1-1 By: Maxey, et al. (Senate Sponsor - Barrientos) H.B. No. 1242
1-2 (In the Senate - Received from the House April 14, 1997;
1-3 April 16, 1997, read first time and referred to Committee on
1-4 Intergovernmental Relations; May 8, 1997, reported favorably by the
1-5 following vote: Yeas 10, Nays 0; May 8, 1997, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to participation in, benefits under, and administration of
1-9 retirement systems for police officers in certain municipalities.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Section 1.02, Chapter 452, Acts of the 72nd
1-12 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
1-13 Civil Statutes), is amended to read as follows:
1-14 Sec. 1.02. DEFINITIONS. The following words and phrases
1-15 have the meanings assigned by this section unless a different
1-16 meaning is plainly required by the context:
1-17 (1) "Accumulated deposits" means the amount standing
1-18 to the credit of a member derived from the deposits required to be
1-19 made by the member to the police retirement system or to the
1-20 predecessor system improved annually by interest credited at a rate
1-21 of five percent or the rate determined by the board that [which] is
1-22 credited as of December 31 to amounts standing to the credit of the
1-23 member on January 1 of the same calendar year.
1-24 (2) "Actuarial equivalent" means any benefit of equal
1-25 present value to a standard benefit when computed as specified by
1-26 this Act.
1-27 (3) "Actuary" means a technical advisor of the police
1-28 retirement board regarding the operations which are based on
1-29 mortality, service, and compensation experience who makes periodic
1-30 valuations of the assets and liabilities of the funds and other
1-31 evaluations as requested by the board.
1-32 (4) "Average final compensation" means the monthly
1-33 average of basic hourly earnings of a member during, as applicable:
1-34 (A) if the member has 120 months or more of
1-35 service during which the member made contributions to the [police]
1-36 system or the predecessor system, the 36 months which yielded the
1-37 highest average during the last 120 months of membership service
1-38 during which the member contributed to the [police] system or the
1-39 predecessor system;
1-40 (B) if the member has less than 120 months of
1-41 membership service during which the member contributed to the
1-42 [police] system or the predecessor system, but has at least 36
1-43 months of membership service during which the member made
1-44 contributions to the [police] system or the predecessor system, the
1-45 average of the 36 months which yielded the highest average; or
1-46 (C) if the member does not have 36 months of
1-47 membership service during which the member contributed to the
1-48 [police] system or the predecessor system, the average of the
1-49 member's months of membership service during which the member made
1-50 contributions to the [police] system or the predecessor system.
1-51 (5) "Basic hourly earnings" means the hourly rate of
1-52 the sum of base pay plus longevity pay but does not include any
1-53 other type of pay.
1-54 (6) "Beneficiary" means any person, trust, or estate
1-55 properly designated by a member or retired member to receive
1-56 benefits from the system.
1-57 (7) [(6)] "Creditable service" means the number of
1-58 months during which a member pays into and keeps on deposit the
1-59 amounts of money prescribed by this Act to be paid by the member
1-60 into the system or into the predecessor system, including certain
1-61 military service and certain probationary service in excess of six
1-62 months for which a member has purchased creditable service in
1-63 accordance with Article V of this Act, and excluding a month in
1-64 which service amounted to fewer than 15 days. The months beyond
2-1 attained age 62 are included within the meaning of creditable
2-2 service, regardless of payments into this system or into the
2-3 predecessor system if the police officer is otherwise eligible for
2-4 membership in the system, is a [an active] police officer employed
2-5 by the city, and did not contribute for the months only if they
2-6 occurred before September 1, 1995.
2-7 (8) "Death benefit" means a single sum payable as a
2-8 result of the death of a member or retired member.
2-9 (9) [(7)] "Deposits" means the amount required to be
2-10 paid by members in accordance with the provisions of this Act.
2-11 (10) [(8)] "Disability retirement" means the
2-12 employment termination [withdrawal] of a member from [active]
2-13 service with a disability retirement benefit [allowance] as
2-14 provided under this Act.
2-15 (11) "Employment termination" means:
2-16 (A) the voluntary termination of employment with
2-17 the city or the system; or
2-18 (B) the involuntary termination of employment
2-19 with the city or the system of a member who does not appeal the
2-20 termination through arbitration or through the civil service
2-21 commission or whose appeal has been denied by arbitration or by the
2-22 civil service commission.
2-23 (12) "Fund No. 1" means the part of the trust assets
2-24 consisting of [fund in which shall be kept] all accumulated
2-25 deposits of members who have not withdrawn from the [police]
2-26 system.
2-27 (13) [(12)] "Fund No. 2" means the part of the trust
2-28 assets consisting of [fund in which shall be kept] all money
2-29 contributed by the city, interest earned thereon, and all
2-30 accumulations and earnings of the system except those of Fund No.
2-31 1.
2-32 (14) [(13)] "Investment consultant" means a person who
2-33 monitors the investment performance of the system and provides
2-34 other services as requested by the board [of the police retirement
2-35 system].
2-36 (15) [(14)] "Investment manager" means a person or
2-37 persons who monitor and manage any portion of the investment
2-38 portfolio for the system [fund] making specified investment
2-39 decisions on behalf of the [police retirement] system.
2-40 (16) [(15)] "Life annuity," "retirement annuity," or
2-41 "annuity" means a series of equal monthly payments, payable for
2-42 life after retirement.
2-43 (17) [(16)] "Life annuity (modified cash refund)"
2-44 means a series of equal monthly payments, payable for life after
2-45 retirement. In the event of death of the retired member before
2-46 that member has received monthly payments equal to the amount of
2-47 that member's accumulated deposits at the date of retirement, the
2-48 excess, if any, of such accumulated deposits over the monthly
2-49 payments shall be refunded in one sum to the member's [designated]
2-50 beneficiary.
2-51 (18) [(17)] "Member" means any police officer or
2-52 employee of the police retirement system [system's administrative
2-53 staff] included in the system under this Act and approved for
2-54 membership by the police retirement board. In any case of doubt
2-55 regarding the eligibility of an employee to become or remain a
2-56 member of the system, the decision of the police retirement board
2-57 shall be final.
2-58 (19) [(18)] "Normal retirement date" means the last
2-59 day of the earliest month in which the member:
2-60 (A) has attained the age of 55 and completed at
2-61 least 20 years of creditable service;
2-62 (B) has completed 25 years of creditable service
2-63 at any age; or
2-64 (C) has reached the age of 62.
2-65 (20) [(19)] "Predecessor system" means the retirement
2-66 system for police officers in effect before January 1, 1980.
2-67 (21) [(20)] "Police officer" means any full-time
2-68 [regular and permanent] commissioned police officer employed by the
2-69 police department of the city [certain cities] pursuant to Chapter
3-1 143, Local Government Code.
3-2 (22) [(21)] "Police retirement board" or "board" means
3-3 the board of trustees of the police retirement system created by
3-4 Section 3.01 of this Act for the purpose of administering the
3-5 [retirement] system.
3-6 (23) [(22)] "Police retirement system" or "[police]
3-7 system" means a retirement and pensioning system for police
3-8 officers of certain cities and for employees of the system
3-9 established by Section 2.01 of this Act.
3-10 (24) "Retired member" means a member who is receiving
3-11 a service or disability retirement benefit.
3-12 (25) "Retirement" means employment termination
3-13 [separation of a member from active service] in order to receive an
3-14 annuity in accordance with the provisions of the police retirement
3-15 system under this Act.
3-16 (26) [(25)] "Retirement date" means the last day of
3-17 the month of the retirement of the member.
3-18 (27) [(26)] "Service" or "active service" means
3-19 service as a police officer of the city paid for by the city or
3-20 service as a member of the police retirement system's
3-21 administrative staff paid for by the system.
3-22 (28) "Spouse" means a spouse as recognized under the
3-23 laws of this state.
3-24 (29) "Survivor benefit" means a series of equal
3-25 monthly payments payable as a result of the death of a member after
3-26 becoming eligible for service retirement but before retirement and
3-27 computed as if the member had retired on the last day of the month
3-28 of death.
3-29 (30) "Vested" means a member has a right to leave the
3-30 member's accumulated deposits standing to the member's credit with
3-31 the system and receive a service retirement benefit on attaining
3-32 the age at which service retirement benefits become payable. A
3-33 member is vested on attaining 10 years of creditable service.
3-34 (31) [(27)] "Vested interest" means the amount of
3-35 benefit to which a member has a nonforfeitable right in accordance
3-36 with the provisions of this Act.
3-37 (32) [(28)] "Withdrawal" means employment termination
3-38 [the separation of any member from active service] for any cause
3-39 whatsoever prior to retirement date and the subsequent receipt or
3-40 direct rollover of the accumulated deposits standing to the
3-41 member's credit [withdrawal from membership] in the police
3-42 retirement system.
3-43 (33) [(29)] "Withdrawal benefit" [allowance"] means
3-44 the accumulated deposits of a member on withdrawal [withdrawing
3-45 from active service and membership in the system] which have been
3-46 made in one lump sum unless specifically provided otherwise in this
3-47 Act.
3-48 SECTION 2. Section 2.01, Chapter 452, Acts of the 72nd
3-49 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
3-50 Civil Statutes), is amended to read as follows:
3-51 Sec. 2.01. ESTABLISHMENT AND APPLICABILITY. The retirement
3-52 system for police officers of the city and the trust forming a part
3-53 of that system are [is] hereby established on the passage of this
3-54 Act by the Legislature of the State of Texas. The police
3-55 retirement system and the related trust are [is] placed under the
3-56 management of the police retirement board for the purpose of
3-57 providing certain benefits on retirement for police officers, as
3-58 defined in this Act.
3-59 SECTION 3. Section 2.03, Chapter 452, Acts of the 72nd
3-60 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
3-61 Civil Statutes), is amended to read as follows:
3-62 Sec. 2.03. PURPOSE. It is the express purpose of this Act
3-63 to have no duplication of benefits provided by the police
3-64 retirement system and the retirement system for other employees of
3-65 the city for a common period of service to the city. Any change in
3-66 employment status which results in transferring membership between
3-67 the police retirement system and the retirement system for other
3-68 employees of the city shall be handled in a policy determined to be
3-69 satisfactory by the police retirement board and by the board for
4-1 the retirement system for other employees of the city. Such policy
4-2 may include the transfer of member service and appropriate transfer
4-3 of Fund No. 1 and Fund No. 2 assets as determined by the retirement
4-4 boards.
4-5 SECTION 4. Section 3.02, Chapter 452, Acts of the 72nd
4-6 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
4-7 Civil Statutes), is amended to read as follows:
4-8 Sec. 3.02. COMPOSITION OF BOARD. The police retirement
4-9 board shall be composed of 11 members as follows:
4-10 (1) one council member designated by the city council;
4-11 (2) the city manager or the city manager's designee;
4-12 (3) the director of finance or the director's
4-13 designee;
4-14 (4) four [active] police officer members elected by
4-15 the police officer members of the system, each to serve for a term
4-16 of four years. Vacancies occurring by death, resignation,
4-17 disability retirement, removal, or any other reason except
4-18 retirement shall be filled for the remainder of the term by a [an
4-19 active] police officer member appointed by the board; a police
4-20 officer [an active employee] member who retires, except for
4-21 disability retirement, will be eligible to complete the remainder
4-22 of the member's term;
4-23 (5) three legally qualified voters of the city,
4-24 resident for the preceding five years, to be appointed by the
4-25 police retirement board. The term of office of citizen members
4-26 shall be four years, and each member shall continue to serve until
4-27 the member's successor is duly selected and qualified. Vacancies
4-28 occurring by death, resignation, or removal shall be filled by
4-29 appointment by the remaining members of the police retirement
4-30 board; and
4-31 (6) one [police officer] retired member to be elected
4-32 by the retired members. The term of office of such member shall be
4-33 four years. Such member shall continue to serve until the member's
4-34 successor is duly elected and qualified. Vacancies occurring by
4-35 death, resignation, or removal of such retired [retiree] member
4-36 shall be filled by election by the retired members.
