By: Barrientos S.B. No. 1266
A BILL TO BE ENTITLED
AN ACT
1-1 relating to public retirement systems for employees of certain
1-2 municipalities:
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 Section 1. Chapter 451, Acts of the 72 Legislature, Regular
1-5 Session, 1991 (Article 6243n, Vernon's Texas Civil Statutes), is
1-6 amended to read as follows:
1-7 Sec. 1. Scope. A retirement system is established by this
1-8 Act for employees of each municipality having a population of more
1-9 than 460,000 and less than 500,000, according to the most recent
1-10 federal census<.>; provided, however, that once such pension system
1-11 becomes operative in any city, any right or privilege accruing to
1-12 any member thereunder shall be a vested right according to the
1-13 terms of this Act and the same shall not be denied or abridged
1-14 thereafter through any change in population of any such city taking
1-15 such city out of the population bracket as herein prescribed, and
1-16 said pension system shall continue to operate and function
1-17 regardless of whether or not any future population exceeds or falls
1-18 below said population bracket.
1-19 Sec. 2. Definitions. The following words and phrases have
1-20 the meanings assigned by this section unless a different meaning is
1-21 plainly required by the context:
1-22 (1) "Accumulated deposits" means the amount standing
1-23 to the credit of a member derived from the deposits required to be
2-1 made by the member to the retirement system improved annually by
2-2 interest credited at a rate determined by the <board which is>
2-3 retirement board from time to time upon the advice of the
2-4 retirement board's actuary and credited as of December 31 to
2-5 amounts standing to the credit of the member on January 1 of the
2-6 same calendar year.
2-7 (2) "Actual retirement date" means the last day of the
2-8 month during which a member retires.
2-9 (3) "Actuarial equivalent" means any benefit of equal
2-10 present value when computed on the basis of actuarial tables
2-11 adopted by the <board in the proper administration of the
2-12 retirement system.> retirement board from time to time upon the
2-13 advice of the retirement board's actuary. The actuarial tables
2-14 adopted for this purpose shall be clearly identified by resolution
2-15 adopted by the retirement board.
2-16 (4) "Actuary" means the technical advisor of the
2-17 retirement board regarding the operations which are based on
2-18 mortality, service, and compensation experience.
2-19 (5) "Agency of the Municipality" means any agency or
2-20 instrumentality of the city, or governmental or publicly owned
2-21 legal entity created by the municipality, subsequent to the
2-22 effective date of this Act, to perform or provide a public service
2-23 or function and which entity is not a hospital authority and
2-24 employs one or more employees to provide services and/or accomplish
2-25 its public purpose.
3-1 (6) "Approved medical leave of absence" means any
3-2 absence authorized in writing by the member's employer for the
3-3 purpose of enabling the member to obtain medical care or treatment
3-4 or to recover from any sickness or injury.
3-5 (7) <(5)> "Authorized leave of absence" means military
3-6 leave of absence, including a period of not more than <the 90th
3-7 day> 90 days after the date of release from active military duty,
3-8 or any other leave of absence during which a member is otherwise
3-9 authorized by law to continue making contributions to the system.
3-10 The term does not include an approved medical leave of absence.
3-11 (8) <(6)> "Average final compensation" means the
3-12 average monthly compensation, <pay, or salary, exclusive of> as
3-13 defined and limited by Section 2 (12) of this act, less overtime,
3-14 incentive, and terminal pay,<that is $16,666 or less and> plus, (i)
3-15 amounts picked up by the employer pursuant to Section 10(e) of this
3-16 Act, (ii) amounts not otherwise included in the member's taxable
3-17 income by reason of either an election under a "cafeteria" plan as
3-18 described in Code Section 125 or deferrals under a plan of deferred
3-19 compensation within the scope of Code Section 457, to the extent
3-20 not in excess of $12,500 for persons who first become members after
3-21 1995 that is earned by a member during, as applicable:
3-22 (A) if the member has 120 months or more of
3-23 membership service, the 36 months of membership service which
3-24 yielded the highest average during the last 120 months of
3-25 membership service;
4-1 (B) if the member has less than 120 months of
4-2 membership service, but has at least 36 months of membership
4-3 service, then the average during the 36 months which yield the
4-4 highest average; or
4-5 (C) if the member does not have 36 months of
4-6 membership service, then the average during the member's months of
4-7 membership service.
4-8 (9) <(7)> "Beneficiary" means <any person, trust, or
4-9 estate properly designated by a member to receive benefits from the
4-10 system> the member's designated beneficiary. If there is no
4-11 effective beneficiary designation on the date of the member's
4-12 death, or if the designated beneficiary predeceases the member<,
4-13 the member's beneficiary is> (or dies on or as a result of the same
4-14 event that caused the member's death and does not survive the
4-15 member by 48 hours), the member's spouse or, if the member does not
4-16 have a spouse, the member's estate shall be the beneficiary.
4-17 (10) "Board" means the boards of directors of an
4-18 employer that is not a municipality as described in Section 1.
4-19 (11) "Code" means the United States Internal Revenue
4-20 Code of 1986 (26 U.S.C. Section 1 et seq.) and its successors.
4-21 (12) "Compensation" means, with respect to any member,
4-22 such member's wages, within the meaning of Section 3401(a) of the
4-23 Code (for purposes of income tax withholding at the source) but
4-24 determined without regard to any rules that limit the remuneration
4-25 included in wages based on the nature or location of the employment
5-1 or the services performed (such as the exception for agricultural
5-2 labor in Section 3401(a)(2) of the Code). Compensation in excess
5-3 of $12,500 per month for any employee who first becomes a member in
5-4 a year commencing after 1995 shall be disregarded. The $12,500
5-5 limitation shall be adjusted for cost of living increases as
5-6 provided under Section 401(a)(17) of the Code. In applying the
5-7 limitations, the family group of a highly compensated employee who
5-8 is one of the ten employees of the employer paid the highest
5-9 compensation during the year, shall be treated as a single
5-10 employee, except that, for this purpose, family members shall
5-11 include only the affected highly compensated employee's spouse and
5-12 lineal descendants who have not attained age nineteen (19) before
5-13 the close of the year. If, as a result of the application of such
5-14 rules, the adjusted $12,500 limitation is exceeded, the limitation
5-15 shall be prorated among the affected family members' compensation
5-16 prior to the application of the limitation or the limitation shall
5-17 be adjusted in accordance with any other method permitted by
5-18 Internal Revenue Service guidelines.
5-19 (13) "Consumer price index" means the Consumer Price
5-20 Index for Urban Wage Earners and Clerical Workers (United States
5-21 City average-all items) published monthly by the Bureau of Labor
5-22 Statistics, United States Department of Labor or its successor in
5-23 function.
5-24 (14) <(8)> "Creditable service" means the total of
5-25 prior service and membership service.
6-1 (15) <(9)> "Current service annuity" means a series of
6-2 equal monthly payments payable for the member's life after
6-3 retirement for membership service from funds of the retirement
6-4 system equal to one-twelfth of the product of <2.2> 2.3 percent of
6-5 a member's average final compensation multiplied by the number of
6-6 months of membership service. However, if payments commence before
6-7 the member's normal retirement date, the amount of the monthly
6-8 payments to which the member would otherwise be entitled shall be
6-9 reduced as provided by Section 7(e) of this Act.
6-10 (16)<(10)> "Deposits" means the amounts required to be
6-11 paid by members in accordance with the provisions of this Act.
6-12 (17) "Designated beneficiary" means any person, trust,
6-13 or estate properly designated in writing by a member to receive
6-14 benefits from the system in the event of the member's death. If
6-15 the member is married an individual other than the member's spouse
6-16 may be the designated beneficiary only if the spouse consents to
6-17 such designation in the form and manner prescribed by the
6-18 retirement board.
6-19 (18)<(11)> "Disability retirement" means the
6-20 termination of employment of a member because of disability with a
6-21 disability retirement allowance as provided in Section 8 of this
6-22 Act.
6-23 (19) "Employer" means the city or municipality
6-24 described in Section 1 of this Act, a hospital authority as defined
6-25 in Section 2(24) of this Act or the retirement board defined in
7-1 Section 2(42) of this Act, or an agency of the municipality as
7-2 defined in Section 2(5) of this Act.
7-3 (20)<(12)> "Fund" means the trust fund containing the
7-4 aggregate of the assets of Fund No. 1 and Fund No. 2.
7-5 (21)<(13)> "Fund No. 1" means the fund in which shall
7-6 be kept all accumulated deposits of members who have not withdrawn
7-7 from the system.
7-8 (22)<(14)> "Fund No. 2" means the fund in which shall
7-9 be kept all money contributed by the city on behalf of city
7-10 employees, all money contributed by a hospital authority on behalf
7-11 of hospital authority employees, and all money contributed by the
7-12 retirement board on behalf of retirement board employees, interest
7-13 earned thereon, and all accumulations and earnings of the system.
7-14 (23) "Governing Body" means the City Council of the
7-15 municipality described in Section 1, and its successors as
7-16 constituted from time to time.
7-17 (24)<(15)> "Hospital authority" means a municipal
7-18 hospital authority created after September 1, 1992, under Chapter
7-19 262, Health and Safety Code, and its subsequent amendments, by a
7-20 city governed by this Act.
7-21 (25)<(16)> "Investment consultant" means the person or
7-22 entity that monitors the investment performance of the system and
7-23 provides such other services as requested by the retirement board.
7-24 (26)<(17)> "Investment manager" means the <person>
7-25 persons or <entity> entities that <has> have the power to manage,
8-1 acquire, or dispose of assets of Fund No. 1 or Fund No. 2 on behalf
8-2 of the retirement system and < acknowledges> that acknowledge
8-3 fiduciary responsibility to the system in writing. <The> An
8-4 investment manager must be a person, firm, or corporation
8-5 registered as an investment adviser under the Investment Advisers
8-6 Act of 1940, a bank, or an insurance company qualified to manage,
8-7 acquire or dispose of assets under the laws of more than one state
8-8 including the State of Texas and must otherwise meet the
8-9 requirements of Section 802.204, Government Code, and its
8-10 subsequent amendments.
8-11 (27)<(18)> "Life annuity" means a series of equal
8-12 monthly payments, payable after retirement for a member's life,
8-13 consisting of a combination of prior service pension and current
8-14 service annuity to which the member is entitled.
8-15 (28)<(19)> "Life annuity (modified cash refund)" means
8-16 a life annuity providing that, in the event of death of the retired
8-17 member before that member has received payments under the life
8-18 annuity <totalling> totaling the amount of that member's
8-19 accumulated deposits at the date of retirement, the excess of such
8-20 accumulated deposits over the payments made shall be paid in one
8-21 lump sum to the member's designated beneficiary.
8-22 (29) "Malfeasance" means (A) willful misconduct or (B)
8-23 the knowingly improper performance of any act, duty or
8-24 responsibility under this Act, including non-performance; which
8-25 interrupts or interferes with the administration, operation and
9-1 management of the retirement system or any person's duties under
9-2 this Act.
9-3 (30)<(20)> "Member" means any:
9-4 (A) regular full<time employee who has completed
9-5 six continuous months of employment with the city, a hospital
9-6 authority, or the board and who has been removed from the
9-7 employee's initial probationary status;>-time employee of an
9-8 employer; and
9-9 (B) former regular full-time employee who has
9-10 not withdrawn the member's accumulated deposits from the system.
9-11 In any case of doubt regarding the eligibility of any
9-12 employee to become or remain a member of the retirement system, the
9-13 decision of the retirement board is final.
9-14 (31)<(21)> "Membership service" means the period of
9-15 time on or after January 1, 1941, during which a person is or was
9-16 employed as a regular full-time employee or is or was on an
9-17 authorized leave of absence and who is eligible for participation
9-18 in the system and pays into and keeps on deposit the amounts of
9-19 money prescribed to be paid by the member into the system. The
9-20 term includes redeemed membership service.
9-21 (32)<(22)> "Normal retirement age" means attainment of
9-22 age 62.
9-23 (33)<(23)> "Normal retirement date" means the earlier
9-24 of the date on which the member has completed 25 years of
9-25 creditable service or has reached <the age of 62> normal retirement
10-1 age.
10-2 (34)<(24)> "Prior service" means service as an
10-3 employee of the city rendered prior to January 1, 1941, for which a
10-4 pension credit is allowable under prior law governing the
10-5 retirement system of that city and includes redeemed prior service.
