By Naishtat H.B. No. 1958
77R8411 SMJ-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to participation in and benefits and administration of
1-3 retirement systems for firefighters in certain municipalities.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Article 2, Chapter 183, Acts of the 64th
1-6 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
1-7 Civil Statutes), is amended by adding Section 2.12 to read as
1-8 follows:
1-9 Sec. 2.12. GIFT, GRANT, OR BEQUEST. The board of trustees
1-10 may accept for the use and benefit of the fund a gift, grant, or
1-11 bequest of money or securities from any source.
1-12 SECTION 2. Section 5.04(b), Chapter 183, Acts of the 64th
1-13 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
1-14 Civil Statutes), is amended to read as follows:
1-15 (b) The three percent factor used in this section may be
1-16 changed to some other percent if the change:
1-17 (1) is first approved by the board's actuary;
1-18 (2) is approved by the board of trustees;
1-19 (3) applies only to:
1-20 (A) firefighters who are employed on an active,
1-21 full-time basis in the fire department at the time of the change;
1-22 (B) firefighters [and those] who begin service
1-23 with the fire department after the change becomes effective; and
1-24 (C) members who retire under Section 5.06 of
2-1 this Act after the change becomes effective; and
2-2 (4) does not reduce a member's benefit for service
2-3 credit accumulated before the date of the change.
2-4 SECTION 3. Section 5.06(b), Chapter 183, Acts of the 64th
2-5 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
2-6 Civil Statutes), is amended to read as follows:
2-7 (b) The retirement benefit payable to a member on retirement
2-8 under this section is the service retirement benefit described by
2-9 Section 5.04 of this Act, computed on the basis of the formula in
2-10 effect at the time of the member's retirement under this Act [the
2-11 member terminated employment with the fire department].
2-12 SECTION 4. Section 7.06, Chapter 183, Acts of the 64th
2-13 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
2-14 Civil Statutes), is amended to read as follows:
2-15 Sec. 7.06. PAYMENTS TO DEPENDENT PARENTS[; PAYMENT TO
2-16 ESTATE]. If a deceased member leaves no surviving spouse, no
2-17 surviving designated beneficiary, and no surviving children
2-18 entitled to receive a benefit under this Act but is survived by one
2-19 or more dependent parents, the dependent parent, or one of the
2-20 surviving parents designated by the board of trustees, is entitled
2-21 to receive a monthly benefit payment equal to the monthly amount
2-22 that would have been payable to a surviving spouse of the deceased.
2-23 All payments under this section cease on the death of the surviving
2-24 dependent parent.
2-25 SECTION 5. Article 7, Chapter 183, Acts of the 64th
2-26 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
2-27 Civil Statutes), is amended by adding Section 7.09 to read as
3-1 follows:
3-2 Sec. 7.09. SURVIVING BENEFICIARY OF CERTAIN UNMARRIED
3-3 MEMBERS. (a) On the death of a retiree or of a member who is
3-4 eligible for retirement but has not retired, a benefit is payable
3-5 under this section if:
3-6 (1) the retiree or member designated a beneficiary to
3-7 receive the benefit payable under this section on a form filed with
3-8 the fund; and
3-9 (2) this Act does not otherwise provide a benefit
3-10 payable to a surviving spouse or child of the member or retiree.
3-11 (b) The benefit payable under this section is an immediate
3-12 monthly benefit from the fund of 75 percent of the amount of the:
3-13 (1) retirement benefit that was being paid to the
3-14 retiree; or
3-15 (2) normal service retirement benefit that the member
3-16 would have received if the member had retired on the date of death.
3-17 (c) If the designated beneficiary of a retiree or member is
3-18 10 or more years younger than the retiree or member at the time of
3-19 the retiree's or member's death, the amount of the benefit payable
3-20 under Subsection (b) of this section shall be reduced to the
3-21 actuarial equivalent of the benefit that would have been payable if
3-22 the beneficiary and the retiree or member were the same age.
3-23 SECTION 6. Section 8.02, Chapter 183, Acts of the 64th
3-24 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
3-25 Civil Statutes), is amended to read as follows:
3-26 Sec. 8.02. ELECTION TO PARTICIPATE IN DROP. The election to
3-27 participate in the DROP shall be made in accordance with procedures
4-1 adopted by the board of trustees. The election may be made at any
4-2 time on or after the date the member becomes eligible for normal
4-3 service retirement under Section 5.01 of this Act or early
4-4 retirement under Section 5.05 of this Act and becomes effective on
4-5 the first day of the first month after the date of the election. At
4-6 the same time that a member makes an election to participate in the
4-7 DROP, the member must agree in writing to terminate service with
4-8 the fire department on a date not later than the seventh [fifth]
4-9 anniversary of the effective date of the election under this
4-10 section. An agreement to terminate service is binding on the
4-11 member and the fire department, except that the member may
4-12 terminate active service at any time before the date selected. An
4-13 election to participate in the DROP has no effect on either the
4-14 municipality's or the member's contributions under Section 10.01 of
4-15 this Act.
