77R16450 GJH-D
By Armbrister, et al. S.B. No. 273
Substitute the following for S.B. No. 273:
By Rangel C.S.S.B. No. 273
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to systems and programs administered by the Teacher
1-3 Retirement System of Texas; providing a penalty.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 803.402, Government Code, is amended to
1-6 read as follows:
1-7 Sec. 803.402. RECORDS. Records [Except as provided by
1-8 Section 825.507, records] of members and beneficiaries of a
1-9 retirement system to which this chapter applies that are in the
1-10 custody of any retirement system to which this chapter applies are
1-11 confidential and not subject to disclosure and are exempt from the
1-12 public access provisions of Chapter 552. The records or
1-13 information in the records may be transferred between retirement
1-14 systems to which this chapter applies to the extent necessary to
1-15 administer the proportionate retirement program provided by this
1-16 chapter.
1-17 SECTION 2. Section 822.006, Government Code, is amended to
1-18 read as follows:
1-19 Sec. 822.006. RESUMPTION OF MEMBERSHIP AFTER TERMINATION. A
1-20 person whose membership in the retirement system has been
1-21 terminated and who resumes membership must enter the retirement
1-22 system on the same terms as a person entering service for the first
1-23 time and is not entitled to credit for previous or other terminated
1-24 service unless it is reinstated under Section 823.501 [or 823.502].
2-1 SECTION 3. Subchapter E, Chapter 823, Government Code, is
2-2 amended by adding Section 823.405 to read as follows:
2-3 Sec. 823.405. CREDIT PURCHASE OPTION. (a) A member may
2-4 establish not more than three years of equivalent membership
2-5 service credit under this section if the member has at least seven
2-6 years of actual membership service.
2-7 (b) A member may establish service credit under this section
2-8 by depositing with the retirement system, for each year of service
2-9 credit, the actuarial present value, at the time of deposit, of the
2-10 additional standard retirement annuity benefits that would be
2-11 attributable to the purchase of the service credit under this
2-12 section, based on rates and tables recommended by the retirement
2-13 system's actuary and adopted by the board of trustees.
2-14 (c) After a member makes the deposits required by this
2-15 section, the retirement system shall grant the member one year of
2-16 equivalent membership service credit for each year of credit
2-17 approved.
2-18 (d) The retirement system shall deposit the amount of the
2-19 actuarial present value of the service credit purchased in the
2-20 member's individual account in the employees saving account.
2-21 (e) The board of trustees may adopt rules to administer this
2-22 section.
2-23 SECTION 4. Sections 824.203(a) and (e), Government Code, are
2-24 amended to read as follows:
2-25 (a) Except as provided by Subsections (c), (d), and (e), the
2-26 standard service retirement annuity is an amount computed on the
2-27 basis of the member's average annual compensation for the three
3-1 years of service, whether or not consecutive, in which the member
3-2 received the highest annual compensation, times 2.3 [2.2] percent
3-3 for each year of service credit in the retirement system.
3-4 (e) The annual standard service retirement annuity for a
3-5 person who immediately before retirement holds a position as a
3-6 classroom teacher or full-time librarian, or the annual death
3-7 benefit annuity based on the service of a member who at the time of
3-8 death held a position as a classroom teacher or full-time
3-9 librarian, may not be less than an amount computed on the basis of
3-10 the minimum annual salary provided by the Education Code for a
3-11 classroom teacher or full-time librarian, multiplied by 2.3 [2.2]
3-12 percent for each year of service credit in the retirement system.
3-13 SECTION 5. Sections 824.404(b)-(d), Government Code, are
3-14 amended to read as follows:
3-15 (b) If the designated beneficiary is the spouse or a
3-16 dependent parent of the decedent, the beneficiary may elect to
3-17 receive for life a monthly benefit of $250 [$200], beginning
3-18 immediately or on the date the beneficiary becomes 65 years old,
3-19 whichever is later.
3-20 (c) If the designated beneficiary is the spouse of the
3-21 decedent and has one or more children less than 18 years old or has
3-22 custody of one or more children of the decedent who are less than
3-23 18 years old, the designated beneficiary may elect to receive:
3-24 (1) a monthly benefit of $350 [$300] payable until the
3-25 youngest child becomes 18 years old; and
3-26 (2) when the youngest child has attained the age of
3-27 18, a monthly benefit for life of $250 [$200], beginning on the
4-1 date the beneficiary becomes 65 years old.
4-2 (d) If the designated beneficiary or beneficiaries are the
4-3 decedent's dependent children who are less than 18 years old, their
4-4 guardian may elect to receive for them:
4-5 (1) a monthly benefit of $350 [$300], payable as long
4-6 as two or more children are less than 18 years old; and
4-7 (2) a monthly benefit of $250 [$200], payable as long
4-8 as only one child is less than 18 years old.