10-6 (35)<(25)> "Prior service pension" means a series of
10-7 equal monthly payments payable from funds of the retirement system
10-8 for a member's life after retirement for prior service equal to
10-9 one-twelfth of the product of <2.2> 2.3 percent of the member's
10-10 average monthly earnings during a period of five years preceding
10-11 January 1, 1941, multiplied by the number of months of prior
10-12 service. On retirement at an age other than normal retirement age,
10-13 the monthly prior service pension herein prescribed shall be the
10-14 actuarial equivalent thereof at the member's <service pension
10-15 herein prescribed shall be the actuarial equivalent thereof at the
10-16 member's> actual retirement date, based on the schedule or
10-17 schedules of payments approved by the actuary and adopted by the
10-18 retirement board and in effect on the member's actual retirement
10-19 date.
10-20 (36)<(26)> "Qualified domestic relations order" has
10-21 the meaning assigned by Section 804.001, Government Code, and its
10-22 subsequent amendments.
10-23 (37)<(27)> "Redeemed membership service" means
10-24 membership service reinstated in accordance with Section 5(e) of
10-25 this Act.
11-1 (38)<(28)> "Redeemed prior service" means prior
11-2 service reinstated in accordance with Section 5(e) of this Act.
11-3 (39)<(29)> "Regular full-time employee" means an
11-4 individual who is employed by the city, a hospital authority, or
11-5 the board,: who is not a commissioned civil service police officer
11-6 or fire fighter, the mayor, or a member of the <city council, whose
11-7 position> governing body; who is classified in the annual <city,
11-8 board, or hospital authority> budget of an employer for employment
11-9 for the full calendar year<, whose position is classified in the
11-10 annual city, board, or hospital authority budget to continue from
11-11 year to year,>; and who works 30 hours or more in a normal 40-hour
11-12 work week. The term does not include an individual whose position
11-13 is classified as seasonal or temporary by the <city, a hospital
11-14 authority, or the board> employer, even if the individual works 30
11-15 hours or more in a normal 40-hour work week in which the individual
11-16 is employed.
11-17 (40)<(30)> "Retirement" means the termination of
11-18 employment of a member after the member becomes entitled to receive
11-19 a retirement allowance in accordance with the provisions of this
11-20 Act.
11-21 (41)<(31)> "Retirement allowance" means the life
11-22 annuity (modified cash refund) to which a member may be entitled
11-23 under this Act, including annuities payable on disability
11-24 retirement or on early retirement.
11-25 (42)<(32)> "Retirement board" <or "board"> means the
12-1 board of trustees of the retirement and pensioning system herein
12-2 created for the purpose of administering the retirement system.
12-3 (43)<(33)> "Retirement system," "retirement and
12-4 pensioning system," "pension system," or "system" means the
12-5 retirement and pensioning system created by this Act for a city
12-6 governed by this Act.
12-7 (44)<(34)> "Year of creditable service" means a
12-8 12-month period of creditable service determined in accordance with
12-9 uniform and nondiscriminatory rules established by the retirement
12-10 board.
12-11 Sec. 3. Establishment and applicability. (a) Except as
12-12 provided by <Subsection> subsection (b) of this section and subject
12-13 to the authority granted the retirement board in Section
12-14 7(d)<(2)(D)> of this Act, members who retired prior to September 1,
12-15 1993, shall continue to receive the same retirement allowances they
12-16 were receiving prior to that date, together with any cost of living
12-17 adjustments authorized and paid in accordance with this Act.
12-18 (b) Members who retired during the calendar years 1962 and
12-19 1963 shall continue to receive a benefit in accordance with their
12-20 election, if any, and the retirement allowances computed in the
12-21 manner prescribed by an applicable city ordinance in effect as of
12-22 January 1, 1962, or in the manner in which said allowances would
12-23 have been computed under applicable city ordinances existing
12-24 immediately prior to the enactments of January 1, 1962, together
12-25 with any cost of living adjustments authorized and paid in
13-1 accordance with this Act.
13-2 Sec. 4. Administration. (a) There is hereby created a
13-3 retirement board of the retirement and pensioning system, in which
13-4 retirement board is hereby vested the power and responsibility for
13-5 the proper and effective general administration, management, and
13-6 operation of the retirement system. The retirement board shall be
13-7 organized immediately after its members have qualified and taken
13-8 the oath of office.
13-9 (b) The retirement board shall be composed of 11 members as
13-10 follows:
13-11 (1) place one: one <city council> member of the
13-12 governing body, designated by the <city council> governing body,
13-13 who may be removed and replaced or redesignated by the <city
13-14 council> governing body at any time;
13-15 (2) place two: the city manager of the city or his or
13-16 her designee;
13-17 (3) <place three: the director of finance of the city
13-18 or his or her designee;>
13-19 <(4)> places <four> three through <six:> five: three
13-20 qualified voters of the city who have been city residents for the
13-21 preceding five years and who are not <city> employees, former
13-22 employees, or officers<;> of an employer;
13-23 (4) <(5)> places <seven> six through <10:> nine: fou
13-24 active-contributory members elected by the active-contributory
13-25 members; and
14-1 (5) <(6) place 11: a retired member who will be>
14-2 places ten and eleven: two retired members elected by the retired
14-3 members.
14-4 (c)(1) The place one retirement board member serves at the
14-5 pleasure of the <city council> governing body and until the
14-6 <council redesignated> governing body redesignates the place one
14-7 member, or until the member is no longer able to serve because of
14-8 death, resignation, termination of position as a <city council>
14-9 member of the governing body, or disability. The <city council>
14-10 governing body shall appoint a person to fill a vacancy in place
14-11 one not later than the 90th day after the first date of the
14-12 vacancy.
14-13 (2) In December of every second even-numbered year,
14-14 the <city council> governing body shall appoint, to place <four>
14-15 three, one person meeting the qualifications for place <four>
14-16 three. In December of every second odd-numbered year, the <city
14-17 council> governing body shall appoint, to place <five> four, one
14-18 person meeting the qualifications for place <five> four. In
14-19 December of every second odd-numbered year, the retirement board
14-20 shall appoint, to place <six> five, one person meeting the
14-21 qualifications for place <six. Board> five. Retirement board
14-22 members holding places <four> three through <six> five each serve a
14-23 four-year term beginning on January 1 of the year after their
14-24 appointment, unless service is earlier terminated by the death,
14-25 disability, resignation, or removal of that retirement board member
15-1 or the retirement board member ceases to meet the qualifications of
15-2 a citizen retirement board member as set forth in Section 4(b) of
15-3 this Act. The <city council> governing body shall fill a vacancy
15-4 in place three or four <or five> with a person meeting the
15-5 qualifications for that place not later than the 90th day after the
15-6 first date of the vacancy. If the <city council> governing body
15-7 fails to appoint an eligible person to fill a vacancy in place
15-8 <four> three or five within the 90-day period, the retirement board
15-9 may appoint a person meeting the qualifications for that place to
15-10 fill the vacancy for the remainder of the unexpired term. The
15-11 retirement board shall appoint a person meeting the qualifications
15-12 for place <six> five to fill a vacancy in place <six> five for the
15-13 remainder of the unexpired term.
15-14 (3) The places <seven> six through <10> nine
15-15 retirement board members each serve on the retirement board for a
15-16 four-year term, unless service is earlier terminated by the death,
15-17 resignation, termination of employment, disability, retirement, or
15-18 removal of <that> the retirement board member. The retirement
15-19 board shall appoint an active-contributory member to fill a vacancy
15-20 in each of places <seven> six through <10> nine for the remainder
15-21 of the unexpired term.
15-22 (4) The <place 11 board member serves for a
15-23 four->places ten and eleven retirement board members serve for a
15-24 four-year term, unless that service is earlier terminated by the
15-25 death, disability, resignation, or removal of the member. The
16-1 retirement board shall appoint a retired member to fill a vacancy
16-2 in <place 11> places ten or eleven for the remainder of the
16-3 unexpired term.
16-4 (d) Members for places <seven> six through <11> eleven shall
16-5 be elected in accordance with the following provisions:
16-6 (1) Only active-contributory members shall be eligible
16-7 for election for places <seven> six through <10> nine. Only
16-8 retired members shall be eligible for election for <place 11>
16-9 places ten and eleven. Not more than one active-contributory
16-10 member shall be eligible for election from any one city department.
16-11 (2) Members for places <seven> six through <10> nine
16-12 shall be elected to four-year staggered terms with the terms of two
16-13 of such retirement board members beginning January 1 of each
16-14 even-numbered year.
16-15 (3) <The board member for place 11 shall be elected in
16-16 an even-numbered year, with the term> Members for places ten and
16-17 eleven shall be elected to four-year staggered terms. One such
16-18 retirement board member shall be elected at an election held in
16-19 every other even numbered year with the term of such retirement
16-20 board member beginning on January 1 of the <next> following
16-21 odd-numbered year. The first election for place ten shall be held
16-22 in 1996 and the term of the retired member elected at that election
16-23 shall begin on January 1, 1997. The retirement board shall appoint
16-24 a retired member, to place ten, to serve until January 1, 1997.
16-25 The term of the retired member serving in place eleven shall expire
17-1 on December 31, 1998.
17-2 (4)(A) No later than the first day of October of each
17-3 odd-numbered year, the retirement board shall appoint a nominating
17-4 and election committee consisting of five committee members and two
17-5 alternates, all of whom are active-contributory members of the
17-6 retirement system. The nominating and election committee shall
17-7 make one or more nominations for each active-contributory member
17-8 vacancy and shall act as election judges. The nominating and
17-9 election committee shall determine and certify that each such
17-10 nominee and each candidate announcing for election is an
17-11 active-contributory member and prepare the ballot containing the
17-12 names of all certified active-contributory member candidates.
17-13 (B) No later than the first day of October of
17-14 every second even-numbered year, the retirement board shall appoint
17-15 a nominating and election committee consisting of five committee
17-16 members and five alternates, all of whom are retired members of the
17-17 retirement system. The nominating and election committee shall
17-18 make one or more nominations for the retired member vacancy and
17-19 shall act as election judges. The nominating and election
17-20 committee shall determine and certify that each such nominee and
17-21 each candidate announcing for election is a retired member and
17-22 prepare the ballot containing the names of all certified retired
17-23 member candidates.
17-24 (5) Each nominating and election committee shall
17-25 publish a notice at least two (2) weeks prior to the applicable
18-1 election date, informing all active-contributory members or retired
18-2 members, as applicable, of the names of the persons who have been
18-3 certified as candidates.
18-4 (6) Elections for places seven through 10 shall be
18-5 held on the first payday in December of each odd-numbered year.
18-6 Elections for place 11 shall be held in December of every second
18-7 even-numbered year. The candidates receiving the highest number of
18-8 eligible votes shall be deemed elected. In case of a tie vote,
18-9 selection shall be by lot drawn by an existing member of the
18-10 retirement board at a meeting of the retirement board held after
18-11 the election but before the first day of January of the year after
18-12 the election.
18-13 (7) The applicable nominating and election committee
18-14 shall canvass the returns, certify the results, and announce the
18-15 official results of the election.
18-16 (8) The retirement board shall approve written
18-17 procedures for the conduct of the election no later than August 1
18-18 of each year in which an election is held.
18-19 (e) Each member of the retirement board shall, within 30
18-20 days after appointment and election <shall>, take an oath of office
18-21 that <the board member> he or she will diligently and honestly
18-22 administer the affairs of the retirement system and will not
18-23 knowingly violate or willingly permit to be violated any law or
18-24 statute applicable to the retirement system. All members of the
18-25 retirement board serve without compensation. <At any time, the
19-1 board> The retirement board may, at any time after notice and
19-2 hearing, by a vote of six retirement board members<, may> remove a
19-3 retirement board member for malfeasance.
19-4 (f) In January of each year, the retirement board shall
19-5 elect from its membership a chairman and a vice-chairman to serve
19-6 one calendar year.
19-7 (g) The retirement board shall hire a pension officer as an
19-8 employee of the retirement board. The pension officer shall hire
19-9 and may fire or suspend necessary staff members, and those staff
19-10 members are employees of the retirement board. The pension officer
19-11 acting under the direction of the retirement board shall keep all
19-12 of the records of the retirement system and a record of the
19-13 proceedings of the retirement board. The pension officer and each
19-14 staff member shall receive such compensation as the retirement
19-15 board may fix in each annual budget of the retirement system, or
19-16 amendments to the budget, and that compensation shall be paid from
19-17 the fund.
19-18 (h) Subject to the limitations of this Act, the retirement
19-19 board shall from time to time establish rules and regulations for
19-20 the administration of the funds authorized to be created hereunder
19-21 and <or> for the transaction of the retirement board's business.