4-37 SECTION 5. Section 3.03, Chapter 452, Acts of the 72nd
4-38 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
4-39 Civil Statutes), is amended to read as follows:
4-40 Sec. 3.03. ELECTION OF POLICE OFFICER MEMBERS. The [elected
4-41 active] police officer members of the board shall be elected in
4-42 accordance with the following provisions:
4-43 (1) Any [active] police officer member [officers of
4-44 the city] shall be eligible to run in the election for a position
4-45 on the board.
4-46 (2) Terms of office shall be four years. Members
4-47 shall serve during the term for which they are elected and until
4-48 their successors are elected and qualified, unless they are removed
4-49 or their active service as police officers with the city is
4-50 terminated for any reason other than retirement. If a [an active]
4-51 police officer member should elect service retirement under Article
4-52 VI of this Act while serving the term for which the member is
4-53 elected, the member shall continue to serve for the remainder of
4-54 the term.
4-55 (3) A vacancy occurring by reason of removal,
4-56 resignation, death, or any other reason except retirement shall be
4-57 filled for the remainder of the term by a [an active] police
4-58 officer member appointed by the remaining members of the police
4-59 retirement board.
4-60 (4) No later than the first day of November of each
4-61 odd-numbered year, the board shall appoint an election committee.
4-62 The election committee shall prepare the ballot containing the
4-63 names of all eligible candidates.
4-64 (5) The election committee shall publish a notice at
4-65 least two weeks prior to the election date, informing all [active]
4-66 police officer members of the election and the names of the police
4-67 officer members who have been certified as candidates.
4-68 (6) Elections for police officer members shall be held
4-69 on the first payday in December of each odd-numbered year. The
5-1 police officers receiving the highest number of votes shall be
5-2 deemed elected. In case of a tie vote, selection shall be by lot.
5-3 (7) The election committee shall canvass the returns,
5-4 certify the results, and announce the official results of the
5-5 election.
5-6 (8) The police retirement board shall approve written
5-7 procedures for the conduct of the election no later than August 1
5-8 of each odd-numbered year.
5-9 SECTION 6. Section 3.05(b), Chapter 452, Acts of the 72nd
5-10 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
5-11 Civil Statutes), is amended to read as follows:
5-12 (b) The board shall appoint a pension officer. The pension
5-13 officer shall appoint other necessary staff members with approval
5-14 of the board. The pension officer, acting under the direction of
5-15 the board, shall keep all of the records of the police retirement
5-16 system and a record of the proceedings of the board. The pension
5-17 officer and other employees of the system [each staff member] shall
5-18 receive such compensation as the board may fix in each annual
5-19 budget or amendments thereto.
5-20 SECTION 7. Section 3.06, Chapter 452, Acts of the 72nd
5-21 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
5-22 Civil Statutes), is amended to read as follows:
5-23 Sec. 3.06. RULES; QUORUM; REMOVAL. (a) Subject to the
5-24 limitations of this Act, the police retirement board shall from
5-25 time to time establish rules and regulations for the administration
5-26 of the police retirement system [fund or funds] authorized to be
5-27 created by this Act and for the transaction of the board's
5-28 business.
5-29 (b) Each member of the board shall be entitled to one vote.
5-30 Six members shall constitute a quorum. A majority vote of members
5-31 attending a meeting shall be necessary for a decision of the board.
5-32 (c) Any member who is absent from five consecutive board
5-33 meetings shall be removed from the [police] board, and the member
5-34 shall be replaced in accordance with Section 3.02 of this Act.
5-35 SECTION 8. Sections 3.08-3.12, Chapter 452, Acts of the 72nd
5-36 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
5-37 Civil Statutes), are amended to read as follows:
5-38 Sec. 3.08. ADMINISTRATION OF POLICE RETIREMENT SYSTEM
5-39 [FUNDS]. (a) The board shall have charge of and administer the
5-40 police retirement system [funds] and shall order payments therefrom
5-41 under the provisions of this Act.
5-42 (b) The board shall obtain from the city all records
5-43 necessary to administer the system. Individual accounts shall be
5-44 maintained with each member of the police retirement system,
5-45 showing the amount of the member's accumulated deposits [and the
5-46 accumulated interest allocated and standing to the credit of the
5-47 member] as provided under the [police] system. Annually a
5-48 statement shall be given each member showing the total accumulation
5-49 of the member's credit.
5-50 (c) The board shall engage and employ a certified public
5-51 accountant or firm of certified public accountants to perform an
5-52 audit of the accounts of the board and the police retirement system
5-53 at least annually.
5-54 Sec. 3.09. ACTUARY; DUTIES. (a) The police retirement
5-55 board shall designate an actuary that shall be the technical
5-56 advisor to the board regarding the funds authorized by provisions
5-57 of this Act and shall perform such other duties as may be required
5-58 in connection therewith. As soon as practicable after the
5-59 establishment of the police retirement system, the actuary shall
5-60 recommend for adoption by the board tables and rates required by
5-61 the [police] system. The board shall adopt the tables and rates
5-62 and as soon as practicable thereafter the actuary shall make a
5-63 valuation, based on the tables and rates, of the assets and
5-64 liabilities of the [police] system.
5-65 (b) From time to time on the advice of the actuary and at
5-66 the direction of the board, the actuary shall make an actuarial
5-67 investigation of the mortality, service, and compensation
5-68 experience of members, retired members, [surviving spouses,] and
5-69 beneficiaries of the [police] system and shall recommend for
6-1 adoption by the board the tables and rates required by the
6-2 [police] system. The board shall adopt the tables and rates to be
6-3 used by the [police] system.
6-4 (c) The actuary shall make valuations of the assets and
6-5 liabilities of the [police] system based on tables and rates
6-6 adopted by the board at least every two years.
6-7 Sec. 3.10. INVESTMENT MANAGERS. The police retirement
6-8 board may hire an investment manager or investment managers who
6-9 shall have full authority to invest the assets and manage any
6-10 portion of the portfolio of the system [fund], as specified by the
6-11 manager's employment contract.
6-12 Sec. 3.11. INVESTMENT CONSULTANT. The board may hire an
6-13 investment consultant to monitor the investment performance of the
6-14 system's [fund's] investment manager or managers and provide other
6-15 investment advice requested by the board.
6-16 Sec. 3.12. LEGAL COUNSEL. The board may retain legal
6-17 counsel to advise, assist, or represent the board in any legal
6-18 matters affecting the operation of the system [fund]. The board
6-19 may litigate all matters for and on behalf of the police retirement
6-20 system.
6-21 SECTION 9. Sections 4.01(c)-(f), Chapter 452, Acts of the
6-22 72nd Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
6-23 Texas Civil Statutes), are amended to read as follows:
6-24 (c) Any person who becomes an employee of the city or the
6-25 [becomes a member of the police system's administrative staff after
6-26 the date of establishment of the police retirement] system, if
6-27 eligible for membership, shall become a member as a condition of
6-28 employment and shall make the required deposits commencing with the
6-29 first pay period following a probationary period of six continuous
6-30 months from date of employment or eligibility, if later.
6-31 (d) Police officers of the city and employees [staff
6-32 members] of the [police] system [who] may not become members of
6-33 the police retirement system if they are [shall include all]
6-34 part-time police officers or employees [and staff members] of the
6-35 [police] system who are expected to work less than [75 percent of]
6-36 a normal work week or if they are [and all] seasonal or [and]
6-37 temporary police officers or employees [and staff members] of the
6-38 [police] system. A [regular] full-time police officer of the city
6-39 or employee of the system eligible for membership in the system
6-40 [who is not included in this excepted classification] is one whose
6-41 position is classified in the annual budget, who is expected to be
6-42 employed throughout the full calendar year, and whose employment
6-43 is expected to continue [continues] from year to year. [If regular
6-44 police officers and staff members of the police system work at
6-45 least 75 percent of a normal work week but less than full-time, the
6-46 members shall make deposits as though they were working a normal
6-47 full-time work week (even though their rate of contribution may
6-48 thereby exceed six percent of actual, regular compensation), and
6-49 their average final compensation shall be computed on the basis of
6-50 the compensation for a normal work week. No deposits shall be made
6-51 nor membership service credit received for periods during which the
6-52 authorized normal work week is less than 75 percent of a normal
6-53 work week for a police officer or staff member of the retirement
6-54 system.]
6-55 (e)(1) Membership in the police retirement system shall
6-56 consist of the following groups:
6-57 (A) Active--Contributory: the member who is in
6-58 a status which allows payroll contributions to the police
6-59 retirement system (working [75 percent of] a normal work week,
6-60 holding a full-time [or more per week, permanent] position, and
6-61 having completed a continuous period of six months of service
6-62 initially, to attain membership).
6-63 (B) Active--Noncontributory: the member whose
6-64 current employment status does not allow contributions to the
6-65 [police] system (working less than a normal work week or on a leave
6-66 of absence under Subsection (f)(6)(A) of this section) and on
6-67 return to working a normal work week, [is thereby deactivated with
6-68 the privilege of immediate reentry, on appropriate change of
6-69 status, to a period for which] the member will again be given
7-1 creditable service, with contributions resumed at time of status
7-2 change.
7-3 (C) Inactive--Contributory: the member who is
7-4 on a uniformed service leave of absence under Subsection (f)(6)(B)
7-5 of this section, who is allowed to make deposits to the [police]
7-6 system during the member's absence.
7-7 (D) Vested--Noncontributory: the terminated
7-8 member who, being [fully] vested, leaves [retains] the member's
7-9 accumulated deposits [contributions] in the [police] system.
7-10 (E) Retired: the member who is receiving a
7-11 service or disability retirement annuity.
7-12 (2) It shall be the duty of the police retirement
7-13 board to determine the membership group to which each police
7-14 officer or employee [staff member] of the [police] system who
7-15 becomes a member of the police retirement system properly belongs.