4-9 SECTION 6. Section 824.602, Government Code, is amended by
4-10 amending Subsection (a) and adding Subsection (m) to read as
4-11 follows:
4-12 (a) Subject to Section 825.506, the retirement system may
4-13 not, under Section 824.601, withhold a monthly benefit payment if
4-14 the retiree is employed in a Texas public educational institution:
4-15 (1) as a substitute only with pay not more than the
4-16 daily rate of substitute pay established by the employer and, if
4-17 the retiree is a disability retiree, the employment has not
4-18 exceeded a total of 90 days in the school year;
4-19 (2) in a position, other than as a substitute, on no
4-20 more than a one-half time basis for the month;
4-21 (3) in one or more positions on as much as a full-time
4-22 basis, if the work occurs in not more than six months of a school
4-23 year that begins after the retiree's effective date of retirement;
4-24 (4) in a position, other than as a substitute, on no
4-25 more than a one-half time basis for no more than 90 days in the
4-26 school year, if the retiree is a disability retiree; [or]
4-27 (5) in a position as a classroom teacher on as much as
5-1 a full-time basis, if the retiree has retired under Section
5-2 824.202(a) [without reduction for retirement at an early age], is
5-3 certified under Subchapter B, Chapter 21, Education Code, to teach
5-4 the subjects assigned, is teaching in an acute shortage area as
5-5 determined [defined] by the board of trustees of a school district
5-6 as provided by Subsection (m) [commissioner of education], and has
5-7 been separated from service with all public schools for at least 12
5-8 months; or
5-9 (6) as a bus driver for a school district on as much
5-10 as a full-time basis, if the retiree has retired under Section
5-11 824.202(a).
5-12 (m) The board of trustees of a school district by rule shall
5-13 determine, for purposes of Subsection (a), whether there are acute
5-14 shortage areas in the district. A determination must be based on
5-15 acute shortage area guidelines that are adopted by the commissioner
5-16 of education. The guidelines adopted by the commissioner of
5-17 education must include:
5-18 (1) a list of acute shortage areas;
5-19 (2) suggested criteria for identifying local acute
5-20 shortage areas; and
5-21 (3) a requirement that a certified applicant for a
5-22 position as a classroom teacher who is not a retiree be given
5-23 preference in hiring.
5-24 SECTION 7. Section 824.603, Government Code, is amended to
5-25 read as follows:
5-26 Sec. 824.603. EXCLUSION FROM CREDIT. Employment of a retiree
5-27 described by Section 824.602(a) does not entitle a retiree to
6-1 additional service credit, and the retiree so employed is not
6-2 required to make contributions to the system from compensation for
6-3 that employment. [Such employment may not be considered in applying
6-4 the provisions of Section 823.502.]
6-5 SECTION 8. Section 824.805(b), Government Code, is amended
6-6 to read as follows:
6-7 (b) A member participating in the plan on September 1, 2001
6-8 [1999], may, before December 31, 2001 [September 1, 2000], elect to
6-9 discontinue participation in the plan on a form prescribed by and
6-10 filed with the retirement system. The retirement system shall make
6-11 account transfers and change records for a member who elects under
6-12 this subsection to discontinue participation in the plan as if the
6-13 member had never participated in the plan.
6-14 SECTION 9. Section 825.307(a), Government Code, is amended to
6-15 read as follows:
6-16 (a) The retirement system shall deposit in a member's
6-17 individual account in the member savings account:
6-18 (1) the amount of contributions to the retirement
6-19 system that is deducted from the member's compensation;
6-20 (2) the portion of a deposit made on or after
6-21 resumption of membership that represents the amount of retirement
6-22 benefits received;
6-23 (3) the portion of a deposit to reinstate service
6-24 credit previously canceled that represents the amount withdrawn or
6-25 refunded;
6-26 (4) the portion of a deposit to establish membership
6-27 service credit previously waived that is required by Section
7-1 823.202(b)(1);
7-2 (5) [the portion of a deposit to establish membership
7-3 service credit for service performed after retirement that is
7-4 required by Section 823.502(c)(3);]
7-5 [(6)] the portion of a deposit to establish military
7-6 service credit required by Section 823.302(c);
7-7 (6) [(7)] the portion of a deposit to establish
7-8 equivalent membership service credit required by Section
7-9 823.401(d), 823.402(e)(1) or (e)(2), 823.404(c), 823.405, or
7-10 823.3021(f)(1); and
7-11 (7) [(8)] interest earned on money in the account as
7-12 provided by Subsections (b) and (c) and Section 825.313(c).
7-13 SECTION 10. Section 825.308, Government Code, is amended to
7-14 read as follows:
7-15 Sec. 825.308. STATE CONTRIBUTION ACCOUNT. The retirement
7-16 system shall deposit in the state contribution account:
7-17 (1) all state contributions to the retirement system
7-18 required by Section 825.404;
7-19 (2) amounts from the interest account as provided by
7-20 Section 825.313(b)(2) [825.313(b)(5)];
7-21 (3) retirement annuities waived or forfeited in
7-22 accordance with Section 824.601 or 824.004;
7-23 (4) fees collected under Section 825.403(h);
7-24 (5) fees and interest for reinstatement of service
7-25 credit or establishment of membership service credit as provided by
7-26 Section 823.202 or[,] 823.501[, or 823.502];
7-27 (6) the portion of a deposit required by Section
8-1 823.302 to establish military service credit that represents a fee;
8-2 and
8-3 (7) the portion of a deposit required by Section
8-4 823.401(e) to establish out-of-state service credit that represents
8-5 a fee.