19-22 Each member of the retirement board is entitled to one vote <on the
19-23 board>. Six concurring votes are necessary for a decision by the
19-24 retirement board members at any meeting of the retirement board,
19-25 and six members constitute a quorum. Each member will be required
20-1 to serve on a committee of the retirement board. Any retirement
20-2 board member who is absent from four consecutive regular monthly
20-3 meetings of the retirement board shall be removed from the
20-4 retirement board and <the member shall be> replaced in accordance
20-5 with the provisions of this section.
20-6 (i)(1) The retirement board shall keep or cause to be kept
20-7 in convenient form such data as are necessary for actuarial
20-8 valuation of the fund of the retirement system and for checking the
20-9 mortality, service, compensation, and payment experience of the
20-10 system.
20-11 (2) The retirement board shall keep a record of all
20-12 its proceedings, which shall be open to public inspection except as
20-13 otherwise specifically provided or permitted by law, and shall
20-14 publish annually a report showing the fiscal transactions of the
20-15 retirement system for the preceding year, the amount of the
20-16 accumulated cash <and>, securities and other assets of the system,
20-17 and the last balance sheet showing the financial condition of the
20-18 system <is> as disclosed by the most recent actuarial valuation of
20-19 the assets and liabilities of the retirement system.
20-20 (3) The retirement board shall have charge of and
20-21 administer the fund as trustee of the fund and shall order payments
20-22 therefrom in pursuance of the provisions of this Act. <The city
20-23 and each hospital authority> Each employer shall provide to the
20-24 retirement board <all> the records necessary and useful to
20-25 administer the system and the fund. The retirement board shall
21-1 report annually to the members on the condition of the fund and the
21-2 receipts and disbursements on account of the fund. The retirement
21-3 board shall keep a complete <list> record of the retired members,
21-4 surviving spouses, and beneficiaries of the fund and the amounts
21-5 paid to them.
21-6 (4) Individual accounts shall be maintained for each
21-7 member of the retirement system, showing the amount of the member's
21-8 accumulated deposits. Annually a statement shall be given each
21-9 member showing the total amount of that member's accumulated
21-10 deposits. The accounts of the retirement board and the retirement
21-11 system shall be included in the annual independent audit of the
21-12 accounts of the system. <A> One copy of <this> the annual audit
21-13 shall be provided to the <city mayor> governing body and to the
21-14 board of each employer.
21-15 (5) The retirement board shall designate an actuary
21-16 who shall be the technical advisor of the retirement board
21-17 regarding the maintenance and operations of the fund authorized by
21-18 the provisions of this Act and shall perform such other duties as
21-19 may be required in connection therewith, but shall not be an
21-20 investment advisor or fiduciary with respect to any investments of
21-21 the fund. The actuary shall make periodic <evaluations> valuations
21-22 of the assets and liabilities of the funds and other <valuations>
21-23 evaluations as requested by the retirement board.
21-24 (6) From time to time on the advice of the actuary and
21-25 the direction of the retirement board, the actuary shall make an
22-1 actuarial investigation of the mortality, service, and compensation
22-2 experience of members, retired members, surviving spouses, and
22-3 beneficiaries of the retirement system and shall make a valuation
22-4 of the assets and liabilities of the funds of the system. Taking
22-5 into account the result of such investigation and valuation, the
22-6 retirement board shall adopt for the retirement system such
22-7 mortality, service, and other actuarial tables or rates as are
22-8 deemed necessary. On the basis of tables and rates adopted by the
22-9 retirement board, the actuary shall make a valuation at least once
22-10 every two years of the assets and liabilities of the funds of the
22-11 retirement system.
22-12 (7) The retirement board may retain the services of
22-13 one or more investment managers who shall have full authority to
22-14 invest and manage the assets of the retirement system and the fund,
22-15 as specified by contract in accordance with <Subchapter> subchapter
22-16 C, Chapter 802, Government Code, and its subsequent amendments.
22-17 (8) The retirement board may retain the services of
22-18 one or more investment consultants to monitor the investment
22-19 performance of the investment managers and provide other
22-20 investment-related services as requested by the retirement board.
22-21 (j) The retirement board may retain legal counsel <to
22-22 advise, assist, or represent the board in any legal matters
22-23 affecting> as necessary in the judgment of the board to advise,
22-24 consult, assist and represent the retirement board and the system
22-25 in and with respect to any legal matter, issue, cause or claim that
23-1 comes before the retirement board or that may affect the retirement
23-2 system <and> or the operation of the fund.
23-3 (k) Except as provided by <Subsection> subsection (l) of
23-4 this section, the retirement board may adopt rules, establish
23-5 regulations or procedures, correct any defect, supply any
23-6 information, or reconcile any inconsistency as the retirement board
23-7 considers necessary or advisable to carry out this Act. Further,
23-8 the retirement board is authorized to adopt any amendment that
23-9 modifies this Act to the extent necessary for the retirement system
23-10 to be a qualified plan.
23-11 (l) Any procedure, discretionary act, interpretation, or
23-12 construction by the retirement board must be done in a
23-13 nondiscriminatory manner based on uniform principles consistently
23-14 applied and must be consistent with this Act and with <26 U.S.C.>
23-15 Section 401(a) of the Code and its subsequent amendments.
23-16 (m) The retirement board is authorized to administer oaths
23-17 to any person providing testimony at any hearing or other
23-18 proceeding of the retirement board.
23-19 Sec. 5. Membership. (a) <Any regular full-time employee
23-20 who has completed six continuous months of employment as a regular
23-21 full-time employee before or after the date of establishment of the
23-22 retirement system and who has been removed from the employee's
23-23 initial probationary status,> Each regular full-time employee shall
23-24 become an active-contributory member as a condition of employment
23-25 and shall make the required deposits commencing with the first pay
24-1 period <following the later of the completion of six continuous
24-2 months of employment as a regular full-time employee or the date of
24-3 removal from the employee's initial probationary status> in which
24-4 the employee is compensated following the effective date of this
24-5 Act. Unless on approved medical leave of absence or <other
24-6 authorized leave> on leave to serve in the uniformed services, the
24-7 employee shall make the deposits as long as the employee remains a
24-8 regular full-time employee and shall remain a member of the system
24-9 until the employee or the employee's beneficiary ceases to be
24-10 entitled to any benefits from the retirement system. The
24-11 membership for all new regular full-time employees shall commence
24-12 on the date their employment commences and all current active
24-13 contributory members shall be deemed to have additional creditable
24-14 service equal to the time elapsed between the date their regular
24-15 full-time employment commenced and the date they became an active
24-16 contributory member, but not in excess of six (6) months.
24-17 (b) Membership in the retirement system consists of the
24-18 following groups:
24-19 (1) the active-contributory members group, which
24-20 consists of all members, other than those on authorized leave of
24-21 absence, who are making deposits;
24-22 (2) the active-noncontributory members group, which
24-23 consists of all employees on approved medical leave of absence and
24-24 all employees of <the city, a hospital authority, or the board> an
24-25 employer, other than inactive-contributory members, who <were> have
25-1 been active-contributory members but who are no longer so because
25-2 they are not regular full-time employees;
25-3 (3) the inactive-contributory members group, which
25-4 consists of all members who are on an authorized leave of absence
25-5 and who continue to make deposits into the retirement system during
25-6 <the employee's> their absence;
25-7 (4) the inactive-noncontributory members group, which
25-8 consists of all members whose status as an employee <with the city,
25-9 a hospital authority, or the board> has been terminated before
25-10 retirement or disability retirement <and> but who are still
25-11 entitled to, or whose beneficiary may become entitled to, benefits
25-12 from the retirement system; and
25-13 (5) the retired members group, which consists of all
25-14 members who have retired and who are receiving or who are entitled
25-15 to receive a retirement allowance.
25-16 (c) An active-noncontributory member becomes an
25-17 active-contributory member immediately on resuming employment as a
25-18 regular full-time employee or on returning from an approved medical
25-19 leave of absence, as applicable.
25-20 (d) It shall be the duty of the retirement board to
25-21 determine the membership group to which each person who becomes a
25-22 member of the retirement system properly belongs. It shall be the
25-23 duty of the <city manager> chief administrative officer of each
25-24 employer to submit to the retirement board a statement showing the
25-25 name, position, compensation, duties, date of birth, length of
26-1 employment, and other information regarding each employee of the
26-2 <city as> employer the retirement board may require. <The pension
26-3 officer shall submit to the board a statement showing the name,
26-4 position, compensation, duties, date of birth, length of
26-5 employment, and other information regarding each employee of the
26-6 board that the board requires. Each hospital authority board shall
26-7 submit to the retirement board a statement showing the name,
26-8 position, compensation, duties, date of birth, length of
26-9 employment, and other information regarding each employee of the
26-10 hospital authority that the retirement board requires.>
26-11 (e) Any person who has ceased to be a member and has
26-12 received a distribution of the person's accumulated deposits may
26-13 have the person's membership service or prior service reinstated if
26-14 the person is reemployed as a regular full-time employee for a
26-15 continuous period of 24 months and deposits into the system, within
26-16 a reasonable period established by the retirement board on a
26-17 uniform and nondiscriminatory basis, the accumulated deposits
26-18 withdrawn by that person, together with an interest payment equal
26-19 to the amount withdrawn multiplied by an interest factor. The
26-20 interest factor is equal to the annually compounded interest rate
26-21 assumed to have been earned by the fund beginning with the month
26-22 and year in which the person withdrew the person's accumulated
26-23 deposits and ending with the month and year in which the deposit
26-24 under this subsection is made. The interest rate assumed to have
26-25 been earned by the fund for any period is equal to the interest
27-1 rate credited for that period to the accumulated deposits of
27-2 members, divided by 0.75.
27-3 (f) A member on authorized leave of absence may make
27-4 deposits each <biweekly> pay period to the system while on
27-5 authorized leave of absence<,>. Each such deposit shall be in an
27-6 amount that is equal to the amount of the member's deposit for the
27-7 last complete <biweekly> pay period that the member was paid by the
27-8 <city, a hospital authority, or the board> employer. As long as
27-9 the member on authorized leave of absence makes the <biweekly
27-10 payments, the city> payments each pay period, the employee's
27-11 employer shall make contributions to the retirement fund, for such
27-12 member <on authorized leave of absence from the city each biweekly
27-13 pay>, each pay period in an amount equal to the contribution amount
27-14 the <city> employer would have made if the member's <biweekly> pay
27-15 had continued to be the <biweekly> pay the member received for the
27-16 last complete <biweekly> pay period that the member was paid by the
27-17 <city. Each hospital authority shall make contributions to the
27-18 retirement fund for a member on authorized leave of absence from
27-19 that hospital authority each pay period in an amount equal to the
27-20 contribution amount the hospital authority would have made if the
27-21 member's pay had continued to be the pay the member received for
27-22 the last complete pay period that the member was paid by the
27-23 hospital authority. The board shall make a contribution to the
27-24 retirement fund from system funds for a member on authorized leave
27-25 of absence from the board each biweekly pay period in an amount
28-1 equal to the contribution amount the board would have made if the
28-2 member's biweekly pay had continued to be the biweekly pay the
28-3 member received for the last complete biweekly pay period that the
28-4 member was paid by the board> employer. If the member does not
28-5 make those deposits while on authorized leave of absence, the
28-6 member may make a single payment, within five years after the
28-7 member has returned to employment with the <city, with the hospital
28-8 authority, or with the board> employer, equal to the deposits the
28-9 member would have made if the member had continued to be paid
28-10 during the authorized leave of absence at the same rate of pay the
28-11 member was receiving at the time the member's authorized leave of
28-12 absence began. <The city> In the event a member elects to make a
28-13 single payment, the member's employer shall make a single payment
28-14 for such member <employed by the city> which payment shall be equal
28-15 to the contributions <it> the employer would have made on the
28-16 member's behalf if the member had made deposits to the fund during
28-17 the period of the member's <behalf if the member had made deposits
28-18 to the fund during the period of the member's> authorized leave of
28-19 absence. <Each hospital authority shall make a single payment for
28-20 a member employed by the hospital authority equal to the
28-21 contributions it would have made on the member's behalf if the
28-22 member had made deposits to the fund during the period of the
28-23 member's> During an authorized leave of absence<. The board shall
28-24 make a single payment to the fund for a member employed by the
28-25 board equal to the contributions it would have made on the member's
29-1 behalf if the member had made deposits to the fund during the
29-2 period of the member's authorized leave of absence. As long as
29-3 deposits are made>, the member will continue to earn membership
29-4 service for the pay periods for which the member makes deposits in
29-5 accordance with this subsection<, the member will continue to earn
29-6 membership service during the period of the authorized leave of
29-7 absence.>. If a member makes the lump sum payment provided for in
29-8 this subsection the membership service will be credited at the time
29-9 of payment.
