1-1 AN ACT
1-2 relating to the establishment of a retirement system for officers
1-3 and employees of certain municipalities and of the retirement
1-4 system and the transfer of credit from one retirement system to the
1-5 established system.
1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-7 SECTION 1. DEFINITIONS. In this Act:
1-8 (1) "Authorized absence" means:
1-9 (A) each day an employee is absent due to an
1-10 approved holiday, vacation, accident, or sickness, if the employee
1-11 is continued on the employment rolls of the city or the pension
1-12 system, receives the employee's regular salary from the city or the
1-13 pension system for each day of absence, and remains eligible to
1-14 work on recovery or return; or
1-15 (B) any period that a person is on military
1-16 leave of absence under Section 18(a) of this Act, provided the
1-17 person complies with the requirements of that section.
1-18 (2) "Average monthly salary" means:
1-19 (A) the amount computed by dividing the sum of
1-20 the 78 highest biweekly salaries paid to an employee during years
1-21 of credited service by 36; or
1-22 (B) if there are fewer than 78 biweekly salaries
1-23 paid to an employee during the employee's period of credited
1-24 service, the amount computed by multiplying the average of all
2-1 biweekly salaries paid to the employee during the period of
2-2 credited service by 26 and dividing the product by 12.
2-3 (3) "Benefit accrual rate" means the percentage in
2-4 Section 10(d) or (e) of this Act for each year of a member's
2-5 credited service used to compute a pension or benefit.
2-6 (4) "City" means a municipality having a population of
2-7 more than 1.5 million.
2-8 (5) "Credited service" means each day of service and
2-9 prior service of a member for which:
2-10 (A) the city has and, for service in group A,
2-11 the member has made required contributions to the pension fund that
2-12 were not subsequently withdrawn;
2-13 (B) the member has purchased service credit or
2-14 converted service credit from group B to group A by paying into the
2-15 pension fund required amounts that were not subsequently withdrawn;
2-16 (C) the member has reinstated service under
2-17 Section 7(g) of this Act; and
2-18 (D) the member has previously made payments to
2-19 the pension fund that, under then existing provisions of law, make
2-20 the member eligible for credit for the service and that were not
2-21 subsequently withdrawn.
2-22 (6) "Deferred participant" means a person who:
2-23 (A) has separated from service;
2-24 (B) has at least five years of credited service
2-25 in the pension system;
2-26 (C) has not met the eligibility requirements for
2-27 a normal retirement pension; and
3-1 (D) has made an election under Section 17(c) of
3-2 this Act.
3-3 (7) "Dependent child" means an unmarried natural or
3-4 legally adopted child of a member, deferred participant, or retiree
3-5 who:
3-6 (A) was supported by the member, deferred
3-7 participant, or retiree; and
3-8 (B) is under 21 years of age or is totally and
3-9 permanently disabled from performing any full-time employment
3-10 because of an injury, illness, or retardation that began before the
3-11 child became 18 years of age and before the death of the member,
3-12 deferred participant, or retiree.
3-13 (8) "Disability" means the complete and permanent
3-14 inability of a member to perform the usual and customary duties
3-15 that the member has been performing as an employee, or any other
3-16 full-time duties for which the member is reasonably suited by
3-17 training or experience, as determined by the pension board on the
3-18 basis of a medical examination and any other evidence the pension
3-19 board determines is necessary.
3-20 (9) "Effective retirement date" means the first day
3-21 retirement begins for a member or deferred participant who is
3-22 eligible for retirement. If the pension system receives a member's
3-23 application for normal retirement before the member's separation
3-24 from service or not later than the 90th day after the date of the
3-25 member's separation from service, the effective retirement date is
3-26 the later of the first day of the month following the month of
3-27 separation or the date specified in the application. If the
4-1 pension system receives the member's application after the 90th day
4-2 after the date of the member's separation from service, the
4-3 effective retirement date is the later of the first day of the
4-4 month after the pension system receives the application or the date
4-5 specified in the application. The effective retirement date for a
4-6 member who qualifies for a service or ordinary disability
4-7 retirement is the later of the day following the member's last day
4-8 of credited service or the date the pension system receives the
4-9 member's request for disability retirement.
4-10 (10) "Eligible survivor" means a surviving spouse or
4-11 dependent child.
4-12 (11) "Employee" means any person, including an elected
4-13 official during the official's service to the city, who is eligible
4-14 under this Act and:
4-15 (A) who holds a municipal position or a position
4-16 with the pension system;
4-17 (B) whose name appears on a regular full-time
4-18 payroll of a city or of the pension fund; and
4-19 (C) who is paid a regular salary for services.
4-20 (12) "Marriage" means a marriage in which:
4-21 (A) a marriage certificate is recorded in the
4-22 records of the county clerk's office in the county in which the
4-23 marriage ceremony was performed; or
4-24 (B) in the case of a common-law marriage, a
4-25 marriage declaration is executed by the couple and recorded in the
4-26 records of the county clerk's office in the county in which the
4-27 couple resides. For separations from service after June 29, 2002,
5-1 a marriage that is evidenced by a declaration of common-law
5-2 marriage signed before a notary public after June 30, 2002, may not
5-3 be treated as effective before the date it was signed before the
5-4 notary public.
5-5 (13) "Member" means each active employee included in
5-6 the pension system, except for an employee who is ineligible under
5-7 Section 4 of this Act.
5-8 (14) "Military service" means active service in the
5-9 armed forces of the United States or wartime service in the armed
5-10 forces of the United States or in the allied forces, if credit for
5-11 military service has not been granted under any federal or other
5-12 state system or used in any other retirement system.
5-13 (15) "Pension" means a benefit payable to a retired
5-14 member out of the pension fund based on a disability or service
5-15 retirement.
5-16 (16) "Pension board" means the board of trustees of
5-17 the pension system created under Chapter 358, Acts of the 48th
5-18 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
5-19 Civil Statutes), and reenacted and continued under this Act for the
5-20 purpose of administering the pension system.
5-21 (17) "Pension fund" means assets consisting of the
5-22 contributions made by the city, contributions made by any member,
5-23 and any income, profits, or other amounts resulting from the
5-24 investment of those contributions.
5-25 (18) "Pension system" means the retirement,
5-26 disability, and survivor benefit plans for municipal employees of a
5-27 city under this Act and employees under Section 3(d) of this Act.
6-1 (19) "Predecessor system" means the retirement system
6-2 authorized by Chapter 358, Acts of the 48th Legislature, Regular
6-3 Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes).
6-4 (20) "Previous service" means any service as an
6-5 employee, other than prior service, that preceded a member's
6-6 current period of employment.
6-7 (21) "Prior service" means any service performed as an
6-8 employee before September 1, 1943.
6-9 (22) "Retiree" means a former member of the pension
6-10 system who:
6-11 (A) has separated from service;
6-12 (B) has met the eligibility requirements for a
6-13 deferred retirement pension, normal retirement pension, or
6-14 disability pension under this Act; and
6-15 (C) is receiving a deferred retirement pension,
6-16 normal retirement pension, or disability pension under this Act
6-17 based on service that was credited to the person.
6-18 (23) "Salary" means base pay, longevity pay, and
6-19 shift-differential pay paid to an employee and attributable to
6-20 services rendered by the employee, regardless of how the employee
6-21 was paid.
6-22 (24) "Separation from service" means the cessation of
6-23 work for the city or the pension system in an eligible position
6-24 covered by this Act for any reason involving the person's removal
6-25 from the employment rolls of the city or the pension system,
6-26 including death, discharge, resignation, or retirement, the
6-27 effective date of which shall be certified by the city or the
7-1 pension system. The term includes the termination of employment.
7-2 (25) "Service" means each day of services and work
7-3 performed by an employee, including an authorized absence. The
7-4 term does not include a period in which a person:
7-5 (A) is a DROP participant;
7-6 (B) is suspended from duty without pay;
7-7 (C) is on leave of absence without pay;
7-8 (D) is ineligible for membership under Section 4
7-9 of this Act; or
7-10 (E) is separated from service.
7-11 (26) "Surviving spouse" means a person who was married
7-12 to a member, deferred participant, or retiree at the time of death
7-13 of the member, deferred participant, or retiree and before
7-14 separation from service by the member, deferred participant, or
7-15 retiree.
7-16 (27) "Trustee" means a trustee of the pension board.
7-17 SECTION 2. PENSION BOARD. (a) The pension board of the
7-18 predecessor system shall continue to administer, manage, and
7-19 operate the pension system, including directing investments and
7-20 overseeing the fund's assets.
7-21 (b) The pension system shall operate for the benefit of the
7-22 employees of a city and the pension system. The pension system
7-23 continues to operate regardless of whether the city's population
7-24 falls below the population required for the city. The pension
7-25 board is not subject to Title 9, Property Code.
7-26 (c) The pension board consists of 11 trustees as follows:
7-27 (1) the mayor of the city, or the director of the
8-1 civil service commission as the mayor's representative;
8-2 (2) the city treasurer or a person performing the
8-3 duties of treasurer;
8-4 (3) four municipal employees of the city who are
8-5 members of the pension system;
8-6 (4) two retirees, each of whom:
8-7 (A) has at least five years of credited service
8-8 in the pension system;
8-9 (B) receives a retirement pension from the
8-10 pension system; and
8-11 (C) is not an officer or employee of the city;
8-12 and
8-13 (5) three persons, each of whom:
8-14 (A) is a registered voter in the city;
8-15 (B) has been a resident of the city for the
8-16 three years preceding the date of initial appointment; and
8-17 (C) is not a city officer or employee.
8-18 (d) To serve as a trustee under Subsection (c)(3) of this
8-19 section, a person must be a member with at least five years of
8-20 credited service and be elected by the active members of the
8-21 pension system at an election called by the pension board. No more
8-22 than two of the employee trustees may be employees of the same
8-23 department.
8-24 (e) A person elected as an employee trustee under Subsection
8-25 (d) of this section who retires during the trustee's term shall
8-26 remain in office until the expiration of the term. Persons elected
8-27 as employee trustees serve staggered four-year terms, with the
9-1 terms of two of the trustees expiring in each even-numbered year.
9-2 Each employee trustee shall continue to serve until a successor is
9-3 qualified.
9-4 (f) A vacancy caused by an employee trustee's death,
9-5 resignation, or removal shall be filled by an appointment made by a
9-6 majority of the trustees elected by the members of the pension
9-7 system on a notarized affidavit of appointment submitted to the
9-8 executive director not later than the 10th day after the date the
9-9 vacancy occurs. The appointee serves for the remainder of the
9-10 unexpired term of the replaced trustee. If the notarized affidavit
9-11 of appointment is not timely submitted, the executive director
9-12 shall call an election to be held not later than the 90th day after
9-13 the date of the vacancy to elect an employee trustee to fill the
9-14 vacancy.
9-15 (g) To serve as a trustee under Subsection (c)(4) of this
9-16 section, a person must be elected by the retired members of the
9-17 pension system at an election called by the pension board.
9-18 (h) Persons elected as retiree trustees serve four-year
9-19 staggered terms, with the term of one trustee expiring in each
9-20 even-numbered year.
9-21 (i) Each retiree trustee serves until the retiree's
9-22 successor is qualified. A vacancy caused by a retiree trustee's
9-23 death, resignation, or removal shall be filled by appointment made
9-24 by the other trustee normally chosen by retiree election on a
9-25 notarized affidavit of appointment submitted to the executive
9-26 director not later than the 10th day after the date the vacancy
9-27 occurs. The appointee serves for the remainder of the unexpired
10-1 term of the replaced trustee. If the notarized affidavit of
10-2 appointment is not timely submitted, the executive director shall
10-3 call an election to be held not later than the 90th day after the
10-4 date of the vacancy to elect a retiree trustee to fill the vacancy.
10-5 (j) To serve as a trustee under Subsection (c)(5) of this
10-6 section, a person must be appointed by the governing body of the
10-7 city. Each trustee appointed under Subsection (c)(5) of this
10-8 section serves a two-year term. The appointment or reappointment
10-9 of both the appointed trustees shall take place in January of each
10-10 even-numbered year. A vacancy caused by an appointed trustee's
10-11 death, resignation, or removal shall be filled by the governing
10-12 body of the city. The appointee serves for the remainder of the
10-13 unexpired term of the replaced trustee. An appointed trustee may
10-14 not serve beyond the expiration of the two-year term other than by
10-15 appointment for a new term by the governing body of the city.
10-16 (k) Notwithstanding any other provision in this section, if
10-17 an eligible candidate for an elected trustee position on the
10-18 pension board is unopposed for an election, the election may not be
10-19 held for that position, and the pension board shall certify the
10-20 candidate as elected to the pension board on the executive
10-21 director's designation that the candidate is eligible to be a
10-22 trustee under this section and is unopposed for election. The
10-23 pension board's certification shall be effective on the day
10-24 following the date the preceding term for the trustee position
10-25 expires.
10-26 (l) Each trustee shall, at the first pension board meeting
10-27 following the trustee's most recent election or appointment, take
11-1 an oath of office that the trustee:
11-2 (1) will diligently and honestly administer the
11-3 pension system; and
11-4 (2) will not knowingly violate this Act or willingly
11-5 allow a violation of this Act to occur.
11-6 (m) A trustee serves without bond unless otherwise required
11-7 by law and may not receive compensation for service on the pension
11-8 board. The pension board by resolution may adopt a policy for
11-9 removal of a trustee.
11-10 (n) The person serving as a trustee under Subsection (c)(2)
11-11 of this section serves as the treasurer of the pension fund under
11-12 penalty of that person's official bond and oath of office. That
11-13 person's official bond to the city shall cover the person's
11-14 position as treasurer of the pension fund, and that person's
11-15 sureties are liable for the treasurer's actions pertaining to the
11-16 pension fund to the same extent as the sureties are liable under
11-17 the terms of the bond for other actions and conduct of the
11-18 treasurer.
11-19 (o) The pension board shall receive, manage, and disburse
11-20 the pension fund as provided by this Act and rules adopted by the
11-21 pension board.
11-22 (p) In each odd-numbered year, the pension board shall elect
11-23 from the elected trustees a chair, vice chair, and secretary.
11-24 (q) The pension board shall hold regular monthly meetings at
11-25 a time and place set by the chair. The chair, the secretary, or a
11-26 majority of the trustees may call a special meeting of the pension
11-27 board.
12-1 (r) The city shall allow city employees who are trustees to
12-2 promptly attend all pension board and committee meetings. The city
12-3 shall allow trustees the time required to travel to and attend
12-4 educational workshops, legislative hearings, and meetings regarding
12-5 proposed amendments to this Act if attendance is consistent with a
12-6 trustee's duty to the pension board.