8-6 SECTION 11. Section 825.408(a), Government Code, is amended
8-7 to read as follows:
8-8 (a) An employing district that fails to remit, before the
8-9 fifth business [11th] day after the last day of a month, all member
8-10 and employer deposits and documentation of the deposits required by
8-11 this subchapter to be remitted by the district for the month shall
8-12 pay to the retirement system, in addition to the deposits, interest
8-13 on the unpaid or undocumented amounts at an annual rate compounded
8-14 monthly. The rate of interest is the rate established under
8-15 Section 825.313(b)(1), plus two percent. Interest required under
8-16 this section is creditable to the interest account. On request, the
8-17 retirement system may grant a waiver of the deadline imposed by
8-18 this subsection based on a district's financial or technological
8-19 resources.
8-20 SECTION 12. The heading of Section 825.507, Government Code,
8-21 is amended to read as follows:
8-22 Sec. 825.507. RECORD CONFIDENTIALITY [OF INFORMATION ABOUT
8-23 MEMBERS, RETIREES, ANNUITANTS, BENEFICIARIES, OR ALTERNATE PAYEES].
8-24 SECTION 13. Sections 825.507(a)-(d), Government Code, are
8-25 amended to read as follows:
8-26 (a) Records of a member, retiree, annuitant, beneficiary, or
8-27 alternate payee [Information contained in records] that are in the
9-1 custody of the retirement system or of an administrator, carrier,
9-2 or other governmental agency acting in cooperation with or on
9-3 behalf of the retirement system are [concerning an individual
9-4 member, retiree, annuitant, beneficiary, or alternate payee is]
9-5 confidential and not subject to public disclosure and are exempt
9-6 from the public access provisions of Chapter 552, except as
9-7 otherwise provided by this section.
9-8 (b) The retirement system may release records to [under
9-9 Section 552.101, and may not be disclosed in a form identifiable
9-10 with a specific individual unless]:
9-11 (1) a member, retiree, annuitant, beneficiary, or
9-12 alternate payee or to an authorized attorney, family member, or
9-13 representative acting on behalf of the member or annuitant [the
9-14 information is disclosed to:]
9-15 [(A) the individual or the individual's
9-16 attorney, guardian, executor, administrator, conservator, or other
9-17 person who the executive director determines is acting in the
9-18 interest of the individual or the individual's estate];
9-19 (2) [(B)] a spouse or former spouse of the individual
9-20 if the executive director determines that the information is
9-21 relevant to the spouse's or former spouse's interest in member
9-22 accounts, benefits, or other amounts payable by the retirement
9-23 system;
9-24 (3) an administrator, carrier, or agent or attorney
9-25 acting on behalf of the retirement system;
9-26 (4) another governmental agency having a legitimate
9-27 need for the information to perform the purposes of the retirement
10-1 system [(C) a governmental official or employee if the executive
10-2 director determines that disclosure of the information requested is
10-3 reasonably necessary to the performance of the duties of the
10-4 official or employee; or]
10-5 [(D) a person authorized by the individual in
10-6 writing to receive the information]; or
10-7 (5) a party in response [(2) the information is
10-8 disclosed pursuant] to a subpoena issued under applicable law [and
10-9 the executive director determines that the individual will have a
10-10 reasonable opportunity to contest the subpoena].
10-11 (c) The records of a member, retiree, annuitant,
10-12 beneficiary, or alternate payee remain confidential after release
10-13 to a person as authorized by this section.
10-14 (d) [(b)] This section does not prevent the disclosure of:
10-15 (1) the status or identity of an individual as a
10-16 member, former member, retiree, deceased member or retiree,
10-17 beneficiary, or alternate payee of the retirement system; or
10-18 (2) information that does not identify a specific
10-19 individual.
10-20 [(c) The executive director may designate other employees of
10-21 the retirement system to make the necessary determinations under
10-22 Subsection (a).]
10-23 [(d) A determination and disclosure under Subsection (a) may
10-24 be made without notice to the individual member, retiree,
10-25 annuitant, beneficiary, or alternate payee.]
10-26 SECTION 14. Notwithstanding Section 824.601, Government Code,
10-27 the retirement system may not withhold a monthly benefit payment
11-1 from a retiree who:
11-2 (1) before January 1, 2001, retired under Section
11-3 824.202(a), Government Code, without a reduction for retirement at
11-4 an early age;
11-5 (2) is employed as a classroom teacher in a Texas
11-6 public educational institution that is in an acute shortage area as
11-7 defined by the commissioner of education; and
11-8 (3) is certified under Subchapter B, Chapter 21,
11-9 Education Code, to teach the subjects that the retiree is assigned
11-10 to teach.
11-11 SECTION 15. Chapter 22, Acts of the 57th Legislature, 3rd
11-12 Called Session, 1962 (Article 6228a-5, Vernon's Texas Civil
11-13 Statutes), is amended by adding Sections 4, 5, 6, 7, 8, 9, 10, and
11-14 11 to read as follows:
11-15 Sec. 4. In this section and in Sections 5, 6, 7, 8, 9, 10,
11-16 and 11 of this Act:
11-17 (1) "Board of trustees" means the board of trustees of
11-18 the Teacher Retirement System of Texas.
11-19 (2) "Educational institution" means a school district
11-20 or an open-enrollment charter school.
