1-1 AN ACT
1-2 relating to participation and credit in, contributions to, and
1-3 benefits and administration of the Texas Municipal Retirement
1-4 System.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 851.001, Government Code, is amended by
1-7 adding Subdivisions (17), (18), and (19), to read as follows:
1-8 (17) "Beneficiary" means a person designated by a
1-9 member, annuitant, or by statute to receive a benefit payable under
1-10 this subtitle as a result of the death of a member or annuitant.
1-11 (18) "Director" means the person appointed executive
1-12 director under Section 855.201.
1-13 (19) "Vested member" means a member who may withdraw
1-14 from employment with all participating municipalities, leave the
1-15 member's accumulated contributions on deposit with the retirement
1-16 system and, on meeting the age and length of service requirements,
1-17 file an application for retirement and begin to receive a service
1-18 retirement benefit.
1-19 SECTION 2. Section 852.106, Government Code, is amended by
1-20 amending Subsection (a) and adding Subsection (e) to read as
1-21 follows:
1-22 (a) Except as provided by this section,[:]
1-23 [(1)] a person who is elected to public office is not
1-24 an employee eligible for membership in the retirement system[; and]
1-25 [(2) a person is not an employee eligible for
2-1 membership and is not eligible to receive credited service in this
2-2 retirement system for service performed that makes a person
2-3 eligible for membership or is creditable in another pension fund or
2-4 retirement system that is at least partly supported at public
2-5 expense].
2-6 (e) A person may simultaneously be a member of this
2-7 retirement system and another state or local retirement system
2-8 authorized or established under Section 67, Article XVI, Texas
2-9 Constitution. However, a person may receive a benefit from this
2-10 system only to the extent that the amount of the benefit is
2-11 computed solely with respect to the member's compensation and
2-12 accumulated contributions as those terms are defined in this
2-13 subtitle. Service credited with or allowed by another retirement
2-14 system may not be counted for purposes of retirement eligibility in
2-15 this retirement system except in accordance with the provisions of
2-16 the proportionate retirement program described by Chapter 803.
2-17 SECTION 3. Subsection (g), Section 852.108, Government Code,
2-18 is amended to read as follows:
2-19 (g) If a person with credited service under this section
2-20 dies before a payment under Subsection (i) is made, the person's
2-21 beneficiary, or if there is no beneficiary surviving, the executor
2-22 or administrator of the person's estate, may elect payment as
2-23 provided by Section 854.105 [854.105(c)].
2-24 SECTION 4. Subsection (c), Section 852.109, Government Code,
2-25 is amended to read as follows:
2-26 (c) If a person with credited service under this section
3-1 dies before a payment under Subsection (e) is made, the person's
3-2 beneficiary, or if there is no beneficiary surviving, the executor
3-3 or administrator of the person's estate, may elect payment as
3-4 provided by Section 854.105 [854.105(c)].
3-5 SECTION 5. Subsection (f), Section 853.105, Government Code,
3-6 is amended to read as follows:
3-7 (f) Interest on a prior service credit is earned for each
3-8 whole calendar year beginning on the effective date of membership
3-9 and ending on the effective date of retirement. If a person
3-10 retires under this subtitle on a date other than December 31,
3-11 interest on a prior service credit is earned for the partial year
3-12 in which the retirement occurs, prorated from January 1 of the year
3-13 in which the retirement occurs to the effective date of retirement.
3-14 SECTION 6. Subsections (b), (c), and (d), Section 853.304,
3-15 Government Code, are amended to read as follows:
3-16 (b) After the retirement system receives a copy of a
3-17 municipality's ordinance described by Subsection (a), the
3-18 retirement system shall furnish to the municipality a report
3-19 containing the names of employees who, according to the retirement
3-20 system's records, are eligible to receive prior service credit for
3-21 probationary employment. [A member may claim prior service credit
3-22 under this section by filing a detailed statement of such service
3-23 with the city clerk or secretary of the municipality for which the
3-24 service was performed at any time within one year from the
3-25 effective date of the ordinance or resolution authorizing such
3-26 credit.]
4-1 (c) As soon as practicable[,] after the municipality
4-2 receives a report under Subsection (b) [a member has filed a
4-3 statement of prior service under this section], the [affected]
4-4 municipality shall verify the information in the report [prior
4-5 service claimed] and certify to the retirement system [board of
4-6 trustees] the number of months of probationary employment to which
4-7 each employee listed on the report appears to be entitled
4-8 [creditable prior service (not exceeding six months) approved] and
4-9 the average monthly compensation paid to the member during the
4-10 period of probationary employment.