12-7 (s) Notice shall be given to all trustees of the pension
12-8 board, unless waived in writing, as to any proposed meeting by any
12-9 method reasonably calculated to give adequate notice of the
12-10 meeting. The notice may be delivered by mail, personal delivery,
12-11 or electronically transmitted notice, including facsimile, and
12-12 shall be properly addressed to each trustee. If a meeting occurs
12-13 that all trustees of the pension board attend, notice is not
12-14 necessary under this subsection.
12-15 (t) Each trustee is entitled to one vote on the pension
12-16 board. A majority of concurring votes present at any meeting of
12-17 the pension board is needed for a decision by the trustees. A
12-18 majority of the trustees is a quorum. A trustee who is a member
12-19 may not vote on any issue relating specifically to that trustee.
12-20 (u) The city shall provide full and timely information to
12-21 the pension board about employees as reasonably required by the
12-22 pension board to administer the pension fund and provide benefits
12-23 properly, including information relating to the hiring of
12-24 employees, members' service dates, compensation of members,
12-25 members' deaths, and terminations of employment.
12-26 (v) The pension board may purchase from an insurer licensed
12-27 to do business in this state an insurance policy that provides for
13-1 reimbursement of a trustee, officer, or employee of the pension
13-2 board for liability imposed for damages caused by an alleged act,
13-3 error, or omission committed in the individual's capacity as
13-4 fiduciary or cofiduciary of assets of the pension fund and for
13-5 costs and expenses incurred by a fiduciary or cofiduciary in
13-6 defense of a claim of an alleged act, error, or omission. A policy
13-7 of insurance purchased under this subsection may not provide for
13-8 reimbursement of a trustee, officer, or employee of the pension
13-9 board for liability imposed or expenses incurred because of the
13-10 individual's personal dishonesty, fraudulent breach of trust, lack
13-11 of good faith, intentional fraud or deception, or intentional
13-12 failure to act prudently. The cost of insurance coverage purchased
13-13 under this subsection shall be paid from money in the pension fund.
13-14 (w) If the insurance described in Subsection (v) of this
13-15 section is not in effect, the pension board may indemnify a
13-16 trustee, officer, or employee of the pension board for liability
13-17 imposed as damages because of an alleged act, error, or omission
13-18 committed in the individual's capacity as fiduciary or cofiduciary
13-19 of assets of the pension fund and for reasonable costs and expenses
13-20 incurred by a fiduciary or a cofiduciary in defense of a claim of
13-21 an alleged act, error, or omission. Indemnification may not extend
13-22 to liability imposed or expenses incurred by a trustee, officer, or
13-23 employee of the pension board because of the individual's personal
13-24 dishonesty, fraudulent breach of trust, lack of good faith,
13-25 intentional fraud or deception, or intentional failure to act
13-26 prudently. A determination of indemnification shall be made by a
13-27 majority vote of the pension board. If a proposed indemnification
14-1 is of a trustee, that trustee may not vote on the matter. In the
14-2 event the vote of the pension board results in a tie, the
14-3 indemnification shall be approved. The pension board may adopt a
14-4 policy establishing a method for presentation, approval, and
14-5 payment of claims for indemnification. Indemnification approved
14-6 under this subsection extends to acts, errors, and omissions of
14-7 trustees, officers, or employees of the predecessor system as long
14-8 as the alleged act, error, or omission occurs after July 1, 1989.
14-9 (x) The pension board shall manage the pension fund under
14-10 this Act and under the Internal Revenue Code of 1986, as amended,
14-11 and may:
14-12 (1) adopt, for the administration of the pension fund,
14-13 written rules and guidelines;
14-14 (2) interpret and construe this Act and any summary
14-15 plan, descriptions, or benefits procedures, except that each
14-16 construction must meet any qualification requirements established
14-17 under Section 401, Internal Revenue Code of 1986, as amended;
14-18 (3) correct any defect, supply any omission, and
14-19 reconcile any inconsistency that appears in this Act in a manner
14-20 and to the extent that the pension board considers expedient to
14-21 administer this Act for the greatest benefit of all members;
14-22 (4) determine all questions, whether legal or factual,
14-23 relating to eligibility for membership, service, or benefits or
14-24 relating to the administration of the pension fund to promote the
14-25 uniform administration of the pension fund for the benefit of all
14-26 members and retirees; and
14-27 (5) establish and maintain records necessary or
15-1 appropriate for the proper administration of the pension fund.
15-2 (y) The determination of any fact by the pension board and
15-3 the pension board's interpretation of this Act are final and
15-4 binding on any interested party, including members, deferred
15-5 participants, retirees, eligible survivors, beneficiaries, and the
15-6 city.
15-7 (z) The pension board shall determine the prior service to
15-8 be credited to each member of the pension system based on:
15-9 (1) the personnel records of the city; or
15-10 (2) affidavits, if the personnel records are
15-11 incomplete.
15-12 (aa) The pension board shall determine each member's
15-13 credited service based on the personnel and financial records of
15-14 the city and the records of the pension board.
15-15 (bb) The trustees and the executive director may rely on:
15-16 (1) tables, valuations, certificates, and reports
15-17 furnished by any actuary employed by the pension board;
15-18 (2) certificates and reports made by an accountant
15-19 selected or approved by the pension board;
15-20 (3) any report furnished by the treasurer; and
15-21 (4) opinions given by any legal counsel selected or
15-22 approved by the pension board.
15-23 (cc) The trustees, executive director, and employees of the
15-24 pension system are fully protected and free of liability for any
15-25 action taken or suffered by them in good faith in reliance on the
15-26 actuary, accountant, treasurer, or counsel, and the action is
15-27 conclusively binding on all employees, members, deferred
16-1 participants, retirees, eligible survivors, beneficiaries, and
16-2 other persons.
16-3 (dd) A gathering of any number of trustees to investigate,
16-4 research, or review prospective or current investments, without
16-5 formal action by the trustees, is not a deliberation or meeting
16-6 under Chapter 551, Government Code, and is not required to be open
16-7 to the public.
16-8 SECTION 3. ADDITIONAL POWERS OF PENSION BOARD. (a) If the
16-9 pension board determines that there is a surplus of funds in an
16-10 amount exceeding the current obligations of the pension fund, the
16-11 pension board may invest the surplus in the manner provided by
16-12 Chapter 802, Government Code.
16-13 (b) The pension board may contract with a person to perform
16-14 any investment, administrative, legal, medical, accounting,
16-15 clerical, or other service the pension board considers appropriate,
16-16 including:
16-17 (1) a certified public accountant or firm of certified
16-18 public accountants to perform an audit of the pension fund at times
16-19 and intervals the pension board considers necessary;
16-20 (2) a professional investment manager or firm of
16-21 managers as provided by Section 802.204, Government Code;
16-22 (3) an actuary or actuarial firm at times and for
16-23 purposes the pension board considers appropriate; and
16-24 (4) an attorney or law firm to advise, assist, or
16-25 represent the pension board in any legal matter relating to the
16-26 pension fund.
16-27 (c) A fee for a service or person contracted with under
17-1 Subsection (b) of this section may be paid from the pension fund.
17-2 (d) The pension board may hire employees as the pension
17-3 board considers advisable for the proper and efficient
17-4 administration of the system, including persons described in
17-5 Subsection (b) of this section, whose positions and salaries shall
17-6 be set by the pension board.
17-7 (e) The executive director hired by the pension board is the
17-8 plan administrator.
17-9 (f) The pension board shall compensate from the pension fund
17-10 the persons performing services under Subsections (d) and (e) of
17-11 this section and may provide other employee benefits that the
17-12 pension board considers proper. Any person employed by the pension
17-13 board under Subsection (d) or (e) of this section who has service
17-14 credits with the pension system at the time of the person's
17-15 employment by the pension board retains the person's status in the
17-16 pension system. Any person employed by the pension system who does
17-17 not have service credits with the pension system at the time of
17-18 employment is a group A member. The pension board shall adopt a
17-19 detailed annual budget detailing its proposed administrative
17-20 expenditures under this subsection for the next fiscal year.
17-21 (g) The pension board may institute legal action in the name
17-22 of the pension board on behalf of the pension system, including a
17-23 civil action to recover from any offending party, or from the
17-24 party's surety, money paid out or obtained from the pension fund
17-25 through fraud, misrepresentation, defalcation, theft, embezzlement,
17-26 or misapplication.
17-27 (h) The pension board may offset amounts received wrongly or
18-1 in error by a member, deferred participant, retiree, eligible
18-2 survivor, alternate payee, or beneficiary from future pension or
18-3 benefit payments payable to the person or the person's
18-4 beneficiaries.
18-5 (i) On written request from the chair, the city attorney
18-6 shall represent the pension board or the pension fund in any legal
18-7 matter. The city attorney may not be compensated from the pension
18-8 fund for providing representation. The pension board may employ,
18-9 if necessary, legal counsel instead of the city attorney or to
18-10 assist the city attorney and may pay reasonable compensation from
18-11 the pension fund.
18-12 (j) The pension board may obtain from any member, deferred
18-13 participant, retiree, eligible survivor, alternate payee, or
18-14 beneficiary any information the pension board considers necessary
18-15 for the proper administration of the pension system. The pension
18-16 board may require any member, survivor, or other person or entity
18-17 to furnish information the pension board requires for the
18-18 determination of benefits under this Act. If a person or entity
18-19 does not cooperate in the furnishing or obtaining of information,
18-20 the pension board may withhold payment of the pension or other
18-21 benefits until the pension board receives the information.
18-22 (k) On majority vote of the trustees, the pension board may
18-23 allocate among the trustees the responsibilities of the pension
18-24 board under this Act and may designate any person who is not a
18-25 trustee, including the executive director and other employees, to
18-26 carry out the responsibilities of the pension board under this Act.
18-27 (l) The pension board may by resolution make the
19-1 implementation of a provision of this Act contingent on receipt of
19-2 a favorable private letter ruling or favorable determination letter
19-3 from the Internal Revenue Service if the pension board determines
19-4 that the action is in the best interest of the pension system.
19-5 (m) It is intended that this Act be construed and
19-6 administered in a manner so that the pension system's benefit plan
19-7 will be considered a qualified plan under Section 401(a), Internal
19-8 Revenue Code of 1986, as amended. The pension board may adopt
19-9 rules that qualify the plan to the extent necessary for the pension
19-10 system to be a qualified plan. Rules adopted by the pension board
19-11 under this subsection are considered a part of the plan. In
19-12 determining qualification status under Section 401(a), Internal
19-13 Revenue Code of 1986, as amended, the pension system's benefit plan
19-14 shall be considered the primary retirement plan for members of the
19-15 pension system.
19-16 SECTION 4. INELIGIBLE INDIVIDUALS. Notwithstanding any
19-17 other provision of this Act, the following employees of the city or
19-18 of the pension system are not eligible to become members of the
19-19 pension system:
19-20 (1) persons on quasi-legislative, quasi-judicial, and
19-21 advisory pension boards and commissions;
19-22 (2) part-time employees, as defined by the city, other
19-23 than elected officials whose service is made part-time by law or
19-24 charter;
19-25 (3) seasonal employees;
19-26 (4) independent contractors, including consultants;
19-27 and
20-1 (5) employees in positions covered by any other
20-2 pension plan of the city to which the city contributes, including
20-3 employees who are excluded from membership in another pension plan
20-4 by action of the board of trustees of the other pension plan,
20-5 except to the extent that they are covered in another pension plan
20-6 only as a beneficiary.
20-7 SECTION 5. INDIVIDUALS ELIGIBLE FOR MEMBERSHIP. (a)
20-8 Individuals described in this section are eligible for membership
20-9 under this Act.
20-10 (b) Except as provided by Subsection (c) of this section and
20-11 Sections 4 and 6 of this Act, an employee is a group A member of
20-12 the pension system as a condition of employment if the employee:
20-13 (1) is hired or rehired as an employee by the city,
20-14 the predecessor system, or the pension system on or after September
20-15 1, 1999;
20-16 (2) was a member of the predecessor system before
20-17 September 1, 1981, under the terms of Chapter 358, Acts of the 48th
20-18 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
20-19 Civil Statutes), and did not make an election before December 1,
20-20 1981, under Section 22(a) of that Act to receive a refund of
20-21 contributions and become a group B member;
20-22 (3) was a group A member who terminated employment
20-23 included in the predecessor system before May 3, 1991, elected
20-24 under Section 16, Chapter 358, Acts of the 48th Legislature,
20-25 Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
20-26 Statutes), to leave the member's contributions in that pension
20-27 fund, met the minimum service requirements for retirement at an
21-1 attained age, was reemployed in a position included in the
21-2 predecessor system before September 1, 1999, and elected, not later
21-3 than the 30th day after the date reemployment began, to continue as
21-4 a group A member;
21-5 (4) became a member of, or resumed membership in, the
21-6 predecessor system as an employee or elected official of the city
21-7 after January 1, 1996, and before September 1, 1999, and elected by
21-8 submission of a signed and notarized form in a manner determined by
21-9 the pension board to become a group A member and to contribute a
21-10 portion of the person's salary to the pension fund as required by
21-11 Chapter 358, Acts of the 48th Legislature, Regular Session, 1943
21-12 (Article 6243g, Vernon's Texas Civil Statutes); or
21-13 (5) met the requirements of Section 3B, Chapter 358,
21-14 Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g,
21-15 Vernon's Texas Civil Statutes), or Subsection (f) of this section
21-16 for membership in group A.
21-17 (c) Except as otherwise provided by this section or Section
21-18 4 of this Act, an employee continues as a group B member of the
21-19 pension system as a condition of employment if the employee:
21-20 (1) was hired or rehired by the city or the
21-21 predecessor system after September 1, 1981, and before September 1,
21-22 1999, and did not make an election under Section 3A, Chapter 358,
21-23 Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g,
21-24 Vernon's Texas Civil Statutes), to become a group A member; or
21-25 (2) was a member of the predecessor system before
21-26 September 1, 1981, under the terms of Chapter 358, Acts of the 48th
21-27 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
22-1 Civil Statutes), and made an election before December 1, 1981,
22-2 under Section 22 of that Act to receive a refund of contributions
22-3 and become a group B member.
22-4 (d) Except as otherwise provided by this section, Section 4
22-5 or 6 of this Act, or Section 22A, Chapter 358, Acts of the 48th
22-6 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
22-7 Civil Statutes), any employee of the city or of the pension system
22-8 who is an executive official as defined by Section 6 of this Act is
22-9 a group C member of the pension system. A group C member is
22-10 subject to the same provisions that apply to group A members except
22-11 as otherwise provided by Section 6 of this Act.