11-21 (3) "Eligible qualified investment" means a qualified
11-22 investment product offered by a company that:
11-23 (A) is certified to the board of trustees under
11-24 Section 5 of this Act; or
11-25 (B) is eligible to certify to the board of
11-26 trustees under Section 8 of this Act.
11-27 (4) "Employee" means an employee of an educational
12-1 institution.
12-2 (5) "Qualified investment product" means an annuity or
12-3 investment that:
12-4 (A) meets the requirements of Section 403(b),
12-5 Internal Revenue Code of 1986, and its subsequent amendments;
12-6 (B) complies with applicable federal insurance
12-7 and securities laws and regulations; and
12-8 (C) complies with applicable state insurance and
12-9 securities laws and rules.
12-10 (6) "Retirement system" means the Teacher Retirement
12-11 System of Texas.
12-12 (7) "Salary reduction agreement" means an agreement
12-13 between an educational institution and an employee to reduce the
12-14 employee's salary for the purpose of making direct contributions to
12-15 or purchases of a qualified investment product.
12-16 Sec. 5. (a) An educational institution may enter into a
12-17 salary reduction agreement with an employee of the institution
12-18 only if the qualified investment product is an eligible qualified
12-19 investment product.
12-20 (b) A company may certify to the retirement system that the
12-21 company offers a qualified investment product that is an annuity
12-22 contract under this section if the company:
12-23 (1) is authorized to issue annuity contracts in this
12-24 state at the time the application is filed; and
12-25 (2) complies with the standards adopted under Section
12-26 6 of this Act.
12-27 (c) A company that certifies under this section shall notify
13-1 the retirement system if, at any time, the company is not in
13-2 compliance with Subsection (b) of this section or if an investment
13-3 product that the company offers under this Act is the subject of a
13-4 salary reduction agreement and the investment product is not a
13-5 qualified investment product.
13-6 (d) The retirement system shall establish and maintain a
13-7 list of companies that have certified under this section. The list
13-8 must be available on the retirement system's Internet website.
13-9 Sec. 6. (a) A company is eligible to certify to the
13-10 retirement system under Section 5 of this Act if the company
13-11 satisfies the following financial strength criteria:
13-12 (1) the company's actuarial opinions required under
13-13 Articles 1.11 and 3.28, Insurance Code, have not been adverse or
13-14 qualified in the five years preceding the date the application is
13-15 filed;
13-16 (2) the company is subject to the annual audit
13-17 requirements of Article 1.15A, Insurance Code, and its most recent
13-18 audit of financial strength conducted by an independent certified
13-19 public accountant is timely filed and does not indicate the
13-20 existence of any material adverse financial conditions in the
13-21 company for the five years preceding the filing deadline for the
13-22 audit;
13-23 (3) the company has not been the subject of an
13-24 administrative or regulatory action by the Texas Department of
13-25 Insurance under Article 1.32 or 21.28-A or Section 83.051,
13-26 Insurance Code, in the five years preceding the date the
13-27 application is filed;
14-1 (4) the company has maintained during the five years
14-2 preceding the date the application is filed an average of at least
14-3 400 percent of the authorized control level, as calculated in
14-4 accordance with the risk-based capital and surplus requirements
14-5 established in rules adopted by the Texas Department of Insurance;
14-6 and
14-7 (5) the company has not fallen below 300 percent of
14-8 the authorized control level, as calculated in accordance with the
14-9 risk-based capital and surplus established in rules adopted by the
14-10 Texas Department of Insurance, at any time in the five years
14-11 preceding the date the application is filed.
14-12 (b) For purposes of Subsection (a)(4) of this section, the
14-13 company must calculate the five-year average on the same date each
14-14 year.
14-15 (c) The board of trustees may not unreasonably restrict an
14-16 employee's access to a reasonable variety of qualified investment
14-17 products.
14-18 (d) After consultation with the Texas Department of
14-19 Insurance and the State Securities Board, the retirement system may
14-20 adopt rules to administer this section and Sections 5 and 7 of this
14-21 Act.
14-22 (e) The retirement system shall refer all complaints about
14-23 qualified investment products to the appropriate division of the
14-24 Texas Department of Insurance or the State Securities Board.
14-25 (f) The Texas Department of Insurance and the State
14-26 Securities Board shall cooperate with the retirement system in the
14-27 administration of this Act and shall notify the retirement system
15-1 of any action or determination regarding a product or a company
15-2 that violates Section 5 of this Act.
15-3 (g) The retirement system shall reject the certification of
15-4 a company if the retirement system receives notice under Subsection
15-5 (f) of this section of a violation regarding the company or the
15-6 company's product. The company may recertify to the board of
15-7 trustees.
15-8 (h) The retirement system shall prescribe the notice
15-9 required by Section 11 of this Act.
15-10 Sec. 7. (a) The retirement system may collect a fee, not to
15-11 exceed the administrative cost to the retirement system, from a
15-12 company that certifies or recertifies under Section 6 or 8 of this
15-13 Act. The fee for certification or recertification may not exceed
15-14 $5,000.
15-15 (b) Fees collected under this section shall be deposited to
15-16 the credit of the 403(b) administrative trust fund. The 403(b)
15-17 administrative trust fund is created as a trust fund with the
15-18 comptroller and shall be administered by the retirement system as a
15-19 trustee on behalf of the participants in qualified investment
15-20 products offered under this Act.