4-11 (d) The certification by the municipality must be received
4-12 by the retirement system not later than the first anniversary of
4-13 the effective date of the ordinance allowing the credit. After
4-14 receiving the [a] certification from the municipality described by
4-15 Subsection (c) [of prior service under this section and the average
4-16 compensation paid the member], the board of trustees shall
4-17 determine the prior service credit allowable to the member in the
4-18 manner provided in Section 853.105.
4-19 SECTION 7. Subsection (a), Section 853.305, Government Code,
4-20 is amended to read as follows:
4-21 (a) The governing body of a participating municipality by
4-22 ordinance may authorize the granting of restricted prior service
4-23 credit to an employee who is a member of the retirement system for
4-24 service previously performed:
4-25 (1) as a full-time, paid employee of the United
4-26 States, of any public authority or agency created by the United
5-1 States, of any state or territory of the United States, of any
5-2 political subdivision of any state of the United States, [or] of
5-3 any public agency or authority created by a state or territory of
5-4 the United States, or of an institution of higher education at
5-5 which the person is commissioned as a campus security personnel
5-6 employee under Section 51.212, Education Code, and for which
5-7 service the person has not otherwise received credited service in
5-8 this system, including combined service credit under Chapter 803;
5-9 or
5-10 (2) as an employee of the state or any branch, agency,
5-11 or subdivision of the state for which the person received credited
5-12 service under the Employees Retirement System of Texas, the Teacher
5-13 Retirement System of Texas, the Judicial Retirement System of Texas
5-14 Plan One, the Judicial Retirement System of Texas Plan Two, the
5-15 Texas County and District Retirement System, or this retirement
5-16 system, and the credit for which was canceled because of withdrawal
5-17 of contributions and has not been reinstated.
5-18 SECTION 8. Section 853.402, Government Code, is amended by
5-19 amending Subsection (f) and by adding Subsection (g) to read as
5-20 follows:
5-21 (f) Interest on an updated service credit is earned for each
5-22 whole calendar year beginning on the date the updated service
5-23 credit takes effect and ending on the effective date of retirement.
5-24 If a person retires under this subtitle on a date other than
5-25 December 31, interest on an updated service credit is earned for
5-26 the partial year in which the retirement occurs, prorated from
6-1 January 1 of the year in which the retirement occurs to the
6-2 effective date of retirement.
6-3 (g) If, before January 1, 1999, a person terminated
6-4 employment with a participating municipality without applying for
6-5 retirement or a refund of accumulated contributions and the person
6-6 did not perform credited service in each of the 36 months described
6-7 by Subsection (b)(1), the individual's updated service compensation
6-8 shall be computed as the average monthly compensation for the
6-9 number of months of credited service performed during the 36-month
6-10 period. If the person did not perform any service during the 36
6-11 months, the person's updated service compensation is computed as
6-12 the average monthly compensation for the number of months of
6-13 credited service performed during the 36-month period ending with
6-14 the last month of the calendar year of the member's most recent
6-15 service.
6-16 SECTION 9. Subsection (d), Section 854.002, Government Code,
6-17 is amended to read as follows:
6-18 (d) Notwithstanding any other provision of this subtitle,
6-19 instead of an annuity, a person will receive from the retirement
6-20 system a single payment equal to the sum of the following if on the
6-21 date of that person's retirement that sum is $10,000 [$5,000] or
6-22 less:
6-23 (1) any updated service credit or any prior service,
6-24 special prior service, or antecedent service credit for that person
6-25 on the date of retirement, plus accumulated interest;
6-26 (2) the amount credited to the person's individual
7-1 account in the employees saving fund; and
7-2 (3) the amount from the municipality accumulation fund
7-3 equal to the amount in the member's individual account or a greater
7-4 amount authorized by a participating municipality under Section
7-5 855.501.
7-6 SECTION 10. Section 854.003, Government Code, is amended by
7-7 amending Subsection (b) and by adding Subsection (h) to read as
7-8 follows:
7-9 (b) If a member dies before retirement and an annuity
7-10 becomes payable under Section 854.105 [has a valid optional
7-11 retirement annuity selection on file with the retirement system],
7-12 the member is considered to have retired on the last day of the
7-13 month immediately preceding the month in which death occurred,
7-14 except as provided by Subsection (h).