7-16 (f)(1) A member shall cease to be a member of the police
7-17 retirement system and shall forfeit creditable [lose membership]
7-18 service if, after employment termination through [death,]
7-19 dismissal, resignation, or from any other cause, the member shall
7-20 [sever the member's service connection and] withdraw the member's
7-21 accumulated deposits as provided under the withdrawal benefit
7-22 [allowance] provisions of this Act; provided, however, that any
7-23 eligible member who has not previously received credit for one-half
7-24 of the member's previously forfeited creditable [membership]
7-25 service shall be entitled to reinstatement of previously forfeited
7-26 creditable [membership] service if such eligible member or eligible
7-27 surviving spouse shall have deposited in the system the accumulated
7-28 deposits withdrawn and an interest charge based on the amount
7-29 withdrawn times an interest factor. The factor is derived by
7-30 adjusting and compounding the [based on the compounded net] annual
7-31 rates [rate] of interest that were credited to the [member's]
7-32 accumulated deposits of members, where each annual rate is
7-33 adjusted by dividing it by 0.75. The period for compounding the
7-34 interest factor begins [contributions divided by 0.75, beginning]
7-35 with the beginning of the month and year in which the member
7-36 withdrew the member's accumulated deposits [contributions] and
7-37 ends [ending] with the beginning of the month and year payment is
7-38 made to the system to reinstate the service. The annual rate of
7-39 interest applicable for the year when payment is made is considered
7-40 to be equal to the prior year's rate of interest for the purpose of
7-41 making the determination.
7-42 (2) For purposes of this subsection, an [An] eligible
7-43 member is a police officer who has been reemployed by the city or a
7-44 system employee who has been [staff member] reemployed by the
7-45 [police] system, has completed at least 24 consecutive months of
7-46 service as a member since the member was reemployed, and is not
7-47 separated from active service. For purposes of this subsection, an
7-48 eligible surviving spouse is the surviving spouse of a member who
7-49 was an eligible member immediately before the time of death if the
7-50 member dies before making payment to the system of the amount
7-51 required by this subsection.
7-52 (3) In order to be eligible to reinstate previously
7-53 forfeited creditable [membership] service, an eligible member or
7-54 eligible surviving spouse must deposit the amount described in
7-55 Subdivision (1) of this subsection as a lump sum in the system. An
7-56 eligible surviving spouse may reinstate previously forfeited
7-57 creditable [membership] service not later than the date that is six
7-58 months after the date of the member's death and only if the
7-59 lump-sum death benefit described by Section 6.05(a) or 6.06(a)(3)
7-60 of this Act is not paid.
7-61 (4) Any such member who has previously received credit
7-62 for one-half of previously forfeited creditable [membership]
7-63 service shall be entitled to reinstate the remaining one-half of
7-64 the member's previously forfeited creditable [membership] service
7-65 by payment of one-half of the amount previously withdrawn and an
7-66 interest charge as described in Subdivision (1) of this subsection.
7-67 (5) The method of determining the amount of the
7-68 required payment described by Subdivision (1) of this subsection
7-69 may be changed if:
8-1 (A) the effect of the change is disclosed by the
8-2 board's actuary;
8-3 (B) the change is adopted by the board as a
8-4 board rule; and
8-5 (C) the change applies to all payments for
8-6 reinstating previously forfeited creditable [membership] service
8-7 under this subsection made to the [retirement] system after the
8-8 effective date of the change.
8-9 (6)(A) A member granted a leave of absence or
8-10 withdrawing from service for a stated period of time, not to
8-11 exceed two years, who allows the member's accumulated deposits
8-12 [contributions] to the police retirement system to remain in the
8-13 system [fund], shall be eligible for continued membership on being
8-14 reemployed by the city as a police officer or by the system as an
8-15 employee of [reentering the service of the city or] the [police]
8-16 system. During that period the employee shall not receive
8-17 creditable service [credit].
8-18 (B) Uniformed service [Military] leave of
8-19 absence shall not be included in the two-year period if the member
8-20 returns to active service with the city as a police officer or with
8-21 the system as an employee of the system within 90 days after the
8-22 expiration of the uniformed service [military] leave of absence.
8-23 A member of the [police] system on uniformed service [military]
8-24 leave of absence may make deposits to the [police] system during
8-25 the [military] leave of absence, in an amount each biweekly pay
8-26 period that is equal to the amount of the member's deposit for the
8-27 last complete biweekly pay period that the member was paid by the
8-28 city or the [police] system. If a member on a uniformed service
8-29 leave of absence makes biweekly deposits during the leave of
8-30 absence, the employer [The city] shall make a contribution to the
8-31 system [retirement fund] for the member [employed by the city]
8-32 each biweekly pay period in an amount the employer [city] would
8-33 have made if the member's biweekly pay had continued to be the
8-34 biweekly pay the member received for the last complete biweekly pay
8-35 period that the member was paid by the employer [city]. If the
8-36 member does not make deposits during a uniformed service [military]
8-37 leave of absence, the member may make payment within five years
8-38 after the member has returned to the employment of the city or the
8-39 system, equal to the deposits the member would have made if the
8-40 member had continued to be paid by the city or the system during
8-41 the member's [military] leave of absence at the same rate of pay
8-42 the member was receiving at the time the member's leave of absence
8-43 began. The payment may be a single payment or may be in
8-44 installments as long as each individual installment is not less
8-45 than 20 percent of the total amount to be paid. A member who
8-46 otherwise would be eligible to make payment under this subdivision
8-47 but who has not made payment and for whom it has been more than
8-48 five years since the member returned to the employment of the city
8-49 may make payment during the period beginning October 1, 1995, and
8-50 ending September 30, 1996. If a member makes payment of the
8-51 deposits after returning to the employment of the city or the
8-52 system, the employer [The city] will make a single contribution for
8-53 the member [employed by the city] equal to the deposits it would
8-54 have made on the member's behalf if the member had made deposits to
8-55 the system [fund] during the period of the member's [military]
8-56 leave.
8-57 SECTION 10. Article V, Chapter 452, Acts of the 72nd
8-58 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
8-59 Civil Statutes), is amended to read as follows:
8-60 ARTICLE V
8-61 Sec. 5.01. CREDITABLE SERVICE. (a) The board shall
8-62 determine by appropriate rules and regulations, subject to the
8-63 provisions of this Act, in case of a member's absence, illness, or
8-64 other temporary separation from service, the portion of each
8-65 calendar year to be allowed as creditable service.
8-66 (b) No credit shall be allowed as service for any period
8-67 exceeding one month during which a member was absent continuously
8-68 without pay, except as provided in Subsection (f) of Section 4.01
8-69 of this Act, with respect to uniformed service [military] leave of
9-1 absence; as provided in Section 5.02 of this Act, with respect to
9-2 military service performed prior to [retirement] system membership;
9-3 or as provided in Section 5.03 of this Act, with respect to
9-4 probationary service in excess of six months.
9-5 (c) The board shall verify the records for service claims
9-6 filed by the members of the police retirement system, in accordance
9-7 with such administrative rules and regulations as the board may
9-8 from time to time adopt.
9-9 Sec. 5.02. MILITARY SERVICE CREDIT. (a) An eligible member
9-10 or eligible surviving spouse may establish creditable service for
9-11 military service performed [that is creditable] as provided under
9-12 this section according to the following conditions, limitations,
9-13 and restrictions:
9-14 (1) Military service creditable in the [retirement]
9-15 system is active federal duty service in the Armed Forces of the
9-16 United States, other than as a student at a service academy, as a
9-17 member of the reserves, or any continuous active military service
9-18 lasting less than 90 days, and such military service must have been
9-19 performed prior to becoming a member of the police retirement
9-20 system or its predecessor system.
9-21 (2) For purposes of this section, an [An] eligible
9-22 member must:
9-23 (A) have been released from military duty under
9-24 conditions not dishonorable; and
9-25 (B) be a police officer employed by the city or
9-26 an employee of [a staff member employed by] the [police] system[,]
9-27 who is not separated from active [police system] service.
9-28 (3) An eligible member or eligible surviving spouse
9-29 may not establish more than 24 months of creditable service in the
9-30 [retirement] system for military service.
9-31 (4) An eligible member or eligible surviving spouse
9-32 may establish creditable service under this section by contributing
9-33 to the [retirement] system a single payment equal to 25 percent of
9-34 the estimated cost of the additional projected retirement benefits
9-35 the member or surviving spouse will be entitled to receive. The
9-36 system will determine the required contribution based on a
9-37 procedure recommended by the actuary and approved by the board.
9-38 (5) After the eligible member or eligible surviving
9-39 spouse makes the deposit required by this section, the [retirement]
9-40 system shall grant the member one month of creditable service for
9-41 each month of military service established by this section.
9-42 (6) For purposes of this section, an eligible
9-43 surviving spouse is the surviving spouse of a member who was an
9-44 eligible member immediately before the time of death if the member
9-45 dies before making payment to the system of the amount required by
9-46 this section. An eligible surviving spouse may establish
9-47 creditable service for military service not later than the date
9-48 that is six months after the date of the member's death and only if
9-49 the lump-sum death benefit described by Section 6.05(a) or
9-50 6.06(a)(3) of this Act is not paid.
9-51 (b) The percent used to calculate the amount of the required
9-52 payment described by Subsection (a)(4) of this section may be
9-53 changed if:
9-54 (1) the effect of the change is disclosed by the
9-55 board's actuary;
9-56 (2) the change is adopted by the board [of trustees]
9-57 as a board rule; and
9-58 (3) the change applies to all payments for
9-59 establishing creditable service under this section made to the
9-60 [retirement] system after the effective date of the change.
9-61 Sec. 5.03. PROBATIONARY SERVICE CREDIT. (a) An eligible
9-62 member or eligible surviving spouse may establish creditable
9-63 service for probationary service performed [that is creditable] as
9-64 provided under this section according to the following conditions,
9-65 limitations, and restrictions:
9-66 (1) Probationary service creditable in the
9-67 [retirement] system is any probationary [nonmembership] service
9-68 following commission date for which the member does not have
9-69 creditable service.
10-1 (2) An eligible member or eligible surviving spouse
10-2 may establish creditable service under this section by contributing
10-3 to the [retirement] system a single payment equal to the
10-4 contribution the member would have made to the system for that
10-5 service at the time the service was performed and an interest
10-6 charge based on the contribution amount to be repaid times an
10-7 interest factor. The factor is derived by adjusting and
10-8 compounding the [based on the compounded] annual rates of interest
10-9 that were [which are equal to the rates which have been] credited
10-10 to the [member's] accumulated deposits of members, where each
10-11 annual rate is adjusted by dividing it by 0.75. The period for
10-12 compounding the interest factor begins [divided by 0.75, beginning]
10-13 with the beginning of the month and year at the end of the
10-14 probationary period for which creditable service is being
10-15 established to the beginning of the month and year [later time]
10-16 payment is made to the system [fund] for the purpose of
10-17 establishing said service. The annual rate of interest applicable
10-18 for the year when payment is made is considered to be equal to the
10-19 prior year's rate of interest for the purpose of making the
10-20 determination.
10-21 (3) After the eligible member or eligible surviving
10-22 spouse makes the deposit required by Subdivision (2) of this
10-23 subsection, the [retirement] system shall grant the member one
10-24 month of creditable service for each month of probationary service
10-25 established under this section.
10-26 (b) For purposes of this section, an eligible member is a
10-27 police officer employed by the city who is not separated from
10-28 active service.
10-29 (c) For purposes of this section, an eligible surviving
10-30 spouse is the surviving spouse of a member who was an eligible
10-31 member immediately before the time of death if the member dies
10-32 before making payment to the system of the amount required by this
10-33 section. An eligible surviving spouse may establish creditable
10-34 service for probationary service not later than the date that is
10-35 six months after the date of the member's death and only if the
10-36 lump-sum death benefit described by Section 6.05(a) or 6.06(a)(3)
10-37 of this Act is not paid.
