By Tillery H.B. No. 2668
75R7831 GCH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a deferred retirement option for members of the Teacher
1-3 Retirement System of Texas.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 824, Government Code, is amended by
1-6 adding Subchapter I to read as follows:
1-7 SUBCHAPTER I. DEFERRED RETIREMENT OPTION PLAN
1-8 Sec. 824.801. DEFINITION. In this subchapter, "plan" means
1-9 the deferred retirement option plan provided by this subchapter.
1-10 Sec. 824.802. PARTICIPATION IN PLAN. (a) A contributing
1-11 member who is eligible under Section 824.202 to retire and receive
1-12 a service retirement annuity that is not actuarially reduced may,
1-13 if the member remains an employee, elect to participate in the
1-14 deferred retirement option plan.
1-15 (b) An election to participate in the plan must be on a form
1-16 prescribed by and filed with the retirement system. An election
1-17 must state the period that the member wishes to participate in the
1-18 plan and must select a standard service retirement annuity or an
1-19 available optional service retirement annuity. The maximum period
1-20 a member may participate in the plan is five years. An election
1-21 under this section is irrevocable after filing. The filing of an
1-22 election under this section is not considered for any purpose an
1-23 application for retirement, and a person is not considered a
1-24 retiree for any purpose because of the filing.
2-1 (c) The effective date of a member's participation in the
2-2 plan is the first day of the month after the month in which an
2-3 election is filed and approved by the retirement system. The
2-4 retirement system shall approve each election filed by a member who
2-5 is eligible to make the election.
2-6 Sec. 824.803. COMPUTATION OF PARTICIPANT'S SERVICE AND
2-7 ANNUITY. (a) A person participating in the plan remains a member
2-8 of the retirement system during the period of participation, unless
2-9 the member terminates membership under Section 822.003, but the
2-10 member may not, during participation, accrue additional service
2-11 credit or make additional employee contributions to the retirement
2-12 system, and the state and the member's employing district, if
2-13 applicable, also cease contributions for the member's service
2-14 performed during the member's participation in the plan. The
2-15 member and the state retain the obligation to contribute under
2-16 Section 16, Texas Public School Employees Group Insurance Act
2-17 (Article 3.50-4, Insurance Code), during the member's participation
2-18 in this plan.
2-19 (b) For purposes of the plan, the computation of the service
2-20 retirement annuity of a member participating in the plan is
2-21 determined as of the effective date of participation. A
2-22 participating member is not eligible to receive a postretirement
2-23 increase made applicable to annuitants during the member's
2-24 participation in the plan.
2-25 Sec. 824.804. BENEFITS UNDER PLAN. (a) On the effective
2-26 date of a member's participation in the plan, the retirement system
2-27 shall make the transfers required by Section 825.309 to the retired
3-1 reserve account as if the member had retired on that date. The
3-2 retirement system shall transfer monthly, during the period of the
3-3 member's participation in the plan, from the retired reserve
3-4 account to an account for the member in the deferred retirement
3-5 option account the amount the member would have received that month
3-6 if the member had retired on the effective date of plan
3-7 participation.
3-8 (b) When a member who has participated in the plan retires,
3-9 the person is entitled to the accumulated amount in the member's
3-10 account in the deferred retirement option account. The amount is
3-11 payable in a lump sum or in periodic installments at the option of
3-12 the member. The board of trustees by rule shall determine the
3-13 number and frequency of installment payments.
3-14 (c) If a member dies during participation in the plan or
3-15 after participation but before retirement, the decedent's
3-16 designated beneficiary is entitled to the accumulated amount in the
3-17 decedent's account in the deferred retirement option account as if
3-18 the decedent had retired immediately before dying.
3-19 (d) Payment of the benefit provided under the plan is in
3-20 addition to any annuity otherwise payable under this subtitle.
3-21 Sec. 824.805. TERMINATION OF PARTICIPATION IN PLAN. A
3-22 member terminates participation in the plan by:
3-23 (1) retirement;
3-24 (2) death; or
3-25 (3) expiration of the period for which participation
3-26 was approved.
3-27 Sec. 824.806. BENEFITS FOR SERVICE AFTER PLAN PARTICIPATION.
4-1 (a) A member whose participation in the plan terminates while the
4-2 member remains an employee resumes accruing service credit at that
4-3 time, and the member, the state and, if applicable, the employing
4-4 district resume the obligations of contributions for the service
4-5 performed after the termination of plan participation.
4-6 (b) At the time a member retires or dies, the retirement
4-7 system shall compute the value of the additional service credit at
4-8 the rate provided under Section 824.203, based on the lesser of the
4-9 three years of service after the member's termination of plan
4-10 participation, or the member's actual years of service after the
4-11 termination, in which the member received the highest annual
4-12 compensation. The retirement system shall add the amount computed
4-13 under this subsection to the amount determined on the effective
4-14 date of plan participation, and the sum is payable, subject to
4-15 actuarial reduction if applicable, as the monthly annuity payment.
4-16 Sec. 824.807. INTEREST. Interest is creditable to a
4-17 member's account in the deferred retirement option account at an
4-18 annual, prorated rate equal to the realized return on the
4-19 retirement system's investments for the preceding year.
4-20 SECTION 2. Section 824.602, Government Code, is amended by
4-21 adding Subsection (l) to read as follows:
4-22 (l) This subchapter does not apply to payments under Section
4-23 824.804(b).
4-24 SECTION 3. Section 825.306, Government Code, is amended to
4-25 read as follows:
4-26 Sec. 825.306. CREDITING SYSTEM ASSETS. The assets of the
4-27 retirement system shall be credited, according to the purpose for
5-1 which they are held, to one of the following accounts:
5-2 (1) member savings account;
5-3 (2) state contribution account;
5-4 (3) retired reserve account;
5-5 (4) interest account; [or]
5-6 (5) expense account; or
5-7 (6) deferred retirement option account.
5-8 SECTION 4. Subchapter D, Chapter 825, Government Code, is
5-9 amended by adding Section 825.3121 to read as follows:
5-10 Sec. 825.3121. DEFERRED RETIREMENT OPTION ACCOUNT. (a) The
5-11 retirement system shall deposit in the deferred retirement option
5-12 account the amounts required to be deposited in the account by
5-13 Section 824.804(a) and interest as required by Section 824.807.
5-14 (b) The retirement system shall pay from the account all
5-15 benefits accrued during participation in the deferred retirement
5-16 option plan.
5-17 SECTION 5. This Act takes effect September 1, 1997.
5-18 SECTION 6. The importance of this legislation and the
5-19 crowded condition of the calendars in both houses create an
5-20 emergency and an imperative public necessity that the
5-21 constitutional rule requiring bills to be read on three several
5-22 days in each house be suspended, and this rule is hereby suspended.