29-10 (g) From time to time the retirement board, subject to the
29-11 approval of the system's actuary, may elect to permit the
29-12 reinstatement of membership service forfeited in accordance with
29-13 the terms of this section.
29-14 Sec. 6. Creditable service. (a) The retirement allowance
29-15 of a member is based on the <amount of> member's creditable service
29-16 <rendered by the member> as of the member's actual retirement date.
29-17 (b) The retirement board shall determine by
29-18 nondiscriminatory rules and regulations consistently applied,
29-19 subject to the provisions of this Act, in case of absence, illness,
29-20 or other temporary interruption in service as a regular full-time
29-21 employee, the portion of each calendar year to be allowed as
29-22 creditable service. No credit shall be allowed as creditable
29-23 service for any period exceeding one month during which an employee
29-24 was absent continuously without pay, except for an authorized leave
29-25 of absence as provided in this Act. The retirement board shall
30-1 verify the records for creditable service claims filed by the
30-2 members of the retirement system, subject to the provisions of this
30-3 Act and in accordance with such administrative rules and
30-4 regulations as the retirement board may from time to time adopt.
30-5 (c) At any time before a member's actual retirement date, a
30-6 member may establish creditable service for military service
30-7 performed that is creditable as provided under this subsection
30-8 according to the following conditions, limitations, and
30-9 restrictions:
30-10 (1) Military service creditable in the retirement
30-11 system is any service required to be credited by the Uniformed
30-12 Services Employment and Reemployment Act of 1994, as amended and
30-13 certain active federal duty service in the armed forces of the
30-14 United States performed before the commencement of employment with
30-15 the employer, other than service as a student at a service academy,
30-16 as a member of the reserves, or any continuous active military
30-17 service lasting less than 90 days. To be creditable, the military
30-18 service must have been performed before the beginning of the
30-19 member's most recent period of membership in the retirement system
30-20 or its predecessor system.
30-21 (2) A member is not eligible to establish military
30-22 service credit unless the member was released from active military
30-23 duty under conditions other than dishonorable.
30-24 (3) A member may not establish creditable service in
30-25 the retirement system for military service for more than the
31-1 greater of the creditable service required under the Uniformed
31-2 Services Employment and Reemployment Act of 1994, as amended, or 24
31-3 months of creditable service in the retirement system for military
31-4 service under this subsection.
31-5 (4) A member may establish creditable service under
31-6 this subsection by contributing to the retirement system a single
31-7 payment equal to 25 percent of the estimated cost of the additional
31-8 projected retirement benefits the member will be entitled to
31-9 receive. The retirement board will determine the required
31-10 contribution based on a procedure recommended by the actuary and
31-11 approved by the retirement board, provided, however,
31-12 notwithstanding the amount determined under the preceeding
31-13 sentence, such contribution may not exceed the amount required
31-14 under the Uniformed Services Employment and Reemployment Act of
31-15 1994, as amended in the case of a member who makes such
31-16 contributions within the time prescribed by such act.
31-17 (5) After the member makes the deposit required by
31-18 this subsection, the retirement system shall grant the member one
31-19 month of creditable service for each month of creditable military
31-20 service established under this subsection.
31-21 Sec. 7. Service retirement benefits and withdrawal benefits.
31-22 (a) Except as provided by <Subsection> subsection (b) of this
31-23 section, a member who retires on or after the member's normal
31-24 retirement date and applies in writing for a retirement allowance
31-25 shall receive a life annuity (modified cash refund) beginning on
32-1 the last day of the month after the month in which the member
32-2 retired. Unless <Subsection> subsection (e) of this section or
32-3 <Section> section 8 of this Act applies, a member whose employment
32-4 by the <city, a hospital authority, or the board> employer
32-5 terminates before the member's normal retirement date is entitled
32-6 to a distribution of the member's accumulated deposits in a single
32-7 lump sum. On receiving that distribution, a member is not entitled
32-8 to any other benefit under this Act. If a member has at least five
32-9 years of creditable service and does not withdraw the member's
32-10 accumulated deposits, the member is entitled to a life annuity
32-11 (modified cash refund) beginning on the first day of the month
32-12 after the month in which the member's normal retirement date
32-13 occurs. If a member has at least 20 years of creditable service
32-14 and does not withdraw the member's accumulated deposits, the member
32-15 is also entitled to elect an early retirement benefit on attaining
32-16 age 55.
32-17 (b) A member who terminates employment with the <city, a
32-18 hospital authority, or the board> employer and who has less than
32-19 five years of creditable service is not entitled to a retirement
32-20 allowance.
32-21 (c) The amount of the retirement allowance and all other
32-22 benefits payable under this statute shall be subject at all times
32-23 to such adjustments as may be required to ensure actuarial
32-24 soundness as may be approved by the actuary and adopted by the
32-25 retirement board, except that annuities already <granted> accrued
33-1 may not be reduced <below the base figure granted at time of
33-2 retirement>.
33-3 (d)(1) Subject to the conditions, limitations, and
33-4 restrictions set forth in this subsection, as well as all other
33-5 pertinent conditions, limitations, and restrictions set forth
33-6 elsewhere in this Act, the retirement board shall have the power
33-7 once each year to authorize a cost of living adjustment
33-8 (hereinafter referred to as the "adjustment") payment of which,
33-9 once authorized, shall be added to the current monthly payment of
33-10 <al> all retirement annuities, pensions, or allowances of each and
33-11 every retired member (or the retired <members' beneficiaries who
33-12 have> member's beneficiary) who has become entitled to benefits, on
33-13 or before December 31 of the year before the year in which the
33-14 adjustment goes into effect. Before December 31 of each year, the
33-15 retirement board shall make a separate determination as to whether
33-16 to authorize the payment of an adjustment and the amount of such
33-17 adjustment, if any. In determining whether to authorize an
33-18 adjustment, the retirement board may consider the changes in the
33-19 consumer price index over the preceding 12-month period, the
33-20 actuarial experience of the fund, the investment experience of the
33-21 fund, the amount of any prior adjustments, and other factors that
33-22 the retirement board and the actuary consider appropriate.
33-23 (2) In determining whether to authorize the payment
33-24 and the amount of any adjustment, the retirement board shall be
33-25 governed by the following conditions, considerations, limitations,
34-1 and restrictions:
34-2 (A) Any and all determinations to authorize the
34-3 payment of any adjustment amount must be based on the ability of
34-4 the fund to pay such an amount and shall not be based on the
34-5 individual needs of any particular retired members or
34-6 beneficiaries.
34-7 (B) Prior to the retirement board's authorizing
34-8 the payment of an adjustment, the actuary must <approve and>
34-9 recommend such an adjustment to the retirement board and certify in
34-10 writing <to the board> that, based on the sound application of
34-11 actuarial assumptions and methods consistent with sound actuarial
34-12 principles and standards, it is demonstrable that the fund has and
34-13 likely will continue to have the ability to pay such an amount out
34-14 of its realized income after all other obligations of the fund have
34-15 been paid.
34-16 (C) The amount of the adjustment for each
34-17 retired member or beneficiary shall be a uniform percentage of the
34-18 monthly payment being received by a member, or by a beneficiary by
34-19 reason of a member, who was retired at least one year before the
34-20 adjustment and may not exceed six percent of the monthly payment
34-21 due the retired member or beneficiary before the adjustment. For
34-22 members who retired during the year in which the adjustment is
34-23 authorized, the increase for the first year in which the adjustment
34-24 is being paid shall be prorated in the ratio that the number of
34-25 completed months after the member's retirement in the year of the
35-1 member's retirement bears to 12. After the first year the member
35-2 is entitled to the full amount of <the> any adjustment without
35-3 proration.
35-4 <(D) The board shall have the authority and the
35-5 duty on recommendation by the actuary, at any and all times and
35-6 without notice to anyone, to decrease the amount of adjustment
35-7 payment as much as is necessary to protect the continuity of the
35-8 retirement and pensioning system and to protect the corpus of the
35-9 system should the ability of the system to continue to pay the
35-10 adjustment be threatened by a change in the economic situation of
35-11 the United States, the State of Texas, the city, or the system
35-12 itself, such as would dictate that a prudent trustee should
35-13 authorize such a decrease, providing that, if the threatening
35-14 change should prove not to have had the predicted harmful effect on
35-15 the system, then the board shall have the authority, on
35-16 recommendation by the actuary, to reinstate the payment of all or
35-17 any portion of the amount of the previously decreased adjustment
35-18 payments.>
35-19 (3) Any adjustment payments shall be in addition to
35-20 the benefits to which a retired member <of> or beneficiary is
35-21 otherwise entitled under this Act<, and in no event shall a
35-22 reduction in the adjustment payments cause the retired member's or
35-23 beneficiary's benefits to be reduced below the actual base
35-24 retirement figure calculated under the provisions of this Act.>
35-25 <(4) The following terms and definitions shall be used
36-1 in construing the meaning of this section:>
36-2 <(A) "Base retirement figure" means that figure
36-3 calculated under the provisions of this Act at the time of actual
36-4 retirement to which, for the purposes of this subsection, a retired
36-5 member is entitled over a 12-month period.>
36-6 <(B) "Consumer price index" means the Consumer
36-7 Price Index (all items--United States City average) published
36-8 monthly by the Bureau of Labor Statistics, United States Department
36-9 of Labor or its successor in function.>
36-10 <(C) "Continuity of the fund" means the ability
36-11 of the retirement and pensioning system's fund to continue to meet
36-12 all of its purposes, to continue to thrive and grow along with the
36-13 economy of the United States, the State of Texas, and the city, or
36-14 to be able to sustain itself and its retired members and their
36-15 beneficiaries during and throughout the periods of deflation or
36-16 recession in those economies>.
36-17 (e) Any member shall be eligible for early retirement if the
36-18 member attains the age of 55 years and completes at least 20 years
36-19 of creditable service. Such member shall be entitled to a benefit
36-20 equal to a life annuity (modified cash refund) reduced at the rate
36-21 of five-twelfths of one percent for each month the member was
36-22 retired before the member's normal retirement date. A member who
36-23 takes early retirement shall begin receiving the benefits provided
36-24 by this subsection beginning on the last day of the month after the
36-25 month in which the member retired.
37-1 (f) A member may file a <duly acknowledged> written
37-2 designation, which, if approved by the retirement board, shall
37-3 entitle the member, on retirement, to receive the actuarial
37-4 equivalent of the life annuity in the form of one of the following
37-5 options:
37-6 (1) Option I. 100 Percent Joint and Survivor Annuity.
37-7 This option is a reduced monthly annuity payable to the member but
37-8 with the provision that on the member's death the annuity shall be
37-9 continued throughout the life of and be paid to such person as the
37-10 member shall designate before the member's actual retirement date.
37-11 (2) Option II. 50 Percent Joint and Survivor Annuity.
37-12 This option is a reduced monthly annuity payable to the member but
37-13 with the provision that on the member's death one-half of the
37-14 annuity shall be continued throughout the life of and be paid to
37-15 such person as the member shall designate before the member's
37-16 actual retirement date.
37-17 (3) Option III. 66-2/3 Percent Joint and Survivor
37-18 Annuity. This option is a reduced monthly annuity payable to the
37-19 member but with the provision that on the member's death two-thirds
37-20 of the annuity shall be continued throughout the life of and be
37-21 paid to such person as the member shall designate before the
37-22 member's actual retirement date.
37-23 (4) Option IV. Joint and 66-2/3 Percent Last Survivor
37-24 Annuity. This option is a reduced monthly annuity payable to the
37-25 member but with the provision that two-thirds of the annuity to
38-1 which the member would be entitled shall be continued throughout
38-2 the life of and be paid to the survivor after the death of either
38-3 the member or such person as the member shall designate before the
38-4 member's actual retirement date.
38-5 (5) Option V. Level Income Option. If payment of a
38-6 retirement allowance commences prior to the earliest age at which
38-7 the member will become eligible for an old age insurance benefit
38-8 under the Social Security Act, the member may elect that the amount
38-9 of the monthly payments be adjusted so that an increased monthly
38-10 amount will be paid prior to such age and a reduced monthly amount,
38-11 if any, will be paid for life after such age. The purpose of this
38-12 adjustment is to enable the member to receive from this plan and
38-13 under the Social Security Act an aggregate income in approximately
38-14 a level amount for life.