10-38 (d) [Notwithstanding Subsection (c) of this section, if an
10-39 eligible member dies on or after December 1, 1994, but not later
10-40 than August 31, 1995, and has not made payment to the system of the
10-41 amount required by this section, an eligible surviving spouse may
10-42 establish creditable service for probationary service on or before
10-43 February 29, 1996.]
10-44 [(e)] The method of determining the amount of the required
10-45 payment described by Subsection (a)(2) of this section may be
10-46 changed if:
10-47 (1) the effect of the change is disclosed by the
10-48 board's actuary;
10-49 (2) the change is adopted by the board [of trustees]
10-50 as a board rule; and
10-51 (3) the change applies to all payments for
10-52 establishing creditable service under this section made to the
10-53 [retirement] system after the effective date of the change.
10-54 Sec. 5.04. CADET SERVICE CREDIT. (a) This section does not
10-55 take effect unless the city council irrevocably authorizes the city
10-56 to begin making contributions to the police retirement system in
10-57 accordance with Section 8.01(a) of this Act for police cadets
10-58 during their employment as cadets while members of a cadet class.
10-59 Police cadets whose cadet class begins after the city council makes
10-60 the irrevocable authorization shall make deposits to the police
10-61 retirement system in accordance with Section 8.01(a) of this Act,
10-62 and those cadets shall be members of the police retirement system
10-63 and shall receive creditable service for employment as cadets while
10-64 members of a cadet class, notwithstanding Sections 1.02(7), (18),
10-65 and (21) of this Act.
10-66 (b) Subsections (c), (d), (e), and (f) of this section take
10-67 effect on the date on which the changes made by those subsections
10-68 are approved by the board's actuary. The effective date of those
10-69 subsections may not be before the date the city council makes the
11-1 irrevocable authorization described by Subsection (a) of this
11-2 section.
11-3 (c) An eligible member or eligible surviving spouse may
11-4 establish creditable service for cadet service performed as
11-5 provided under this section according to the following conditions,
11-6 limitations, and restrictions:
11-7 (1) Cadet service creditable in the system is any
11-8 service while a member of a cadet class for which the member does
11-9 not have creditable service.
11-10 (2) An eligible member or eligible surviving spouse
11-11 may establish creditable service under this section by contributing
11-12 to the system a single payment equal to the contribution the member
11-13 would have made to the system for that service at the time the
11-14 service was performed and an interest charge based on the
11-15 contribution amount to be repaid times an interest factor. The
11-16 factor is derived by adjusting and compounding the annual rates of
11-17 interest that were credited to the accumulated deposits of members,
11-18 where each annual rate is adjusted by dividing it by 0.75. The
11-19 period for compounding the interest factor begins with the
11-20 beginning of the month and year at the end of the cadet class for
11-21 which creditable service is being established and ends with the
11-22 beginning of the month and year payment is made to the system for
11-23 the purpose of establishing said service. The annual rate of
11-24 interest applicable for the year when payment is made is considered
11-25 to be equal to the prior year's rate of interest for the purpose of
11-26 making the determination.
11-27 (3) After the eligible member or eligible surviving
11-28 spouse makes the deposit required by Subsection (c)(2) of this
11-29 section, the system shall grant the member one month of creditable
11-30 service for each month of cadet service established under this
11-31 section.
11-32 (d) For purposes of Subsection (c) of this section, an
11-33 eligible member is a police officer employed by the city who is not
11-34 separated from active service.
11-35 (e) For purposes of Subsection (c) of this section, an
11-36 eligible surviving spouse is the surviving spouse of a member who
11-37 was an eligible member immediately before the time of death if the
11-38 member dies before making payment to the system of the amount
11-39 required by this section. An eligible surviving spouse may
11-40 establish creditable service for cadet service not later than the
11-41 date that is six months after the date of the member's death and
11-42 only if the lump-sum death benefit described by Section 6.05(a) or
11-43 6.06(a)(3) of this Act is not paid.
11-44 (f) The method of determining the amount of the required
11-45 payment described by Subsection (c)(2) of this section may be
11-46 changed if:
11-47 (1) the effect of the change is disclosed by the
11-48 board's actuary;
11-49 (2) the change is adopted by the board as a board
11-50 rule; and
11-51 (3) the change applies to all payments for
11-52 establishing creditable service under this section made to the
11-53 system after the effective date of the change.
11-54 SECTION 11. Sections 6.01 and 6.02, Chapter 452, Acts of the
11-55 72nd Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
11-56 Texas Civil Statutes), are amended to read as follows:
11-57 Sec. 6.01. SERVICE RETIREMENT BENEFITS AND INCREASES IN
11-58 [WITHDRAWAL] BENEFITS. (a) On retirement [from service] after
11-59 having reached the member's normal retirement date, members
11-60 entitled thereto shall receive a service [normal] retirement
11-61 benefit in the form of a life annuity (modified cash refund). Each
11-62 monthly payment of the life annuity (modified cash refund) shall be
11-63 equal to one-twelfth of the product of 2.88 [2.8] percent of a
11-64 member's average final compensation multiplied by the number of
11-65 months of creditable service. [If payments commence after the
11-66 member becomes 62 years of age and after completion of 120 months
11-67 of contributions, the amount of monthly payments shall be increased
11-68 at the rate of five-twelfths of one percent for each month after
11-69 age 62 for which the member earned creditable service but made no
12-1 contributions on the basis of the law in effect before September 1,
12-2 1995. The increased benefit shall not exceed 15 percent of the
12-3 amount which would otherwise have been paid if payments had
12-4 commenced at the member's retirement date. For a retirement date
12-5 after December 31, 1996, the amount of monthly payments may not be
12-6 increased for payments that commence after the member becomes 62
12-7 years of age.] The retirement benefit percent specified by this
12-8 section to calculate the amount of the monthly payment of the life
12-9 annuity (modified cash refund) may be changed after 1997 [1995] if:
12-10 (1) the change is approved by the board's actuary;
12-11 (2) the change is adopted by the board [of trustees]
12-12 as a board rule;
12-13 (3) the change applies to all present members, all
12-14 retired members, and all who become members after the effective
12-15 date of the change in the retirement benefit percent;
12-16 (4) a member's vested interest [accrued benefit] as of
12-17 the last day of the month immediately preceding the effective date
12-18 of the change in the retirement benefit percent is not reduced; and
12-19 (5) a retirement annuity being paid by the police
12-20 retirement system to members or to the surviving spouses or
12-21 beneficiaries of members who retired before the effective date of
12-22 the change in the retirement benefit percent is changed as
12-23 prescribed by Subsection (d)(6) [(d)(8)] of this section, except
12-24 that a reduction in annuities may not cause the member's, surviving
12-25 spouse's, or beneficiary's annuity payment to be reduced below the
12-26 base retirement amount calculated under this Act.
12-27 (b) An annuity shall be considered as a life annuity
12-28 (modified cash refund) with the first monthly payment due at the
12-29 end of the month immediately following [from] the member's
12-30 retirement date, but the amounts of these and all other benefits
12-31 payable under this Act shall be subject at all times to such
12-32 adjustments as may be required to ensure actuarial soundness as may
12-33 be approved by the actuary and adopted by the board, except that
12-34 annuities already granted may not be reduced below the base
12-35 retirement amount [figure] granted at time of retirement.
12-36 (c) Subject to the conditions, limitations, and restrictions
12-37 set forth in this subsection, as well as all other pertinent
12-38 conditions, limitations, and restrictions set forth elsewhere in
12-39 this Act, the board shall have the power to authorize an annual
12-40 cost of living adjustment (hereinafter referred to as "adjustment")
12-41 payment which, once authorized, shall be paid out [in 12 equal]
12-42 monthly and [installments] which shall be added to the current
12-43 monthly payment of all retirement annuities of each and every
12-44 member of the police retirement system who has retired or those of
12-45 the members' surviving spouses or beneficiaries who have become
12-46 entitled to benefits on or before December 31 of any preceding
12-47 year. Before January 1 of each year, the board shall make a
12-48 separate determination of whether to authorize the payment of an
12-49 annual adjustment and the amount of the adjustment, if any. These
12-50 adjustments shall be paid [in 12] monthly [installments] beginning
12-51 January 31 of the succeeding calendar year.
12-52 (d) In determining whether to authorize the payment and the
12-53 amount of any annual adjustment, the board shall be governed by the
12-54 following conditions, considerations, limitations, and
12-55 restrictions:
12-56 (1) Any and all determinations to authorize the
12-57 payment of any amount must be based on the ability of the system
12-58 [fund] to pay such an amount and shall not be based upon the
12-59 individual needs of any particular retired members, surviving
12-60 spouses, or beneficiaries.
12-61 (2) Prior to the board's authorizing the payment of an
12-62 annual adjustment, the actuary must approve and recommend such an
12-63 adjustment to the board and certify in writing to the board that
12-64 based on the sound application of actuarial assumptions and methods
12-65 consistent with sound actuarial principles and standards, it is
12-66 demonstrable that the system [fund] has and will continue to have
12-67 the ability to pay such an amount out of its realized income after
12-68 all other obligations of the system [fund] have been paid.
12-69 (3) The amount of the adjustment payment to the
13-1 retirement benefit [allowance] for each retired member, surviving
13-2 spouse, or beneficiary shall be increased or decreased by an
13-3 amount, not to exceed six percent, determined by the board and the
13-4 actuary based on the consumer price index, actuarial experience of
13-5 the system [fund], investment experience of the system [fund], and
13-6 cost-of-living increases granted in the past. Such increases
13-7 shall be prorated for a member who retired during the year in the
13-8 ratio that the number of the member's completed months after the
13-9 member's retirement in that year bears to 12. The cost-of-living
13-10 increase presented for approval by the board must be approved by
13-11 the system's [fund's] actuary.
13-12 (4) The board shall have the authority and the duty,
13-13 at any and all times and without notice to anyone, to decrease the
13-14 amount of the adjustment payment as much as is necessary to protect
13-15 the continuity of the police retirement system and to protect the
13-16 corpus of the system [fund] should the ability of the system [fund]
13-17 to continue to pay the adjustment be threatened by a change in the
13-18 economic situation of the United States, the State of Texas, the
13-19 city, or the system [fund] itself such as would dictate that a
13-20 prudent trustee should authorize such a decrease; provided that if
13-21 the threatened change should prove not to have had the predicted
13-22 harmful effect on the system [fund], then the board shall have the
13-23 authority to reinstate the payment of all or any portion of the
13-24 amount of the previously decreased adjustment payments. If at any
13-25 time the actuary in the actuary's discretion shall deem the
13-26 continuity of the system [fund] to be threatened by whatever cause,
13-27 the actuary shall have the power and authority to order the board
13-28 to make no further adjustment payments and the board shall have the
13-29 power and authority to see to it that no further adjustment
13-30 payments are made unless and until the actuary shall order either
13-31 that the same adjustment payments which were discontinued by the
13-32 actuary's order be reinstated retroactively, or that the adjustment
13-33 payments (of the same amount as those which were discontinued) be
13-34 reinstated prospectively from the date of the actuary's order to
13-35 reinstate or the actuary may recommend to the board that the
13-36 adjustment payments be decreased by whatever amount the actuary may
13-37 deem to be sufficient to protect the continuity of the system
13-38 [fund]. The board shall not have the power or authority to
13-39 authorize or permit the payment of any adjustment payments in
13-40 excess of that recommended by the actuary.