7-15 (h) If the person who is eligible to receive an annuity
7-16 under Subsection (b) is the member's surviving spouse, the person
7-17 may elect, by notifying the retirement system not later than the
7-18 180th day after the date of the member's death, to leave the
7-19 member's accumulated contributions on deposit with the retirement
7-20 system until the date the member would have been eligible for
7-21 service retirement. If a surviving spouse makes an election under
7-22 this subsection, the deceased member is considered to have retired
7-23 on the last day of the month in which the member would have
7-24 attained an age for service retirement eligibility. An election
7-25 under this subsection is revocable before the payment of the first
7-26 annuity payment by filing a written application approved by the
8-1 board of trustees to receive the member's accumulated
8-2 contributions.
8-3 SECTION 11. Section 854.007, Government Code, is amended to
8-4 read as follows:
8-5 Sec. 854.007. LIMITATION ON PAYMENT OF BENEFITS. If the
8-6 amount of a benefit payment under this subtitle would exceed the
8-7 limitations provided by Section 415, Internal Revenue Code of 1986,
8-8 and its subsequent amendments, and the regulations adopted under
8-9 that section, the retirement system shall reduce the amount of the
8-10 benefit to comply with that section [(a) In this section:]
8-11 [(1) "Annual benefit" means the total of all annuity
8-12 payments by the retirement system on behalf of a person who has
8-13 retired under this Subtitle during a calendar year, including any
8-14 distributive benefit payments.]
8-15 [(2) "Compensation" has the meaning assigned by
8-16 Section 415, Internal Revenue Code, and the regulations adopted
8-17 under that section, instead of the meaning assigned by Section
8-18 851.001.]
8-19 [(3) "Highest average annual compensation" means the
8-20 average compensation for the three consecutive calendar years of
8-21 service that produces the highest average.]
8-22 [(4) "Internal Revenue Code" means the Internal
8-23 Revenue Code of 1986 (Title 26, United States Code).]
8-24 [(b) If the amount of any benefit payment under this
8-25 subtitle would exceed the limitations provided by this section, the
8-26 retirement system shall reduce the amount of the benefit in
9-1 accordance with this section.]
9-2 [(c) Except as otherwise provided by this section, a benefit
9-3 is adjusted to an actuarially equivalent straight life annuity for
9-4 the purpose of determining limitations under this section. An
9-5 actuarial adjustment to a benefit is not required for the value of
9-6 a qualified joint and survivor annuity and the value of
9-7 postretirement cost-of-living increases made in accordance with
9-8 Section 415, Internal Revenue Code.]
9-9 [(d) Except as provided by Subsections (f), (h), and (i), an
9-10 annual benefit payable by the retirement system may not exceed
9-11 $115,641, or another amount as adjusted each January 1 by the
9-12 secretary of the treasury under Section 415 of the Internal Revenue
9-13 Code of 1986 (26 U.S.C. Section 415) for cost-of-living increases
9-14 after January 1, 1993.]
9-15 [(e) If payment of a benefit begins before a member attains
9-16 age 62, the dollar limitation is the actuarial equivalent of an
9-17 annual benefit beginning at age 62 as described by Subsection (d)
9-18 for a person at age 62. A reduction under this subsection may not
9-19 exceed that required by the Internal Revenue Code of 1986.]
9-20 [(f) If payment of a benefit begins after the member attains
9-21 age 65, the dollar limitation is the actuarial equivalent of an
9-22 annual benefit beginning at age 65 as described by Subsection
9-23 (d)(1).]
9-24 [(g) To determine actuarial equivalence, the interest rate
9-25 assumption under Subsection (c) or (e) is the greater of the rate
9-26 specified by Section 855.316(a) or five percent, and the interest
10-1 rate assumption under Subsection (f) is the lesser of those rates.]
10-2 [(h) The limitations provided by Subsections (d), (e), and
10-3 (f) do not apply to any portion of an annual benefit payable by the
10-4 retirement system that is paid from the balance in the member's
10-5 individual account in the employees saving fund as of December 31,
10-6 1983, or from interest credited to the member's account after
10-7 December 31, 1983, as a result of deposits before that date.]
10-8 [(i) This section may not be applied to reduce the annual
10-9 benefit payable to any person who retired under the retirement
10-10 system before January 1, 1994, or to reduce the vested accrued
10-11 benefit as of December 31, 1993, of any person who was a member of
10-12 the retirement system on that date.]
10-13 [(j) If the Internal Revenue Code is amended in such a
10-14 manner that limitations similar to those provided by this section
10-15 are not required of governmental retirement plans to constitute
10-16 qualified plans, the board of trustees may by rule eliminate all or
10-17 any portion of the limitations provided by this section.]
10-18 [(k) An employer may not provide employee retirement or
10-19 deferred benefits to the extent that, when considered together with
10-20 the benefits authorized by this subtitle as required by the
10-21 Internal Revenue Code, would result in the failure of the
10-22 retirement system's plan to meet federal qualification standards as
10-23 applied to governmental retirement plans.]