38-15 (6) Option VI. 66-2/3 Percent Joint and Survivor/Level
38-16 Income Option. If payment of a retirement allowance commences
38-17 prior to the earliest age at which the member could become eligible
38-18 for an old age insurance benefit under the Social Security Act, the
38-19 member may elect that the amount of the monthly payments be
38-20 adjusted so that an increased monthly amount will be paid prior to
38-21 such age and a reduced monthly amount will be paid for life after
38-22 such age. The purpose of this adjustment is to enable the member
38-23 to receive from this plan and under the Social Security Act an
38-24 aggregate income in approximately a level amount for life. Option
38-25 VI provides that if the member's death occurs after age 62,
39-1 two-thirds of the monthly annuity the member was receiving at the
39-2 time of the member's death shall be continued throughout the life
39-3 of and be paid to such person as the member shall designate before
39-4 the member's actual retirement date. If the member's death occurs
39-5 before age 62, two-thirds of the monthly annuity the member was
39-6 receiving at the time of member's death shall be paid to such
39-7 person as the member shall designate before the member's actual
39-8 retirement date through the end of the month when the member would
39-9 have reached age 62. The monthly annuity being paid to such person
39-10 as the member shall designate before the member's actual retirement
39-11 date will be reduced at the end of the month following the month in
39-12 which the member would have reached age 62 to two-thirds of the
39-13 reduced benefit the member would have begun to receive at age 62.
39-14 (7) Option VII. 15-Year Certain and Life Annuity.
39-15 This option is a reduced annuity payable to the member for life.
39-16 In the <even> event of the member's death before 180 monthly
39-17 payments have been made, the remainder of the 180 payments shall be
39-18 paid to the member's beneficiary or, if there is no beneficiary, to
39-19 the member's estate.
39-20 (8) Option VIII. Equivalent Benefit Plan. If a member
39-21 requests in writing, any other form of benefit or benefits may be
39-22 paid either to the member or to such person or persons as the
39-23 member shall designate before the member's actual retirement date,
39-24 provided that the benefit plan requested by the member is certified
39-25 by the actuary for the system to be the actuarial equivalent of the
40-1 life annuity with guaranteed refund of the retired member's
40-2 accumulated deposits. If, on the death of the member and all other
40-3 persons entitled to receive payments under an optional benefit, the
40-4 member's accumulated deposits as of the member's actual retirement
40-5 date exceed the sum of all payments made under that optional
40-6 benefit, that excess shall be paid in one lump sum to the member's
40-7 beneficiary.
40-8 (g)(1) For purposes of <Subsection> subsection (f) of this
40-9 section, the designation of a beneficiary must be made in writing
40-10 on a form and in the manner prescribed by the retirement board. If
40-11 a member has chosen Option I, II, III, IV, VI, or VIII, the
40-12 member's designation of a beneficiary may not be revoked after a
40-13 member retires, and any attempted revocation of a designation for
40-14 those options is void. Spousal consent shall not be required for a
40-15 member to select Option I, II, III, IV or VI. If the member is
40-16 married, spousal consent is required for the member to select an
40-17 optional benefit other than Option I, II, III, IV<,> or VI. At any
40-18 time before retirement, a member may file with the retirement board
40-19 a written statement designating one or more persons to be entitled
40-20 to receive as beneficiary the reduced annuity payable under one of
40-21 the optional benefits. If a married member designates as a
40-22 beneficiary any person other than the member's spouse, the member's
40-23 spouse must consent in writing to the beneficiary designation, and
40-24 the beneficiary designation may not be changed without spousal
40-25 consent, unless the consent of the spouse expressly permits
41-1 designations by the member without the requirement of further
41-2 consent by the spouse. The spouse's consent is irrevocable and
41-3 must acknowledge the effect of the designation and be witnessed by
41-4 a retirement board employee or notary public. Spousal consent is
41-5 not required if it is established to the satisfaction of the
41-6 retirement board that the required consent cannot be obtained
41-7 because there is no spouse, the spouse cannot be located, or other
41-8 circumstances exist as prescribed by United States Treasury
41-9 regulations. Notwithstanding other provisions of this subdivision,
41-10 the option election or beneficiary designation made by a member and
41-11 consented to by the member's spouse may be revoked by the member in
41-12 writing without consent of the spouse at any time before
41-13 retirement. The number of revocations is not limited. A former
41-14 spouse's waiver or consent is not binding on a new spouse. An
41-15 option selection becomes effective on the member's actual
41-16 retirement date. The member retains the right to change the option
41-17 selected or the beneficiary designated until the member's actual
41-18 retirement date, subject to this subsection.
41-19 (2) After filing the written statement selecting one
41-20 of the optional benefits, the member may continue in employment and
41-21 retire any time after the member becomes eligible by filing a
41-22 written application for retirement. If the member dies before
41-23 retirement but after becoming eligible for retirement, the
41-24 effective date of the member's retirement is the last day of the
41-25 calendar month of death, and the benefit is computed on the
42-1 optional benefit selected as if the member had retired on that
42-2 date.
42-3 (h) The amount of the annuity payment in Options I, II, III,
42-4 IV, V, VI, VII, and VIII shall be determined without considering
42-5 the minimum cumulative payment of the retired member's accumulated
42-6 deposits since that refund feature will stay in effect as indicated
42-7 herein.
42-8 (i) If a member who is eligible for retirement dies without
42-9 having filed a written selection of one of the enumerated options
42-10 and if the member leaves a surviving spouse, that spouse may select
42-11 the optional benefit in the same manner as if the member had made
42-12 the selection or may select a lump-sum payment equal to the
42-13 deceased member's accumulated deposits plus an equivalent amount
42-14 from Fund No. 2. If the member does not leave a surviving spouse,
42-15 the member's designated beneficiary is entitled to elect either
42-16 Option VII, to become effective at the beginning of the calendar
42-17 month after the month in which the death of the member occurs, or
42-18 the sum of a lump-sum payment equal to the deceased member's
42-19 accumulated deposits plus an equivalent amount from Fund No. 2.
42-20 If the surviving spouse dies before the spouse receives retirement
42-21 allowances equal to the amount of the member's accumulated deposits
42-22 on the date of the member's death, the excess of the accumulated
42-23 deposits over the retirement allowances paid shall be distributed
42-24 in one lump sum to the member's estate.
42-25 (j) In the event of death of a member who is ineligible for
43-1 retirement, the member's accumulated deposits and an equivalent
43-2 amount from Fund No. 2 shall be paid in a lump sum to the member's
43-3 beneficiary.
43-4 (k)(1) If a prior demand for withdrawal of accumulated
43-5 deposits has not been made within seven years after termination of
43-6 employment <with the city, a hospital authority, or the board of>
43-7 by a member with less than five years' of creditable service, the
43-8 member's accumulated deposits shall be returned to the member or
43-9 the member's beneficiary. Except as provided by <Subdivision>
43-10 subdivision (2) of this subsection, if the system is unable to
43-11 locate the member or the member's beneficiary, the member's
43-12 accumulated deposits shall thereafter be forfeited and become a
43-13 part of Fund No. 2.
43-14 (2) If the member or member's beneficiary later
43-15 appears and requests in writing the payment of the member's
43-16 accumulated deposits, the system shall:
43-17 (A) reinstate the account of the member;
43-18 (B) credit to that account an amount equal to
43-19 all of the accumulated deposits previously standing to the member's
43-20 credit plus interest that would have been earned on those
43-21 accumulated deposits if the funds had remained in Fund No. 1
43-22 between the date of forfeiture to Fund No. 2 and the date of
43-23 reinstatement of the member's account;
43-24 (C) fund the account from the monies in Fund No.
43-25 2; and
44-1 (D) make all necessary payments to the member or
44-2 member's beneficiary from the reinstated account.
44-3 (3) On payment of the accumulated deposits under this
44-4 subsection, plus any interest on those deposits to which the member
44-5 may be entitled <to>, to the member or member's beneficiary in
44-6 accordance with this subsection, the terminated employee ceases to
44-7 be a member of the system.
44-8 (l) In the event of the death of a member receiving a
44-9 retirement allowance, the sum of <$2,000> $10,000 shall be payable
44-10 in a lump sum to the member's beneficiary.
44-11 (m) When monthly survivor benefits are deemed payable as a
44-12 result of the death of a member before retirement, an additional
44-13 sum of <$2,000> $10,000 shall be payable as a death benefit to the
44-14 member's designated beneficiary.
44-15 (n) In the event of the death of the retired member then
44-16 receiving a retirement allowance under any retirement option and
44-17 the death of the beneficiary designated by the retired member, when
44-18 either Option I, Option II, Option III, Option IV, or Option VI is
44-19 in effect, before retirement allowances have been received that are
44-20 equal or greater than the retired member's accumulated deposits,
44-21 <then> the member's estate will receive the excess of the retired
44-22 member's accumulated deposits over the retirement allowances paid.
44-23 (o) Notwithstanding any contrary provision of this Act, the
44-24 distribution of a member's benefits, including benefits payable
44-25 after the member's death, made on or after January 1, 1985, shall
45-1 be made in accordance with the following requirements and shall
45-2 otherwise comply with <26 U.S.C.> Section 401(a)(9) <and its
45-3 subsequent amendments and> of the Code and related regulations,
45-4 including Regulation Section 1.401(a)(9)-2:
45-5 (1) A member's benefits shall be distributed to the
45-6 member, or the distribution of those benefits shall begin, not
45-7 later than April 1 of the calendar year after the calendar year in
45-8 which occurs the later of the date on which the member attains age
45-9 70-1/2 or the date on which the member's employment by the <city,
45-10 hospital authority, or the board> employer terminates.
45-11 (2) A member's benefits shall be distributed over a
45-12 period not exceeding the life of the member or the lives of the
45-13 member and the member's beneficiary or over a period not exceeding
45-14 the life expectancy of the member or the life expectancy of the
45-15 member and the member's beneficiary.
45-16 (3) If the distribution of a member's benefit has
45-17 begun and the member dies before the member's entire benefit is
45-18 distributed, the remaining portion of that benefit shall be
45-19 distributed at least as rapidly as under the form of benefit
45-20 selected as of the date of the member's death, adjusted as
45-21 necessary under this subsection.
45-22 (4) If a member dies before the distribution of the
45-23 member's benefit has begun, the member's death benefit shall be
45-24 distributed to the member's beneficiary within five years after the
45-25 date of the member's death. This five-year rule does not apply to
46-1 any portion of the deceased member's benefit that is payable to or
46-2 for the benefit of the member's surviving spouse. A benefit
46-3 payable to or for the benefit of the member's surviving spouse may
46-4 be distributed over the life of the spouse or over a period not
46-5 exceeding the life expectancy of the spouse, provided that payment
46-6 of the benefit begins not later than the date on which the deceased
46-7 member would have <attached> attained age 70-1/2. If the surviving
46-8 spouse dies before distributions to that spouse begin, the
46-9 five-year rule applies as if the spouse had been the member.
46-10 (5) The five-year rule does not apply to distributions
46-11 payable to a beneficiary over the life or life expectancy of the
46-12 beneficiary, provided that payment of the benefit begins not later
46-13 than the first anniversary of the date of the member's death.
46-14 (6) In applying the requirements of this subsection,
46-15 the life expectancy of the member and the member's beneficiary
46-16 shall be redetermined annually in accordance with regulations under
46-17 <26 U.S.C.> Section 401(a)(9) of the Code and its subsequent
46-18 amendments.
46-19 (p) <The board may adjust the terms of payment under any
46-20 form of benefit payment as long as the benefit as adjusted is the
46-21 actuarial equivalent of the benefit before adjustment.>
46-22 Forfeitures that may result from the termination of any right of a
46-23 member may not be used to increase benefits to remaining members.
46-24 This subsection shall not preclude an increase in benefits by
46-25 amendment to this Act or action of the retirement board in
47-1 accordance with subsection (d) of this section that is made
47-2 possible by forfeitures or for any other reason.
47-3 Sec. 8. Disability retirement. (a) Only
47-4 active-contributory members, inactive-contributory members, and
47-5 members on approved medical leave of absence are eligible for
47-6 consideration for disability retirement. Such members may apply
47-7 for disability retirement at any date prior to their normal
47-8 retirement date. Inactive-noncontributory members are not eligible
47-9 for consideration for disability retirement and may not receive any
47-10 benefits under this section.
47-11 (b) If a member who is eligible for consideration for
47-12 disability retirement <and who has less than 10 years of creditable
47-13 service> has become mentally or physically incapacitated for the
47-14 performance of all employment duties as a direct result of injuries
47-15 sustained in the performance of the member's employment duties
47-16 subsequent to the member's effective date of membership in the
47-17 retirement system, the member may apply for disability retirement.