15-21 Sec. 8. (a) A company that offers qualified investment
15-22 products other than annuity contracts may certify to the retirement
15-23 system based on rules adopted by the board of trustees. The rules
15-24 shall be based on reasonable factors, including:
15-25 (1) the financial strength of the companies offering
15-26 products; and
15-27 (2) the administrative cost to employees.
16-1 (b) The retirement system shall establish and maintain a
16-2 list of companies that provide certification under this section.
16-3 The list must be available on the retirement system's Internet
16-4 website.
16-5 Sec. 9. An educational institution may not:
16-6 (1) refuse to enter into a salary reduction agreement
16-7 with an employee if the qualified investment product that is the
16-8 subject of the salary reduction is an eligible qualified
16-9 investment;
16-10 (2) require or coerce an employee's attendance at any
16-11 meeting at which qualified investment products are marketed;
16-12 (3) limit the ability of an employee to initiate,
16-13 change, or terminate a qualified investment product at any time the
16-14 employee chooses;
16-15 (4) grant exclusive access to an employee by
16-16 discriminating against or imposing barriers to any agent, broker,
16-17 or company that provides qualified investment products under this
16-18 Act;
16-19 (5) grant exclusive access to information about an
16-20 employee's financial information, including information about an
16-21 employee's qualified investment products, to a company or agent
16-22 offering qualified investment products unless the employee consents
16-23 in writing to the access;
16-24 (6) accept any benefit from a company that offers
16-25 qualified investment products; or
16-26 (7) use public funds to recommend a qualified
16-27 investment product offered by a company or agent.
17-1 Sec. 10. (a) A person commits an offense if the person:
17-2 (1) sells or offers for sale a qualified investment
17-3 product that is not an eligible qualified investment product and
17-4 that the person reasonably believes will be the subject of a salary
17-5 reduction agreement;
17-6 (2) violates Article 21.07A, Insurance Code, with
17-7 regard to a qualified investment product that the person knows will
17-8 be the subject of a salary reduction agreement;
17-9 (3) engages in activity described by Section 4,
17-10 Article 21.21, Insurance Code, with regard to a qualified
17-11 investment product that the person knows will be the subject of a
17-12 salary reduction agreement; or
17-13 (4) violates Article 21.02-1, Insurance Code, with
17-14 regard to a qualified investment product that the person knows will
17-15 be the subject of a salary reduction agreement.
17-16 (b) An offense under this section is a Class A misdemeanor.
17-17 Sec. 11. (a) A person who offers to sell an annuity
17-18 contract that is or will likely be the subject of a salary
17-19 reduction agreement shall provide notice to a potential purchaser
17-20 as provided by this section.
17-21 (b) The retirement system shall make the notice available on
17-22 request and post the notice on the retirement system's website.
17-23 (c) The notice required under this section must:
17-24 (1) be in at least 14-point type;
17-25 (2) contain spaces for:
17-26 (A) the name, address, and telephone number of
17-27 the agent and company offering the annuity contract for sale;
18-1 (B) the name, address, and telephone number of
18-2 the company underwriting the annuity;
18-3 (C) the license number of the person offering to
18-4 sell the product;
18-5 (D) the name of the state agency that issued the
18-6 person's license; and
18-7 (E) with respect to fixed annuity products:
18-8 (i) the current interest rate or the
18-9 formula used to calculate the current rate of interest;
18-10 (ii) the guaranteed rate of interest and
18-11 the percentage of the premium to which the interest rate applies;
18-12 (iii) how interest is compounded;
18-13 (iv) the amount of any up-front,
18-14 surrender, withdrawal, deferred sales, and market value adjustment
18-15 charges or any other contract restriction that exceeds 10 years;
18-16 (v) the time, if any, the annuity is
18-17 required to be in force before the purchaser is entitled to the
18-18 full bonus accumulation value;
18-19 (vi) the manner in which the amount of the
18-20 guaranteed benefit under the annuity is computed;
18-21 (vii) whether loans are available under
18-22 the annuity;
18-23 (viii) what restrictions, if any, apply to
18-24 the availability of money attributable to the value of the annuity
18-25 once the purchaser is retired or separated from the employment of
18-26 the employer; and
18-27 (ix) the amount of any other fees, costs,
19-1 or penalties; and
19-2 (3) state, in plain language:
19-3 (A) that the company offering the annuity must
19-4 comply with Section 5 of this Act;
19-5 (B) that the potential purchaser may contact the
19-6 retirement system or access its website to determine which
19-7 companies are in compliance with Section 5 of this Act;
19-8 (C) the civil remedies available to the
19-9 employee;
19-10 (D) that the employee may purchase any
19-11 qualified investment product;
19-12 (E) the name and telephone number of the Texas
19-13 Department of Insurance division that specializes in consumer
19-14 protection; and
19-15 (F) the name and telephone number of the
19-16 attorney general's division that specializes in consumer
19-17 protection.
19-18 (d) In addition to the notice required by this section, a
19-19 variable annuity must be accompanied by the prospectus and any
19-20 other purchasing information required by law.
19-21 (e) An equity-based index contract must state in plain
19-22 language how the annuity contract will be credited with growth.