10-24 [(l) The annual benefit payable by the retirement system
10-25 that is otherwise limited by Subsection (d) may be increased each
10-26 year in accordance with cost-of-living adjustments by the secretary
11-1 of the treasury of the dollar limitation or the compensation
11-2 limitation, as long as the benefit does not exceed the amount that
11-3 would be payable without the limitation of Section 415 of the
11-4 Internal Revenue Code of 1986 (26 U.S.C. Section 415).]
11-5 [(m) The limitations provided by this section may not be
11-6 applied to reduce the benefit of any person whose retirement
11-7 benefits payable under this and all other defined benefit plans of
11-8 the member's employer do not exceed $10,000, plus the benefit
11-9 provided under Subsection (h), for the plan year or for any
11-10 previous plan year and who has not at any time participated in a
11-11 defined contribution plan maintained by the person's employer].
11-12 SECTION 12. Section 854.008, Government Code, is amended by
11-13 amending Subsection (a) and adding Subsections (f) and (g) to read
11-14 as follows:
11-15 (a) A member who is eligible for service retirement and who
11-16 terminates employment with all participating municipalities may
11-17 apply for a partial lump-sum distribution under this section. The
11-18 board of trustees may adopt rules to allow the beneficiary of a
11-19 deceased member who at the time of death was eligible for service
11-20 retirement but had not retired to make the same election that the
11-21 member could have made under this section at the time of
11-22 retirement.
11-23 (f) If a benefit payable under this section is subject to a
11-24 domestic relations order that the retirement system determines is
11-25 qualified under Section 804.003, the alternate payee under that
11-26 order may elect to receive a partial lump-sum distribution under
12-1 Subsection (g).
12-2 (g) The partial lump-sum distribution under Subsection (f)
12-3 shall be paid as a single payment, payable at the same time as the
12-4 first monthly annuity payment paid to the alternate payee, and
12-5 shall be deducted from the sum used in computing the alternate
12-6 payee's annuity. The amount of the lump-sum distribution shall be
12-7 equal to the monthly payments, excluding any distributive benefit
12-8 payments that the alternate payee would otherwise have received,
12-9 during the:
12-10 (1) 12 months after the effective date of the member's
12-11 retirement;
12-12 (2) 24 months after the effective date of the member's
12-13 retirement; or
12-14 (3) 36 months after the effective date of the member's
12-15 retirement.
12-16 SECTION 13. Section 854.102, Government Code, is amended by
12-17 adding Subsection (h) to read as follows:
12-18 (h) A member is eligible to retire and receive a service
12-19 retirement annuity if the member is at least 60 years old and has
12-20 at least five years of credited service in the retirement system
12-21 that is performed for one or more municipalities to which the
12-22 five-year vesting provision under Section 854.205 applies.
12-23 SECTION 14. Subsection (b), Section 854.103, Government
12-24 Code, is amended to read as follows:
12-25 (b) A standard service retirement annuity is payable
12-26 throughout the life of a retiree. [If a retiree dies before 60
13-1 monthly payments of a standard service retirement annuity have been
13-2 made, the remainder of the 60 monthly payments are payable to the
13-3 retiree's designated beneficiary.]
13-4 SECTION 15. Section 854.104, Government Code, is amended by
13-5 amending Subsection (c) and by adding Subsections (h), (i), and (j)
13-6 to read as follows:
13-7 (c) An eligible person may select an optional annuity that
13-8 provides that:
13-9 (1) after the retiree's death, the reduced annuity is
13-10 payable throughout the life of a person designated by the retiree;
13-11 (2) after the retiree's death, one-half of the reduced
13-12 annuity is payable throughout the life of a person designated by
13-13 the retiree;
13-14 (3) if the retiree dies before 120 monthly annuity
13-15 payments have been made, the remainder of the 120 payments are
13-16 payable to the retiree's beneficiary or, if one does not exist, to
13-17 the retiree's estate;
13-18 (4) if the retiree dies before 180 monthly annuity
13-19 payments have been made, the remainder of the 180 payments are
13-20 payable to the retiree's beneficiary or, if one does not exist, to
13-21 the retiree's estate;
13-22 (5) after the retiree's death, three-fourths
13-23 [two-thirds] of the reduced annuity is payable throughout the life
13-24 of a person designated by the retiree; or
13-25 (6) if the retiree dies before 60 monthly payments
13-26 have been made, the remainder of the 60 payments are payable to the
14-1 retiree's beneficiary or, if one does not exist, to the retiree's
14-2 estate [the annuity is payable only during the retiree's lifetime].
