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