19-23 (f) If a notice and other information required under this
19-24 section is not provided, any annuity contract for which the notice
19-25 is required is voidable at the discretion of the purchaser. Not
19-26 later than the 30th day after the date an employee notifies the
19-27 seller in writing of the employee's election to void the contract,
20-1 the seller shall refund to the employee:
20-2 (1) the amount of all consideration paid to the
20-3 purchaser; and
20-4 (2) 10 percent interest up to the date the employee
20-5 provides the notice to the seller.
20-6 (g) A seller who receives a refund request under this
20-7 section is not required to make a refund otherwise required by
20-8 this section if, not later than the 30th day after the date the
20-9 seller receives a request for a refund from the employee, the
20-10 seller provides a copy of the notice signed by the employee.
20-11 SECTION 16. Section 16(h), Article 3.50-4, Insurance Code, is
20-12 amended to read as follows:
20-13 (h) An employing district that fails to remit, before the
20-14 fifth business [11th] day after the last day of the month, all
20-15 member deposits required by this section to be remitted by the
20-16 district for the month shall pay to the Texas public school retired
20-17 employees group insurance fund, in addition to the deposits,
20-18 interest on the unpaid amounts at the annual rate of six percent
20-19 compounded monthly. On request, the trustee may grant a waiver of
20-20 the deadline imposed by this subsection based on a district's
20-21 financial or technological resources.
20-22 SECTION 17. Article 3.50-4a, Insurance Code, as added by
20-23 Chapter 372, Acts of the 76th Legislature, Regular Session, 1999,
20-24 is amended by adding Subsection (f) to read as follows:
20-25 (f) A premium or contribution on a policy, insurance
20-26 contract, or agreement authorized as provided by this article is
20-27 not subject to any state tax, regulatory fee, or surcharge,
21-1 including a premium or maintenance tax or fee.
21-2 SECTION 18. Article 3.50-4a, Insurance Code, as added by
21-3 Chapter 1540, Acts of the 76th Legislature, Regular Session, 1999,
21-4 is amended by adding Section 6 to read as follows:
21-5 Sec. 6. EXEMPTION FROM STATE TAXES AND FEES. A premium or
21-6 contribution on a policy, insurance contract, or agreement
21-7 authorized as provided by this article is not subject to any state
21-8 tax, regulatory fee, or surcharge, including a premium or
21-9 maintenance tax or fee.
21-10 SECTION 19. Article 21.02-1, Insurance Code, is amended to
21-11 read as follows:
21-12 Art. 21.02-1. PENALTY FOR UNLAWFULLY ACTING AS AGENT. Except
21-13 as provided by Chapter 22, Acts of the 57th Legislature, 3rd Called
21-14 Session, 1962 (Article 6228a-5, Vernon's Texas Civil Statutes),
21-15 whoever [Whoever] shall do or perform any of the acts or things
21-16 mentioned in the first article of this chapter for any insurance
21-17 company referred to in said article without such company having
21-18 first complied with the requirements of the laws of this State,
21-19 shall be fined not less than five hundred nor more than one
21-20 thousand dollars.
21-21 SECTION 20. Article 21.07A, Insurance Code, is amended to
21-22 read as follows:
21-23 Art. 21.07A. PENALTY FOR ACTING AS, OR EMPLOYING, LIFE,
21-24 HEALTH, OR ACCIDENT INSURANCE AGENT WITHOUT LICENSE. (a) Any
21-25 person who shall act as a life, health or accident insurance agent
21-26 without having first obtained a license as herein provided, or who
21-27 shall solicit life, health or accident insurance or act as a life,
22-1 health or accident agent without having been appointed and
22-2 designated by some duly authorized life insurance company, accident
22-3 insurance company, life and accident, health and accident, or life,
22-4 health and accident insurance company, or association, or
22-5 organization, local mutual aid association, or statewide mutual
22-6 association to do so as herein provided, or any person who shall
22-7 solicit life, health or accident insurance or act as an agent for
22-8 any person or insurance company or association not authorized to do
22-9 business in Texas; or any officer or representative of any life
22-10 insurance company, accident insurance company, life and accident,
22-11 health and accident, or life, health and accident insurance company
22-12 or association, or organization, local mutual aid association, or
22-13 statewide mutual association who shall knowingly contract with or
22-14 appoint as an agent any person who does not have a valid and
22-15 outstanding license, as herein provided shall be guilty of a
22-16 misdemeanor and, upon conviction, shall be fined any sum not in
22-17 excess of Five Hundred Dollars ($500) and shall be barred from
22-18 receiving a license as an insurance agent for a period of at least
22-19 two (2) years.
22-20 (b) Notwithstanding Subsection (a) of this article, a
22-21 violation of this article that is described by Section 10(a)(2),
22-22 Chapter 22, Acts of the 57th Legislature, 3rd Called Session, 1962
22-23 (Article 6228a-5, Vernon's Texas Civil Statutes), is subject to
22-24 prosecution under that section.