4-16 SECTION 7. Sections 8.06(c) and (d), Chapter 183, Acts of the
4-17 64th Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's
4-18 Texas Civil Statutes), are amended to read as follows:
4-19 (c) If a member elects to participate in the DROP under this
4-20 section:
4-21 (1) the board of trustees shall cause to be credited
4-22 to a DROP account maintained within the fund for the benefit of
4-23 that person an amount equal to the credits that the member's DROP
4-24 account would have received, including interest, if the member had
4-25 established the DROP account after becoming eligible for service
4-26 retirement, but not more than seven [five] years before the
4-27 effective date of the person's retirement;
5-1 (2) the date used in computations under Subdivision
5-2 (1) of this section as if the member had established the DROP
5-3 account on that date is the effective date of the member's election
5-4 to participate in the DROP;
5-5 (3) the member will receive payments from the member's
5-6 DROP account as the member may select under Section 8.05 of this
5-7 Act; and
5-8 (4) the member's DROP account shall be credited with
5-9 interest as provided by Section 8.05 of this Act.
5-10 (d) If a member who did not establish a DROP account under
5-11 this section but was eligible to do so dies before retirement, the
5-12 surviving spouse, if any, of that member may elect to participate
5-13 in the DROP if the surviving spouse has not received any benefit
5-14 payments under Section 7.01 of this Act. If a surviving spouse
5-15 makes an election under this subsection:
5-16 (1) the board of trustees shall cause to be paid to
5-17 the surviving spouse in a lump sum, as soon as administratively
5-18 possible after the fund receives notice of the election, an amount
5-19 equal to the credits that the member's DROP account would have
5-20 received, including interest, if the member had established the
5-21 DROP account after becoming eligible for service retirement, but
5-22 not more than seven [five] years before the date of the member's
5-23 death; and
5-24 (2) the amount of the benefit payable to the surviving
5-25 spouse under Section 7.03 of this Act is 75 percent of the benefit
5-26 the member would have been eligible to receive if the member had
5-27 established the DROP account on becoming eligible for service
6-1 retirement, but not more than seven [five] years before the date of
6-2 the member's death.
6-3 SECTION 8. Section 9.03, Chapter 183, Acts of the 64th
6-4 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
6-5 Civil Statutes), is amended to read as follows:
6-6 Sec. 9.03. LIMITATION ON PAYMENT OF BENEFITS. (a) If the
6-7 [The] amount of [the payment of] any benefit payment under this Act
6-8 [that] would exceed the limitations provided by Section 415 of the
6-9 Internal Revenue Code of 1986, and the regulations adopted under
6-10 that [set forth in this] section, the board of trustees shall
6-11 reduce the amount of the benefit as needed to comply [be reduced in
6-12 accordance] with that [this] section.
6-13 (b) [In this section:]
6-14 [(1) "Compensation" has the meaning provided by
6-15 Section 415 of the Internal Revenue Code and the regulations
6-16 adopted under that section, instead of the meaning provided by
6-17 Section 1.02 of this Act, but as to any person who begins
6-18 participation on or after December 31, 1995, "compensation"
6-19 excludes any payments received in excess of $150,000 in a calendar
6-20 year, indexed pursuant to Section 401(a)(17) of the Internal
6-21 Revenue Code.]
6-22 [(2) "Highest average annual compensation" means the
6-23 average compensation for the three consecutive calendar years of
6-24 service with the fire department that produces the highest average.]
6-25 [(d) If payment of a benefit begins before a member attains
6-26 age 55, the annual benefit may not exceed the greater of:]
6-27 [(1) the actuarial equivalent of a $75,000 annual
7-1 benefit beginning at age 55;]
7-2 [(2) the actuarial equivalent of a $90,000 annual
7-3 benefit beginning at age 62; or]
7-4 [(3) $50,000.]
7-5 [(e) If a member does not have at least 15 years of service
7-6 credit as a firefighter with the fire department, the $50,000
7-7 limitation provided by Subsection (d) of this section is
7-8 inapplicable.]
7-9 [(f) If payment of a benefit begins when or after a member
7-10 attains age 55 but before the member attains age 62, the annual
7-11 benefit may not exceed the greater of:]
7-12 [(1) the actuarial equivalent of a $90,000 annual
7-13 benefit beginning at age 62; or]
7-14 [(2) $75,000.]
7-15 [(g) If payment of a benefit begins when or after a member
7-16 attains age 62 but before the member attains age 65, the annual
7-17 benefit may not exceed $90,000.]