14-3 (h) Subsection (i) applies only to a person who retired
14-4 before September 1, 1997, and who elected, at retirement, to
14-5 receive a reduced annuity that is payable until the death of the
14-6 last to die of the retiree and a person designated as a beneficiary
14-7 under Subsection (e).
14-8 (i) If both the retiree and the beneficiary described in
14-9 Subsection (h) are alive, they may jointly elect in the manner
14-10 provided by Subsection (j) to modify the annuity being received.
14-11 An annuity modified under this subsection:
14-12 (1) begins with the first payment after one calendar
14-13 month has passed since the date the form under Subsection (j) is
14-14 filed, with the amount of the monthly payments, while the
14-15 beneficiary is alive, being the actuarial equivalent of the
14-16 previous annuity; and
14-17 (2) increases to the amount of the standard service
14-18 retirement annuity that the retiree would otherwise be entitled to
14-19 receive if the retiree had not selected the optional annuity with
14-20 adjustments made for any postretirement increase in that benefit
14-21 and becomes payable the month following the month in which the
14-22 beneficiary dies and continues until the retiree dies.
14-23 (j) To make the election under Subsection (i), the retiree
14-24 and beneficiary must execute and acknowledge, as provided by this
14-25 subsection, a form stating that they are requesting a modification
14-26 under Subsection (i) and that they understand that the modified
15-1 annuity will be smaller than the standard service annuity while
15-2 they are both living and if the beneficiary survives the member.
15-3 The acknowledgment must be on a form prescribed by the board of
15-4 trustees and be made before a notary public or other officer
15-5 authorized to take acknowledgments. The retiree and beneficiary
15-6 must file the executed form with the retirement system before
15-7 January 1, 2003.
15-8 SECTION 16. Section 854.105, Government Code, is amended to
15-9 read as follows:
15-10 Sec. 854.105. SELECTION OF OPTIONAL SERVICE RETIREMENT
15-11 ANNUITY. (a) A vested member [who is eligible for service
15-12 retirement] may, while continuing to perform service for a
15-13 participating municipality or after terminating all service, file
15-14 with the board of trustees, on a form prescribed by the board, a
15-15 selection of an optional service retirement annuity available under
15-16 Section 854.104 and a designation of beneficiary or a designation
15-17 of beneficiary without selecting a retirement option. An annuity
15-18 selected as provided by this section is payable [on the member's
15-19 retirement or] on the member's death before retirement.
15-20 (b) A member may change a selection of an optional annuity
15-21 or a designation of beneficiary at any time before the member's
15-22 retirement or death in the same manner that the original selection
15-23 or [and] designation was [were] made.
15-24 (c) If a member eligible under this section to select an
15-25 optional service retirement annuity dies before retirement without
15-26 having made a selection, the beneficiary designated under
16-1 Subsection (a) may select an optional annuity in the same manner as
16-2 if the member had made the selection, subject only to the
16-3 requirements of the Internal Revenue Code of 1986, and its
16-4 subsequent amendments, as to the length of time over which the
16-5 payments can be made.
16-6 (d) If a beneficiary has not been designated under
16-7 Subsection (a), the member's surviving spouse may elect to receive
16-8 a refund of the member's accumulated contributions or [select] an
16-9 optional annuity in the same manner as if the member had made the
16-10 selection.
16-11 (e) If a beneficiary has not been designated under
16-12 Subsection (a) and no surviving spouse exists, the member's
16-13 surviving children jointly may elect to receive:
16-14 (1) a refund of the member's accumulated
16-15 contributions; or
16-16 (2) an optional annuity in the same manner as if the
16-17 member had made the selection, subject only to the requirements of
16-18 the Internal Revenue Code of 1986, and its subsequent amendments,
16-19 as to the length of time over which the payments can be made.
16-20 (f) If there is no surviving spouse or surviving child and
16-21 no beneficiary designated under Subsection (a) exists, the last
16-22 person designated by the member as a beneficiary on a form filed
16-23 with the retirement system may elect to receive:
16-24 (1) a refund of the member's accumulated
16-25 contributions; or
16-26 (2) an optional annuity in the same manner as if the
17-1 member had made the selection, subject only to the requirements of
17-2 the Internal Revenue Code of 1986, and its subsequent amendments,
17-3 as to the length of time over which the payments can be made.