13-41 (5) [All monthly retirement annuities being paid by
13-42 the system to members where payments began prior to January 1,
13-43 1980, shall be increased retroactive to March 1, 1985, with the
13-44 first increased amounts being paid March 31, 1985, in accordance
13-45 with the following schedule:]
13-46 [Year of] [Percentage]
13-47 (]LRetirement ]LIncrease
13-48 [1970 and earlier] [160]
13-49 [1971] [105]
13-50 [1972] [100]
13-51 [1973] [65]
13-52 [1974] [55]
13-53 [1975] [50]
13-54 [1976] [45]
13-55 [1977] [40]
13-56 [1978] [35]
13-57 [1979] [25]
13-58 [(6)] Provided that the adjustment payments, if any,
13-59 shall be in addition to the benefits to which a retired member,
13-60 surviving spouse, or beneficiary is otherwise entitled under this
13-61 Act, and in no event shall a reduction in the adjustment payments
13-62 cause the retired member's, surviving spouse's, or beneficiary's
13-63 benefits to be reduced below the actual base retirement amount
13-64 calculated under the provisions of this Act.
13-65 (6) Service [(7) Retirement and disability annuities
13-66 being paid by the police retirement system to members or to the
13-67 surviving spouses or beneficiaries of members who retired before
13-68 September 1, 1995, are increased beginning with the payments due at
13-69 the end of September in 1995. The amount of the increase for a
14-1 member or the surviving spouse or beneficiary of the member is
14-2 equal to a percentage multiplied by the annuity payment otherwise
14-3 due. The percentage is equal to 2.8 percent divided by the
14-4 retirement benefit percentage in effect on the date of the member's
14-5 retirement, minus one, and multiplied by 100.]
14-6 [(8) Retirement] and disability retirement annuities
14-7 and survivor benefits being paid by the police retirement system
14-8 to members or to the surviving spouses or beneficiaries of members
14-9 who retire before the effective date of any change in the
14-10 retirement benefit percent under this section that occurs after
14-11 1995 shall be changed beginning with the first payment due after
14-12 the effective date of the change in the retirement benefit percent.
14-13 The amount of the change for a member or the surviving spouse or
14-14 beneficiary of the member is equal to a percentage multiplied by
14-15 the annuity payment otherwise due. The percentage is equal to the
14-16 new retirement benefit percentage divided by the retirement benefit
14-17 percent in effect immediately before the effective date of the new
14-18 retirement benefit percent, minus one, and multiplied by 100.
14-19 (e) The following terms and definitions shall be used in
14-20 construing the meaning of this section:
14-21 (1) "Base retirement amount" means that monthly
14-22 retirement amount calculated under this Act at the time of actual
14-23 retirement, reduced for the optional form selected under Section
14-24 6.03(a) of this Act, and further reduced, if appropriate for the
14-25 optional form selected, if the member or the member's [designated]
14-26 beneficiary has died.
14-27 (2) "Consumer price index" means the Consumer Price
14-28 Index for All Urban Consumers published monthly by the Bureau of
14-29 Labor Statistics, United States Department of Labor, or its
14-30 successor in function.
14-31 (3) ["Fund" means for the purposes of this subsection
14-32 a combination of both Fund No. 1 and Fund No. 2 as defined in this
14-33 Act unless otherwise indicated.]
14-34 [(4)] "Continuity of the system" [fund"] means the
14-35 ability of the police retirement system [system's fund] to
14-36 continue to meet all of its purposes, to continue to thrive and
14-37 grow along with the economy of the United States, the State of
14-38 Texas, and the city, or to be able to sustain itself and its
14-39 beneficiaries during and throughout periods of deflation or
14-40 recession in that economy.
14-41 (f) For purposes of this section, compensation of each
14-42 noneligible member taken into account under this Act [the plan] may
14-43 not exceed $150,000 per calendar year, indexed pursuant to Section
14-44 401(a)(17) of the Internal Revenue Code of 1986 (26 U.S.C. Section
14-45 401). The $150,000 limit does not apply to an eligible member.
14-46 For purposes of this subsection, an eligible member is any
14-47 individual who first became a member before January 1, 1996. For
14-48 purposes of this subsection, a noneligible member is any other
14-49 member. [For purposes of this subsection, in determining the
14-50 compensation of a member Section 414(q)(6) of the Internal Revenue
14-51 Code of 1986 (26 U.S.C. Section 414) applies, except the term
14-52 "family member" includes only the spouse of the member and any
14-53 lineal descendants of the member who have not attained the age of
14-54 19 before the close of the year. Compensation in excess of the
14-55 limit shall be prorated among the family members in accordance with
14-56 Section 401(a)(17) of the Internal Revenue Code of 1986 (26 U.S.C.
14-57 Section 401).]
14-58 Sec. 6.02. ELIGIBILITY FOR SERVICE RETIREMENT. (a) Any
14-59 member shall be eligible for service [normal] retirement if the
14-60 member has attained the age of 55 years and completed at least 20
14-61 years of creditable service with the city, completed 25 years of
14-62 creditable service, or attained age 62.
14-63 (b) Any member, irrespective of the number of years of
14-64 creditable service, shall be eligible for service retirement at age
14-65 62. [After age 62, the member may continue in the employment of
14-66 the city as a police officer.] No member shall be paid any
14-67 benefits by the [police] system so long as the member is
14-68 [permanently] employed by the city as a police officer or by the
14-69 system as an employee of the system's administrative staff.
15-1 SECTION 12. Sections 6.03(a) and (b), Chapter 452, Acts of
15-2 the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
15-3 Vernon's Texas Civil Statutes), are amended to read as follows:
15-4 (a) In lieu of the life annuity (modified cash refund)
15-5 defined in Section 6.01 of this Act, a member attaining eligibility
15-6 for service [retirement, except for disability] retirement[,] may
15-7 file a duly acknowledged written designation which, if approved by
15-8 the board, shall entitle the member to receive the actuarial
15-9 equivalent of the life annuity by electing [or elect] one of the
15-10 following options:
15-11 OPTION I. Joint and 100 Percent Survivor Annuity. A reduced
15-12 annuity payable to the member but with the provision that on the
15-13 member's death, the annuity shall be continued throughout the life
15-14 of and be paid to such person that the member shall irrevocably
15-15 designate before the member's retirement date.
15-16 OPTION II. Joint and 50 Percent Survivor Annuity. A reduced
15-17 annuity payable to the member but with the provision that on the
15-18 member's death, one-half of the annuity shall be continued
15-19 throughout the life of and be paid to the person that the member
15-20 shall irrevocably designate before the member's retirement date.
15-21 OPTION III. Joint and 66-2/3 Percent Survivor Annuity. A
15-22 reduced annuity payable to the member but with the provision that
15-23 on the member's death, two-thirds of the annuity shall be continued
15-24 throughout the life of and be paid to the person that the member
15-25 shall irrevocably designate before the member's retirement date.
15-26 OPTION IV. Joint and 66-2/3 Percent Last Survivor Annuity.
15-27 A reduced annuity payable to the member but with the provision that
15-28 two-thirds of the annuity to which the member would be entitled
15-29 shall be continued throughout the life of and be paid to the
15-30 survivor after the death of either the member or the person that
15-31 the member shall irrevocably designate before the member's
15-32 retirement date.
15-33 OPTION V. [Level Income Option. If payment of a retirement
15-34 benefit commences prior to the earliest age at which the member
15-35 will become eligible for an old age insurance benefit under the
15-36 Social Security Act, the member may elect that the amount of the
15-37 payments be adjusted so that an increased amount will be paid prior
15-38 to such age and a reduced amount, if any, will be paid for life
15-39 after such age. The purpose of this adjustment is to enable the
15-40 member to receive from this plan and under the Social Security Act
15-41 an aggregate income in approximately a level amount for life. Such
15-42 adjusted payments shall be the actuarial equivalent of the pension
15-43 otherwise payable to such member.]
15-44 [OPTION VI. Joint and 66-2/3 Percent to Survivor/Level
15-45 Income Option. If payment of a retirement benefit commences prior
15-46 to the earliest age at which the member could become eligible for
15-47 an old age insurance benefit under the Social Security Act, the
15-48 member may elect that the amount of the payments be adjusted so
15-49 that an increased amount will be paid prior to such age and a
15-50 reduced amount will be paid for life after such age. The purpose
15-51 of this adjustment is to enable the member to receive from this
15-52 plan and under the Social Security Act an aggregate income in
15-53 approximately a level amount for life. If the member's death
15-54 occurs after age 62, two-thirds of the monthly annuity the member
15-55 was receiving at the time of the member's death shall be continued
15-56 throughout the life of and be paid to the person that the member
15-57 shall irrevocably designate before the member's retirement date.
15-58 If the member's death occurs before age 62, two-thirds of the
15-59 monthly annuity the member was receiving at the time of the
15-60 member's death shall be paid to the person that the member shall
15-61 irrevocably designate before the member's retirement date through
15-62 the end of the month when the member would have reached age 62.
15-63 The monthly annuity being paid to the person that the member shall
15-64 irrevocably designate before the member's retirement date will be
15-65 reduced at the end of the month following the month when the member
15-66 would have reached age 62 to two-thirds of the reduced benefit the
15-67 member would have begun to receive at age 62.]
15-68 [OPTION VII.] 15-Year Certain and Life Annuity. A reduced
15-69 annuity shall be payable to the member for life. In the event of
16-1 the member's death before 180 monthly payments have been made, the
16-2 remainder of the 180 payments are payable to the member's
16-3 beneficiary or, if one does not exist, to the member's estate.
16-4 [OPTION VIII. Any other form of benefit or benefits may be
16-5 paid either to the member or to the person or persons that the
16-6 member shall designate in writing, provided that the benefit plan
16-7 shall be certified by the actuary for the system to be the
16-8 actuarial equivalent of the life annuity with guaranteed refund of
16-9 the retired member's accumulated deposits.]
16-10 (b) The amount of the annuity payment in Options I, II, III,
16-11 IV, and V[, VI, VII, and VIII] shall be determined without
16-12 considering the minimum cumulative payment of the retired member's
16-13 [police officer's] accumulated deposits since that refund feature
16-14 will stay in effect as indicated in Subsection (b), Section 6.06,
16-15 of this Act.
16-16 SECTION 13. Section 6.04(a), Chapter 452, Acts of the 72nd
16-17 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
16-18 Civil Statutes), is amended to read as follows:
16-19 (a) On employment termination [separation from service by
16-20 resignation or dismissal before retirement], the member shall
16-21 receive the amount of the accumulated deposits standing to the
16-22 member's credit in one lump sum, except that if such member has had
16-23 at least 10 years of creditable service at the time the member
16-24 separates from service [employee's service is terminated], the
16-25 member shall have a [vested] right to elect to leave the member's
16-26 accumulated deposits with the police retirement system until such
16-27 time as the member shall have applied in writing for service
16-28 retirement [benefit payments] and shall have attained an age at
16-29 which the member shall have become entitled to receive a service
16-30 [monthly] retirement benefit [payments] under this Act, at which
16-31 time the member shall be entitled to a service retirement benefit
16-32 computed under the formula in Section 6.01(a) of this Act in effect
16-33 on the last day of the month immediately preceding the month of the
16-34 first benefit payment [allowance equal to that which the member
16-35 would have received if the member had attained the age at the time
16-36 of termination of the member's service which the member had
16-37 attained at the time of making such application].