22-12 (e) Any member or former member of the pension system
22-13 elected to an office of the city on or after September 1, 1999,
22-14 becomes a group A member and is eligible to receive credit for all
22-15 previous service on the same conditions as reemployed group A
22-16 members under Sections 7(c), (d), (e), and (f) of this Act, except
22-17 as otherwise provided by this Act. Notwithstanding any other
22-18 provision in this Act or in Chapter 358, Acts of the 48th
22-19 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
22-20 Civil Statutes), consecutive terms of office of any elected member
22-21 who is elected to an office of the city are considered to be
22-22 continuous employment for purposes of this Act.
22-23 (f) Each group B member of the pension system may make an
22-24 irrevocable election on a date and in a manner determined by the
22-25 pension board to change membership from group B to group A:
22-26 (1) for future service only; or
22-27 (2) for future service and to convert all past group B
23-1 service to group A service and comply with the requirements of
23-2 Subsection (h) of this section.
23-3 (g) Each group A member with service in group B may make an
23-4 irrevocable election on a date and in a manner determined by the
23-5 pension board to convert all group B service to group A service and
23-6 to comply with the requirements of Subsection (h) of this section.
23-7 (h) A member who makes an election under Subsection (f) or
23-8 (g) of this section must pay into the pension fund all
23-9 contributions that would have been deducted as member contributions
23-10 to group A during the period that the person was a group B member,
23-11 as computed under Section 7(c), (d), (e), or (f) of this Act,
23-12 including required interest. Payment of these amounts must be
23-13 completed before the earliest of the date of the termination of the
23-14 member's employment or term in office, the date of the member's
23-15 retirement or death, or the fifth anniversary of the date of the
23-16 member's election under this section. If the payments are not
23-17 completed by that date, the member or the member's estate may
23-18 either make an immediate payment of the balance due or receive a
23-19 refund, without interest, of the amount the member paid as
23-20 contributions to group A for the period that the person was a group
23-21 B member. If a refund is paid under this subsection and the member
23-22 made the election under Subsection (f) of this section, the member
23-23 is considered to have been a group B member during the period
23-24 preceding the member's election and to have been a group A member
23-25 since the date of the member's election. If a refund is paid under
23-26 this subsection and the member made the election under Subsection
23-27 (g) of this section, all of the group B service that the member had
24-1 elected to convert to group A service reverts back to group B
24-2 service.
24-3 (i) A member who makes an election under Subsection (f)(1)
24-4 or (2) of this section shall pay required contributions under
24-5 Section 8 of this Act for all service after the date of the
24-6 election.
24-7 SECTION 6. GROUP C MEMBERSHIP, SERVICE REQUIREMENTS, AND
24-8 BENEFITS. (a) A group C member is subject to the provisions that
24-9 apply to group A members under this Act, except as otherwise
24-10 provided by this section.
24-11 (b) In this section:
24-12 (1) "Credited service" means the number of whole and
24-13 fractional years of a member's eligible service in group C as an
24-14 executive official after the executive official's effective date of
24-15 participation in group C for which member and employer
24-16 contributions are on deposit with the pension fund.
24-17 (2) "Effective date of participation in group C" means
24-18 September 1, 1999, except that for an employee who first becomes an
24-19 executive official and whose contributions to group C begin after
24-20 that date, the effective date of participation in group C is the
24-21 first date on which the employee qualifies as an executive official
24-22 and for which applicable contributions are made for service in
24-23 group C as an executive official.
24-24 (3) "Executive official" means a person in one of the
24-25 following categories:
24-26 (A) the chief administrative officer of the
24-27 city;
25-1 (B) the executive director of the pension
25-2 system; or
25-3 (C) a full-time appointed director of a
25-4 department of the city as designated by the governing body of the
25-5 city and approved by the pension board, other than a director who
25-6 is covered by another pension system to which the city contributes
25-7 or an acting director or the equivalent.
25-8 (4) "Group C" means the executive officials' plan
25-9 established under Chapter 358, Acts of the 48th Legislature,
25-10 Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
25-11 Statutes), and reenacted and continued under this Act.
25-12 (c) An executive official becomes a member of group C on the
25-13 official's effective date of participation in group C, except that
25-14 a group A or group B member who is participating in the DROP under
25-15 Section 12 of this Act is ineligible to become a member of group C.
25-16 (d) A group C member receives two times the number of actual
25-17 years of credited service in group C solely for the purpose of
25-18 fulfilling the eligibility requirements for a deferred or normal
25-19 retirement pension in group C as provided by Subsection (e) of this
25-20 section. For all other computations under this Act, the actual
25-21 years of credited service in group C are used.
25-22 (e) A group C member who ceases to be an executive official
25-23 is eligible for a deferred or normal retirement pension beginning
25-24 on the member's effective retirement date when the member separates
25-25 from service and:
25-26 (1) fulfills the requirement for years of age and
25-27 years of credited service for a normal retirement pension under
26-1 Section 10(b) of this Act; or
26-2 (2) attains 65 years of age with any amount of group C
26-3 credited service.
26-4 (f) For purposes of group C service under this section, the
26-5 amount of the monthly:
26-6 (1) normal retirement pension for a group C member
26-7 equals the member's average monthly salary multiplied by two times
26-8 the benefit accrual rate in effect for group A members and that
26-9 product multiplied by the group C member's actual years of credited
26-10 service in group C;
26-11 (2) deferred retirement pension for a group C member
26-12 is computed under Subdivision (1) of this subsection, but based on
26-13 the member's average monthly salary and actual years of credited
26-14 service as of the member's last day of credited service and subject
26-15 to the provisions of this Act in effect on the member's last day of
26-16 credited service;
26-17 (3) ordinary disability pension for a group C member
26-18 under Section 13 of this Act is computed under Subdivision (1) of
26-19 this subsection;
26-20 (4) service disability pension for a group C member
26-21 under Section 13 of this Act is the greater of:
26-22 (A) the amount computed under Subdivision (1) of
26-23 this subsection; or
26-24 (B) the amount computed under Section 13(b) of
26-25 this Act; and
26-26 (5) survivor benefit for any eligible survivor of a
26-27 deceased group C member under Section 14(b) of this Act is computed
27-1 under Section 14(b), but based on the ordinary disability benefit
27-2 as computed under Subdivision (3) of this subsection.
27-3 (g) Any previous service of a group C member in group A or
27-4 group B is governed by the applicable group A or group B provisions
27-5 of this Act and may not be credited to group C, except as provided
27-6 in Subsection (i) of this section. Group C service may not be
27-7 credited to group A or group B.
27-8 (h) This section applies to a member only while the member
27-9 is an eligible executive official. A member who ceases to be an
27-10 executive official and transfers to or is rehired into a municipal
27-11 position covered by group A participates in group A, does not
27-12 forfeit group C service, and remains eligible for normal retirement
27-13 for group C service as provided under Subsection (e) of this
27-14 section. A former group C member is not eligible to participate in
27-15 group B.
27-16 (i) A group C member who has at least two years of
27-17 continuous credited service in group C is eligible to receive
27-18 credited service in group C, on application in a manner determined
27-19 by the pension board, for all periods of service before the group C
27-20 member's effective date of participation in group C in which the
27-21 member has otherwise met the definition of "executive official"
27-22 under Subsection (b)(3) of this section, provided that:
27-23 (1) if the service was in group A, the group C member
27-24 may not have received a refund of contributions unless the group C
27-25 member repaid refunded contributions under Sections 7(c), (d), (e),
27-26 and (f) of this Act or Section 5(j), Chapter 358, Acts of the 48th
27-27 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
28-1 Civil Statutes); and
28-2 (2) if service was in group B, the group C member must
28-3 elect, at a time and in a manner determined by the pension board,
28-4 to purchase the service into group C and must purchase the service
28-5 in the same manner as the service would be purchased into group A
28-6 under Section 5(f) of this Act.
28-7 (j) If payments under Subsection (i)(1) of this section are
28-8 not timely made, the group C member may not receive credited
28-9 service in group C under this section for group A service. If
28-10 required payments under Subsection (i)(2) of this section are not
28-11 timely made, the group C member may not receive credited service in
28-12 group C under this section for group B service.
28-13 SECTION 7. SERVICE; CREDITED SERVICE. (a) Notwithstanding
28-14 any other provision of this Act, duplication of service or credited
28-15 service in group A, B, or C of the pension system or in the pension
28-16 system and any other defined benefit pension plan to which the city
28-17 contributes is prohibited.
28-18 (b) A member's service begins on the date the member first
28-19 performs services for the city, the pension system, or the
28-20 predecessor system as an eligible employee on or after September 1,
28-21 1943. A member's period of service terminates on the earliest of
28-22 the date of the member's:
28-23 (1) retirement;
28-24 (2) death;
28-25 (3) resignation;
28-26 (4) discharge; or
28-27 (5) other cessation of actual performance of services
29-1 for the city or for the pension system, other than an authorized
29-2 absence.
29-3 (c) Except as provided by Section 12 of this Act, a group A
29-4 member may pay into the pension fund and obtain credit for any
29-5 service with the city or the pension system for which credit is
29-6 otherwise allowable in group A under this Act, except that:
29-7 (1) no contributions were made by the member for the
29-8 service; or
29-9 (2) refunded contributions attributable to the service
29-10 have not been subsequently repaid.
29-11 (d) To establish service described by Subsection (c) of this
29-12 section that occurred before September 1, 1999, the member shall
29-13 pay a sum computed at the rate of four percent of the member's
29-14 salary, and the city shall pay into the pension fund an amount
29-15 equal to 18 percent of that salary for the same period.
29-16 (e) To establish service described by Subsection (c) of this
29-17 section that occurred on or after September 1, 1999, the member
29-18 shall pay a sum computed by multiplying the member's salary during
29-19 the service by the rate established by the pension board for member
29-20 contributions under Section 8 of this Act, and the city shall pay
29-21 into the pension fund an amount equal to the rate established for
29-22 city contributions under Section 8 of this Act multiplied by that
29-23 member's salary for the same period.
29-24 (f) In addition to the amounts to be paid by the member
29-25 under Subsection (d) or (e) of this section, the member shall also
29-26 pay interest on those amounts at the rate of six percent per year,
29-27 not compounded, from the date the contributions would have been
30-1 deducted, if made, or from the date contributions were refunded to
30-2 the date of repayment of those contributions into the pension fund.
30-3 (g) If a group B member separates from service before
30-4 completing five years of credited service, the member's service
30-5 credit is canceled at the time of separation. If the member is
30-6 reemployed by the city before the first anniversary of the date of
30-7 separation, all credit for previous service is restored. Any
30-8 member whose service credit is canceled under this subsection and
30-9 who is reemployed by the city after the first anniversary of the
30-10 date of separation receives one year of previous service credit in
30-11 group B for each full year of subsequent service up to the amount
30-12 of the previous service that was canceled.
30-13 (h) A group B member who was a group A member before
30-14 September 1, 1981, and who was eligible to purchase credit for
30-15 previous service under Chapter 358, Acts of the 48th Legislature,
30-16 Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
30-17 Statutes), may purchase the service credit in group B by paying
30-18 into the pension fund an amount equal to six percent per year, not
30-19 compounded, on any contributions previously withdrawn for the
30-20 period from the date of withdrawal to the date of purchase.
30-21 SECTION 8. CONTRIBUTIONS. (a) Each group A member of the
30-22 pension system shall make monthly contributions during employment
30-23 in an amount determined by the pension board and expressed as a
30-24 percentage of salary. The contributions shall be deducted by the
30-25 employer from the salary of each member and paid to the pension
30-26 system for deposit in the pension fund.
30-27 (b) This section does not increase or decrease the
31-1 contribution obligation of any member that arose before September
31-2 1, 2001, or give rise to any claim for a refund for any
31-3 contributions made before that date.
31-4 (c) The employer shall pick up the contributions required of
31-5 group A members by Subsection (a) of this section for all salaries
31-6 earned after the effective date of this Act. The city shall pay the
31-7 pickup contributions to the pension system from the same source of
31-8 funds that is used for paying salaries to the members. The pickup
31-9 contributions are in lieu of contributions by group A members. The
31-10 city may pick up those contributions by a deduction from each group
31-11 A member's salary equal to the amount of the member's contributions
31-12 picked up by the city. Members may not choose to receive the
31-13 contributed amounts directly instead of having the contributed
31-14 amounts paid by the city to the pension system. An accounting of
31-15 member contributions picked up by the employer shall be maintained,
31-16 and the contributions shall be treated for all other purposes as if
31-17 the amount were a part of the member's salary and had been deducted
31-18 under this section. Contributions picked up under this subsection
31-19 shall be treated as employer contributions in determining tax
31-20 treatment of the amounts under the Internal Revenue Code of 1986,
31-21 as amended.
31-22 (d) The city shall make periodic payments into the pension
31-23 fund in an amount equal to the percentage contribution rate
31-24 multiplied by the combined salaries of all group A and group B
31-25 members of the pension fund. The contribution rate, expressed as a
31-26 percentage, shall be based on the results of actuarial valuations
31-27 made at least every three years. The city's contribution rate
32-1 shall consist of the normal cost plus the level percentage of
32-2 salary payments required to amortize the unfunded actuarial
32-3 liability over a period of 40 years from January 1, 1983, computed
32-4 on the basis of an actuarial reserve funding method approved by the
32-5 pension board. Notwithstanding any other provision of this Act,
32-6 the city's contribution rate, when added to any contributions with
32-7 respect to a qualified governmental excess benefit arrangement
32-8 maintained in accordance with Section 24 of this Act, may not be an
32-9 amount less than the greater of 10 percent of the combined salaries
32-10 of all members or two times the contribution rate of group A
32-11 members as provided in Subsection (a) of this section.
32-12 SECTION 9. CONTRIBUTION REFUNDS. (a) If any member's
32-13 employment by the city or the pension system is terminated for
32-14 other than a service disability before the completion of five years
32-15 of service with the city or the pension system, the member is not
32-16 eligible to receive a pension.
32-17 (b) The system shall refund to the terminated member the
32-18 amount paid by the member into the pension fund through salary
32-19 deduction or other authorized contributions, without interest, as
32-20 provided by Section 17 of this Act.
32-21 (c) If a member dies and there are no eligible survivors to
32-22 receive the allowance provided for in Section 14 of this Act, the
32-23 member's beneficiary or, if there is no beneficiary, the member's
32-24 estate shall receive the refund amount.
32-25 SECTION 10. NORMAL RETIREMENT PENSION. (a) For purposes of
32-26 this section, a pension under this section is referred to as a
32-27 normal retirement pension.