17-4 (g) If there is not a person who is eligible to make a
17-5 selection under Subsections (c)-(f), the executor or administrator
17-6 of the member's estate may elect:
17-7 (1) for an estate beneficiary to receive the optional
17-8 annuity under Section 854.104(c)(4), in which case the member will
17-9 be considered to have retired on the last day of the month
17-10 immediately preceding the month in which death occurred; or
17-11 (2) for the estate to receive a refund of the member's
17-12 accumulated contributions under Section 854.501, in which case the
17-13 member will be considered to have been a contributing member at the
17-14 time of death.
17-15 SECTION 17. Subsection (a), Section 854.106, Government
17-16 Code, is amended to read as follows:
17-17 (a) If a surviving spouse, or the executor or administrator
17-18 of a member's estate, would be entitled to make an election under
17-19 Section 854.105 [854.105(c)] because of the death of the member,
17-20 the heirs of the deceased member may make that election if:
17-21 (1) no surviving spouse exists;
17-22 (2) no petition for the appointment of a personal
17-23 representative of the member is pending or has been granted;
17-24 (3) 30 days have elapsed since the death of the
17-25 member;
17-26 (4) the value of the entire assets of the member's
18-1 estate, excluding homestead and exempt property, does not exceed
18-2 $50,000;
18-3 (5) there are not more than three heirs; and
18-4 (6) on file with the retirement system is a certified
18-5 copy of a small estates affidavit that has been approved and filed
18-6 in accordance with Section 137, Texas Probate Code, or an original
18-7 affidavit as described by Subsection (b).
18-8 SECTION 18. Subchapter B, Chapter 854, Government Code, is
18-9 amended by adding Sections 854.107 and 854.108 to read as follows:
18-10 Sec. 854.107. DESIGNATION OF BENEFICIARY AFTER RETIREMENT
18-11 UNDER STRAIGHT LIFE OR GUARANTEED TERM ANNUITY. (a) This section
18-12 applies only to a retiree who marries after the date of the
18-13 person's retirement and who at the time of retirement selected
18-14 either:
18-15 (1) a service or disability retirement annuity that
18-16 would be payable throughout the retiree's life and would not be
18-17 paid after the retiree's death, except as provided by Section
18-18 854.502; or
18-19 (2) a service or disability retirement annuity that
18-20 would be payable throughout the retiree's life and, if the retiree
18-21 dies before 60, 120, or 180 monthly annuity payments, as
18-22 appropriate, have been made, would be payable for the remainder of
18-23 those months.
18-24 (b) A retiree described under Subsection (a) may replace the
18-25 annuity by selecting an optional retirement annuity under Section
18-26 854.104(c)(1), (2), or (5) and by designating the person's spouse
19-1 as beneficiary in the same manner as an annuity selection and
19-2 designation of beneficiary may be made before retirement.
19-3 (c) The selection under Subsection (b) must be filed with
19-4 the retirement system before the first anniversary of the date of
19-5 the marriage unless the postretirement marriage occurred before
19-6 January 1, 2002, in which case the selection must be filed with the
19-7 retirement system before January 1, 2003.
19-8 (d) A person may make a postretirement designation of a
19-9 beneficiary under this section only once.
19-10 (e) The retirement system shall adjust the monthly payments
19-11 of the annuity under the option selected to an actuarial equivalent
19-12 amount of the annuity being paid immediately before the change in
19-13 benefit option and beneficiary selection.
19-14 (f) The selection of an optional annuity and designation of
19-15 a beneficiary under this section is not effective if the retiree or
19-16 beneficiary dies before the date the change is to take effect.
19-17 Sec. 854.108. DESIGNATION OF BENEFICIARY AFTER RETIREMENT
19-18 UNDER JOINT AND SURVIVOR ANNUITY. (a) This section applies only
19-19 to a retiree who:
19-20 (1) at the time of retirement selected an optional
19-21 annuity providing that, after the retiree's death, payments would
19-22 be made to a beneficiary throughout the remaining life of the
19-23 beneficiary and the beneficiary predeceases the retiree;
19-24 (2) marries after the date of the person's retirement;
19-25 and
19-26 (3) has not previously replaced an annuity under this
20-1 section.
20-2 (b) A retiree described by Subsection (a) may replace an
20-3 annuity by selecting an optional annuity under Section
20-4 854.104(c)(1), (2), or (5) and designating the person's spouse as
20-5 beneficiary in the same manner as an annuity selection and
20-6 designation of beneficiary may be made before retirement.
20-7 (c) The selection under Subsection (b) must be filed with
20-8 the retirement system before the first anniversary of the date of
20-9 the marriage unless the postretirement marriage occurred before
20-10 January 1, 2002, in which case the selection must be filed with the
20-11 retirement system before January 1, 2003.