22-25 SECTION 21. Section 17.46(b), Business & Commerce Code, is
22-26 amended to read as follows:
22-27 (b) Except as provided in Subsection (d) of this section,
23-1 the term "false, misleading, or deceptive acts or practices"
23-2 includes, but is not limited to, the following acts:
23-3 (1) passing off goods or services as those of another;
23-4 (2) causing confusion or misunderstanding as to the
23-5 source, sponsorship, approval, or certification of goods or
23-6 services;
23-7 (3) causing confusion or misunderstanding as to
23-8 affiliation, connection, or association with, or certification by,
23-9 another;
23-10 (4) using deceptive representations or designations of
23-11 geographic origin in connection with goods or services;
23-12 (5) representing that goods or services have
23-13 sponsorship, approval, characteristics, ingredients, uses,
23-14 benefits, or quantities which they do not have or that a person has
23-15 a sponsorship, approval, status, affiliation, or connection which
23-16 he does not;
23-17 (6) representing that goods are original or new if
23-18 they are deteriorated, reconditioned, reclaimed, used, or
23-19 secondhand;
23-20 (7) representing that goods or services are of a
23-21 particular standard, quality, or grade, or that goods are of a
23-22 particular style or model, if they are of another;
23-23 (8) disparaging the goods, services, or business of
23-24 another by false or misleading representation of facts;
23-25 (9) advertising goods or services with intent not to
23-26 sell them as advertised;
23-27 (10) advertising goods or services with intent not to
24-1 supply a reasonable expectable public demand, unless the
24-2 advertisements disclosed a limitation of quantity;
24-3 (11) making false or misleading statements of fact
24-4 concerning the reasons for, existence of, or amount of price
24-5 reductions;
24-6 (12) representing that an agreement confers or
24-7 involves rights, remedies, or obligations which it does not have or
24-8 involve, or which are prohibited by law;
24-9 (13) knowingly making false or misleading statements
24-10 of fact concerning the need for parts, replacement, or repair
24-11 service;
24-12 (14) misrepresenting the authority of a salesman,
24-13 representative or agent to negotiate the final terms of a consumer
24-14 transaction;
24-15 (15) basing a charge for the repair of any item in
24-16 whole or in part on a guaranty or warranty instead of on the value
24-17 of the actual repairs made or work to be performed on the item
24-18 without stating separately the charges for the work and the charge
24-19 for the warranty or guaranty, if any;
24-20 (16) disconnecting, turning back, or resetting the
24-21 odometer of any motor vehicle so as to reduce the number of miles
24-22 indicated on the odometer gauge;
24-23 (17) advertising of any sale by fraudulently
24-24 representing that a person is going out of business;
24-25 (18) using or employing a chain referral sales plan in
24-26 connection with the sale or offer to sell of goods, merchandise, or
24-27 anything of value, which uses the sales technique, plan,
25-1 arrangement, or agreement in which the buyer or prospective buyer
25-2 is offered the opportunity to purchase merchandise or goods and in
25-3 connection with the purchase receives the seller's promise or
25-4 representation that the buyer shall have the right to receive
25-5 compensation or consideration in any form for furnishing to the
25-6 seller the names of other prospective buyers if receipt of the
25-7 compensation or consideration is contingent upon the occurrence of
25-8 an event subsequent to the time the buyer purchases the merchandise
25-9 or goods;
25-10 (19) representing that a guarantee or warranty confers
25-11 or involves rights or remedies which it does not have or involve,
25-12 provided, however, that nothing in this subchapter shall be
25-13 construed to expand the implied warranty of merchantability as
25-14 defined in Sections 2.314 through 2.318 and Sections 2A.212 through
25-15 2A.216 of the Business & Commerce Code to involve obligations in
25-16 excess of those which are appropriate to the goods;
25-17 (20) promoting a pyramid promotional scheme, as
25-18 defined by Section 17.461;
25-19 (21) representing that work or services have been
25-20 performed on, or parts replaced in, goods when the work or services
25-21 were not performed or the parts replaced;
25-22 (22) filing suit founded upon a written contractual
25-23 obligation of and signed by the defendant to pay money arising out
25-24 of or based on a consumer transaction for goods, services, loans,
25-25 or extensions of credit intended primarily for personal, family,
25-26 household, or agricultural use in any county other than in the
25-27 county in which the defendant resides at the time of the
26-1 commencement of the action or in the county in which the defendant
26-2 in fact signed the contract; provided, however, that a violation
26-3 of this subsection shall not occur where it is shown by the person
26-4 filing such suit he neither knew or had reason to know that the
26-5 county in which such suit was filed was neither the county in which
26-6 the defendant resides at the commencement of the suit nor the
26-7 county in which the defendant in fact signed the contract;
26-8 (23) the failure to disclose information concerning
26-9 goods or services which was known at the time of the transaction if
26-10 such failure to disclose such information was intended to induce
26-11 the consumer into a transaction into which the consumer would not
26-12 have entered had the information been disclosed;
26-13 (24) using the term "corporation," "incorporated," or
26-14 an abbreviation of either of those terms in the name of a business
26-15 entity that is not incorporated under the laws of this state or
26-16 another jurisdiction; [or]
26-17 (25) taking advantage of a disaster declared by the
26-18 governor under Chapter 418, Government Code, by:
26-19 (A) selling or leasing fuel, food, medicine, or
26-20 another necessity at an exorbitant or excessive price; or
26-21 (B) demanding an exorbitant or excessive price
26-22 in connection with the sale or lease of fuel, food, medicine, or
26-23 another necessity; or
26-24 (26) selling, offering to sell, or illegally promoting
26-25 an annuity contract under Chapter 22, Acts of the 57th Legislature,
26-26 3rd Called Session, 1962 (Article 6228a-5, Vernon's Texas Civil
26-27 Statutes), with the intent that the annuity contract will be the
27-1 subject of a salary reduction agreement, as defined by that Act, if
27-2 the annuity contract is not an eligible qualified investment under
27-3 that Act.