33-1 (b) A group A or group B member of the pension system who
33-2 terminates employment is eligible for a normal retirement pension
33-3 beginning on the member's effective retirement date after the date
33-4 the member completes at least five years of credited service and
33-5 attains either:
33-6 (1) 62 years of age; or
33-7 (2) a combination of years of age and years of
33-8 credited service, including parts of years, the sum of which equals
33-9 the number 70.
33-10 (c) A group C member of the pension system who terminates
33-11 employment is eligible for a normal retirement pension beginning on
33-12 the member's effective retirement date as provided by Section 6(e)
33-13 of this Act.
33-14 (d) The amount of the monthly normal retirement pension
33-15 payable to an eligible retired group A member is equal to the
33-16 member's average monthly salary multiplied by 3-1/4 percent for
33-17 each year of the member's years of credited service in group A
33-18 during the member's first 10 years of service, 3-1/2 percent for
33-19 each of the member's years of credited service in group A during
33-20 the member's next 10 years of service, and 4-1/4 percent for each
33-21 year of credited service of the member in group A during the
33-22 member's years of service in excess of 20 years. For purposes of
33-23 this subsection, service credit is rounded to the nearest
33-24 one-twelfth of a year. The normal retirement pension of a retired
33-25 group A member may not exceed 90 percent of the member's average
33-26 monthly salary.
33-27 (e) The amount of the monthly normal retirement pension
34-1 payable to an eligible retired group B member equals the member's
34-2 average monthly salary multiplied by 1-3/4 percent for each year of
34-3 the member's years of credited service in group B during the
34-4 member's first 10 years of service, 2 percent for each of the
34-5 member's years of credited service in group B during the member's
34-6 next 10 years of service, and 2-3/4 percent for each year of
34-7 credited service of the member in group B during the member's years
34-8 of service in excess of 20 years. For purposes of this subsection,
34-9 service credit is rounded to the nearest one-twelfth of a year.
34-10 The normal retirement pension of a retired group B member may not
34-11 exceed 90 percent of the member's average monthly salary.
34-12 (f) The amount of the monthly normal retirement pension
34-13 payable to a retired group C member is computed as provided by
34-14 Section 6 of this Act.
34-15 (g) Notwithstanding any other provision of this Act, the
34-16 total normal retirement pension of a retired member with credited
34-17 service in group A, group B, or group C may not exceed 90 percent
34-18 of the member's average monthly salary.
34-19 (h) For future payments only, pension and survivor benefits
34-20 for all retirees and eligible survivors shall be increased annually
34-21 by four percent, not compounded, for all persons receiving a
34-22 pension or survivor benefit as of January 1 of the year in which
34-23 the increase is made.
34-24 (i) A member receiving a normal retirement pension is
34-25 considered to have resigned and shall be removed from the regular
34-26 full-time employment rolls of the city or the pension system not
34-27 later than the day before the member's effective retirement date.
35-1 SECTION 11. GROUP B RETIREMENT OPTIONS. (a) A group B
35-2 member who terminated employment with the city or the predecessor
35-3 system before September 1, 1997, must elect before the member's
35-4 effective retirement date whether to have the member's normal
35-5 retirement pension or early retirement pension paid under one of
35-6 the options provided by Subsection (b) of this section. The
35-7 election may be revoked, in a manner and at a time established by
35-8 the pension board, not later than the 60th day before the member's
35-9 effective retirement date.
35-10 (b) The normal retirement pension or early retirement
35-11 pension may be one of the following actuarially equivalent amounts:
35-12 (1) option 1: a reduced pension payable to the member,
35-13 then on the member's death one-half of the amount of that reduced
35-14 pension is payable to the member's designated survivor, for life;
35-15 (2) option 2: a reduced pension payable to the member,
35-16 then on the member's death that same reduced pension is payable to
35-17 the member's designated survivor, for life; and
35-18 (3) option 3: a reduced pension payable to the member,
35-19 and if the member dies within 10 years, the pension is paid to the
35-20 member's designated survivor for the remainder of the 10-year
35-21 period beginning on the member's effective retirement date.
35-22 (c) If a former group B member who has made the election
35-23 provided by Subsection (b) of this section dies after terminating
35-24 employment with at least five years of credited service but before
35-25 attaining the age required to begin receiving a normal or early
35-26 retirement pension, the person's designated survivor is eligible
35-27 for the benefits provided by the option selected by the former
36-1 member at the time of separation from service. The benefits first
36-2 become payable to an eligible designated survivor on the date the
36-3 former member would have become eligible to begin receiving a
36-4 pension.
36-5 (d) If a former group B member under Subsection (a) of this
36-6 section does not elect one of the options under Subsection (b) of
36-7 this section, a survivor benefit is not payable.
36-8 SECTION 12. DEFERRED RETIREMENT OPTION PLAN. (a) In this
36-9 section:
36-10 (1) "DROP" means the deferred retirement option plan
36-11 established under Chapter 358, Acts of the 48th Legislature,
36-12 Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
36-13 Statutes), and reenacted and continued under this Act.
36-14 (2) "DROP account" means a notional account
36-15 established for a DROP participant that is used solely as an
36-16 accounting convention to aid in the computation of the DROP
36-17 participant's DROP benefit. The DROP account may only be used for
36-18 accounting purposes, and there is no actual separation of assets of
36-19 the pension fund before the distribution of the DROP participant's
36-20 DROP benefit.
36-21 (3) "DROP benefit" means a DROP participant's total
36-22 DROP account balance at the time the DROP participant terminates
36-23 employment.
36-24 (4) "DROP election date" means the date the pension
36-25 system receives a member's election to participate in the DROP in
36-26 the manner and form determined by the pension system and approved
36-27 by the pension board.
37-1 (5) "DROP entry date" means the date a member ceases
37-2 to earn service credit and begins earning credit for the member's
37-3 DROP account, which is the later of the date the member is eligible
37-4 to participate in the DROP, the date requested by the member, or
37-5 October 1, 1997, as approved by the pension board. The DROP entry
37-6 date is the first day of a month and is determined by the normal
37-7 retirement eligibility requirements of this Act or of Chapter 358,
37-8 Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g,
37-9 Vernon's Texas Civil Statutes), as applicable, in effect on the
37-10 requested DROP entry date.
37-11 (6) "DROP participant" means a pension system member
37-12 who is participating in the DROP.
37-13 (b) A member who is eligible to receive a normal retirement
37-14 pension under this Act and who is in active service with the city
37-15 or the pension system, or a person who is eligible to receive a
37-16 normal retirement pension under this Act and who has been separated
37-17 from service for less than 30 days and has not otherwise been
37-18 granted a pension or benefit, may file with the pension system an
37-19 election to participate in the DROP and receive a DROP benefit
37-20 under procedures established by the pension board. An election to
37-21 participate in the DROP is irrevocable except as provided by
37-22 Subsection (j) of this section.
37-23 (c) A member who is required to make payments to the pension
37-24 system to purchase service or to convert service is eligible to
37-25 participate in the DROP only to the extent that the member is
37-26 eligible to participate in the DROP without regard to the service
37-27 covered by the payment obligation, but must complete the
38-1 obligation. If the payment obligation is not fully met, the
38-2 member's participation in the DROP is determined as though the
38-3 payment obligation was not entered into. A member who is
38-4 participating in the DROP may not change membership from one group
38-5 to another group, convert service from one group to another group,
38-6 purchase service credit, or make a claim to purchase military
38-7 service.
38-8 (d) Credited service and normal retirement benefits cease to
38-9 accrue on the day preceding the member's DROP entry date. The
38-10 period of a member's DROP participation, unless revoked as provided
38-11 by Subsection (j) of this section, begins on the DROP participant's
38-12 DROP entry date and ends on the date of the DROP participant's last
38-13 day of active service with the city or the pension system. On the
38-14 first day of the month following the month in which the pension
38-15 board approves the member's DROP election, the DROP election
38-16 becomes effective and the pension board shall establish a DROP
38-17 account for the DROP participant. For each month during the period
38-18 of DROP participation before a DROP participant's termination of
38-19 employment, the following amounts shall be credited to the DROP
38-20 participant's DROP account, including prorated amounts for partial
38-21 months of service:
38-22 (1) an amount equal to what would have been the DROP
38-23 participant's monthly normal retirement benefit if the DROP
38-24 participant had retired on the DROP participant's DROP entry date,
38-25 except that the monthly amount shall be computed based on the DROP
38-26 participant's credited service and average monthly salary as of the
38-27 DROP entry date and the benefit accrual rates and maximum allowable
39-1 benefit applicable on the DROP election date, with the
39-2 cost-of-living adjustments that would apply if the DROP participant
39-3 had retired on the DROP participant's DROP entry date;
39-4 (2) for a group A member, the member's contributions
39-5 to the pension fund required under Section 8 of this Act during the
39-6 member's participation in the DROP; and
39-7 (3) interest on the DROP participant's DROP account
39-8 balance computed at a rate determined by the pension board and
39-9 compounded at intervals designated by the pension board, but at
39-10 least once in each 13-month period.
39-11 (e) The monthly amount credited under Subsection (d)(1) of
39-12 this section may not include any amount that is intended to help
39-13 defray an increase in group medical insurance costs as described by
39-14 Section 15(a) of this Act. In any year in which a supplemental
39-15 payment is made to retirees under Section 15(b) of this Act, an
39-16 amount equal to the amount of the supplemental payment that would
39-17 have been made to the DROP participant if the DROP participant had
39-18 retired on the DROP entry date shall be credited to the DROP
39-19 participant's DROP account.
39-20 (f) The period for credits to a DROP participant's DROP
39-21 account includes each month beginning with the DROP participant's
39-22 DROP entry date through the date the DROP participant terminates
39-23 employment with the city or the pension system. Credits may not be
39-24 made to a DROP participant's DROP account for a period that occurs
39-25 after the date the DROP participant terminates employment, except
39-26 that interest at a rate determined by the pension board may be paid
39-27 on the person's undistributed DROP account balance after the date
40-1 the person terminates employment.
40-2 (g) A DROP participant who terminates employment is eligible
40-3 to elect to receive the DROP participant's DROP benefit in a lump
40-4 sum, in substantially equal periodic payments, or in a partial lump
40-5 sum followed by substantially equal periodic payments. The pension
40-6 board shall determine a reasonable time for lump-sum and periodic
40-7 payments of the DROP benefit. An election concerning single
40-8 lump-sum or partial payments as provided by this subsection must
40-9 satisfy the requirements of Section 401(a)(9), Internal Revenue
40-10 Code of 1986, as amended. All distributions and changes in the
40-11 form of distribution must be made in a manner and at a time that
40-12 complies with that provision of the Internal Revenue Code of 1986,
40-13 as amended.
40-14 (h) If a DROP participant dies before the full distribution
40-15 of the DROP participant's DROP account balance, the undistributed
40-16 DROP account balance shall be distributed to the DROP participant's
40-17 surviving spouse, if any, in a lump-sum payment within a reasonable
40-18 time after the pension board has determined that the surviving
40-19 spouse is eligible for the distribution. If there is no surviving
40-20 spouse, the DROP participant's beneficiary, as designated in the
40-21 manner and on a form established by the pension board, is eligible
40-22 to receive the deceased DROP participant's undistributed DROP
40-23 account balance in a lump-sum payment within a reasonable time
40-24 after the pension board has determined that the beneficiary is
40-25 eligible for the distribution. If no beneficiary is designated,
40-26 the undistributed DROP account balance shall be distributed to the
40-27 member's estate.
41-1 (i) A DROP participant is ineligible for disability benefits
41-2 provided by this Act.
41-3 (j) An election to participate in the DROP is irrevocable,
41-4 except that:
41-5 (1) if a DROP participant is approved for a service
41-6 disability pension, the DROP participant's DROP election is
41-7 automatically revoked;
41-8 (2) if a DROP participant dies, the surviving spouse,
41-9 if any, or the beneficiary, if any, may elect to revoke the DROP
41-10 participant's DROP election, at a time and in a manner determined
41-11 by the pension board, only if the revocation occurs before a
41-12 distribution from the DROP participant's DROP account or the
41-13 payment of a survivor benefit under this Act or Chapter 358, Acts
41-14 of the 48th Legislature, Regular Session, 1943 (Article 6243g,
41-15 Vernon's Texas Civil Statutes); and
41-16 (3) a DROP participant approved by the pension board
41-17 of the predecessor system before September 1, 1999, to participate
41-18 in the DROP may make a one-time, irrevocable election before
41-19 termination of employment, on a date and in a manner determined by
41-20 the pension board, to revoke the DROP election and waive any and
41-21 all rights associated with the DROP election.
41-22 (k) On revocation of a DROP election under Subsection (j) of
41-23 this section, the DROP account balance becomes zero, and a
41-24 distribution of DROP benefits may not be made to the member, the
41-25 member's surviving spouse, or the member's beneficiaries. In the
41-26 event of revocation, the benefits based on the member's service are
41-27 determined as if the member's DROP election had never occurred.
42-1 (l) Under a rule adopted by the pension board under this
42-2 section, the surviving spouse of a deceased member or, if the
42-3 member has no surviving spouse, the designated beneficiary of the
42-4 deceased member may make the DROP election that the deceased member
42-5 would have been eligible to make the day before the member's death
42-6 and may receive the DROP distribution in a lump sum within a
42-7 reasonable time after the pension board has determined that the
42-8 surviving spouse or designated beneficiary is eligible for the
42-9 distribution. A DROP election by the surviving spouse or
42-10 designated beneficiary under this subsection may not be made after
42-11 the sixth month after the date of the member's death. An election
42-12 may not be made under this subsection if a survivor benefit or
42-13 other distribution has been made with respect to the deceased
42-14 member. Notwithstanding any other provision, an election made
42-15 under this subsection is irrevocable.
42-16 (m) If an unanticipated actuarial cost occurs in
42-17 administering the DROP, the pension board, on the advice of the
42-18 pension system's actuary, may take action necessary to mitigate the
42-19 unanticipated cost, including refusal to accept additional
42-20 elections to participate in the plan. The pension system shall
42-21 continue to administer the plan for the DROP participants
42-22 participating in the plan before the date of the mitigating action.
42-23 (n) A former DROP participant who is rehired by the city or
42-24 the pension system following termination of employment is not
42-25 eligible to participate in the DROP.