20-12 (d) The retirement system shall adjust the monthly payments
20-13 of the annuity under the option selected to an actuarial equivalent
20-14 amount of the annuity being paid immediately before the change in
20-15 benefit option and beneficiary selection.
20-16 (e) The selection of an optional annuity and designation of
20-17 a beneficiary under this section is not effective if the retiree or
20-18 beneficiary dies before the date the change is to take effect.
20-19 SECTION 19. Section 854.202, Government Code, is amended by
20-20 adding Subsection (j) to read as follows:
20-21 (j) A member is eligible to retire and receive a service
20-22 retirement annuity if the member:
20-23 (1) is at least 60 years of age; and
20-24 (2) has at least five years of credited service
20-25 performed for one or more municipalities to which the five-year
20-26 vesting provision under Section 854.205 applies.
21-1 SECTION 20. Subchapter C, Chapter 854, Government Code, is
21-2 amended by adding Section 854.205 to read as follows:
21-3 Sec. 854.205. FIVE-YEAR VESTING. (a) This section applies
21-4 to each municipality unless the municipality's governing board
21-5 files with the board of trustees before December 31, 2001, an
21-6 election to not provide for five-year vesting. A governing board
21-7 that elects to not provide five-year vesting may revoke that
21-8 election by sending notice to the board of trustees to provide for
21-9 five-year vesting.
21-10 (b) After December 31, 2001, a member may terminate covered
21-11 employment and remain eligible to retire and receive a service
21-12 retirement annuity at any time after the member attains an
21-13 applicable age as provided by law if the member has at least five
21-14 years of credited service performed for one or more municipalities
21-15 to which the five-year vesting provision under this section
21-16 applies.
21-17 SECTION 21. Subsection (c), Section 854.304, Government
21-18 Code, is amended to read as follows:
21-19 (c) A standard disability retirement annuity is payable
21-20 throughout the life of a retiree. [If a retiree dies before 60
21-21 monthly payments of a standard disability retirement annuity have
21-22 been made, the remainder of the 60 monthly payments is payable to
21-23 the retiree's designated beneficiary.] When a retiree who receives
21-24 an annuity under this section dies, an additional benefit may be
21-25 payable under Section 854.502.
21-26 SECTION 22. Subsection (c), Section 854.305, Government
22-1 Code, is amended to read as follows:
22-2 (c) An eligible person may select an optional annuity under
22-3 Section 854.104(c) [that provides that:]
22-4 [(1) after the retiree's death, the reduced annuity is
22-5 payable throughout the life of a person designated by the retiree;]
22-6 [(2) after the retiree's death, one-half of the
22-7 reduced annuity is payable throughout the life of a person
22-8 designated by the retiree;]
22-9 [(3) if the retiree dies before 120 monthly annuity
22-10 payments have been made, the remainder of the 120 payments are
22-11 payable to the retiree's beneficiary or, if one does not exist, to
22-12 the retiree's estate;]
22-13 [(4) if the retiree dies before 180 monthly annuity
22-14 payments have been made, the remainder of the 180 payments are
22-15 payable to the retiree's beneficiary or, if one does not exist, to
22-16 the retiree's estate;]
22-17 [(5) after the retiree's death, two-thirds of the
22-18 reduced annuity is payable throughout the life of a person
22-19 designated by the retiree; or]
22-20 [(6) the annuity is payable only during the retiree's
22-21 lifetime].
22-22 SECTION 23. Section 854.605, Government Code, is amended by
22-23 adding Subsection (c) to read as follows:
22-24 (c) If a member or retiree who has designated a beneficiary
22-25 to receive supplemental death benefits under Section 854.603 or
22-26 854.604 subsequently designates a different beneficiary to receive
23-1 other benefits under this subtitle in the event of the death of the
23-2 member or retiree, the supplemental death benefits shall be paid to
23-3 the subsequently designated beneficiary unless the member or
23-4 retiree contemporaneously or subsequently designates another
23-5 beneficiary to receive the supplemental death benefit.
23-6 SECTION 24. Section 855.201, Government Code, is amended to
23-7 read as follows:
23-8 Sec. 855.201. EXECUTIVE DIRECTOR. (a) The board of
23-9 trustees shall appoint an executive [a] director.
23-10 (b) The executive director shall:
23-11 (1) manage and administer the retirement system under
23-12 the supervision and direction of the board; and
23-13 (2) invest the assets of the system.
23-14 (c) The board of trustees may delegate to the executive
23-15 director powers and duties in addition to those stated by
23-16 Subsection (b).
