 401), that accepts the distributee's eligible
16-45 rollover distribution; or
16-46 (B) an individual retirement account or
16-47 individual retirement annuity, in the case of an eligible rollover
16-48 distribution to a surviving spouse.
16-49 (3) "Distributee" means a member or former member, the
16-50 member's or former member's surviving spouse, or the member's or
16-51 former member's spouse or former spouse who is the alternate payee
16-52 under a qualified domestic relations order, as prescribed by
16-53 Section 804.003, Government Code.
16-54 (4) "Direct rollover" means a payment by the plan to
16-55 the eligible retirement plan specified by the distributee.
16-56 SECTION 18. Subdivisions (9), (10), and (23), Section 1.02,
16-57 and Subsection (g), Section 4.01, Chapter 452, Acts of the 72nd
16-58 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
16-59 Civil Statutes), are repealed.
16-60 SECTION 19. This Act takes effect September 1, 1995.
16-61 SECTION 20. The importance of this legislation and the
16-62 crowded condition of the calendars in both houses create an
16-63 emergency and an imperative public necessity that the
16-64 constitutional rule requiring bills to be read on three several
16-65 days in each house be suspended, and this rule is hereby suspended.
16-66 * * * * *