42-26 (o) On termination of employment, a DROP participant shall
42-27 receive a normal retirement pension under Section 10 of this Act or
43-1 under Section 11, 22A, or 24 of Chapter 358, Acts of the 48th
43-2 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
43-3 Civil Statutes), as those sections read on the day preceding the
43-4 participant's DROP entry date, as applicable, except that the
43-5 credited service under that section is the member's credited
43-6 service as of the day before the member's DROP entry date, the
43-7 benefit accrual rate applicable to the credited service shall be
43-8 the benefit accrual rate in effect on the member's DROP election
43-9 date, the maximum allowable benefit shall be the maximum allowable
43-10 benefit in effect on the member's DROP election date, and the
43-11 member's average monthly salary is the average monthly salary
43-12 determined as of the date of the member's termination of
43-13 employment. The DROP participant's normal retirement pension is
43-14 increased by any cost-of-living adjustments applied to the monthly
43-15 credit to the member's DROP account under Subsection (d)(1) of this
43-16 section during the member's participation in the DROP.
43-17 Cost-of-living adjustments applicable to periods after the date of
43-18 the DROP participant's termination of employment are based on the
43-19 DROP participant's normal retirement pension computed under this
43-20 subsection, excluding any cost-of-living adjustments.
43-21 (p) If a DROP election is not revoked under Subsection (j)
43-22 of this section, the survivor benefit payable to an eligible
43-23 survivor of a deceased DROP participant under Section 14 of this
43-24 Act is computed as a percentage of the monthly ordinary disability
43-25 pension that the member would have been eligible to receive had the
43-26 member suffered a disability the day before the member's DROP entry
43-27 date, except that the ordinary disability pension is computed based
44-1 on the DROP participant's credited service as of the day before the
44-2 DROP participant's DROP entry date, the benefit accrual rate
44-3 applicable to the credited service as of the DROP participant's
44-4 DROP election date, and the DROP participant's average monthly
44-5 salary as of the date of the DROP participant's death. A surviving
44-6 spouse, if any, of a DROP participant who dies from a cause
44-7 directly resulting from a specific incident in the performance of
44-8 the DROP participant's duties for the city or the pension system is
44-9 ineligible to receive enhanced survivor benefits under Section
44-10 14(c) of this Act unless the DROP election is revoked under
44-11 Subsection (j)(2) of this section and the surviving spouse receives
44-12 a survivor benefit as otherwise provided by this subsection.
44-13 (q) The pension board may adopt rules for the implementation
44-14 and operation of the DROP, including rules regarding the payment of
44-15 DROP benefits.
44-16 SECTION 13. DISABILITY PENSIONS. (a) A member who has
44-17 completed five or more years of credited service and who becomes
44-18 disabled is eligible, regardless of age, for an ordinary
44-19 disability retirement and shall receive a monthly disability
44-20 pension computed in accordance with Section 10(d) for group A
44-21 members and Section 10(e) for group B members.
44-22 (b) A member who is disabled by reason of a personal injury
44-23 sustained or a hazard undergone as a result of, and while in the
44-24 performance of, the member's employment duties at some definite
44-25 place and at some definite time on or after the date of becoming a
44-26 member, without serious and wilful misconduct on the member's part,
44-27 is eligible for a service disability retirement and shall receive
45-1 a monthly disability pension equal to the greater of:
45-2 (1) the monthly normal retirement pension computed
45-3 under Section 10(d) of this Act for a group A member or Section
45-4 10(e) for a group B member; or
45-5 (2) 20 percent of the member's monthly salary on the
45-6 date the injury occurred or the hazard was undergone.
45-7 (c) In addition to the monthly disability pension under
45-8 Subsection (b)(2) of this section, a group A member shall receive
45-9 one percent of the salary under Subsection (b)(2) of this section
45-10 for each year of credited service. The total disability pension
45-11 computed under Subsection (b)(2) of this section may not exceed the
45-12 greater of:
45-13 (1) 40 percent of that monthly salary; or
45-14 (2) the monthly normal retirement pension computed in
45-15 accordance with Section 10(d) for a group A member or Section 10(e)
45-16 for a group B member.
45-17 (d) A disability pension may be granted under this section
45-18 to a member only if the member is unable to perform work or
45-19 services as an employee due to the disability. A member who is
45-20 granted a disability pension is considered to have resigned and
45-21 shall be removed from the employment rolls of the city or the
45-22 pension system not later than the last day of the month in which
45-23 the disability pension is approved.
45-24 (e) A person retired for disability under this Act or a
45-25 person receiving survivor benefits as a disabled dependent child
45-26 under this Act shall file an annual report of employment activities
45-27 and earnings with the pension board. The pension board shall
46-1 establish the form of the report and the time for filing the
46-2 report. If the amount of the earnings added to the disability
46-3 pension being received by the member exceeds the amount of the
46-4 monthly salary of the member at the time of the member's separation
46-5 from service, as adjusted annually by cost-of-living adjustments
46-6 equal to the percentage change in the Consumer Price Index for All
46-7 Urban Consumers for the preceding year, as determined by the United
46-8 States Department of Labor, but not to exceed the cost-of-living
46-9 adjustment provided by Section 10(h) of this Act, the pension board
46-10 may reduce the amount of the pension. A disability pension
46-11 recipient is not required to submit the annual affidavit of
46-12 employment activities and earnings after the recipient reaches:
46-13 (1) the date on which the recipient would be eligible
46-14 to retire, if Section 10(b) or (c) applied to the recipient; or
46-15 (2) 65 years of age.
46-16 (f) A member may not receive a disability pension and a
46-17 deferred or normal retirement pension at the same time. If a member
46-18 who has at least five years of credited service is eligible for a
46-19 disability pension, the member's disability ceases to exist, and
46-20 the member does not return to work for the city, the member is
46-21 eligible to receive a deferred or normal retirement pension,
46-22 beginning on the later of the member's effective retirement date or
46-23 the date the disability ceases. The deferred or normal retirement
46-24 pension is based on actual credited service up to the time of
46-25 disability and is computed based on the schedule of benefits and
46-26 provisions in effect on the person's last day of credited service.
46-27 (g) A former member who is retired for disability or a
47-1 person receiving survivor benefits as a disabled dependent child
47-2 under this Act is subject at all times to reexamination by the
47-3 pension board and shall submit to an examination the pension board
47-4 requires. If the disability retiree or dependent child who is
47-5 receiving survivor benefits as a disabled child refuses to submit
47-6 to a required examination, the pension board may order that
47-7 payments be suspended, up to and including discontinuation of the
47-8 disability pension or survivor benefit. If the pension board
47-9 determines that a member who has been retired for a disability or a
47-10 person who is receiving survivor benefits as a disabled dependent
47-11 child recovers so that the member or person is able to perform the
47-12 usual and customary duties formerly handled by the member or person
47-13 or other full-time duties that could be performed by the member or
47-14 person, the pension board shall suspend or discontinue pension or
47-15 survivor benefit payments.
47-16 (h) The result of an examination, report by a physician, or
47-17 report of employment activities and earnings shall be considered by
47-18 the pension board in determining whether the benefits shall be
47-19 continued, increased if less than the maximum provided, decreased,
47-20 or discontinued. The pension board may reduce, suspend, or
47-21 discontinue all benefits to a person receiving benefits under this
47-22 section who, after notice from the pension board:
47-23 (1) fails to appear for a required examination;
47-24 (2) fails to file a report of employment activities
47-25 and earnings or another related report requested by the pension
47-26 board; or
47-27 (3) files a materially false or misleading report of
48-1 employment activities and earnings or examination result or other
48-2 report, as determined by the pension board.
48-3 (i) To apply for a disability pension, a person must be a
48-4 member or a former member whose separation from service occurred
48-5 not more than 30 days before the date the pension system receives
48-6 the person's request to apply for a disability pension as a result
48-7 of a disability that arose during employment, except that a member
48-8 may not apply for a disability pension after the sixth month after
48-9 the date of the member's last day of credited service.
48-10 SECTION 14. SURVIVING SPOUSE AND DEPENDENT CHILD MONTHLY
48-11 ALLOWANCE. (a) Except as provided by Section 12 of this Act, the
48-12 pension board shall order survivor benefits to be paid in the form
48-13 of a monthly allowance under this section if:
48-14 (1) a member or former member dies from any cause
48-15 after the completion of five years of credited service with the
48-16 city or the pension system;
48-17 (2) while in the service of the city or the pension
48-18 system, a member dies from any cause directly resulting from a
48-19 specific incident in the performance of the member's duty; or
48-20 (3) a member dies after the date the member retires on
48-21 a pension because of length of service or a disability and the
48-22 member leaves an eligible survivor.
48-23 (b) A surviving spouse of a member or former member who dies
48-24 after having completed five years of credited service with the city
48-25 or the pension system, but before beginning to receive retirement
48-26 benefits, is eligible for a sum equal to 100 percent of the
48-27 retirement benefits to which the deceased member or former member
49-1 would have been eligible had the member been totally disabled with
49-2 an ordinary disability at the time of the member's last day of
49-3 credited service, except that the allowance payable to the
49-4 surviving spouse may not be less than $100 a month.
49-5 (c) A surviving spouse of a member who dies from a cause
49-6 directly resulting from a specific incident in the performance of
49-7 the member's duty with the city or the pension system, without
49-8 serious or wilful misconduct on the member's part, is eligible for
49-9 a sum equal to 100 percent of the deceased member's final average
49-10 salary.
49-11 (d) A surviving spouse of a retiree who dies after having
49-12 received retirement benefits is eligible for a sum equal to 100
49-13 percent of the retirement benefits being received at the time of
49-14 the retiree's death. The cost-of-living adjustment in the survivor
49-15 benefit under Section 10(h) of this Act is computed based on the
49-16 unadjusted normal retirement pension of the deceased retiree.
49-17 (e) If there is a surviving spouse, each dependent child
49-18 shall receive a survivor benefit equal to 10 percent of the pension
49-19 the member would have received if the member had been disabled at
49-20 the time of death up to a maximum of 20 percent for all dependent
49-21 children, except that if the total amount payable to the surviving
49-22 spouse and dependent children is greater than 100 percent of the
49-23 benefit the member would have received, the percentage of benefits
49-24 payable to the surviving spouse shall be reduced so that the total
49-25 amount is not greater than 100 percent of the benefit the member
49-26 would have received, and the reduction shall continue until the
49-27 total amount payable to the surviving spouse and dependent child,
50-1 if any, would not be greater than 100 percent of the benefit the
50-2 member would have received.
50-3 (f) If there is no surviving spouse, each dependent child is
50-4 eligible to receive a survivor benefit equal to 50 percent of the
50-5 amount of the surviving spouse benefit had there been a surviving
50-6 spouse, not to exceed 100 percent of the surviving spouse benefit
50-7 for all dependent children in the aggregate.
50-8 (g) Benefits for a dependent child are payable to the
50-9 guardian of the child, except that the pension board may approve
50-10 the payment of benefits to a child who is at least 18 years of age.
50-11 As used in this subsection, "guardian" means the person who has the
50-12 primary responsibility for a child's care and support, including
50-13 the surviving parent, a legal guardian, a managing conservator, or
50-14 any other person with a similar legal relationship to the child.
50-15 (h) If a retiree dies and there is no eligible survivor, the
50-16 retiree's spouse, if any, or if there is no spouse, the retiree's
50-17 estate, is eligible to receive a lump-sum payment of the
50-18 unamortized balance of the retiree's accrued employee
50-19 contributions, if any, other than contributions after the DROP
50-20 entry date, as determined by an amortization schedule and method
50-21 approved by the pension board. A pension payable to a retiree
50-22 ceases on the last day of the month preceding the month of the
50-23 retiree's death. A survivor benefit payable to an eligible
50-24 survivor is effective on the first day of the month of the
50-25 retiree's death and ceases on the month preceding the month of the
50-26 eligible survivor's death or on the last day of the month in which
50-27 the survivor ceases to be eligible to receive a survivor's benefit.
51-1 SECTION 15. ANNUITY INCREASE. (a) In addition to the
51-2 postretirement increases under Section 10(h) of this Act, the
51-3 pension board may increase annuities payable under this Act by an
51-4 amount that does not exceed the annual increase in the amount of
51-5 premiums being paid under a group insurance program provided for
51-6 retirees of the city.
51-7 (b) The pension board may distribute a supplemental payment
51-8 to all retirees and eligible survivors who are receiving annuities
51-9 as of January 1 of the year in which the supplemental payment is
51-10 made. The supplemental payment shall be credited to DROP
51-11 participants who are participating in DROP as of January 1 of the
51-12 year in which the supplemental payment is made, if the pension
51-13 board's actuary determines that as of the end of any fiscal year:
51-14 (1) the value of the pension system's assets exceeds
51-15 the amount of the pension system's accrued liability;
51-16 (2) the pension system has met the actuarial
51-17 investment assumption for the previous fiscal year; and
51-18 (3) the issuance of the supplemental check will not
51-19 cause the city's contribution rate to increase.
51-20 (c) A person may not receive more than one supplemental
51-21 payment as a result of the person's status as:
51-22 (1) a retiree and eligible survivor; or
51-23 (2) a DROP participant and eligible survivor.
51-24 SECTION 16. LUMP-SUM BENEFIT PAYMENT. (a) Notwithstanding
51-25 any other provision of this Act, the pension board may pay to a
51-26 member, deferred participant, eligible survivor, alternate payee,
51-27 or beneficiary in a lump-sum payment the present value of any
52-1 benefit payable to such a person that is less than $10,000 instead
52-2 of paying any other benefit payable under this Act. If the lump-sum
52-3 present value of the benefit is at least $5,000 but less than
52-4 $10,000, the pension board may make a lump-sum payment only on
52-5 written request by the member, deferred participant, eligible
52-6 survivor, alternate payee, or other beneficiary. The pension board
52-7 shall make any payment under this subsection as soon as practicable
52-8 after eligibility under this section has been determined by the
52-9 pension board.
52-10 (b) The pension board shall adopt actuarial assumptions,
52-11 including an interest rate, to be used in determining lump-sum
52-12 present values and amounts distributable under this section.
52-13 (c) If the pension board determines that available resources
52-14 in the pension fund are inadequate to make lump-sum payments,
52-15 payments under this section shall be made monthly in amounts the
52-16 pension board determines.
52-17 (d) Payments under this section may not be made for a
52-18 benefit that was being paid by the predecessor system or this
52-19 pension system.
52-20 (e) A member who is reemployed by the city or the pension
52-21 system and who has at least two years of continuous credited
52-22 service after reemployment may reinstate service for which the
52-23 member received a lump-sum payment under this section by paying
52-24 into the pension fund the amount of the lump-sum payment, plus
52-25 interest on that amount at the rate of six percent per year, not
52-26 compounded, from the date the lump-sum payment was made to the
52-27 member until the date of repayment to the pension fund.
53-1 (f) The actuarial value of a lump-sum payment is determined
53-2 as of the last day of credited service or September 1, 1995,
53-3 whichever is later.