16-38 SECTION 14. Sections 6.05 and 6.06, Chapter 452, Acts of the
16-39 72nd Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
16-40 Texas Civil Statutes), are amended to read as follows:
16-41 Sec. 6.05. DEATH OF A MEMBER; TREATMENT OF ACCUMULATED
16-42 DEPOSITS. (a) In the event of death of a member who is ineligible
16-43 for retirement, the accumulated deposits standing to the member's
16-44 credit in Fund No. 1 and an equivalent amount from Fund No. 2 shall
16-45 be payable in a lump sum to the member's beneficiary or, if no
16-46 beneficiary, to the member's estate, unless the member shall have
16-47 directed otherwise in writing duly acknowledged and filed with the
16-48 board. The lump sum may not be less than $7,500. When the $7,500
16-49 minimum is payable, the amount payable from Fund No. 2 is $7,500
16-50 minus the accumulated deposits standing to the member's credit in
16-51 Fund No. 1.
16-52 (b) Seven years after [cessation of service of] a member
16-53 separates from service with less than 10 years' service, if no
16-54 previous demand has been made, any accumulated deposits standing
16-55 to the member's credit shall be returned to the member or to the
16-56 member's estate, but if the contributor or the member's personal
16-57 representative cannot be found or if the member dies without
16-58 leaving heirs or legatees, the member's accumulated deposits shall
16-59 thereafter become a part of Fund No. 2.
16-60 (c) In the event of death of a member receiving a retirement
16-61 benefit [allowance], the sum of $7,500 [$5,000] shall be payable
16-62 in a lump sum to the member's beneficiary or, if no beneficiary, to
16-63 the member's estate, unless the member shall have directed
16-64 otherwise in writing, duly acknowledged and filed with the board.
16-65 Sec. 6.06. SELECTING OPTIONS; DESIGNATING BENEFICIARIES.
16-66 (a)(1) Within one year prior to the date on which a member becomes
16-67 eligible for service retirement under any provision of this
16-68 article, the member may file with the board the member's written
16-69 statement either selecting one of the optional benefits authorized
17-1 by this Act and designating the beneficiary of the option if one is
17-2 selected or stating that the member has been afforded an
17-3 opportunity to select an option but does not desire to do so. An
17-4 option selection shall become effective at the member's date of
17-5 eligibility for service retirement. The member shall retain the
17-6 right to make a final selection until the date of retirement. The
17-7 final selection shall be binding on all parties.
17-8 (2) After filing the written statement selecting one
17-9 of the optional benefits, the member may continue in service and
17-10 thereafter retire any time after eligibility by filing a written
17-11 application for service retirement. If the member dies before
17-12 retirement but after becoming eligible for service retirement, the
17-13 [effective date of the] member's survivor [retirement is the last
17-14 day of the calendar month of death, and the] benefit is calculated
17-15 as if the member had retired on the last day of the calendar month
17-16 of death [that date] under the optional benefit selected.
17-17 (3) In the event a member who is eligible for service
17-18 retirement dies without making a written selection of one of the
17-19 options listed in Section 6.03 of this Act and if the member leaves
17-20 a [lawfully married] spouse surviving, then the surviving spouse of
17-21 such member may select the optional form of the survivor benefit
17-22 [annuity] in the same manner as if the member had made the
17-23 selection or may select a lump-sum payment equal to the accumulated
17-24 deposits standing to the member's credit in Fund No. 1 plus an
17-25 equivalent amount from Fund No. 2. If the member leaves no
17-26 [lawfully married] spouse surviving, then the member's [designated]
17-27 beneficiary, or if no beneficiary exists, the executor or
17-28 administrator of the estate of the member, is entitled to elect
17-29 either an Option V survivor benefit [VII] (15-Year Certain and Life
17-30 Annuity), effective the last day of the calendar month in which the
17-31 death of the member occurs, or a lump-sum payment equal to the
17-32 accumulated deposits standing to the member's credit in Fund No. 1
17-33 plus an equivalent amount from Fund No. 2. In the event of the
17-34 death of the [lawfully married] surviving spouse before having
17-35 received survivor benefits [retirement allowances] equal to the
17-36 amount of the member's accumulated deposits at date of the member's
17-37 death, the excess of such accumulated deposits over the survivor
17-38 benefits [retirement allowances] paid shall be refunded in one sum
17-39 to the member's estate.
17-40 (4) When monthly survivor benefits are payable as a
17-41 result of the death of a member before retirement, an additional
17-42 sum of $7,500 [$5,000] shall be payable as a death benefit to the
17-43 member's [designated] beneficiary or, if no beneficiary exists, to
17-44 the member's estate.
17-45 (b) In the event of death of the retired member under any
17-46 retirement option and the death of the person irrevocably
17-47 designated by the retired member when Option I, Option II, Option
17-48 III, Option IV, or Option VI, as that option existed before the
17-49 amendment of Section 6.03(a) of this Act by H.B. No. 1242 or S.B.
17-50 No. 588, Acts of the 75th Legislature, Regular Session, 1997, as
17-51 described in Section 6.03 of this Act is in effect, before monthly
17-52 retirement benefits [allowances] have been received that are equal
17-53 to or greater than the retired member's accumulated deposits, then
17-54 the member's estate will receive the excess of the retired member's
17-55 accumulated deposits over the retirement benefits [allowance] paid.
17-56 SECTION 15. Article VI, Chapter 452, Acts of the 72nd
17-57 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
17-58 Civil Statutes), is amended by adding Section 6.07 to read as
17-59 follows:
17-60 Sec. 6.07. RETROACTIVE DEFERRED RETIREMENT OPTION PLAN.
17-61 (a) The retroactive deferred retirement option plan, referred to
17-62 as RETRO DROP, is an option a member eligible for service
17-63 retirement under Section 6.02 of this Act may elect at retirement
17-64 subject to the conditions of this section. A member who elects
17-65 RETRO DROP receives a lump sum and a monthly retirement benefit.
17-66 (b) The member shall select the RETRO DROP benefit
17-67 computation date. The date:
17-68 (1) must be the last day of the month used for the
17-69 purpose of determining the monthly retirement benefit;
18-1 (2) may not precede the normal retirement date as
18-2 defined by Section 1.02(19) of this Act, except that for purposes
18-3 of this subsection, creditable service does not include any
18-4 military service credit established under Section 5.02 of this Act;
18-5 and
18-6 (3) may not precede the date of retirement by more
18-7 than 36 months.
18-8 (c) On the election of RETRO DROP and the selection of the
18-9 RETRO DROP benefit computation date, the member's monthly life
18-10 annuity (modified cash refund) is computed according to Section
18-11 6.01 of this Act as if the member had retired on the RETRO DROP
18-12 benefit computation date but including any creditable service
18-13 established after that date under Section 5.02, Section 5.03, or
18-14 Section 5.04 of this Act. In lieu of the life annuity (modified
18-15 cash refund) defined by Section 6.01 of this Act, the member may
18-16 file a duly acknowledged written designation to elect one of the
18-17 annuity options described by Section 6.03 of this Act in effect at
18-18 retirement that are actuarially equivalent at the RETRO DROP
18-19 benefit computation date.
18-20 (d) The RETRO DROP lump-sum accumulation period includes
18-21 each month from the month following the RETRO DROP benefit
18-22 computation date through the month of retirement. The RETRO DROP
18-23 lump sum accumulates month by month during the accumulation period
18-24 as the sum of:
18-25 (1) the monthly annuity amounts that would have been
18-26 paid during the RETRO DROP lump-sum accumulation period;
18-27 (2) deposits made by the member to the police
18-28 retirement system as a percent of the basic hourly earnings of the
18-29 member during the RETRO DROP lump-sum accumulation period; and
18-30 (3) interest credited on the RETRO DROP lump sum
18-31 during the RETRO DROP lump-sum accumulation period.
18-32 (e) The first monthly annuity amount that would have been
18-33 paid during the RETRO DROP lump-sum accumulation period is the
18-34 amount defined by Subsection (c) of this section. Subsequent
18-35 monthly annuity amounts that would have been paid during the RETRO
18-36 DROP lump-sum accumulation period must include any cost-of-living
18-37 increases or special ad hoc increases in annuity amounts granted in
18-38 accordance with Sections 6.01(c) and (d) of this Act.
18-39 (f) The interest credited to the RETRO DROP lump sum shall
18-40 be credited on each December 31 in the RETRO DROP lump-sum
18-41 accumulation period in an amount equal to five percent of the
18-42 amount of the RETRO DROP lump sum as of January 1 of the same
18-43 calendar year. If the month of retirement is other than December,
18-44 the interest shall be credited for the partial year at the end of
18-45 the month of retirement in an amount equal to five-twelfths of one
18-46 percent of the amount of the RETRO DROP lump sum as of January 1 of
18-47 that year multiplied by the number of complete months of service
18-48 in that year. A complete month does not include a month in which
18-49 service amounted to fewer than 15 days.
18-50 (g) The first monthly annuity payment shall be on the last
18-51 day of the month immediately following the month of retirement.
18-52 The lump sum is due and payable to the member on the date selected
18-53 by the member. The date must be a business day and must be during
18-54 the period beginning on the last day of the month immediately
18-55 following the month of retirement and ending exactly two years
18-56 later. If the member dies before the date the member selected to
18-57 receive the lump sum, the lump sum is payable to the member's
18-58 beneficiary or, if no beneficiary exists, to the member's estate,
18-59 unless the member has directed otherwise in a duly acknowledged
18-60 writing filed with the board.
18-61 (h) The board may modify or eliminate the RETRO DROP
18-62 provisions of this section by the adoption of board rules until
18-63 August 31, 2002. At that time, the board's actuary shall study the
18-64 effects of the RETRO DROP provisions of this section and report
18-65 the results of the study to the board. Based on the report, the
18-66 board may decide to continue with, modify, or eliminate the RETRO
18-67 DROP provisions by the adoption of board rules.
18-68 SECTION 16. Section 7.01, Chapter 452, Acts of the 72nd
18-69 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
19-1 Civil Statutes), is amended to read as follows:
19-2 Sec. 7.01. DISABILITY RETIREMENT. (a) Only members who are
19-3 classified as Active-Contributory, Active-Noncontributory [I], or
19-4 Inactive-Contributory, pursuant to Subsection (e) of Section 4.01
19-5 of this Act, are eligible for consideration for disability
19-6 retirement pursuant to this article.
19-7 (b)(1) If a member with less than 10 years of creditable
19-8 service has become mentally or physically incapacitated for the
19-9 performance of the [member's former] employment duties the member
19-10 had immediately before incapacitation as a direct result of
19-11 injuries sustained subsequent to the member's effective date of
19-12 membership in the police retirement system, the member may apply
19-13 for disability retirement. Such application made for or on behalf
19-14 of the injured member shall show that the injury sustained was as a
19-15 direct or proximate result of the performance of the member's
19-16 employment duties with the city or with the system and that it is
19-17 likely to result in the member's inability to perform the duties of
19-18 a position offered to the member in the system, the police
19-19 department, or any other department in the city that pays as much
19-20 or more than the current pay of the position the member was holding
19-21 on the date of the member's disability.