47-18 Such application, made by or on behalf of the injured member, shall
47-19 show that the injury sustained:
47-20 (1) was by external and violent means;
47-21 (2) came as a direct and proximate result of the
47-22 performance of the member's employment duties with the <city, a
47-23 hospital authority, or the board;> employer; and
47-24 (3) is likely to be permanent.
47-25 (c) On recommendation of the physician or physicians
48-1 appointed or selected by the retirement board that <an> the
48-2 eligible member's incapacity is likely to be permanent and after
48-3 <considering> determining on that basis, or on the basis of any
48-4 additional evidence which the retirement board deems relevant, that
48-5 the member meets the requirements of subsection (b) of this
48-6 section, the retirement board shall award <the> such member a
48-7 disability retirement allowance. The decision of the retirement
48-8 board is final subject to the reexamination, discontinuance and
48-9 revocation rules at subsections (h) and (i) of this section.
48-10 (d) If a member who is eligible for consideration for
48-11 disability retirement, and who has more than 10 years of creditable
48-12 service, has become mentally or physically incapacitated for the
48-13 performance of all employment duties, <the> such member may apply
48-14 for disability retirement. The application made on behalf of the
48-15 disabled member shall show that the incapacity is likely to be
48-16 permanent. On recommendation of the physician or physicians
48-17 appointed or selected by the retirement board that the eligible
48-18 member's incapacity is likely to be permanent and after
48-19 <considering> determining on that basis, or on the basis of any
48-20 additional evidence which the retirement board deems relevant, that
48-21 the member meets the requirements of this subsection (d) of this
48-22 section, the retirement board shall award such member a disability
48-23 retirement allowance. The decision of the retirement board is
48-24 final subject to the reexamination, discontinuance and revocation
48-25 rules at subsections (h) and (i) of this section.
49-1 (e) On award of a disability retirement allowance, the
49-2 member shall receive a disability retirement allowance, beginning
49-3 on the last day of the month after the month in which the member
49-4 became disabled, which shall be computed in the same manner that a
49-5 retirement allowance would be computed at the member's normal
49-6 retirement date, based on compensation and creditable service at
49-7 the date of disability retirement, without reduction for early
49-8 retirement. The disabled member may choose to receive a life
49-9 annuity (modified cash refund) or a benefit as described by Section
49-10 7(f) of this Act as Option I, Option II, Option III, Option IV, or
49-11 Option VII.
49-12 (f) A member receiving a disability retirement allowance
49-13 will be required to file an annual report with the retirement board
49-14 concerning continued proof of disability. The report shall
49-15 include:
49-16 (1) a current statement of the member's physical or
49-17 mental condition, signed by the member's attending physician; and
49-18 (2) a statement of all employment activities pursued
49-19 in the preceding year.
49-20 (g) <The board may verify all information submitted in this
49-21 report.> Each calendar year, a disabled member shall file <an> the
49-22 annual report <not> required by subsection (f) of this section no
49-23 later than the 60th day after the anniversary date of the member's
49-24 disability retirement. The retirement board may verify all
49-25 information submitted in the report.
50-1 (h) The pension officer will be responsible for a yearly
50-2 report to the retirement board listing those disabled members who
50-3 should be examined. The retirement board shall have the right to
50-4 order an examination of any person on disability retirement once
50-5 each year until the member reaches the age of 62 years. If the
50-6 member refuses to submit to an examination by a physician or
50-7 physicians appointed by the retirement board or if the member
50-8 refuses to submit an annual report in accordance with <Subsection>
50-9 subsection (g) of this section concerning continued proof of
50-10 disability, the disability retirement allowance shall be
50-11 discontinued until such refusal is withdrawn and the member has
50-12 submitted to an examination <or> and has submitted an annual
50-13 report. Should such refusal continue for a period of one year, the
50-14 disability retirement allowance may be revoked by the retirement
50-15 board. If a member's disability retirement allowance has been
50-16 revoked, the retirement board may reinstate the member's disability
50-17 retirement allowance on a prospective basis only on the member's
50-18 full performance of and compliance with all requirements of this
50-19 section and the retirement board's determination that the member's
50-20 disability is continuing.
50-21 (i) If after investigation of the disabled member's
50-22 activities or if the annual medical examination shows that the
50-23 member is no longer physically or mentally incapacitated for the
50-24 purposes of the performance of employment duties or that such
50-25 member is engaged in or is able to engage in substantial gainful
51-1 occupation, as defined by Social Security disability income
51-2 guidelines, for which he or she is reasonably suited by education,
51-3 training, or experience, the retirement board <may continue> shall
51-4 discontinue the disability retirement allowance. If the disability
51-5 retirement allowance of a member who had less than 10 years of
51-6 creditable service is discontinued under this subsection <of
51-7 Subsection> or subsection (h) of this section and not reinstated,
51-8 and the member is not reemployed by the <city, a hospital
51-9 authority, or the board> employer, the member is entitled to any
51-10 amount by which the sum of the member's accumulated deposits as of
51-11 the date of disability retirement exceeds the sum of all disability
51-12 retirement benefits paid to the member by the system. If the
51-13 disability retirement allowance of a member <who had 10 years or
51-14 more of creditable service> is discontinued under this subsection
51-15 <of Subsection> or subsection (h) of this section<,> and not
51-16 reinstated, and the member is not reemployed by the <city, a
51-17 hospital authority, or the board> employer, the member may withdraw
51-18 any amount by which the sum of the member's accumulated deposits as
51-19 of the date of the disability retirement exceeds the sum of all
51-20 disability retirement benefits paid to the member by the system.
51-21 If <the member> a member who had 10 or more years of creditable
51-22 service does not withdraw the excess, the member is entitled to a
51-23 life annuity (modified cash refund) beginning on the first day of
51-24 the month after the month in which the member's normal retirement
51-25 date occurs.
52-1 (j) If a disabled member returns to active employment
52-2 service with the <city, a hospital authority, or the board>
52-3 employer, the disability retirement allowance shall cease. If the
52-4 person is reemployed as a regular full-time employee, the person
52-5 shall be reinstated as an active-contributory member of the system
52-6 and shall comply with all requirements of this Act. If reinstated
52-7 as an active-contributory member, membership service credits
52-8 accumulated prior to disability shall be restored to the full
52-9 amount standing to the member's credit as of the date the
52-10 retirement board found the member eligible for disability
52-11 retirement, and any prior service credit shall be restored in full.
52-12 The member is not required to reimburse the fund for any disability
52-13 retirement allowance amounts received by the member.
52-14 Sec. 9. LIMITATIONS ON BENEFITS. (a) Notwithstanding any
52-15 other provisions of this Act, the annual benefit provided with
52-16 respect to any member may not exceed the lesser of:
52-17 (1) $90,000; or
52-18 (2) 100 percent of the member's compensation averaged
52-19 over the three consecutive calendar years during which the member
52-20 had the greatest aggregate compensation from the employer.
52-21 (b) Benefits provided to a member under this Act and under
52-22 any other qualified defined benefit plan or plans maintained by the
52-23 employer shall be aggregated for purposes of determining whether
52-24 the limitations in subsection (a) are met. If the aggregate
52-25 benefits otherwise payable to any member under this Act and any
53-1 other defined benefit plan or plans maintained by the employer
53-2 would otherwise exceed the limitations of subsection (a), the
53-3 reductions in benefits shall be made in the benefits provided under
53-4 this Act, to the extent necessary to enable each plan or plans to
53-5 satisfy those limitations, unless the retirement board is informed
53-6 by the administrator of the other plan that the reductions are
53-7 required to be made in the other plan.
53-8 (c) The maximum benefit otherwise permitted under subsection
53-9 (a) or (b) of this section is subject to the following adjustments:
53-10 (1) If the annual benefit begins before the member
53-11 attains age 62, the $90,000 limitation, as adjusted, shall be
53-12 reduced in a manner prescribed by the Secretary of the Treasury.
53-13 However, that adjustment may not reduce the member's annual benefit
53-14 below $75,000, if the member's benefit begins after age 55, or the
53-15 actuarial equivalent of $75,000 beginning at age 55 if benefits
53-16 begin before age 55.
53-17 (2) If the annual benefit begins after the member
53-18 attains age 65, the $90,000 limitation, as adjusted, will be
53-19 increased so that it is the actuarial equivalent of the $90,000
53-20 limitation at age 65.
53-21 (3) The portion of a member's benefit that is
53-22 attributable to the member's own after tax contributions is not
53-23 part of the annual benefit subject to the limitations of this
53-24 section. Instead, the amount of those contributions is treated as
53-25 an annual addition to a qualified defined contribution plan
54-1 maintained by the employer.
54-2 (d) The $90,000 limitation on annual benefits provided by
54-3 this section, but not the $75,000 limitation, shall be adjusted
54-4 annually as provided by Section 415(d) of the Code and the
54-5 regulations prescribed by the Secretary of the Treasury to reflect
54-6 cost of living adjustments. The adjusted limitation is effective
54-7 as of January 1 of each calendar year.
54-8 (e) The limitation provided by this section for a member who
54-9 has separated from service with a vested right to a pension shall
54-10 be adjusted annually as provided by Section 415(d) of the Code and
54-11 the regulations prescribed by the Secretary of the Treasury.
54-12 (f) The following interest rate assumptions shall be used in
54-13 computing the limitations under this section:
54-14 (1) For the purpose of determining the portion of the
54-15 annual benefit that is purchased with employee contributions, the
54-16 interest rate assumption is 120 percent of the federal mid-term
54-17 rate, as in effect under Section 1274 of the Code, compounded
54-18 annually.
54-19 (2) For the purpose of adjusting the annual benefit to
54-20 a straight life annuity, the interest rate assumption is five
54-21 percent, unless a different rate is required by the Secretary of
54-22 the Treasury.
54-23 (3) For the purpose of adjusting the $90,000
54-24 limitation after a member attains age 65, the interest rate
54-25 assumption is five percent, unless a different rate is required by
55-1 the Secretary of the Treasury, and the mortality decrement shall be
55-2 ignored to the extent that a forfeiture does not occur at death.
55-3 (g) For purposes of this section, an adjustment under
55-4 Section 415(d) of the Code may not be taken into account before the
55-5 year for which that adjustment first takes effect. No adjustment
55-6 is required for the value of qualified joint and survivor annuity
55-7 benefits, preretirement death benefits, post retirement medical
55-8 benefits, or post retirement cost-of-living increases made in
55-9 accordance with Section 415(d) of the Code and Section 1.415-3(c)
55-10 of the Income Tax Regulations.
55-11 (h) This plan may still pay an annual benefit to any member
55-12 in excess of the member's maximum annual benefit otherwise allowed
55-13 if:
55-14 (1) the annual benefit derived from the employer's
55-15 contributions under all qualified plans subject to the limitations
55-16 of Section 415 of the Code does not in the aggregate exceed $10,000
55-17 for the year or for any prior year; and
55-18 (2) the member has not at any time participated in a
55-19 defined contribution plan maintained by the employer.
55-20 For purposes of this subsection, member contributions under
55-21 the Act are not considered a separate defined contribution plan
55-22 maintained by the employer.
55-23 (i) If a member has less than ten years of creditable
55-24 service at the time the member begins to receive benefits under the
55-25 Act, the $90,000 limitation, as adjusted, shall be reduced by
56-1 multiplying the limitation by a fraction in which the numerator is
56-2 the number of years of creditable service and the denominator is
56-3 10; provided, however, that the fraction may not be less than
56-4 one-tenth. If the employee has less than 10 years of employment
56-5 with the employer, the 100 percent limitation of subsection (a)(2)
56-6 and the $10,000 limitation of this subsection (h) shall be reduced
56-7 in the same manner as provided in the preceding sentence, except
56-8 the numerator shall be the number of years of employment with the
56-9 employer rather than the number of years of creditable service.
56-10 (j) If a member is or has been a member in one or more
56-11 defined contribution plans maintained by the employer, the sum of
56-12 the defined benefit plan fraction and the defined contribution plan
56-13 fraction for any year may not exceed 1.0.
56-14 (k) For purposes of subsection (j). the defined benefit plan
56-15 fraction for any year is a fraction in which:
56-16 (1) the numerator is the projected annual benefit of a
56-17 member, determined as of the close of the year pursuant to Section
56-18 1.415-7(b)(3) of the Income Tax Regulations; and
56-19 (2) the denominator is the lesser of:
56-20 (A) the product of 1.25 and the maximum dollar
56-21 limitation provided by subsection (a)(1) of this section, as
56-22 adjusted, for the year; or
56-23 (B) the product of 1.4 and the amount that may
56-24 be taken into account under subsection (a)(2) of this section for
56-25 the year.