53-4 SECTION 17. TERMINATION OF EMPLOYMENT; DEATH; REEMPLOYMENT.
53-5 (a) A member who terminates employment with the city involuntarily
53-6 due to a reduction in workforce, as determined by the pension
53-7 board, before the member becomes eligible for a normal retirement
53-8 pension or attains five years of credited service, by written
53-9 notice to the pension board, may make an irrevocable election to
53-10 leave the person's contributions in the pension fund until the
53-11 first anniversary of the date of termination. If during that period
53-12 the person is reemployed by the city, all rights and service credit
53-13 as a member shall be immediately restored without penalty. If
53-14 reemployment with the city does not occur before the first
53-15 anniversary of the date of termination, all payments made by the
53-16 person into the pension fund by salary deductions or other
53-17 authorized contributions shall be refunded to the person without
53-18 interest. If the person is subsequently reemployed, the person may
53-19 have credit restored, subject to the provisions applicable at the
53-20 time of reemployment.
53-21 (b) A member who leaves employment voluntarily, before
53-22 becoming eligible for a normal retirement or disability pension,
53-23 ceases to be a member of the pension system and shall be refunded
53-24 all eligible payments made by the member into the pension fund by
53-25 salary deductions or other authorized contributions, without
53-26 interest, subject to this section.
53-27 (c) A member whose employment is terminated for a reason
54-1 other than death or receipt of a retirement or disability pension
54-2 after the completion of five years of credited service may elect,
54-3 in a manner determined by the pension board, to receive a deferred
54-4 retirement pension that begins on the member's effective retirement
54-5 date after the member attains either 62 years of age or a
54-6 combination of years of age and years of credited service,
54-7 including parts of years, the sum of which equals the number 70.
54-8 The amount of monthly benefit shall be computed in the same manner
54-9 as for a normal retirement pension, but based on average monthly
54-10 salary and credited service as of the member's last day of credited
54-11 service and subject to the provisions of this Act or Chapter 358,
54-12 Acts of 48th Legislature, Regular Session, 1943 (Article 6243g,
54-13 Vernon's Texas Civil Statutes), in effect on the member's last day
54-14 of credited service.
54-15 (d) If a member dies while still employed by the city,
54-16 whether eligible for a pension or not, and Sections 12 and 14 of
54-17 this Act do not apply, all of the member's rights in the pension
54-18 fund shall be satisfied by the refund to the member's designated
54-19 beneficiary, if any, or if there is no designated beneficiary, to
54-20 the member's estate, of all eligible payments, if any, made by the
54-21 member into the pension fund, without interest.
54-22 (e) The provisions of Section 14 of this Act concerning
54-23 payments to eligible survivors apply in the case of any former
54-24 member who has made the election permitted by Subsection (c) of
54-25 this section and who dies before reaching the age at which the
54-26 former member would be eligible to receive a pension. If there is
54-27 no eligible survivor of the former member, all of the former
55-1 member's rights in the pension fund shall be satisfied by the
55-2 refund to the former member's designated beneficiary, if any, or if
55-3 there is no designated beneficiary, to the former member's estate,
55-4 of all eligible payments made by the former member into the pension
55-5 fund by way of employee contributions, without interest.
55-6 (f) This Act does not change the status of any former member
55-7 of the predecessor system whose services with the city or the
55-8 pension system were terminated under Chapter 358, Acts of the 48th
55-9 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
55-10 Civil Statutes), except as otherwise expressly provided. Refunds
55-11 of contributions made under this section shall be paid to the
55-12 departing member, the member's beneficiary, or the member's estate
55-13 on written request and approval by the pension board in a lump sum,
55-14 except that if the pension board determines that funds are
55-15 insufficient to justify the lump-sum payment, the payment shall be
55-16 refunded on a monthly basis in amounts determined by the pension
55-17 board.
55-18 (g) If a deferred participant is reemployed by the city or
55-19 the pension system before receiving a deferred retirement pension
55-20 or if a retiree is reemployed by the city or the pension system,
55-21 Subsections (h) and (j) of this section apply to the computation of
55-22 the member's pension following the member's subsequent separation
55-23 from service.
55-24 (h) If a member described in Subsection (g) of this section
55-25 accrues not more than two years of continuous credited service
55-26 after reemployment:
55-27 (1) the portion of the member's deferred or normal
56-1 retirement pension attributable to the member's period of credited
56-2 service accrued before the date of the member's original separation
56-3 from service is computed on the basis of the applicable provisions
56-4 of this Act or the predecessor system that were in effect on the
56-5 member's last day of credited service for the original period of
56-6 credited service;
56-7 (2) the portion of the member's deferred or normal
56-8 retirement pension attributable to the member's period of credited
56-9 service accrued after the date of the member's reemployment by the
56-10 city or the pension system is computed on the basis of the
56-11 applicable provisions of this Act or the predecessor system in
56-12 effect on the member's last day of credited service for the
56-13 subsequent period of credited service; and
56-14 (3) the disability pension or survivor benefit
56-15 attributable to the member's period of credited service accrued
56-16 both before the date of the member's original separation from
56-17 service and after the date of the member's reemployment by the city
56-18 or the pension system is computed on the basis of the applicable
56-19 provisions of this Act or the predecessor system that were in
56-20 effect on the member's last day of credited service for the
56-21 original period of credited service.
56-22 (i) Subject to Subsection (l) of this section, the
56-23 disability pension or survivor benefit under Subsection (h)(3) of
56-24 this section is computed by adding the following amounts:
56-25 (1) the amount of the benefit derived from the
56-26 member's credited service accrued after the date of reemployment
56-27 based on the benefit accrual rate in effect on the member's last
57-1 day of original credited service in the group in which the member
57-2 participated on the member's last day of subsequent credited
57-3 service; and
57-4 (2) the amount of the benefit the member, beneficiary,
57-5 or eligible survivor was eligible to receive based on the member's
57-6 original credited service and the provisions in effect on the
57-7 member's last day of original credited service.
57-8 (j) If the member accrues more than two years of continuous
57-9 credited service after reemployment, for purposes of future payment
57-10 only, a deferred retirement pension, normal retirement pension,
57-11 disability pension, or survivor benefit is computed on the basis of
57-12 the applicable provisions of this Act or the predecessor system in
57-13 effect on the member's last day of credited service for the
57-14 subsequent service.
57-15 (k) Notwithstanding any other provision of this Act, if a
57-16 retiree is reemployed by the city or the pension system and becomes
57-17 a member, the retiree's pension under this Act ceases on the day
57-18 before the date the retiree is reemployed. Payment of the pension
57-19 shall be suspended during the period of reemployment and may not
57-20 begin until the month following the month in which the reemployed
57-21 retiree subsequently terminates employment. On subsequent
57-22 separation, benefits payable are computed under Subsections (h) and
57-23 (j) of this section. If the reemployed retiree receives any pension
57-24 during the period of reemployment, the retiree shall return all of
57-25 the pension received during that period to the pension system not
57-26 later than the 30th day after the date of receipt. If the
57-27 reemployed retiree does not timely return all of the pension, the
58-1 pension board shall offset the amount not returned against the
58-2 payment of any future retirement pension, disability pension, or
58-3 survivor benefit payable on behalf of the reemployed retiree.
58-4 (l) If a member is covered by Subsection (h) of this section
58-5 and has made an election or was eligible to make an election under
58-6 Section 11 of this Act or an optional annuity election under
58-7 Section 29, Chapter 358, Acts of the 48th Legislature, Regular
58-8 Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), or
58-9 has received a pension computed on the basis of an optional annuity
58-10 election, the optional annuity election, including any designation
58-11 of an eligible designated survivor, governs the payment of any
58-12 pension or benefit, and no other survivor benefit is payable. If a
58-13 member meets the requirements of Subsection (j) of this section and
58-14 has made an optional annuity election or has received a pension
58-15 computed on the basis of an optional annuity election, the optional
58-16 annuity election, including any designation of an eligible
58-17 designated survivor, shall control the payment of any pension or
58-18 benefit, and no other survivor benefit is payable unless the member
58-19 elects, not later than the 90th day after the date of the
58-20 separation of employment and before payment of a pension, to revoke
58-21 the optional annuity election for future payment of benefits. If
58-22 revocation occurs, any survivor benefit is paid under Subsection
58-23 (j) of this section.
58-24 (m) If a member's service is terminated before the member
58-25 has completed five years of service for any reason other than
58-26 death, a city workforce reduction as described by Subsection (a) of
58-27 this section, or a service disability, the member:
59-1 (1) forfeits the member's accrued pension, service and
59-2 credited service, and any benefit payable under this Act; and
59-3 (2) shall be refunded, on written request, the amount
59-4 paid by the member into the pension fund as employee contributions,
59-5 without interest, in full satisfaction of the member's rights under
59-6 this Act.
59-7 (n) This section does not allow retroactive payment of any
59-8 benefits or other amounts under this section to any member,
59-9 retiree, deferred participant, beneficiary, eligible survivor,
59-10 estate, or other person or entity.
59-11 (o) After separation from service, a member is subject to
59-12 the schedule of benefits and provisions in effect on the member's
59-13 last day of credited service, except as otherwise expressly
59-14 provided by this Act.
59-15 (p) A person receiving or eligible for a survivor benefit
59-16 under this Act is subject to the schedule of benefits and
59-17 provisions in effect on the last day of credited service of the
59-18 deceased participant for whom the person is claiming survivor
59-19 status, except as otherwise expressly provided by this Act.
59-20 SECTION 18. MILITARY SERVICE CREDIT. (a) Notwithstanding
59-21 any other provision of this Act, contributions, benefits, and
59-22 service with respect to service in the uniformed services, as
59-23 defined in 38 U.S.C. Section 4301 et seq., of a member who is
59-24 eligible for reemployment rights with the city under 38 U.S.C.
59-25 Section 4301 et seq. for the service shall be provided in
59-26 accordance with Section 414(u), Internal Revenue Code of 1986, as
59-27 amended.
60-1 (b) The city shall make the employer contributions to the
60-2 pension fund for the employee's membership for each month of
60-3 service credit in which the member is engaged in service in a
60-4 uniformed service described by Subsection (a) of this section,
60-5 based on the member's rate of monthly compensation as of the date
60-6 the member left the member's position.
60-7 (c) A member who has active military service for which the
60-8 member is not eligible for reemployment rights with the city under
60-9 38 U.S.C. Section 4301 et seq. may receive credited service for the
60-10 active military service on proper action by the pension board if
60-11 the member:
60-12 (1) has completed at least five years of credited
60-13 service in the pension system;
60-14 (2) obtains, at the member's cost, a report approved
60-15 by the pension board of the actuarial cost of the service for which
60-16 the member claims credit, with service time expressed as a number
60-17 of whole months; and
60-18 (3) pays the actuarially determined cost of the
60-19 service under Subdivision (2) of this subsection as approved by the
60-20 pension board, plus all administrative costs associated with
60-21 crediting the service, if any, plus six percent interest from the
60-22 due date of the amounts until the date full payment is made to the
60-23 pension fund, with the payments made before:
60-24 (A) the fifth anniversary of the date the claim
60-25 for service is made, if a member does not terminate employment
60-26 before the fifth anniversary; or
60-27 (B) the 60th day after the date employment is
61-1 terminated, if a member terminates employment before the fifth
61-2 anniversary of the date the claim for service is made.
61-3 (d) The military service credited under Subsection (c) of
61-4 this section:
61-5 (1) may not exceed a total of 60 months;
61-6 (2) may be claimed as service in group A only if the
61-7 member is a group A member or group C member at the time the member
61-8 claims the service; and
61-9 (3) may be claimed as service in group B only if the
61-10 member is a group B member at the time the member claims the
61-11 service.
61-12 SECTION 19. MULTIPLE PENSIONS; TRANSFER OF EMPLOYMENT. (a)
61-13 The pension board may authorize a member to make a one-time
61-14 irrevocable election, on a date and in a manner established by the
61-15 pension board, to cease to be a member of the pension system and,
61-16 for future service only, to become a member of the retirement
61-17 system governed by Article 6243e.2(1), Revised Statutes, or Article
61-18 6243g-4, Revised Statutes, or a successor statute to either of
61-19 those laws, if the member:
61-20 (1) was a member of the pension system as authorized
61-21 under Section 16B, Chapter 358, Acts of the 48th Legislature,
61-22 Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
61-23 Statutes);
61-24 (2) is in a position covered by another retirement
61-25 system to which the city contributes; and
61-26 (3) has not begun to receive payment of benefits from
61-27 the pension system.
62-1 (b) A person who does not make an election to cease
62-2 membership in the pension system under Subsection (a) of this
62-3 section remains a member of the pension system as authorized under
62-4 this Act.
62-5 (c) A person who makes an election to cease membership in
62-6 the pension system is considered to have separated from service on
62-7 the date of the election established by the pension board.
62-8 (d) Notwithstanding any other provision of this Act,
62-9 duplication of any pension or benefit payable from the pension
62-10 system and any pension or benefit payable under another defined
62-11 benefit pension plan to which the city contributes is not
62-12 permitted. Any pension or benefit payable to any person under
62-13 another defined benefit pension plan, based on a period of service
62-14 for which credited service is given under this Act, is deducted
62-15 from the total pension or benefit otherwise payable to the
62-16 participant under this Act, except that the pension or benefit may
62-17 not be reduced to an amount less than the amount that would have
62-18 been payable if the period of service had been excluded from
62-19 service.
62-20 SECTION 20. SERVICE FOR FORMERLY INELIGIBLE EMPLOYEES. (a)
62-21 A member who was ineligible to be a member under Section 4(d),
62-22 Chapter 358, Acts of the 48th Legislature, Regular Session, 1943
62-23 (Article 6243g, Vernon's Texas Civil Statutes), before September 1,
62-24 1999, because the member was receiving a pension from another
62-25 pension system of the city to which the city contributes may
62-26 purchase credited service solely in group A for otherwise eligible
62-27 service previously disallowed by Section 4(d), Chapter 358, Acts of
63-1 the 48th Legislature, Regular Session, 1943 (Article 6243g,
63-2 Vernon's Texas Civil Statutes), if the member:
63-3 (1) has been continuously employed by the city since
63-4 the date of reemployment into a municipal position that became
63-5 covered by Chapter 358, Acts of the 48th Legislature, Regular
63-6 Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), on
63-7 September 1, 1999, by removal of the prohibition under Section
63-8 4(d), Chapter 358, Acts of the 48th Legislature, Regular Session,
63-9 1943 (Article 6243g, Vernon's Texas Civil Statutes);
63-10 (2) would have been eligible to be a member and
63-11 receive service for the municipal employment before September 1,
63-12 1999, but for the prohibition under Section 4(d), Chapter 358, Acts
63-13 of the 48th Legislature, Regular Session, 1943 (Article 6243g,
63-14 Vernon's Texas Civil Statutes);
63-15 (3) was a member in group A on September 1, 1999, and
63-16 on September 1, 2001;
63-17 (4) makes written application, in a manner and time
63-18 determined by the pension board, to receive credited service in
63-19 group A for all otherwise eligible service; and
63-20 (5) on approval by the pension board, pays into the
63-21 pension fund all contributions that would have been deducted or
63-22 picked up as member contributions during the period of claimed
63-23 service as described by Section 7(c) of this Act, including
63-24 required interest.