27-4 SECTION 22. Section 17.49, Business & Commerce Code, is
27-5 amended by amending Subsection (c) and adding Subsection (h) to
27-6 read as follows:
27-7 (c) Nothing in this subchapter shall apply to a claim for
27-8 damages based on the rendering of a professional service, the
27-9 essence of which is the providing of advice, judgment, opinion, or
27-10 similar professional skill. This exemption does not apply to:
27-11 (1) an express misrepresentation of a material fact
27-12 that cannot be characterized as advice, judgment, or opinion;
27-13 (2) a failure to disclose information in violation of
27-14 Section 17.46(b)(23);
27-15 (3) an unconscionable action or course of action that
27-16 cannot be characterized as advice, judgment, or opinion; [or]
27-17 (4) breach of an express warranty that cannot be
27-18 characterized as advice, judgment, or opinion; or
27-19 (5) a violation of Section 17.46(b)(26).
27-20 (h) A person who violates Section 17.46(b)(26) is jointly
27-21 and severally liable under that subdivision for actual damages,
27-22 court costs, and attorney's fees. Subject to Chapter 41, Civil
27-23 Practice and Remedies Code, exemplary damages may be awarded in the
27-24 event of fraud or malice.
27-25 SECTION 23. The following sections of the Government Code
27-26 are repealed:
27-27 (1) Section 823.502; and
28-1 (2) Section 824.306.
28-2 SECTION 24. (a) Monthly payments of a death or retirement
28-3 benefit annuity by the Teacher Retirement System of Texas are
28-4 increased in accordance with this section beginning with the
28-5 payment due at the end of September 2001.
28-6 (b) The increase does not apply to payments under Section
28-7 824.304(a), 824.404, or 824.501, Government Code.
28-8 (c) For the purpose of computing the monthly payments of
28-9 annuities for retirees who retired on or before August 31, 2000,
28-10 the amount of the monthly payment is equal to the amount of the
28-11 last monthly payment made before the effective date of this Act
28-12 multiplied by 1.06.
28-13 (d) After making the computations required by Subsection (c)
28-14 of this section, the Teacher Retirement System of Texas shall
28-15 increase each annuity payable by the system beginning on September
28-16 1, 2001, other than an annuity under Section 824.304(a), 824.404,
28-17 or 824.501, Government Code, by 4.5 percent, which is a benefit
28-18 equivalent to the benefit provided by using a 2.3-percent
28-19 multiplier for computing annuities.
28-20 SECTION 25. (a) The changes in law made to Chapter 22, Acts
28-21 of the 57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
28-22 Vernon's Texas Civil Statutes), by this Act do not apply to a
28-23 contract between an employee of a school district or
28-24 open-enrollment charter school and a company offering investments
28-25 or annuities that was entered into or is entered into under Chapter
28-26 22, Acts of the 57th Legislature, 3rd Called Session, 1962 (Article
28-27 6228a-5, Vernon's Texas Civil Statutes), before June 1, 2003.
29-1 (b) A contract described by Subsection (a) of this section
29-2 is governed by the law in effect immediately before the effective
29-3 date of this Act, and the former law is continued in effect for
29-4 that purpose.
29-5 SECTION 26. The Teacher Retirement System of Texas shall
29-6 prescribe the notice required by Section 6(h), Chapter 22, Acts of
29-7 the 57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
29-8 Vernon's Texas Civil Statutes), not later than December 1, 2001.
29-9 SECTION 27. (a) Except as otherwise provided by this
29-10 section, this Act takes effect September 1, 2001.
29-11 (b) The changes in law made by this Act to the following
29-12 laws take effect June 1, 2003:
29-13 (1) Sections 9, 10, and 11, Chapter 22, Acts of the
29-14 57th Legislature, 3rd Called Session, 1962 (Article 6228a-5,
29-15 Vernon's Texas Civil Statutes);
29-16 (2) Article 21.02-1, Insurance Code;
29-17 (3) Article 21.07A, Insurance Code;
29-18 (4) Section 17.46, Business & Commerce Code; and
29-19 (5) Section 17.49, Business & Commerce Code.
29-20 (c) The changes in law made by this Act to the following
29-21 laws take effect September 1, 2002:
29-22 (1) Section 825.408(a), Government Code; and
29-23 (2) Section 16(h), Article 3.50-4, Insurance Code.
29-24 (d) The changes in law made by this Act to Section 824.602,
29-25 Government Code, apply beginning with the 2001-2002 school year.
29-26 Section 824.602, Government Code, as amended by this Act, takes
29-27 effect immediately if this Act receives a vote of two-thirds of all
30-1 the members elected to each house, as provided by Section 39,
30-2 Article III, Texas Constitution. If this Act does not receive the
30-3 vote necessary for immediate effect, Section 824.602, Government
30-4 Code, as amended by this Act, takes effect September 1, 2001.