57-1 (l) For purposes of subsection (a) of this section the
57-2 defined contribution plan fraction for any year is a fraction in
57-3 which:
57-4 (1) the numerator is the sum of the annual additions
57-5 to the member's account as of the close of the year; and
57-6 (2) the denominator is the sum of the lesser of the
57-7 following amounts determined for the year and each prior year of
57-8 employment with the employer:
57-9 (A) the product of 1.25 and the dollar
57-10 limitation in effect under Section 415(c)(1)(A) of the Code for the
57-11 year, determined without regard to Section 415(c)(6) of the Code;
57-12 or
57-13 (B) the product of 1.4 and the amount that may
57-14 be taken into account under Section 415(c)(1)(B) of the Code for
57-15 the year.
57-16 The annual additions may not be recomputed for years
57-17 beginning before January 1, 1987 to treat all member contributions
57-18 as annual additions.
57-19 (m) If the sum of the defined benefit plan fraction and the
57-20 defined contribution plan fraction exceeds 1.0 in any year for any
57-21 member, the retirement board shall first request the person or
57-22 persons responsible for the defined contribution plan or plans, to
57-23 reduce, the annual additions to the member's account to the extent
57-24 necessary for that year. If, after limiting to the extent possible
57-25 the annual additions to the member's account for the year, the sum
58-1 of the defined benefit plan fraction and the defined contribution
58-2 plan fraction still exceeds 1.0, the retirement board shall adjust
58-3 the benefits provided under this Act so that the sum of both
58-4 fractions shall not exceed 1.0 in any year for the member.
58-5 (n) For purposes of determining the limits provided by this
58-6 section, all qualified defined benefit plans, whether terminated or
58-7 not, ever maintained by or contributed to by the employer, shall be
58-8 treated as one defined benefit plan, and all qualified defined
58-9 contribution plans, whether terminated or not, ever maintained by
58-10 or contributed to by the employer, shall be treated as one defined
58-11 contribution plan.
58-12 (o) Notwithstanding anything contained in this section to
58-13 the contrary, the limitations, adjustments, and other requirements
58-14 prescribed by this Act shall at all times comply with the
58-15 requirements of Section 415 of the Code and all Regulations
58-16 promulgated under the Code. If any provision of Section 415 of the
58-17 Code is repealed or is not enforced by the Internal Revenue
58-18 Service, that provision may not reduce the benefits of any member
58-19 after the effective date of the repeal of the provision or during
58-20 the period in which the provision is not enforced.
58-21 METHOD OF FINANCING
58-22 Sec. 10. <9> Method of financing. (a) Each
58-23 active-contributory member shall make deposits to the retirement
58-24 system at a rate equal to seven percent of the member's
58-25 compensation, pay, or salary, exclusive of overtime, incentive, or
59-1 terminal pay<, and disregarding compensation, pay, or salary in any
59-2 month in excess of $16,666>. Deposits shall be made by payroll
59-3 deduction. If a regular full-time employee works at least 75
59-4 percent of a normal 40-hour work week but less than the full 40
59-5 hours, the employee shall make deposits as though working a normal
59-6 40-hour work week even though the rate of contribution may exceed
59-7 seven percent of the employee's actual compensation, pay, or
59-8 salary, and the employee's average final compensation shall be
59-9 computed on the basis of the compensation, pay, or salary for a
59-10 normal 40-hour work week. No deposits may be made nor membership
59-11 service credit received for periods during which an employee's
59-12 authorized normal work week is less than <75> seventy-five percent
59-13 (75%) of a normal 40-hour work week. A person who is eligible for
59-14 inactive-contributory membership status and who chooses to be an
59-15 inactive-contributory member shall make deposits to the retirement
59-16 system <biweekly> each pay period in an amount that is equal to the
59-17 amount of the member's deposit for the last complete <biweekly> pay
59-18 period that the member was employed by the <city, a hospital
59-19 authority, or the board. The> employer. The regular full-time
59-20 employee members, by a majority vote of all such members voting in
59-21 favor of an increase in contributions above seven percent, may
59-22 increase each member's contributions above seven percent in
59-23 whatever amount the <pension> retirement board recommends. <The
59-24 city> Each employer shall contribute amounts equal to seven percent
59-25 of the compensation, pay, or salary of each active-contributory
60-1 member and each inactive-contributory member employed by the <city>
60-2 employer, exclusive of overtime, incentive, or terminal pay<, and
60-3 disregarding compensation, pay, or salary in any month in excess of
60-4 $16,666. If a regular full>. If a regular full-time employee of
60-5 the <city> employer works at least <75> seventy five percent (75%)
60-6 of a normal 40-hour work week but less than the full 40 hours, the
60-7 <city> employer shall make contributions for that employee as
60-8 though that employee works a normal 40-hour work week even though
60-9 the rate of contribution may exceed seven percent of that
60-10 employee's actual compensation, pay, or salary. The governing body
60-11 of the city <council> may authorize the city to make additional
60-12 contributions to the system in whatever amount the <city council
60-13 may determine. The board shall pay from the fund contributions in
60-14 amounts equal to seven percent of the compensation, pay, or salary
60-15 of each active-contributory member and each inactive-contributory
60-16 member employed by the board, exclusive of overtime, incentive, or
60-17 terminal pay, disregarding compensation, pay, or salary in any
60-18 month in excess of $16,666. If a regular full-time employee of the
60-19 board works at least 75 percent of a normal 40-hour work week but
60-20 less than the full 40 hours, the board shall make contributions for
60-21 the employee as though the employee works a normal 40-hour work
60-22 week even though the rate of contribution may exceed seven percent
60-23 of the employee's actual compensation, pay, or salary. If the city
60-24 council> governing body may determine. If the governing body
60-25 authorizes additional contributions to the system by the city for
61-1 city employees, the board of each employer may increase the
61-2 contributions for <the board> such employer's respective employees
61-3 by the same percentage. <Each hospital authority shall contribute
61-4 amounts equal to seven percent of the compensation, pay, or salary
61-5 of each active-contributory member and each inactive-contributory
61-6 member employed by the hospital authority, exclusive of overtime,
61-7 incentive, or terminal pay, disregarding compensation, pay, or
61-8 salary in any month in excess of $16,666. If a regular full-time
61-9 employee of a hospital authority works at least 75 percent of a
61-10 normal 40-hour work week but less than the full 40 hours, the
61-11 hospital authority shall make contributions for that employee as
61-12 though that employee works a normal 40-hour work week even though
61-13 the rate of contribution may exceed seven percent of that
61-14 employee's actual compensation, pay, or salary. If the city
61-15 council authorizes additional contributions to the system by the
61-16 city for city employees, each hospital authority may increase the
61-17 contributions for the hospital authority employees by the same
61-18 percentage. Contributions to the city, a hospital authority, and
61-19 the board> Employer contributions shall be made each pay period.
61-20 (b) In addition to the <contribution> contributions by the
61-21 city required by <Subsection> subsection (a) of this section, the
61-22 city shall contribute to the retirement fund each month two-thirds
61-23 of such amounts as are required for the payment of prior service
61-24 pensions that are payable during that month, and one-third of each
61-25 prior service pension payable that month shall be made from Fund
62-1 No. 2.
62-2 (c) <Contributions by the city> Employer contributions shall
62-3 be paid to the retirement system after appropriation by the <city
62-4 council> respective governing body or board.
62-5 (d) Expenses for administration and operation of the
62-6 retirement system that are approved by the retirement board shall
62-7 be paid by the retirement board from funds of the retirement
62-8 system. Such expenses shall include salaries of retirement board
62-9 employees and fees for actuarial services, legal counsel services,
62-10 physician services, accountant services, annual audits, investment
62-11 manager services, investment consultant services, preparation of
62-12 annual reports, and staff assistance.
62-13 (e) <The city shall pick up the city employee contributions
62-14 to the fund. The board shall pick up the board employee
62-15 contributions to the fund. Each hospital authority shall pick up
62-16 hospital authority employee contributions to the fund. Member>
62-17 Each employer shall pick up the contributions required to be made
62-18 to the fund by its respective employees. Active contributory
62-19 member deposits will be picked up by each employer by a reduction
62-20 in <their> each such employee's monetary compensation.
62-21 <Contributions picked up> All such employee contributions shall be
62-22 treated as employer contributions in accordance with Section
62-23 414(h)(2) of the <Internal Revenue> Code <of 1986 (26 U.S.C.
62-24 Section 414(h)(2)> for the purpose of determining tax treatment of
62-25 the amounts under the <Internal Revenue Code of 1986. These> Code.
63-1 Such contributions are not includable in the gross income of the
63-2 employee until such time as they are distributed or made available
63-3 to the employee. <Employee deposits> Each employee deposit picked
63-4 up as provided by this subsection shall be credited to the
63-5 individual accumulated deposits account of each <affected> such
63-6 employee and shall be treated as compensation of <employees> the
63-7 employee for all other purposes of this <statute> Act and for the
63-8 purpose of determining contributions to social security. The
63-9 provisions of this subsection shall remain in effect as long as the
63-10 plan covering employees of the <city> employers is a qualified
63-11 retirement plan under Section 401(a) of the <Internal Revenue> Code
63-12 <of 1986 (26 U.S.C. Section 401(a)),> and its related trust is tax
63-13 exempt under Section 501(a) of the <Internal Revenue Code of 1986
63-14 (26 U.S.C. Section 501(a)).> Code.
63-15 (f) <Before the satisfaction of all liabilities incurred
63-16 with respect to members and their beneficiaries under this Act, the
63-17 corpus or income of the fund may not be used for, or diverted to,
63-18 purposes other than for> Under no circumstances and in no event may
63-19 any of the contributions and income of the retirement system revert
63-20 to the employer or otherwise be diverted to or used for any purpose
63-21 other than the exclusive benefit of the members, retirees and their
63-22 beneficiaries. It shall be impossible for the diversion or use
63-23 prohibited by the preceding sentence to occur, whether by operation
63-24 or natural termination of the retirement system, by power of
63-25 revocation or amendment, by the happening of a contingency, by
64-1 collateral arrangement, or by any other means.
64-2 Sec. 11. <10.> INVESTMENTS OF THE RETIREMENT BOARD.
64-3 (a) The retirement board shall be the trustee of the funds of the
64-4 retirement system and shall have full power in its sole discretion
64-5 to invest and reinvest, alter, and change the form of investment of
64-6 the funds. The retirement board shall invest the funds in whatever
64-7 instrument or investments the retirement board considers prudent.
64-8 In making investments for the funds, the retirement board shall
64-9 discharge its duties:
64-10 (1) for the exclusive purposes of:
64-11 (A) providing benefits to members and their
64-12 beneficiaries; and
64-13 (B) defraying reasonable expenses of
64-14 administering the funds;
64-15 (2) with the care, skill, prudence, and diligence
64-16 under the circumstances then prevailing that a prudent person
64-17 acting in a like capacity and familiar with such matters would use
64-18 in the conduct of an enterprise of a like character and with like
64-19 aims;
64-20 (3) by diversifying the investments of the funds to
64-21 minimize the risk of large losses, unless under the circumstances
64-22 it is clearly prudent not to do so; and
64-23 (4) in accordance with the laws, documents, and
64-24 instruments governing the funds.
64-25 (b) A member of the retirement board is not liable for any
65-1 losses incurred in the investment of the fund in accordance with
65-2 this section.
65-3 (c) No member of the retirement board and no employee of the
65-4 retirement board, except as herein provided, shall have any
65-5 interest, directly or indirectly, in the funds or receive any pay
65-6 or emolument for his or her services. No member of the retirement
65-7 board or employee thereof shall, directly or indirectly, for
65-8 himself or herself or as an agent, in any manner use the funds or
65-9 deposits of the retirement system except to make such current and
65-10 necessary payments as are authorized by the retirement board, nor
65-11 shall any member or employee of the retirement board become an
65-12 endorser or surety or in any manner an <obligator> obligor for
65-13 money loaned by or borrowed from the <board> retirement system.
65-14 (d) Subject to the exceptions provided by this subsection,
65-15 the funds or money mentioned in this Act are not assignable and are
65-16 not subject to execution, levy, attachment, garnishment, the
65-17 operation of bankruptcy or insolvency law, or any other process of
65-18 law whatsoever. This subsection does not apply to a qualified
65-19 domestic relations order. The retirement board shall establish <a>
65-20 written <procedure> procedures to determine the qualified status of
65-21 domestic relations orders and to administer distributions under
65-22 those orders. To the extent necessary to authorize distributions
65-23 pursuant to a qualified domestic relations order, a former spouse
65-24 of a member will be treated as the spouse or surviving spouse of
65-25 the member.