63-25 (b) Payments of the amounts required under this section must
63-26 be completed by the earliest of:
63-27 (1) the date of the member's termination of employment
64-1 or term in office;
64-2 (2) the date of the member's retirement or death; or
64-3 (3) the fifth anniversary of the date of the member's
64-4 approved claim for credited service under this section.
64-5 (c) If the payments are not completed within the period
64-6 described by Subsection (b) of this section, the member or the
64-7 member's estate may either make an immediate payment of the balance
64-8 due or receive a refund, without interest, of the member's
64-9 contributions to group A for the claimed service. If the refund is
64-10 paid, the member is considered to have never been eligible for
64-11 credit for the service claimed under this section.
64-12 SECTION 21. REDUCTION OF BENEFITS; DISSOLUTION OF SYSTEM. (a)
64-13 If the pension board determines that the pension fund is seriously
64-14 depleted, the pension board may proportionately and temporarily
64-15 reduce the benefits of all retirees, eligible survivors, alternate
64-16 payees, and beneficiaries.
64-17 (b) The amount of any reduction under Subsection (a) of this
64-18 section shall be paid to the retirees, eligible survivors,
64-19 alternate payees, and beneficiaries if the pension board determines
64-20 that the pension fund is sufficiently reestablished to pay the
64-21 amounts.
64-22 (c) If the reserve and surplus in the pension fund become
64-23 exhausted and the payouts of the pension fund exceed the income to
64-24 the pension fund, the governing body of the city by ordinance may
64-25 dissolve the pension system and require liquidation of the pension
64-26 system without any liability to the city.
64-27 (d) Any retiree or eligible survivor receiving a retirement
65-1 pension or survivor benefit may, at that person's option, receive a
65-2 smaller retirement pension or survivor benefit after properly
65-3 making a request in writing to the pension board.
65-4 SECTION 22. EXEMPTION FROM EXECUTION, ATTACHMENT, OR OTHER
65-5 WRIT. (a) No portion of the pension fund, either before or after
65-6 its order of disbursement by the pension board, and no amount due
65-7 or to become due to any retiree, eligible survivor, or beneficiary,
65-8 may be held, seized, taken, detained, or levied on by, or subjected
65-9 to, execution, attachment, garnishment, injunction, or any other
65-10 writ. No order or decree, or any process or proceeding, may be
65-11 issued by a court of this state for the payment or satisfaction in
65-12 whole or in part out of the pension fund of a debt, damage, claim,
65-13 demand, or judgment against any member, retiree, eligible survivor,
65-14 or other person. The pension fund and any claim on the pension fund
65-15 may not be directly or indirectly assigned or transferred. Any
65-16 attempt to transfer or assign the pension fund or any part of the
65-17 pension fund, and any claim on the pension fund, is void. The
65-18 pension fund shall be sacredly held, kept, and disbursed only for
65-19 the purposes provided by this Act, except that a retiree or
65-20 eligible survivor may have deducted from that person's pension or
65-21 survivor benefit an amount required by law or a voluntary amount
65-22 authorized by law and the pension board.
65-23 (b) This section does not prevent the division of benefits
65-24 accrued by a member under any court order determined by the pension
65-25 board or its designee to be a qualified domestic relations order
65-26 and the payment of a share of a retiree's benefits or contributions
65-27 to an alternate payee in accordance with the order.
66-1 (c) This section does not prevent the offset of amounts
66-2 received wrongly or in error against future pension or benefit
66-3 payments under Section 3(h) of this Act.
66-4 SECTION 23. FEDERAL TAX QUALIFICATION OF PENSION FUND;
66-5 MAXIMUM BENEFITS FROM PENSION FUND. (a) The pension fund is
66-6 intended to qualify under Section 401(a), Internal Revenue Code of
66-7 1986, as amended, and is for the exclusive benefit of the members
66-8 and retirees and their eligible survivors. No part of the corpus or
66-9 income of the pension fund may ever be used for or diverted to any
66-10 purpose other than for the benefit of members and retirees and
66-11 their eligible survivors as provided by this Act.
66-12 (b) A member, retiree, or eligible survivor of the pension
66-13 system may not accrue a retirement pension, disability retirement
66-14 allowance, survivor benefit, death benefit allowance, DROP benefit,
66-15 or any other benefit under this Act in excess of the benefit limits
66-16 applicable to the pension fund under Section 415, Internal Revenue
66-17 Code of 1986, as amended. The pension board shall reduce the amount
66-18 of any benefit that exceeds those limits by the amount of the
66-19 excess. If total benefits under the pension fund and the benefits
66-20 and contributions to which any member is eligible under any other
66-21 qualified plan maintained by the city that employs the member would
66-22 otherwise exceed the applicable limits under Section 415, Internal
66-23 Revenue Code of 1986, as amended, the benefits the member would
66-24 otherwise receive from the pension fund shall be reduced to the
66-25 extent necessary so that the benefits do not exceed the benefit
66-26 limits under Section 415, Internal Revenue Code of 1986, as
66-27 amended.
67-1 (c) Any member, retiree, or eligible survivor who receives
67-2 any distribution that is an eligible rollover distribution as
67-3 defined by Section 402(c)(4), Internal Revenue Code of 1986, as
67-4 amended, is eligible to have that distribution transferred directly
67-5 to another eligible retirement plan of the member's, retiree's, or
67-6 eligible survivor's choice on providing direction to the pension
67-7 system regarding that transfer in accordance with procedures
67-8 established by the pension board.
67-9 (d) The total salary taken into account for any purpose for
67-10 any member or retiree of the pension system may not exceed $200,000
67-11 for any year for an eligible participant, or $150,000 a year for an
67-12 ineligible participant. These dollar limits shall be adjusted from
67-13 time to time in accordance with guidelines provided by the United
67-14 States secretary of the treasury. For purposes of this subsection,
67-15 an eligible participant is a person who first became a member of
67-16 the predecessor system before 1996, and an ineligible participant
67-17 is a member who is not an eligible participant.
67-18 (e) Accrued benefits under this Act become 100 percent
67-19 nonforfeitable for a member on the date the member has completed
67-20 five years of credited service, except as otherwise provided by
67-21 law. If the pension system or the pension fund is terminated or
67-22 partially terminated, or city contributions to the pension fund are
67-23 discontinued completely, there may not be a reversion of funds to
67-24 the city. On the complete or partial termination or discontinuance
67-25 of city contributions, the pension fund held by the pension system
67-26 shall be used exclusively for benefits for members, deferred
67-27 participants, retirees, and their eligible survivors, and the
68-1 affected employees' rights to the benefits, to the extent funded,
68-2 shall be nonforfeitable if not already nonforfeitable under this
68-3 subsection.
68-4 (f) Amounts representing forfeited benefits of terminated
68-5 members may not be used to increase benefits payable from the
68-6 pension fund, but may be used to reduce contributions for future
68-7 plan years.
68-8 (g) Distributions of benefits must begin not later than
68-9 April 1 of the year following the calendar year during which the
68-10 member becomes 70-1/2 years of age or terminates employment with
68-11 the employer, if later, and must otherwise conform to Section
68-12 401(a)(9), Internal Revenue Code of 1986, as amended.
68-13 (h) If the amount of any benefit is to be determined on the
68-14 basis of actuarial assumptions that are not otherwise specifically
68-15 set forth for that purpose in this Act, the actuarial assumptions
68-16 to be used are those earnings and mortality assumptions being used
68-17 on the date of the determination by the pension fund's actuary and
68-18 approved by the pension board. The actuarial assumptions being used
68-19 at any particular time shall be attached as an addendum to a copy
68-20 of this Act and treated for all purposes as a part of the Act. The
68-21 actuarial assumptions may be changed by the pension fund's actuary
68-22 at any time if approved by the pension board. A change in
68-23 actuarial assumptions may not result in any decrease in benefits
68-24 accrued as of the effective date of the change.
68-25 (i) To the extent permitted by law, the pension board may
68-26 adjust the benefits of retirees and eligible survivors by
68-27 increasing any benefit that was reduced because of Section 415,
69-1 Internal Revenue Code of 1986, as amended. If Section 415, Internal
69-2 Revenue Code of 1986, as amended, is amended to permit the payment
69-3 of amounts previously precluded under that section, the pension
69-4 board may adjust the benefits of retirees and eligible survivors,
69-5 including restoring benefits previously denied. Benefits paid under
69-6 this subsection are not extra compensation earned after retirement
69-7 but are the delayed payment of benefits earned before retirement.
69-8 (j) The pension board may make any change in this Act to the
69-9 extent that the change is necessary to ensure compliance with the
69-10 qualification requirements of Section 401, Internal Revenue Code of
69-11 1986, as amended, or any other federal law.
69-12 SECTION 24. EXCESS BENEFIT PLAN. (a) A separate,
69-13 nonqualified, unfunded excess benefit plan is reenacted and
69-14 continued outside the pension fund.
69-15 (b) In this section:
69-16 (1) "Excess benefit participant" means any retiree
69-17 whose retirement benefits, as determined on the basis of all
69-18 qualified plans without regard to the limitations provided by
69-19 Section 23 of this Act and comparable provisions of other qualified
69-20 plans, would exceed the maximum benefit permitted under Section
69-21 415, Internal Revenue Code of 1986, as amended.
69-22 (2) "Excess benefit plan" means the separate,
69-23 nonqualified, unfunded excess benefit plan that is continued under
69-24 this section, that was created under the predecessor system for the
69-25 benefit of eligible members, as amended or restated from time to
69-26 time, and that is intended to be a qualified governmental excess
69-27 benefit arrangement within the meaning of Section 415(m), Internal
70-1 Revenue Code of 1986, as amended.
70-2 (3) "Maximum benefit" means the retirement benefit a
70-3 retiree and the surviving spouse or dependent child of a retiree or
70-4 deceased member or retiree are eligible to receive from all
70-5 qualified plans in any month after giving effect to Section 23 of
70-6 this Act and any similar provision of any other qualified plan
70-7 designed to conform to Section 415, Internal Revenue Code of 1986,
70-8 as amended.
70-9 (4) "Qualified plan" means the fund and any other plan
70-10 that is maintained by the city for the exclusive benefit of some or
70-11 all of the members of the fund and that has been found by the
70-12 Internal Revenue Service to be qualified or has been treated by the
70-13 city as a qualified plan under Section 401, Internal Revenue Code
70-14 of 1986, as amended.
70-15 (5) "Unrestricted benefit" means the monthly
70-16 retirement benefit a retiree and the surviving spouse and dependent
70-17 child of a retiree or deceased member or retiree would have
70-18 received under the terms of all qualified plans, except for the
70-19 limitations provided by Section 23 of this Act and any similar
70-20 provision of any other qualified plan designed to conform to
70-21 Section 415, Internal Revenue Code of 1986, as amended.
70-22 (c) An excess benefit participant who is receiving benefits
70-23 from the pension fund is eligible for a monthly benefit under the
70-24 excess benefit plan in an amount equal to the lesser of:
70-25 (1) the member's unrestricted benefit less the maximum
70-26 benefit; or
70-27 (2) the amount by which the member's monthly benefit
71-1 from the pension fund has been reduced because of the limitations
71-2 provided by Section 415, Internal Revenue Code of 1986, as amended.
71-3 (d) If a surviving spouse or dependent child is eligible for
71-4 preretirement or postretirement survivor benefits under a qualified
71-5 plan after the date of the death of an excess benefit participant,
71-6 the surviving spouse or dependent child is eligible for a monthly
71-7 benefit under the excess benefit plan equal to the benefit
71-8 determined in accordance with this Act, without regard to the
71-9 limitations provided by Section 23 of this Act or Section 415,
71-10 Internal Revenue Code of 1986, as amended, less the maximum
71-11 benefit.
71-12 (e) Any benefit to which a person is eligible under this
71-13 section shall be paid at the same time and in the same manner as
71-14 the benefit that would have been paid from the pension fund if
71-15 payment of the benefit from the pension fund had not been precluded
71-16 by Section 23 of this Act. An excess benefit participant or a
71-17 beneficiary of the participant may not, under any circumstances,
71-18 elect to defer receipt of all or any part of a payment due under
71-19 this section.
71-20 (f) The pension board shall administer the excess benefit
71-21 plan, and the executive director shall carry out the business of
71-22 the board with respect to the plan. Except as otherwise provided
71-23 by this section, the rights, duties, and responsibilities of the
71-24 pension board and the executive director are the same for the plan
71-25 as for the pension fund.
71-26 (g) The consultants, independent auditors, attorneys, and
71-27 actuaries selected to perform services for the pension fund shall
72-1 perform services for the excess benefit plan, but their fees for
72-2 services may not be paid by the pension fund. The actuary engaged
72-3 to perform services for the pension fund shall advise the pension
72-4 board of the amount of benefits that may not be provided from the
72-5 pension fund solely by reason of the limitations provided by
72-6 Section 415, Internal Revenue Code of 1986, as amended, and of the
72-7 amount of employer contributions that will be made to the plan
72-8 rather than to the pension fund.
72-9 (h) Contributions may not accumulate under the excess
72-10 benefit plan to pay future retirement benefits. The executive
72-11 director shall reduce each payment of employer contributions that
72-12 would otherwise be made to the pension fund under Section 8 of this
72-13 Act by the amount determined to be necessary to meet the
72-14 requirements for retirement benefits under the plan, including
72-15 reasonable administrative expenses, until the next payment of
72-16 municipal contributions is expected to be made to the pension fund.
72-17 The employer shall pay to the plan, from the withheld
72-18 contributions, not earlier than the 30th day before the date each
72-19 distribution of monthly retirement benefits is required to be made
72-20 from the plan, the amount necessary to satisfy the obligation to
72-21 pay monthly retirement benefits from the plan. The executive
72-22 director shall satisfy the obligation of the plan to pay retirement
72-23 benefits from the employer contributions transferred for that
72-24 month.