19-22 (2) On recommendation of physicians or vocational
19-23 rehabilitation experts appointed or selected by the board that the
19-24 member's incapacity is likely to result in the member's inability
19-25 to perform the duties of a position offered to the member in the
19-26 system, the police department, or any other department in the city
19-27 that pays as much or more than the current pay of the position the
19-28 member was holding at the date of the member's disability and after
19-29 considering any additional evidence which the board deems relevant,
19-30 the board may award such member disability retirement benefits.
19-31 The decision of the board is final.
19-32 (c) If a member with more than 10 years of creditable
19-33 service has become mentally or physically incapacitated for the
19-34 performance of the [member's former] employment duties the member
19-35 had immediately before incapacitation, the member may apply for
19-36 disability retirement. Such application made for or on behalf of
19-37 the disabled member shall show that the incapacity is likely to
19-38 result in the member's inability to perform the duties of a
19-39 position offered to such member in the system, the police
19-40 department, or any other department in the city that pays as much
19-41 or more than the current pay of the position the member was holding
19-42 on the date of the member's disability. On recommendation of
19-43 physicians or vocational rehabilitation experts appointed or
19-44 selected by the board that the member's incapacity is likely to
19-45 result in the member's inability to perform the duties of a
19-46 position offered to the member in the system, the police
19-47 department, or any other department in the city that pays as much
19-48 or more than the current pay of the position the member was holding
19-49 on the date of the member's disability and after considering any
19-50 additional evidence which the board deems relevant, the board may
19-51 award such member disability retirement benefits. The decision of
19-52 the board is final.
19-53 SECTION 17. Section 7.02(a), Chapter 452, Acts of the 72nd
19-54 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
19-55 Civil Statutes), is amended to read as follows:
19-56 (a) On award of disability retirement benefits, the member
19-57 shall receive a disability retirement benefit [allowance] computed
19-58 in the same manner that a service retirement benefit [allowance]
19-59 would be computed at the member's normal retirement date, based on
19-60 average final compensation and creditable service at date of
19-61 disability retirement without reduction for early retirement. If
19-62 the disability is a direct or proximate result of the performance
19-63 of the member's employment duties with the system or the city, then
19-64 the disability retirement benefit [allowance] will be subject to a
19-65 minimum benefit based on average final compensation at date of
19-66 disability retirement and 20 years of creditable service. The
19-67 options allowed are life annuity or its actuarial equivalent
19-68 payable in the form described as Option I, Option II, Option III,
19-69 Option IV, or Option V [VII] in Section 6.03 of this Act. The
20-1 disability benefits paid to the member will be paid from Fund No.
20-2 1 until the amount received equals the member's accumulated
20-3 deposits; thereafter the benefits will be paid from Fund No. 2.
20-4 SECTION 18. Sections 7.03(a)-(d), Chapter 452, Acts of the
20-5 72nd Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
20-6 Texas Civil Statutes), are amended to read as follows:
20-7 (a)(1) A member receiving a disability retirement benefit
20-8 [allowance] is required to file a report to the board concerning
20-9 continued proof of disability one year after the date on which the
20-10 board originally awarded the member disability retirement. The
20-11 report shall include:
20-12 (A) a current statement of the member's physical
20-13 and/or mental condition, signed by the member's attending
20-14 physician; and
20-15 (B) a statement of all employment activities
20-16 pursued in the preceding one-year period and a copy of federal
20-17 income tax returns applicable to the one-year period.
20-18 (2) The board may verify all information submitted in
20-19 this report. A disabled member shall file an annual report
20-20 containing this same type of information every year thereafter on
20-21 the anniversary date of the member's disability retirement; the
20-22 annual report shall be filed no later than 60 days following the
20-23 due date.
20-24 (b) The pension officer is responsible for a yearly report
20-25 to the board listing those disabled members who should be examined.
20-26 The board shall have the right to order an examination of any
20-27 person on disability retirement after the member has received a
20-28 disability retirement benefit [allowance] for a one-year period and
20-29 continuing on an annual basis thereafter until the member reaches
20-30 the age of 62 years. If the member refuses to submit to an
20-31 examination by physicians or vocational rehabilitation experts
20-32 appointed or selected by the board or if the member refuses to
20-33 submit an annual report concerning continued proof of disability,
20-34 the disability retirement benefit [allowance] shall be discontinued
20-35 until such refusal is withdrawn.
20-36 (c)(1) If, during the first 2-1/2 years, the annual medical
20-37 examination shows that the member is able to perform the duties of
20-38 a position offered to the member in the system, the police
20-39 department, or any other department in the city that pays as much
20-40 or more than the current pay of the position the member was holding
20-41 on the date of the member's disability, the board may discontinue
20-42 the disability retirement benefit [allowance]. If after the
20-43 disabled member has received disability benefits from the system
20-44 [fund] for at least 2-1/2 years[,] the member is able to perform
20-45 the duties of any occupation for which the member is reasonably
20-46 suited by education, training, or experience, the board shall
20-47 review and modify the disability benefit according to the following
20-48 provisions:
20-49 (A) if the member is able to earn at least as
20-50 much money in the member's new job as the member would have in the
20-51 member's most recent [former] position with the system or the
20-52 police department, the board may terminate the member's benefit;
20-53 (B) if the member is able to earn between
20-54 one-half as much money and as much money in the member's new job as
20-55 the member would have in the member's most recent [former] position
20-56 with the system or the police department, the board may reduce the
20-57 monthly disability benefit to one-half of its original amount; or
20-58 (C) if the member is not able to earn at least
20-59 one-half as much money in the member's new job as the member would
20-60 have in the member's most recent [former] position with the system
20-61 or the police department, the board may continue the benefit
20-62 unchanged.
20-63 (2) If the member who received a disability benefit
20-64 [allowance] pursuant to Subsection (b) of Section 7.01 of this Act
20-65 has the member's benefit [allowance] discontinued pursuant to this
20-66 provision and does not return to the employ of the system or the
20-67 police department, any remaining balance of Fund No. 1 benefits
20-68 will be refunded to the member. If the member who received a
20-69 disability benefit [allowance] pursuant to Subsection (c) of
21-1 Section 7.01 of this Act has the member's benefit [allowance]
21-2 discontinued[,] pursuant to this provision and does not return to
21-3 the employ of the system or the police department, the member's
21-4 accumulated deposits [contributions] shall remain in the system,
21-5 and the member shall be considered a vested noncontributory member
21-6 unless the member elects a refund of the remaining accumulated
21-7 deposits.
21-8 (d) If a disabled member returns to [active] employment with
21-9 the city [service] as a police officer or to employment with the
21-10 system [with the city], the disability retirement benefit
21-11 [allowance] shall cease. Such person shall be reinstated as an
21-12 active member of the system and shall comply with all requirements.
21-13 Creditable service accumulated prior to disability shall be
21-14 restored to the full amount standing to the member's credit as of
21-15 the date the board found the member eligible for disability
21-16 retirement.
21-17 SECTION 19. Sections 8.01(a), (c), and (f), Chapter 452,
21-18 Acts of the 72nd Legislature, Regular Session, 1991 (Article
21-19 6243n-1, Vernon's Texas Civil Statutes), are amended to read as
21-20 follows:
21-21 (a) Deposits by the members to the police retirement system
21-22 shall be made at a rate of at least six percent of the basic hourly
21-23 earnings of each member. Deposits required to be made by members
21-24 shall be deducted from payroll. On recommendation of the board,
21-25 the [The] Active--Contributory members may [,] by a majority of
21-26 those voting [vote in favor of an increase in contributions above
21-27 six percent, shall] increase the rate of member deposits [each
21-28 member's contribution] above six percent to [in] whatever amount
21-29 the board has recommended [recommends]. If the deposit rate for
21-30 members has been increased to a rate above six percent, the rate
21-31 may be decreased if the board recommends the decrease, the board's
21-32 actuary approves the decrease, and a majority of the
21-33 Active--Contributory members voting on the matter approve the
21-34 decrease [by majority vote]. The city shall contribute amounts
21-35 equal to 18 percent [a percentage, as specified by this
21-36 subsection,] of the basic hourly earnings of each member employed
21-37 by the city. [That percentage shall be 14 percent for the fiscal
21-38 year ending in 1995, 16 percent for the fiscal year ending in 1996,
21-39 and 18 percent for each subsequent fiscal year.] The city council
21-40 may authorize the city to make additional contributions to the
21-41 police retirement system in whatever amount the city council may
21-42 determine. Contributions by the city shall be made each pay
21-43 period.
21-44 (c) Contributions by the city shall be paid to the system
21-45 [retirement fund] after appropriation by the city council.
21-46 (f) The city shall make the police officer contributions to
21-47 the system [fund] required by Subsection (a) of this section. The
21-48 system shall make the administrative staff's contributions to the
21-49 system [fund]. Member contributions will be made by a reduction in
21-50 their monetary compensation. Contributions made shall be treated
21-51 as employer contributions in accordance with Section 414(h)(2),
21-52 Internal Revenue Code (26 U.S.C. Section 414(h)(2)), for the
21-53 purpose of determining tax treatment of the amounts under the
21-54 federal Internal Revenue Code. These contributions are not
21-55 includible [includable] in the gross income of the member until
21-56 such time as they are distributed or made available to the member.
21-57 Member contributions made as provided by this subsection shall be
21-58 deposited to the individual account of each affected member and
21-59 shall be treated as compensation of members for all other purposes
21-60 of this Act and for the purpose of determining contributions to the
21-61 federal Old-Age, Survivors, and Disability Insurance System (Social
21-62 Security). The provisions of this subsection shall remain in
21-63 effect as long as the plan covering members is a qualified
21-64 retirement plan under Section 401(a), Internal Revenue Code (26
21-65 U.S.C. Section 401(a)), and its related trust is tax exempt under
21-66 Section 501(a), Internal Revenue Code (26 U.S.C. Section 501(a)).
21-67 SECTION 20. Section 9.01, Chapter 452, Acts of the 72nd
21-68 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
21-69 Civil Statutes), is amended by amending the heading and Subsections
22-1 (a), (b), and (d) and by adding Subsection (e) to read as follows:
22-2 Sec. 9.01. INVESTMENTS OF THE [POLICE] BOARD. (a) The
22-3 police retirement board shall be the trustee of the funds of the
22-4 police retirement system and shall have full power in its sole
22-5 discretion to invest and reinvest, alter, and change such funds.
22-6 The board shall invest the funds in whatever instruments or
22-7 investments the board considers prudent. In making investments for
22-8 the system [fund], the board shall discharge its duties:
22-9 (1) for the exclusive purposes of:
22-10 (A) providing benefits to members and their
22-11 beneficiaries; and
22-12 (B) defraying reasonable expenses of
22-13 administering the system [fund];
22-14 (2) with the care, skill, prudence, and diligence
22-15 under the circumstances then prevailing that a prudent person
22-16 acting in a like capacity and familiar with such matters would use
22-17 in the conduct of an enterprise of a like character and with like
22-18 aims;
22-19 (3) by diversifying the investments of the system
22-20 [fund] to minimize the risk of large losses, unless under the
22-21 circumstances it is clearly prudent not to do so; and
22-22 (4) in accordance with the laws, documents, and
22-23 instruments governing the system [fund].