66-1 (e) Subject to the exceptions provided by this subsection,
66-2 the right of a member to a pension, an annuity, a disability
66-3 retirement allowance, or a retirement allowance, to the return of
66-4 accumulated deposits, the pension, annuity, or retirement allowance
66-5 itself, any optional benefit or death benefits, any other right
66-6 accrued or accruing to any person under the provisions of this Act
66-7 <are> is unassignable and <are> is not subject to execution, levy,
66-8 attachment, garnishment, the operation of bankruptcy or insolvency
66-9 law, or any other process of law whatsoever. This subsection does
66-10 not apply to a qualified domestic relations order.
66-11 (f) If the retirement board makes an election to have
66-12 Subchapters A and C of Chapter 804, Government <Code,1> Code, and
66-13 their subsequent amendments, apply to the system, the death of an
66-14 alternate payee, as defined by Section 804.001, Government Code,
66-15 and its subsequent amendments, or the death of a member's spouse
66-16 terminates any interest of the alternate payee or spouse that would
66-17 otherwise exist under this Act, except an interest accrued by that
66-18 person as a member.
66-19 Sec. 12. <11> Miscellaneous. (a) A person who with intent
66-20 to deceive makes any statement or report required under this Act
66-21 which is untrue or falsifies or knowingly permits to be falsified
66-22 any record or records of the retirement system shall forfeit any
66-23 office or rights held by the person under the system, and such
66-24 deception, falsification, or acquiescence in falsification is
66-25 deemed a Class B misdemeanor.
67-1 (b) If any change or error in the records of the retirement
67-2 system is discovered or results in any member, surviving spouse, or
67-3 beneficiary receiving from the retirement system more or less than
67-4 the member, surviving spouse, or beneficiary would have been
67-5 entitled to receive had the records been correct, the retirement
67-6 board shall have the power to correct such error and as far as
67-7 possible to adjust the payments in such a manner that the actuarial
67-8 equivalent of the benefits to which the member, surviving spouse,
67-9 or beneficiary was correctly entitled shall be paid.
67-10 (c) On the full or partial termination of the retirement and
67-11 pensioning system, or on the complete discontinuance of
67-12 contributions by <the city, all hospital authorities, and the
67-13 board> all employers under this Act, the retirement allowance of
67-14 <a> each affected member who is employed by <the city, a hospital
67-15 authority, or the board> an employer on the date of termination is
67-16 determined by reference to the member's average final compensation
67-17 and creditable service determined as of the date of termination or
67-18 partial termination of the system or the date of discontinuance of
67-19 deposits as if the member had attained normal retirement age on
67-20 that date, and such amount shall become nonforfeitable to the
67-21 extent then funded. This subsection does not accelerate the date
67-22 on which the payment of that benefit would otherwise begin.
67-23 (d) <A member who is entitled to a benefit, including a
67-24 benefit consisting solely of a distribution of the member's
67-25 accumulated deposits, from the system may instruct the system to
68-1 pay the single lump-sum> Any other provision in this Act to the
68-2 contrary, in the event of a termination of the retirement and
68-3 pensioning system, the benefit of any highly compensated employee
68-4 or former employee is limited to a benefit that is
68-5 nondiscriminatory under Section 401(a)(4) of the Code. Benefits
68-6 distributed to any of the twenty five (25) most highly compensated
68-7 active and former highly compensated employees are restricted such
68-8 that the annual payments are no greater than an amount equal to the
68-9 payment that would be made on behalf of an employee under a single
68-10 life annuity that is the actuarial equivalent of <that benefit
68-11 directly to>:
68-12 <(1) another trust forming part of a pension,
68-13 profit-sharing, or stock bonus plan maintained by that member's new
68-14 employer and represented by that employer in writing as meeting the
68-15 requirements of 26 U.S.C. Section 401(a) and its subsequent
68-16 amendments, subject to the acceptance by the trust to which those
68-17 transfers are made of those transfers; or>
68-18 <(2) an eligible transferee plan in accordance with the
68-19 federal Unemployment Compensation Amendments of 1992 (Pub. L. No.
68-20 102-318) and its subsequent amendments governing direct rollovers
68-21 of eligible rollover distributions from qualified retirement plans.>
68-22 <(e) This Act does not grant a contract of employment between
68-23 a member and the city, a hospital authority, or the board.
68-24 Severability> the sum of the employee's accrued benefit and the
68-25 employee's other benefits under the plan. The preceding sentence
69-1 shall not apply if: (1) after payment of the benefit to an employee
69-2 described in that sentence, the value of plan assets equals or
69-3 exceeds 110% of the value of the current liabilities, as defined in
69-4 Section 412(l)(7) of the Code, or (2) the value of the benefits for
69-5 an employee described in that paragraph is less than one percent
69-6 (1%) of the value of current liabilities. For purposes of this
69-7 subsection, benefit includes loans in excess of the amount set
69-8 forth in Section 72(p)(2)(A) of the Code, any periodic income, any
69-9 withdrawal values payable to a living employee and any death
69-10 benefits not provided for by insurance on the employee's life.
69-11 (e) Notwithstanding any provision of this Act to the
69-12 contrary that would otherwise limit a distributee's election, a
69-13 distributee may elect, at the time and in the manner prescribed by
69-14 the retirement board, to have any portion of an eligible rollover
69-15 distribution paid directly to an eligible retirement plan specified
69-16 by the distributee in a direct rollover.
69-17 For purposes of this subsection (e) of this Section:
69-18 (1) An eligible rollover distribution is any
69-19 distribution of all or any portion of the balance to the credit of
69-20 the distributee, except that an eligible rollover distribution does
69-21 not include: (1) any distribution that is one of a series of
69-22 substantially equal periodic payments (not less frequently than
69-23 annually) made over the life (or life expectancy) of the
69-24 distributee or the joint lives (or joint life expectancies) of the
69-25 distributee and the distributee's designated beneficiary; (2) any
70-1 series of payments for a specified period of ten years or more; (3)
70-2 any distribution to the extent such distribution is required under
70-3 Section 401(a)(9) of the Code; or (4) the portion of any
70-4 distribution that is not includible in gross income (determined
70-5 without regard to the exclusion for net unrealized appreciation
70-6 with respect to employer securities).
70-7 (2) An "eligible retirement plan" is an individual
70-8 retirement account described in Section 408(a) of the Code, an
70-9 individual retirement annuity described in Section 408(b) of the
70-10 Code, an annuity plan described in Section 403(a) of the Code, or a
70-11 qualified trust described in Section 401(a) of the Code, that
70-12 accepts the distributee's eligible rollover distribution. However,
70-13 in the case of an eligible rollover distribution to the surviving
70-14 spouse, an eligible retirement plan is an individual retirement
70-15 account or individual retirement annuity only.
70-16 (3) A "distributee" includes an employee or former
70-17 employee. In addition, the employee's or former employee's
70-18 surviving spouse and the employee's or former employee's spouse or
70-19 former spouse who is the alternate payee under a qualified domestic
70-20 relations order, as defined in Section 414(p) of the Code, are
70-21 distributees with regard to the interest of the spouse or the
70-22 former spouse.
70-23 (4) A "direct rollover" is a payment by the retirement
70-24 system to the eligible retirement plan specified by the
70-25 distributee.
71-1 (f) <SECTION 11. (a)> (1) Retirement allowances being paid
71-2 by the retirement and pensioning system created by Chapter 451,
71-3 Acts of the 72nd Legislature, Regular Session, 1991 (Article 6243n,
71-4 Vernon's Texas Civil Statutes), to members of the retirement
71-5 system, or to the beneficiaries of those members, who retired
71-6 before the effective date of this Act <December 1, 1989,> are
71-7 increased beginning with the payments due at the end of October
71-8 1995 <September in 1993>.
71-9 (2) The amount of the increase for a member, or the
71-10 beneficiary of the member, is by a percentage equal to:
71-11 A. <(1)> 2.3 <2.2> percent divided by the
71-12 retirement formula in effect on the date of the member's
71-13 retirement;
71-14 B. <(2)> minus one; and
71-15 C. <(3)> multiplied by 100.
71-16 (g) <SECTION 12. (a)> (1) The changes in law made by H.B.
71-17 2799, Acts of the 73rd Legislature, Regular Session, 1993, <this
71-18 Act> to Section 5(e), Chapter 451, Acts of the 72nd Legislature,
71-19 Regular Session, 1991 (Article 6243n, Vernon's Texas Civil
71-20 Statutes), <as redesignated by this Act,> permit a member who,
71-21 before July 1, 1993, reinstated any portion of the member's
71-22 membership service or prior service under a city ordinance that was
71-23 in effect before July 1, 1993, to reinstate any membership service
71-24 or prior service to which the member was not entitled to reinstate
71-25 under that city ordinance.
72-1 (2) <(b)> The changes in law made by H.B. 2799, Acts
72-2 of the 73rd Legislature, Regular Session, 1993, <this Act> to
72-3 Section 7, Chapter 451, Acts of the 72nd Legislature, Regular
72-4 Session, 1991 (Article 6243n, Vernon's Texas Civil Statutes), apply
72-5 only to an option election or beneficiary designation made on or
72-6 after July 1, 1993 <the effective date of this Act> is governed by
72-7 the law in effect at the time the election or designation was made,
72-8 and that law is continued in effect for this purpose only.
72-9 Sec. 13. CONFIDENTIALITY. (a) Information contained in
72-10 records that are in the custody of the retirement board or the
72-11 system concerning an individual member, retiree, annuitant,
72-12 beneficiary, or alternate payee is confidential under this section
72-13 14 and may not be disclosed in a form indentifiable with a specific
72-14 individual unless:
72-15 (1) the information is disclosed to:
72-16 (A) the individual or the individual's attorney,
72-17 guardian, executor, administrator, conservator, or other person who
72-18 the pension officer determines is acting in the interest of the
72-19 individual or the individual's estate;
72-20 (B) a spouse or former spouse of the individual
72-21 if the pension officer determines that the information is relevant
72-22 to the spouse's or former spouse's interest in member accounts,
72-23 benefits, or other amounts payable by the retirement system;
72-24 (C) a governmental official or employee if the
72-25 pension officer determines that disclosure of the information
73-1 requested is reasonably necessary to the performance of the duties
73-2 of the official or employee;
73-3 (D) the individual's employer as defined in this
73-4 Act; or
73-5 (E) a person authorized by the individual in
73-6 writing to receive the information; or
73-7 (2) the information is disclosed pursuant to a
73-8 subpoena and the pension officer determines that the individual
73-9 will have a reasonable opportunity to contest the subpoena.
73-10 (b) This section does not prevent the disclosure of the
73-11 status or identity of an individual as a member, former member,
73-12 retiree, deceased member or retiree, beneficiary, or alternate
73-13 payee of the retirement system.
73-14 (c) The pension officer may designate other employees of the
73-15 retirement system to make the necessary determinations under
73-16 Subsection (a).
73-17 (d) A determination and disclosure under Subsection (a) may
73-18 be made without notice to the individual member, retiree,
73-19 annuitant, beneficiary, or alternate payee.
73-20 Sec. 14. <12> Severability. If any provision, section,
73-21 part, subsection, sentence, clause, phrase, or paragraph of this
73-22 Act is declared invalid or unconstitutional, the same shall not
73-23 affect any other portion or provision hereof and all other
73-24 provisions shall remain valid and unaffected by any invalid
73-25 portion, if any.
74-1 Sec. 15. <13> Savings clause. The provisions of this Act
74-2 shall be cumulative of and in addition to all laws relating to
74-3 pensions, which laws are hereby preserved and continued in full
74-4 force and effect, provided that in the event of conflict, expressly
74-5 excluding any statutes relating to federal tax exemption, the
74-6 provisions of this Act control, and employee pensions in a city
74-7 covered by this Act shall be administered in accordance with this
74-8 Act.
74-9 SECTION 2. This Act takes effect October 1, 1995, unless
74-10 otherwise provided in Section 3.
74-11 SECTION 3. The importance of this legislation and the
74-12 crowded condition of the calendars in both houses create an
74-13 emergency and an imperative public necessity that the
74-14 constitutional rule requiring bills to be read on three several
74-15 days in each house be suspended, and this rule is hereby suspended,
74-16 and that this Act take effect and be in force according to its
74-17 terms, and it is so enacted.