72-25 (i) Employer contributions otherwise required to be made to
72-26 the pension fund under Section 8 of this Act and to any other
72-27 qualified plan shall be divided into those contributions required
73-1 to pay retirement benefits under this section and those
73-2 contributions paid into and accumulated to pay the maximum benefits
73-3 required under the qualified plan. Employer contributions made to
73-4 provide retirement benefits under this section may not be
73-5 commingled with the money of the pension fund or any other
73-6 qualified plan.
73-7 (j) Benefits under this section are exempt from execution,
73-8 attachment, garnishment, assignment, injunction, and any other writ
73-9 in the same manner as retirement annuities under Section 22 of this
73-10 Act and may not be paid to a person other than to the person who
73-11 would have received the benefits from the pension fund except for
73-12 the limitations provided by Section 23 of this Act.
73-13 SECTION 25. EMPLOYEES ON RETIREMENT WHEN ACT TAKES EFFECT.
73-14 (a) Any person receiving a retirement benefit from the predecessor
73-15 system immediately before the effective date of this Act shall
73-16 continue to receive the same benefit amount the person was entitled
73-17 to receive under the predecessor system.
73-18 (b) This Act does not change the status of any former member
73-19 receiving a pension, or who is eligible to receive a pension, from
73-20 the city or the pension system under the predecessor system, unless
73-21 otherwise expressly provided by this Act.
73-22 SECTION 26. CONFIDENTIAL INFORMATION. (a) Records that are
73-23 in the custody of the pension system concerning an individual
73-24 member, deferred participant, retiree, eligible survivor,
73-25 beneficiary, or alternate payee are not public information under
73-26 Chapter 552, Government Code, and may not be disclosed in a form
73-27 identifiable to a specific individual unless:
74-1 (1) the information is disclosed to:
74-2 (A) the individual or the individual's attorney,
74-3 guardian, executor, administrator, or conservator, or another
74-4 person who the executive director determines is acting in the
74-5 interest of the individual or the individual's estate;
74-6 (B) a spouse or former spouse of the individual
74-7 and the executive director determines that the information is
74-8 relevant to the spouse's or former spouse's interest in a member's
74-9 accounts or benefits or other amounts payable by the pension
74-10 system;
74-11 (C) a governmental official or employee and the
74-12 executive director determines that disclosure of the information
74-13 requested is reasonably necessary to the performance of the duties
74-14 of the official or employee; or
74-15 (D) a person authorized by the individual in
74-16 writing to receive the information; or
74-17 (2) the information is disclosed under a subpoena and
74-18 the executive director determines that the individual will have a
74-19 reasonable opportunity to contest the subpoena.
74-20 (b) This section does not prevent the disclosure of the
74-21 status or identity of an individual as a member, former member,
74-22 deferred participant, retiree, deceased participant, eligible
74-23 survivor, beneficiary, or alternate payee of the pension system.
74-24 (c) The executive director may designate other employees of
74-25 the pension system to make the necessary determinations under
74-26 Subsection (a) of this section.
74-27 (d) A determination and disclosure under Subsection (a) of
75-1 this section does not require notice to the individual member,
75-2 deferred participant, retiree, eligible survivor, beneficiary, or
75-3 alternate payee.
75-4 SECTION 27. POWER OF ATTORNEY. (a) A person eligible for
75-5 payment of a pension or other benefits administered by the pension
75-6 system may direct the pension system to treat as the authorized
75-7 representative of the person concerning the disposition of the
75-8 pension or other benefits an attorney-in-fact under a power of
75-9 attorney that the pension system determines complies with Section
75-10 490, Texas Probate Code.
75-11 (b) If the power of attorney under Subsection (a) of this
75-12 section is revoked, the pension system is not liable for payments
75-13 made to or actions taken at the request of the attorney-in-fact
75-14 before the date the pension system receives written notice that the
75-15 power of attorney has been revoked.
75-16 SECTION 28. PROPORTIONATE RETIREMENT PROGRAM WITH
75-17 PARTICIPATING RETIREMENT SYSTEMS. (a) The pension board may
75-18 establish a program of proportionate retirement benefits subject to
75-19 the requirements of this section.
75-20 (b) In this section:
75-21 (1) "Combined service credit" means the combined sum
75-22 of an eligible participant's service credit in each participating
75-23 retirement system in which the participant has service credit and
75-24 for which the total satisfies the length-of-service requirements
75-25 for normal service retirement from that system at the eligible
75-26 participant's attained age.
75-27 (2) "Eligible participant" means a person who is or
76-1 has been a member of the pension system and who is actively
76-2 employed by the city and covered by a participating retirement
76-3 system at the time of full participation by the three retirement
76-4 systems established by Article 6243e.2(1), Revised Statutes,
76-5 Article 6243g-4, Revised Statutes, a successor statute to either of
76-6 those laws, and this Act. An eligible participant does not include
76-7 any individual who:
76-8 (A) is in retirement or DROP status;
76-9 (B) is receiving a retirement pension; or
76-10 (C) is in a probationary or trainee firefighter
76-11 or police officer position.
76-12 (3) "Full participation" means that a retirement
76-13 system has met the requirements of a participating retirement
76-14 system.
76-15 (4) "Maximum benefit" means the maximum total amount
76-16 of benefits payable to an eligible participant who has used
76-17 combined service credit to qualify for benefits from a
76-18 participating retirement system, which is 90 percent of the
76-19 participant's average monthly compensation at the time the
76-20 participant ceases employment in a position covered by the pension
76-21 system.
76-22 (5) "Participating retirement system" means a
76-23 retirement system that is established by Article 6243e.2(1),
76-24 Revised Statutes, Article 6243g-4, Revised Statutes, a successor
76-25 statute to either of those laws, or this Act and that recognizes
76-26 and allows the use of combined service credit and disability
76-27 determinations to provide proportionate retirement benefits in its
77-1 system for an eligible participant under the provisions of this
77-2 Act.
77-3 (6) "Service credit" means service that is credited by
77-4 the rules of a participating retirement system and that may be used
77-5 to meet length-of-service requirements for service retirement in
77-6 the system, except that service credit that would otherwise be
77-7 allowed by more than one participating retirement system for the
77-8 same service period is counted only once in determining the amount
77-9 of a person's combined service credit and applies as service credit
77-10 only in the participating retirement system in which the person
77-11 first established the service credit.
77-12 (c) Participation by the pension system in the proportionate
77-13 retirement program is voluntary. The pension board may elect to
77-14 participate in the proportionate retirement program by adopting a
77-15 resolution. If a resolution is adopted, the pension board shall
77-16 notify the other participating retirement systems of the election.
77-17 The effective date of participation in the proportionate retirement
77-18 program for which an election is made is the first day of the third
77-19 month after the month in which notice is given. Participation in
77-20 the proportionate retirement program by the pension system may be
77-21 terminated for any reason by adoption of a pension board
77-22 resolution, except that the proportionate retirement program will
77-23 be continued by the pension system for eligible participants who
77-24 are actively employed at the time of the termination and who remain
77-25 actively employed. On adoption of a resolution of termination, the
77-26 pension board shall notify the other participating retirement
77-27 systems of the termination. The effective date of termination from
78-1 the proportionate retirement program is the first day of the month
78-2 following the month in which notice of termination is given.
78-3 (d) An eligible participant's combined service credit may be
78-4 used only for determining eligibility for a normal retirement
78-5 pension under this Act and may not be used in determining
78-6 eligibility for DROP participation, a disability pension, survivor
78-7 benefits, or any type of benefit other than a normal retirement
78-8 pension, nor may combined service credit be used in determining the
78-9 amount of any type of pension or benefit. The amount of a pension
78-10 or benefit payable by the pension system is determined according
78-11 to, and in the manner prescribed by, this Act and the rules
78-12 established by the pension board and is based solely on an eligible
78-13 participant's service credit in the pension system and allowable
78-14 maximum benefit. The pension board has sole responsibility and
78-15 discretion to determine the eligibility of eligible participants
78-16 for benefits, including whether sufficient combined service credit
78-17 exists to qualify eligible participants for proportionate
78-18 retirement benefits from the pension system and the amount and
78-19 duration of proportionate retirement benefits payable by the
78-20 pension system.
78-21 (e) A person who withdraws pension contributions from a
78-22 participating retirement system ceases to be a member of that
78-23 participating retirement system. Membership and service credit for
78-24 which contributions were withdrawn or otherwise forfeited may be
78-25 reestablished under the statutes and rules governing that system.
78-26 To be counted as combined service credit, all service in a
78-27 participating retirement system for which the person withdrew
79-1 contributions or that was otherwise forfeited must be reinstated in
79-2 accordance with the statutes and rules applicable to that system.
79-3 A lump-sum distribution is governed by the statutes and rules
79-4 applicable to the particular retirement system that distributed the
79-5 lump-sum payment.
79-6 (f) A person who has service credit in another participating
79-7 retirement system for which the person is receiving or may become
79-8 eligible to receive a benefit is not eligible to vote in a pension
79-9 board election or hold a position on the pension board.
79-10 (g) The pension board shall make determinations regarding an
79-11 eligible participant's combined service credit based on the
79-12 certified records of a participating retirement system, including
79-13 the pension system, and of the city.
79-14 (h) The provisions of Section 17 of this Act relating to
79-15 termination of employment do not apply to an eligible participant
79-16 to the extent the participant is separated from service covered by
79-17 the pension system during a period for which the participant earns
79-18 service credit in another participating retirement system for
79-19 service performed for the city in an amount sufficient to meet the
79-20 length-of-service requirement, using combined service credit, for a
79-21 retirement benefit from the participating retirement system.
79-22 (i) A proportionate retirement benefit may be paid by the
79-23 pension system under the proportionate retirement program to an
79-24 eligible participant who fulfills the requirements for receiving a
79-25 proportionate retirement benefit in the pension system using
79-26 combined service credit only if the participant is eligible to
79-27 receive and has applied for proportionate retirement benefits from
80-1 the applicable other participating retirement systems. An eligible
80-2 participant may not become eligible to receive a proportionate
80-3 retirement benefit from the pension system while employed in a
80-4 position covered by the pension system.
80-5 (j) The pension system is governed solely by its own
80-6 statutory provisions, policies, and procedures relating to
80-7 disability benefit determinations for members who apply for a
80-8 disability pension from the pension system, except that the pension
80-9 system shall pay a proportionate amount of the ordinary disability
80-10 benefit attributable to the service credited under the pension
80-11 system, based on the schedule of benefits in effect under this Act
80-12 or Chapter 358, Acts of the 48th Legislature, Regular Session, 1943
80-13 (Article 6243g, Vernon's Texas Civil Statutes), as applicable, on
80-14 the eligible participant's last day of credited service as a member
80-15 in the pension system if:
80-16 (1) the eligible participant has combined service
80-17 credit from any other participating retirement system in addition
80-18 to the pension system;
80-19 (2) the eligible participant files for a disability
80-20 pension for the first time as a member of the other participating
80-21 retirement system;
80-22 (3) the eligible participant is otherwise eligible for
80-23 a disability pension in both participating retirement systems;
80-24 (4) the eligible participant receives a determination
80-25 from the pension board of trustees of the other participating
80-26 pension system that the person has a disability that is of a type
80-27 recognized by the pension system; and
81-1 (5) the other participating retirement system grants
81-2 the disability pension.
81-3 (k) If the disability is determined to be service-related,
81-4 the pension system shall pay only the ordinary disability benefit
81-5 amount. The pension board has the right to require examinations,
81-6 reports, and any other information permitted under this Act for the
81-7 administration and payment of disability benefits and the right to
81-8 reduce, suspend, or terminate a benefit accordingly. The benefit
81-9 allowed under this subsection and Subsection (j) of this section is
81-10 payable only if the other participating retirement systems
81-11 authorize and pay a disability benefit under the same circumstances
81-12 as provided by this subsection. A person who is receiving a
81-13 disability benefit from a participating retirement system is not
81-14 eligible for a disability pension under this Act, except as
81-15 provided by this subsection and Subsection (j) of this section.
81-16 (l) Creditable military service, if any, will be credited in
81-17 the pension system only as provided by this Act and only if the
81-18 service is not credited in any other participating retirement
81-19 system.
81-20 (m) If the pension board elects to participate in the
81-21 proportionate retirement program under this section, the pension
81-22 board shall adopt rules for implementing and administering the
81-23 proportionate retirement program.
81-24 (n) A person may not receive a benefit under this section in
81-25 an amount that is greater than the amount of the benefits accrued
81-26 by the person in the absence of this section. A survivor benefit
81-27 otherwise payable under Section 14(c) of this Act on behalf of a
82-1 person who has used combined service credit to qualify for benefits
82-2 from at least one participating retirement system shall be computed
82-3 and payable as provided by Section 14(b) of this Act.
82-4 SECTION 29. Chapter 358, Acts of the 48th Legislature,
82-5 Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
82-6 Statutes), is repealed.
82-7 SECTION 30. (a) This Act continues in effect each municipal
82-8 employees pension fund established under Chapter 358, Acts of the
82-9 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's
82-10 Texas Civil Statutes), as that law existed before repeal by this
82-11 Act.
82-12 (b) All assets, service credit reports, and liabilities
82-13 relating to persons who are covered by the predecessor system
82-14 immediately before the effective date of this Act are transferred
82-15 to the pension system created by this Act.
82-16 SECTION 31. A member of the pension board of trustees serving
82-17 under Chapter 358, Acts of the 48th Legislature, Regular Session,
82-18 1943 (Article 6243g, Vernon's Texas Civil Statutes), before the
82-19 effective date of this Act continues to serve on the pension board
82-20 created under this Act until the expiration of the term for which
82-21 the member was elected or appointed under Chapter 358, Acts of the
82-22 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's
82-23 Texas Civil Statutes).
82-24 SECTION 32. (a) Section 14(d) of this Act applies only to
82-25 deaths that occur on or after the effective date of this Act,
82-26 without regard to the date of a member's separation from service.
82-27 (b) Section 10(h) of this Act applies only to the payment of
83-1 pension and survivor benefits on or after the effective date of
83-2 this Act, without regard to the date of a member's death or
83-3 separation from service.
83-4 SECTION 33. This Act takes effect immediately if it receives
83-5 a vote of two-thirds of all the members elected to each house, as
83-6 provided by Section 39, Article III, Texas Constitution. If this
83-7 Act does not receive the vote necessary for immediate effect, this
83-8 Act takes effect September 1, 2001.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1573 was passed by the House on April
5, 2001, by the following vote: Yeas 139, Nays 1, 1 present, not
voting.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 1573 was passed by the Senate on
April 26, 2001, by the following vote: Yeas 30, Nays 0, 1 present,
not voting.
_______________________________
Secretary of the Senate
APPROVED: __________________________
Date
__________________________
Governor