22-24 (b) No member of the [board and no employee of the] board,
22-25 except as herein provided, shall have any interest in, directly or
22-26 indirectly, or receive any pay or emolument for the member's
22-27 services. No member of the board [or employee thereof] shall,
22-28 directly or indirectly, for himself or as an agent in any manner
22-29 use the funds or deposits of the police retirement system except to
22-30 make the current and necessary payments authorized by the board;
22-31 nor shall any member [or employee] of the board become an endorser
22-32 or surety or in any manner an obligor for money loaned by or
22-33 borrowed from the board.
22-34 (d) The right of a member to a [pension, an annuity, or a]
22-35 retirement benefit, [allowance, to] the return of accumulated
22-36 deposits, the payment of a RETRO DROP lump sum, or [contributions,
22-37 the pension, annuity, or retirement allowance itself, any optional
22-38 benefit or death benefits,] any other right accrued or accruing to
22-39 any person under the provisions of this Act, and the money in the
22-40 trust created by this Act shall be unassignable except as
22-41 specifically provided in this Act and shall not be subject to
22-42 execution, levy, attachment, garnishment, the operation of
22-43 bankruptcy or insolvency law, or any other process of law
22-44 whatsoever.
22-45 (e) Service retirement benefits, disability retirement
22-46 benefits, survivor benefits, death benefits, and withdrawal
22-47 benefits may be paid to a former spouse or other alternate payee
22-48 under the terms of a domestic relations order, but only if the
22-49 board determines that the order constitutes a qualified domestic
22-50 relations order within the meaning of Chapter 804, Government Code.
22-51 Benefit payments may be made to alternate payees only when and to
22-52 the extent permitted by the qualified domestic relations order.
22-53 The amount of any benefit payment under this Act made to an
22-54 alternate payee under a qualified domestic relations order shall
22-55 reduce and offset the amount otherwise payable to the member or
22-56 other beneficiary under this Act. On the death of an alternate
22-57 payee under a qualified domestic relations order, the interest of
22-58 the alternate payee in the benefits under this Act ends, and
22-59 remaining benefits shall be paid as if the qualified domestic
22-60 relations order had not existed.
22-61 SECTION 21. Section 10.01, Chapter 452, Acts of the 72nd
22-62 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
22-63 Civil Statutes), is amended to read as follows:
22-64 Sec. 10.01. FALSE REPORT OR STATEMENT. Whoever with intent
22-65 to deceive shall make any statement or report required under this
22-66 Act which is untrue or shall falsify or permit to be falsified any
22-67 record or records of the police retirement system shall forfeit any
22-68 office or rights held by the person under the [police] system, and
22-69 such deception, falsification, or acquiescence in falsification
23-1 shall be deemed a misdemeanor and the violation thereof shall be
23-2 punishable by a fine not to exceed $1,000.
23-3 SECTION 22. Section 11.01(a)(1), Chapter 452, Acts of the
23-4 72nd Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
23-5 Texas Civil Statutes), is amended to read as follows:
23-6 (1) "Annual benefit" means the total of all service
23-7 retirement annuity payments by the police retirement system on
23-8 behalf of a retired member during a calendar year.
23-9 SECTION 23. Sections 11.01(d)-(h), Chapter 452, Acts of the
23-10 72nd Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's
23-11 Texas Civil Statutes), are amended to read as follows:
23-12 (d) Except as provided by Subsections (f), (h), and (i) of
23-13 this section, an annual benefit payable by the [retirement] system
23-14 may not exceed [the lesser of:]
23-15 [(1)] $118,800, or another amount as adjusted each
23-16 January 1 by the secretary of the treasury under Section 415 of the
23-17 Internal Revenue Code of 1986 (26 U.S.C. Section 415) for
23-18 cost-of-living increases after January 1, 1994[; or]
23-19 [(2) 100 percent of the former member's highest
23-20 average annual compensation, including annual cost-of-living
23-21 increases after separation from service].
23-22 (e) If payment of a benefit begins before a member attains
23-23 age 62, the dollar limitation is the actuarial equivalent of an
23-24 annual benefit beginning at age 62 as described by Subsection
23-25 (d)[(1)] of this section for a person at age 62. A reduction under
23-26 this subsection may not reduce the dollar limitation below $75,000
23-27 if the benefit begins at or after age 55 or, if the benefit begins
23-28 before age 55, the actuarial equivalent of a $75,000 limitation
23-29 beginning at age 55. A reduction under this section may not reduce
23-30 the dollar limitation of any qualified participant below $66,000 or
23-31 another amount as determined for the applicable calendar year by
23-32 the secretary of the treasury under Section 415 of the Internal
23-33 Revenue Code of 1986 (26 U.S.C. Section 415) for cost-of-living
23-34 increases after January 1, 1994. For purposes of this subsection,
23-35 a qualified participant is a member whose creditable service
23-36 includes at least 15 years of service as a full-time employee of
23-37 the police department of the city or as a member of the Armed
23-38 Forces of the United States.
23-39 (f) If payment of a benefit begins after the member attains
23-40 age 65, the dollar limitation is the actuarial equivalent of an
23-41 annual benefit beginning at age 65 as described by Subsection
23-42 (d)[(1)] of this section.
23-43 (g) For purposes of this section, actuarial equivalence
23-44 shall be computed in the manner prescribed by Section 6.03 [or
23-45 7.02] of this Act except that the interest rate assumption under
23-46 Subsection (c) or (e) of this section is the greater of the rate
23-47 specified by Section 6.03 [or 7.02] or five percent, and the
23-48 interest rate assumption under Subsection (f) of this section is
23-49 the lesser of those rates.
23-50 (h) The limitations prescribed by Subsections (d), (e), and
23-51 (f) of this section do not apply to any portion of an annual
23-52 benefit payable by the [retirement] system that is attributable to
23-53 the balance in the member's individual account in Fund No. 1 as of
23-54 December 31, 1985, or from interest credited to the member's
23-55 account after December 31, 1985, as a result of deposits before
23-56 that date.
23-57 SECTION 24. Section 12.01, Chapter 452, Acts of the 72nd
23-58 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
23-59 Civil Statutes), is amended by amending the heading and Subsections
23-60 (b), (c), and (g) to read as follows:
23-61 Sec. 12.01. DISTRIBUTION RULES FOR SERVICE RETIREMENT AND
23-62 DEATH ANNUITY PAYMENTS.
23-63 (b) If, according to mortality tables adopted by the
23-64 Internal Revenue Service, at the time of the member's retirement
23-65 the joint life expectancy of the member making the selection and of
23-66 the [designated] beneficiary is less than the minimum period that
23-67 monthly payments would be required under the option selected, the
23-68 member must select another option so that the minimum period that
23-69 monthly payments would be required does not exceed the joint life
24-1 expectancy of the person making the selection and of the
24-2 [designated] beneficiary.
24-3 (c) If, according to mortality tables adopted by the
24-4 Internal Revenue Service, the life expectancy of a person to whom a
24-5 benefit will be paid as the result of a member's death before
24-6 retirement is less at the time of the member's death than the
24-7 minimum period that monthly payments would be required under the
24-8 option selected, the [retirement] system shall adjust the minimum
24-9 period that monthly payments will be required to a period that is
24-10 not less than 60 months and that is the greatest multiple of 12
24-11 months that does not exceed the life expectancy of the person to
24-12 whom the benefit will be paid. The amount of the monthly payment
24-13 shall be adjusted to the actuarial equivalent of the payments that
24-14 would be made for the greater number of months.
24-15 (g) Unless the member's spouse is the [designated]
24-16 beneficiary of an optional annuity that guarantees a fixed number
24-17 of monthly payments, the guaranteed number of payments may not
24-18 exceed the applicable period using the following table:
24-19 Maximum number
24-20 of guaranteed
24-21 Age of member at retirement: monthly payments:
24-22 less than 84 180
24-23 at least 84 but less than 91 120
24-24 91 or more 60
24-25 SECTION 25. Sections 12.02(b) and (e), Chapter 452, Acts of
24-26 the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
24-27 Vernon's Texas Civil Statutes), are amended to read as follows:
24-28 (b) If, according to mortality tables adopted by the
24-29 Internal Revenue Service, at the time of the member's retirement
24-30 the joint life expectancy of the member making the selection and of
24-31 the [designated] beneficiary is less than the minimum period that
24-32 monthly payments would be required under the option selected, the
24-33 member must select another option so that the minimum period that
24-34 monthly payments would be required does not exceed the joint life
24-35 expectancy of the person making the selection and of the
24-36 [designated] beneficiary.
24-37 (e) Unless the member's spouse is the [designated]
24-38 beneficiary of an optional annuity that guarantees a fixed number
24-39 of monthly payments, the guaranteed number of payments may not
24-40 exceed the applicable period using the following table:
24-41 Maximum number
24-42 of guaranteed
24-43 Age of member at retirement: monthly payments:
24-44 less than 84 180
24-45 at least 84 but less than 91 120
24-46 91 or more 60
24-47 SECTION 26. Section 13.01(a), Chapter 452, Acts of the 72nd
24-48 Legislature, Regular Session, 1991 (Article 6243n-1, Vernon's Texas
24-49 Civil Statutes), is amended to read as follows:
24-50 (a) [This section applies to distributions made on or after
24-51 January 1, 1993.] Notwithstanding any provision of this Act [the
24-52 plan] to the contrary that would otherwise limit a distributee's
24-53 election under this section, a distributee may elect, at the time
24-54 and in the manner prescribed by the board [plan administrator], to
24-55 have any portion of an eligible rollover distribution paid directly
24-56 to an eligible retirement plan specified by the distributee in a
24-57 direct rollover.
24-58 SECTION 27. Sections 13.01(b)(1) and (4), Chapter 452, Acts
24-59 of the 72nd Legislature, Regular Session, 1991 (Article 6243n-1,
24-60 Vernon's Texas Civil Statutes), are amended to read as follows:
24-61 (1) "Eligible rollover distribution" means any
24-62 distribution of all or any portion of the balance to the credit of
24-63 the distributee, except that an eligible rollover distribution does
24-64 not include:
24-65 (A) any distribution that is one of a series of
24-66 substantially equal periodic payments made at least annually for
24-67 the life or life expectancy of the distributee or the joint lives
24-68 or joint life expectancies of the distributee and distributee's
24-69 [designated] beneficiary, or for a specified period of 10 years or
25-1 more;
25-2 (B) any distribution to the extent the
25-3 distribution is required under Section 401(a)(9) of the Internal
25-4 Revenue Code of 1986 (26 U.S.C. Section 401); or
25-5 (C) the portion of any distribution that is not
25-6 includible in gross income.
25-7 (4) "Direct rollover" means a payment by this system
25-8 [the plan] to the eligible retirement plan specified by the
25-9 distributee.
25-10 SECTION 28. This Act takes effect September 1, 1997.
25-11 SECTION 29. The importance of this legislation and the
25-12 crowded condition of the calendars in both houses create an
25-13 emergency and an imperative public necessity that the
25-14 constitutional rule requiring bills to be read on three several
25-15 days in each house be suspended, and this rule is hereby suspended.
25-16 * * * * *