7-18 [(h) If payment of a benefit begins when or after a member
7-19 attains age 65, the annual benefit may not exceed the actuarial
7-20 equivalent of a $90,000 annual benefit beginning at age 65.]
7-21 [(i) The $90,000 and $50,000 limitations provided by this
7-22 section are automatically adjusted to the amounts determined by the
7-23 secretary of the treasury in effect at the time of the member's
7-24 retirement.]
7-25 [(j) To determine the actuarial equivalent of a benefit
7-26 under this section, the interest rate assumption is the rate not to
7-27 exceed five percent that is adopted by the board of trustees in the
8-1 proper administration of the fund.]
8-2 [(k)] A person's vested accrued benefit in effect on
8-3 September 1, 1995, may not be reduced under this section.
8-4 SECTION 9. Section 9.04(b), Chapter 183, Acts of the 64th
8-5 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
8-6 Civil Statutes), is amended to read as follows:
8-7 (b) If an adjustment under Subsection (a) of this section
8-8 would exceed [one-half of] one percent of a person's benefit, the
8-9 portion of the adjustment that exceeds [one-half of] one percent of
8-10 the benefit may not be made under this section unless the board's
8-11 actuary has advised the board of trustees that the adjustment would
8-12 not impair the financial stability of the fund and the adjustment
8-13 has been approved by the affirmative vote of a majority of the
8-14 board of trustees. If an adjustment under Subsection (a) of this
8-15 section would be [one-half of] one percent or less of a person's
8-16 benefit, the adjustment may not be made under this section unless
8-17 the board's actuary has advised the board of trustees that the
8-18 adjustment would not impair the financial stability of the fund.
8-19 SECTION 10. Article 9, Chapter 183, Acts of the 64th
8-20 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
8-21 Civil Statutes), is amended by adding Section 9.10 to read as
8-22 follows:
8-23 Sec. 9.10. OPTIONAL RETIREMENT ANNUITY. (a) An optional
8-24 retirement annuity is an annuity that is certified by the board's
8-25 actuary to be the actuarial equivalent of the annuity provided
8-26 under Section 5.04 of this Act and the survivor's benefits provided
8-27 under Article 7 of this Act. An optional retirement annuity is
9-1 payable throughout the life of the retiree.
9-2 (b) Instead of the annuity payable under Section 5.04 of
9-3 this Act, a member who retires may elect to receive an optional
9-4 retirement annuity approved by the board of trustees under this
9-5 section.
9-6 (c) The survivor's benefits provided under Article 7 of this
9-7 Act are not payable on the death of a retiree who elects an
9-8 optional retirement annuity under this section.
9-9 (d) The board of trustees by rule may provide that:
9-10 (1) an optional retirement annuity is payable after a
9-11 member's death throughout the life of a person designated by the
9-12 member; or
9-13 (2) if a retiree dies before a fixed number of monthly
9-14 annuity payments are made, the remaining number of payments are
9-15 payable to the retiree's designated beneficiary or, if a designated
9-16 beneficiary does not exist, to the retiree's estate.
9-17 (e) To elect an optional retirement annuity, a member must
9-18 make the election and designate a beneficiary on a form prescribed
9-19 by the board of trustees. The member must file the form with the
9-20 board on or before the effective date of the member's retirement.
9-21 (f) Except as provided by Subsections (g), (h), and (i) of
9-22 this section, if a member elects an optional retirement annuity
9-23 that, on the member's death, pays to the member's spouse an amount
9-24 that is less than 75 percent of the annuity that is payable during
9-25 the joint lives of the member and the member's spouse, the spouse
9-26 must consent to the election. The spouse's consent must be in
9-27 writing and witnessed by an officer or employee of the fund or
10-1 acknowledged by a notary public.
10-2 (g) If a member's spouse has been adjudicated incompetent,
10-3 the consent required under Subsection (f) of this section may be
10-4 given by the spouse's guardian.
10-5 (h) If a physician determines that a member's spouse is not
10-6 mentally capable of managing the spouse's affairs, the consent
10-7 required under Subsection (f) of this section may be given by the
10-8 member if the member would be qualified to serve as a guardian of
10-9 the spouse and the board of trustees determines that a guardianship
10-10 of the estate is not necessary.
10-11 (i) Spousal consent under Subsection (f) of this section is
10-12 not required if the board of trustees determines that:
10-13 (1) a spouse does not exist;
10-14 (2) the spouse cannot be located;
10-15 (3) the first anniversary of the marriage will not
10-16 occur before the date the annuity first becomes payable; or
10-17 (4) a former spouse is entitled to receive a portion
10-18 of the member's optional retirement benefit under a qualified
10-19 domestic relations order.
10-20 SECTION 11. This Act takes effect September 1, 2001.