23-17 (d) The executive director annually shall:
23-18 (1) prepare an itemized budget showing the amount
23-19 required to pay the retirement system's expenses for the following
23-20 fiscal year; and
23-21 (2) submit the report to the board for review,
23-22 amendment, and adoption.
23-23 SECTION 25. Section 855.301, Government Code, is amended by
23-24 adding Subsection (c) to read as follows:
23-25 (c) The board of trustees, in the exercise of its discretion
23-26 to manage the assets of the retirement system, may select one or
24-1 more commercial banks or other entities experienced in short-term
24-2 cash management to invest the system's cash balances through its
24-3 short-term investment fund or funds and in such short-term
24-4 securities as the board of trustees determines and as authorized by
24-5 this section.
24-6 SECTION 26. Subchapter D, Chapter 855, Government Code, is
24-7 amended by adding Section 855.3011 to read as follows:
24-8 Sec. 855.3011. SECURITIES LENDING. (a) The board of
24-9 trustees, in the exercise of its discretion to manage the assets of
24-10 the retirement system, may select a person, including a commercial
24-11 bank or depository trust company, to lend retirement system
24-12 securities as provided by this section and rules adopted by the
24-13 board of trustees.
24-14 (b) To be eligible to lend securities under this section, a
24-15 person must:
24-16 (1) be experienced in the operations of a fully
24-17 secured securities lending program;
24-18 (2) maintain capital adequate in the prudent judgment
24-19 of the retirement system to assure the safety of the securities;
24-20 (3) execute an indemnification agreement, satisfactory
24-21 in form and content to the retirement system, fully indemnifying
24-22 the retirement system against any loss resulting from borrower
24-23 default or the failure of the securities lending agent to properly
24-24 execute the agent's responsibilities under the applicable
24-25 securities lending agreement;
24-26 (4) require any securities broker or dealer to whom
25-1 the agent lends securities belonging to the retirement system to
25-2 deliver and maintain with the custodian collateral in the form of
25-3 cash or United States government securities eligible for book
25-4 entry, the market value of which must equal not less than 100
25-5 percent of the market value, from time to time, of the loaned
25-6 securities; and
25-7 (5) comply with the guidelines adopted by the board of
25-8 trustees relating to the investment of cash collateral, borrower
25-9 limits, and other items.
25-10 SECTION 27. Subchapter G, Chapter 855, Government Code, is
25-11 amended by adding Section 855.608 to read as follows:
25-12 Sec. 855.608. FULL BENEFIT ARRANGEMENT. (a) A separate
25-13 fund for the payment of benefits under Section 415(m), Internal
25-14 Revenue Code of 1986, and its subsequent amendments, is created
25-15 solely for the purpose of providing benefits to participants equal
25-16 to the amount by which the participant's annual benefit otherwise
25-17 payable under this subtitle exceeds the limitation on benefits
25-18 imposed by Section 415, Internal Revenue Code of 1986, and its
25-19 subsequent amendments.
25-20 (b) The board of trustees shall administer this section.
25-21 Except as otherwise provided by this section, the board of trustees
25-22 has the same rights, duties, and responsibilities concerning the
25-23 full benefits arrangement as it has for the trust fund.
25-24 (c) Money for the payment of benefits to a participant under
25-25 this section shall be transferred to the separate fund created by
25-26 this section from the municipality accumulation fund account of the
26-1 municipality that employed the member. If the benefit is payable
26-2 as a result of service with more than one participating
26-3 municipality, there shall be transferred from the municipality
26-4 accumulation fund account of each such municipality the amount
26-5 chargeable to that municipality for the member. The monthly amount
26-6 to pay benefits under this section shall be transferred at least 15
26-7 days before the date of a monthly payment to a person receiving
26-8 annuity benefits under this section.
26-9 (d) The full benefits arrangement shall be administered as a
26-10 governmental excess benefit arrangement. The board of trustees may
26-11 adopt rules for the efficient administration of this section and to
26-12 maintain compliance with Section 415(m), Internal Revenue Code of
26-13 1986, and its subsequent amendments.
26-14 SECTION 28. Section 854.204, Government Code, is repealed.
26-15 SECTION 29. (a) Except as provided by Subsection (b) of
26-16 this section, this Act takes effect January 1, 2002.
26-17 (b) Section 854.205, Government Code, as added by this Act,
26-18 takes effect September 1, 2001.
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 522 passed the Senate on
March 15, 2001, by a viva-voce vote; and that the Senate concurred
in House amendment on May 2, 2001, by a viva-voce vote.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 522 passed the House, with
amendment, on April 26, 2001, by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor