By Armbrister S.B. No. 522
77R3099 GJH-F
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 on 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 852.108(g), Government Code, is amended to
1-20 read as follows:
1-21 (g) If a person with credited service under this section
1-22 dies before a payment under Subsection (i) is made, the person's
1-23 beneficiary, or if there is no beneficiary surviving, the executor
1-24 or administrator of the person's estate, may elect payment as
2-1 provided by Section 854.105 [854.105(c)].
2-2 SECTION 3. Section 852.109(c), Government Code, is amended to
2-3 read as follows:
2-4 (c) If a person with credited service under this section
2-5 dies before a payment under Subsection (e) is made, the person's
2-6 beneficiary, or if there is no beneficiary surviving, the executor
2-7 or administrator of the person's estate, may elect payment as
2-8 provided by Section 854.105 [854.105(c)].
2-9 SECTION 4. Section 853.105(f), Government Code, is amended to
2-10 read as follows:
2-11 (f) Interest on a prior service credit is earned for each
2-12 whole calendar year beginning on the effective date of membership
2-13 and ending on the effective date of retirement. If a person
2-14 retires under this subtitle on a date other than December 31,
2-15 interest on a prior service credit is earned for the partial year
2-16 in which the retirement occurs, prorated from January 1 of the year
2-17 in which the retirement occurs to the effective date of retirement.
2-18 SECTION 5. Sections 853.304(b), (c), and (d), Government
2-19 Code, are amended to read as follows:
2-20 (b) After the retirement system receives a copy of a
2-21 municipality's ordinance described by Subsection (a), the
2-22 retirement system shall furnish to the municipality a report
2-23 containing the names of employees who, according to the retirement
2-24 system's records, are eligible to receive prior service credit for
2-25 probationary employment. [A member may claim prior service credit
2-26 under this section by filing a detailed statement of such service
2-27 with the city clerk or secretary of the municipality for which the
3-1 service was performed at any time within one year from the
3-2 effective date of the ordinance or resolution authorizing such
3-3 credit.]
3-4 (c) As soon as practicable, after the municipality receives
3-5 a report under Subsection (b) [a member has filed a statement of
3-6 prior service under this section], the [affected] municipality
3-7 shall verify the information in the report [prior service claimed]
3-8 and certify to the retirement system [board of trustees] the number
3-9 of months of probationary employment to which each employee listed
3-10 on the report appears to be entitled [creditable prior service (not
3-11 exceeding six months) approved] and the average monthly
3-12 compensation paid to the member during the period of probationary
3-13 employment.
3-14 (d) The certification by the municipality must be received
3-15 by the retirement system not later than the first anniversary of
3-16 the effective date of the ordinance allowing the credit. After
3-17 receiving the [a] certification from the municipality described by
3-18 Subsection (c) [of prior service under this section and the average
3-19 compensation paid the member], the board of trustees shall
3-20 determine the prior service credit allowable to the member in the
3-21 manner provided in Section 853.105.
3-22 SECTION 6. Section 853.402, Government Code, is amended by
3-23 amending Subsection (f) and by adding Subsection (g) to read as
3-24 follows:
3-25 (f) Interest on an updated service credit is earned for each
3-26 whole calendar year beginning on the date the updated service
3-27 credit takes effect and ending on the effective date of retirement.
4-1 If a person retires under this subtitle on a date other than
4-2 December 31, interest on an updated service credit is earned for
4-3 the partial year in which the retirement occurs, prorated from
4-4 January 1 of the year in which the retirement occurs to the
4-5 effective date of retirement.
4-6 (g) If, before January 1, 1999, a person terminated
4-7 employment with a participating municipality without applying for
4-8 retirement or a refund of accumulated contributions and the person
4-9 did not perform credited service in each of the 36 months described
4-10 by Subsection (b)(1), the individual's updated service compensation
4-11 shall be computed as the average monthly compensation for the
4-12 number of months for credited service performed during the 36-month
4-13 period. If the person did not perform any service during the 36
4-14 months, the person's updated service compensation is computed as
4-15 the average monthly compensation for the number of months of
4-16 credited service performed during the 36-month period ending with
4-17 the last month of the calendar year of the member's most recent
4-18 service.
4-19 SECTION 7. Section 854.002(d), Government Code, is amended to
4-20 read as follows:
4-21 (d) Notwithstanding any other provision of this subtitle,
4-22 instead of an annuity, a person will receive from the retirement
4-23 system a single payment equal to the sum of the following if on the
4-24 date of that person's retirement that sum is $10,000 [$5,000] or
4-25 less:
4-26 (1) any updated service credit or any prior service,
4-27 special prior service, or antecedent service credit for that person
5-1 on the date of retirement, plus accumulated interest;
5-2 (2) the amount credited to the person's individual
5-3 account in the employees saving fund; and
5-4 (3) the amount from the municipality accumulation fund
5-5 equal to the amount in the member's individual account or a greater
5-6 amount authorized by a participating municipality under Section
5-7 855.501.
5-8 SECTION 8. Section 854.003, Government Code, is amended by
5-9 amending Subsection (b) and by adding Subsection (h) to read as
5-10 follows:
5-11 (b) If a member dies before retirement and an annuity
5-12 becomes payable under Section 854.105 [has a valid optional
5-13 retirement annuity selection on file with the retirement system],
5-14 the member is considered to have retired on the last day of the
5-15 month immediately preceding the month in which death occurred,
5-16 except as provided by Subsection (h).
5-17 (h) If the person who is eligible to receive an annuity
5-18 under Subsection (b) is the member's surviving spouse, the person
5-19 may elect, by notifying the system not later than the 180th day
5-20 after the date of the member's death, to leave the member's
5-21 accumulated contributions on deposit with the retirement system
5-22 until the date the member would have been eligible for service
5-23 retirement. If a surviving spouse makes an election under this
5-24 subsection, the deceased member is considered to have retired on
5-25 the last day of the month in which the member would have attained
5-26 an age for service retirement eligibility. An election under this
5-27 subsection is revocable before the payment of the first annuity
6-1 payment by filing a written application approved by the board of
6-2 trustees to receive the member's accumulated contributions.
6-3 SECTION 9. Section 854.007, Government Code, is amended to
6-4 read as follows:
6-5 Sec. 854.007. LIMITATION ON PAYMENT OF BENEFITS. If the
6-6 amount of a benefit payment under this subtitle would exceed the
6-7 limitations provided by Section 415, Internal Revenue Code of 1986,
6-8 and its subsequent amendments, and the regulations adopted under
6-9 that section, the retirement system shall reduce the amount of the
6-10 benefit to comply with that section [(a) In this section:]
6-11 [(1) "Annual benefit" means the total of all annuity
6-12 payments by the retirement system on behalf of a person who has
6-13 retired under this Subtitle during a calendar year, including any
6-14 distributive benefit payments.]
6-15 [(2) "Compensation" has the meaning assigned by
6-16 Section 415, Internal Revenue Code, and the regulations adopted
6-17 under that section, instead of the meaning assigned by Section
6-18 851.001.]
6-19 [(3) "Highest average annual compensation" means the
6-20 average compensation for the three consecutive calendar years of
6-21 service that produces the highest average.]
6-22 [(4) "Internal Revenue Code" means the Internal
6-23 Revenue Code of 1986 (Title 26, United States Code).]
6-24 [(b) If the amount of any benefit payment under this
6-25 subtitle would exceed the limitations provided by this section, the
6-26 retirement system shall reduce the amount of the benefit in
6-27 accordance with this section.]
7-1 [(c) Except as otherwise provided by this section, a benefit
7-2 is adjusted to an actuarially equivalent straight life annuity for
7-3 the purpose of determining limitations under this section. An
7-4 actuarial adjustment to a benefit is not required for the value of
7-5 a qualified joint and survivor annuity and the value of
7-6 postretirement cost-of-living increases made in accordance with
7-7 Section 415, Internal Revenue Code.]
7-8 [(d) Except as provided by Subsections (f), (h), and (i), an
7-9 annual benefit payable by the retirement system may not exceed
7-10 $115,641, or another amount as adjusted each January 1 by the
7-11 secretary of the treasury under Section 415 of the Internal Revenue
7-12 Code of 1986 (26 U.S.C. Section 415) for cost-of-living increases
7-13 after January 1, 1993.]
7-14 [(e) If payment of a benefit begins before a member attains
7-15 age 62, the dollar limitation is the actuarial equivalent of an
7-16 annual benefit beginning at age 62 as described by Subsection (d)
7-17 for a person at age 62. A reduction under this subsection may not
7-18 exceed that required by the Internal Revenue Code of 1986.]
7-19 [(f) If payment of a benefit begins after the member attains
7-20 age 65, the dollar limitation is the actuarial equivalent of an
7-21 annual benefit beginning at age 65 as described by Subsection
7-22 (d)(1).]
7-23 [(g) To determine actuarial equivalence, the interest rate
7-24 assumption under Subsection (c) or (e) is the greater of the rate
7-25 specified by Section 855.316(a) or five percent, and the interest
7-26 rate assumption under Subsection (f) is the lesser of those rates.]
7-27 [(h) The limitations provided by Subsections (d), (e), and
8-1 (f) do not apply to any portion of an annual benefit payable by the
8-2 retirement system that is paid from the balance in the member's
8-3 individual account in the employees saving fund as of December 31,
8-4 1983, or from interest credited to the member's account after
8-5 December 31, 1983, as a result of deposits before that date.]
8-6 [(i) This section may not be applied to reduce the annual
8-7 benefit payable to any person who retired under the retirement
8-8 system before January 1, 1994, or to reduce the vested accrued
8-9 benefit as of December 31, 1993, of any person who was a member of
8-10 the retirement system on that date.]
8-11 [(j) If the Internal Revenue Code is amended in such a
8-12 manner that limitations similar to those provided by this section
8-13 are not required of governmental retirement plans to constitute
8-14 qualified plans, the board of trustees may by rule eliminate all or
8-15 any portion of the limitations provided by this section.]
8-16 [(k) An employer may not provide employee retirement or
8-17 deferred benefits to the extent that, when considered together with
8-18 the benefits authorized by this subtitle as required by the
8-19 Internal Revenue Code, would result in the failure of the
8-20 retirement system's plan to meet federal qualification standards as
8-21 applied to governmental retirement plans.]
8-22 [(l) The annual benefit payable by the retirement system
8-23 that is otherwise limited by Subsection (d) may be increased each
8-24 year in accordance with cost-of-living adjustments by the secretary
8-25 of the treasury of the dollar limitation or the compensation
8-26 limitation, as long as the benefit does not exceed the amount that
8-27 would be payable without the limitation of Section 415 of the
9-1 Internal Revenue Code of 1986 (26 U.S.C. Section 415).]
9-2 [(m) The limitations provided by this section may not be
9-3 applied to reduce the benefit of any person whose retirement
9-4 benefits payable under this and all other defined benefit plans of
9-5 the member's employer do not exceed $10,000, plus the benefit
9-6 provided under Subsection (h), for the plan year or for any
9-7 previous plan year and who has not at any time participated in a
9-8 defined contribution plan maintained by the person's employer].
9-9 SECTION 10. Section 854.008, Government Code, is amended by
9-10 adding Subsections (f) and (g) to read as follows:
9-11 (f) If a benefit payable under this section is subject to a
9-12 domestic relations order that the retirement system determines is
9-13 qualified under Section 804.003, the alternate payee under that
9-14 order may elect to receive a partial lump-sum distribution under
9-15 Subsection (g).
9-16 (g) The partial lump-sum distribution under Subsection (f)
9-17 shall be paid as a single payment, payable at the same time as the
9-18 first monthly annuity payment paid to the alternate payee, and
9-19 shall be deducted from the sum used in computing the alternate
9-20 payee's annuity. The amount of the lump-sum distribution shall be
9-21 equal to the monthly payments, excluding any distributive benefit
9-22 payments that the alternate payee would otherwise have received,
9-23 during the:
9-24 (1) 12 months after the effective date of the member's
9-25 retirement;
9-26 (2) 24 months after the effective date of the member's
9-27 retirement; or
10-1 (3) 36 months after the effective date of the member's
10-2 retirement.
10-3 SECTION 11. Section 854.102, Government Code, is amended by
10-4 adding Subsection (h) to read as follows:
10-5 (h) A member is eligible to retire and receive a service
10-6 retirement annuity if the member is at least 60 years old and has
10-7 at least five years of credited service in the retirement system
10-8 that is performed for one or more municipalities to which the
10-9 five-year vesting provision under Section 854.205 applies.
10-10 SECTION 12. Section 854.103(b), Government Code, is amended
10-11 to read as follows:
10-12 (b) A standard service retirement annuity is payable
10-13 throughout the life of a retiree. [If a retiree dies before 60
10-14 monthly payments of a standard service retirement annuity have been
10-15 made, the remainder of the 60 monthly payments are payable to the
10-16 retiree's designated beneficiary.]
10-17 SECTION 13. Section 854.104, Government Code, is amended by
10-18 amending Subsection (c) and by adding Subsections (h)-(j) to read
10-19 as follows:
10-20 (c) An eligible person may select an optional annuity that
10-21 provides that:
10-22 (1) after the retiree's death, the reduced annuity is
10-23 payable throughout the life of a person designated by the retiree;
10-24 (2) after the retiree's death, one-half of the reduced
10-25 annuity is payable throughout the life of a person designated by
10-26 the retiree;
10-27 (3) if the retiree dies before 120 monthly annuity
11-1 payments have been made, the remainder of the 120 payments are
11-2 payable to the retiree's beneficiary or, if one does not exist, to
11-3 the retiree's estate;
11-4 (4) if the retiree dies before 180 monthly annuity
11-5 payments have been made, the remainder of the 180 payments are
11-6 payable to the retiree's beneficiary or, if one does not exist, to
11-7 the retiree's estate;
11-8 (5) after the retiree's death, three-fourths
11-9 [two-thirds] of the reduced annuity is payable throughout the life
11-10 of a person designated by the retiree; or
11-11 (6) if the retiree dies before 60 monthly payments
11-12 have been made, the remainder of the 60 payments are payable to the
11-13 retiree's beneficiary or, if one does not exist, to the retiree's
11-14 estate [the annuity is payable only during the retiree's lifetime].
11-15 (h) Subsection (i) applies only to a person who retired
11-16 before September 1, 1997, and who elected, at retirement, to
11-17 receive a reduced annuity that is payable until the death of the
11-18 last to die of the retiree and a person designated as a beneficiary
11-19 under Subsection (e).
11-20 (i) If both the retiree and the beneficiary described in
11-21 Subsection (h) are alive, they may jointly elect in the manner
11-22 provided by Subsection (j) to modify the annuity being received.
11-23 An annuity modified under this subsection:
11-24 (1) begins with the first payment after one calendar
11-25 month has passed since the date the form under Subsection (j) is
11-26 filed with the amount of the monthly payments, while the
11-27 beneficiary is alive, being the actuarial equivalent of the
12-1 previous annuity; and
12-2 (2) increases to the amount of the standard service
12-3 retirement annuity that the retiree would otherwise be entitled to
12-4 receive if the retiree had not selected the optional annuity with
12-5 adjustments made for any post retirement increase in that benefit
12-6 and becomes payable the month following the month in which the
12-7 beneficiary dies and continues until the retiree dies.
12-8 (j) To make the election under Subsection (i), the retiree
12-9 and beneficiary must execute and acknowledge, as provided by this
12-10 subsection, a form stating that they are requesting a modification
12-11 under Subsection (i) and that they understand that the modified
12-12 annuity will be smaller than the standard service annuity while
12-13 they are both living and if the beneficiary survives the member.
12-14 The acknowledgment must be on a form prescribed by the board of
12-15 trustees and be made before a notary public or other officer
12-16 authorized to take acknowledgments. The retiree and beneficiary
12-17 must file the executed form with the retirement system before
12-18 January 1, 2003.
12-19 SECTION 14. Section 854.105, Government Code, is amended to
12-20 read as follows:
12-21 Sec. 854.105. SELECTION OF OPTIONAL SERVICE RETIREMENT
12-22 ANNUITY. (a) A vested member [who is eligible for service
12-23 retirement] may, while continuing to perform service for a
12-24 participating municipality or after terminating any service, file
12-25 with the board of trustees, on a form prescribed by the board, a
12-26 selection of an optional service retirement annuity available under
12-27 Section 854.104 and a designation of beneficiary or a designation
13-1 of beneficiary without selecting a retirement option. An annuity
13-2 selected as provided by this section is payable [on the member's
13-3 retirement or] on the member's death before retirement.
13-4 (b) A member may change a selection of an optional annuity
13-5 or a designation of beneficiary at any time before the member's
13-6 retirement or death in the same manner that the original selection
13-7 or [and] designation was [were] made.
13-8 (c) If a member eligible under this section to select an
13-9 optional service retirement annuity dies before retirement without
13-10 having made a selection, the beneficiary designated under
13-11 Subsection (a) may select an optional annuity in the same manner
13-12 as if the member had made the selection, subject only to the
13-13 requirements of the Internal Revenue Code of 1986, and its
13-14 subsequent amendments, as to the length of time over which the
13-15 payments can be made.
13-16 (d) If a beneficiary has not been designated under
13-17 Subsection (a), the member's surviving spouse may elect to receive
13-18 a refund of the member's accumulated contributions or [select] an
13-19 optional annuity in the same manner as if the member had made the
13-20 selection.
13-21 (e) If a beneficiary has not been designated under
13-22 Subsection (a) and no surviving spouse exists, the member's
13-23 surviving children jointly may elect to receive:
13-24 (1) a refund of the member's accumulated
13-25 contributions; or
13-26 (2) an optional annuity in the same manner as if the
13-27 member had made the selection, subject only to the requirements of
14-1 the Internal Revenue Code of 1986, and its subsequent amendments,
14-2 as to the length of time over which the payments can be made.
14-3 (f) If there is no surviving spouse or surviving child, and
14-4 no beneficiary designated under Subsection (a) exists, the last
14-5 person designated by the member as a beneficiary on a form filed
14-6 with the retirement system may elect to receive:
14-7 (1) a refund of the member's accumulated
14-8 contributions; or
14-9 (2) an optional annuity in the same manner as if the
14-10 member had made the selection, subject only to the requirements of
14-11 the Internal Revenue Code of 1986, and its subsequent amendments,
14-12 as to the length of time over which the payments can be made.
14-13 (g) If there is not a person who is eligible to make a
14-14 selection under Subsections (c)-(f), the executor or administrator
14-15 of the member's estate may elect:
14-16 (1) for an estate beneficiary to receive the optional
14-17 annuity under Section 854.104(c)(4), in which case the member will
14-18 be considered to have retired on the last day of the month
14-19 immediately preceding the month in which death occurred; or
14-20 (2) for the estate to receive a refund of the member's
14-21 accumulated contributions under Section 854.501, in which case the
14-22 member will be considered to have been a contributing member at the
14-23 time of death.
14-24 SECTION 15. Section 854.106(a), Government Code, is amended
14-25 to read as follows:
14-26 (a) If a surviving spouse, or the executor or administrator
14-27 of a member's estate, would be entitled to make an election under
15-1 Section 854.105 [854.105(c)] because of the death of the member,
15-2 the heirs of the deceased member may make that election if:
15-3 (1) no surviving spouse exists;
15-4 (2) no petition for the appointment of a personal
15-5 representative of the member is pending or has been granted;
15-6 (3) 30 days have elapsed since the death of the
15-7 member;
15-8 (4) the value of the entire assets of the member's
15-9 estate, excluding homestead and exempt property, does not exceed
15-10 $50,000;
15-11 (5) there are not more than three heirs; and
15-12 (6) on file with the retirement system is a certified
15-13 copy of a small estates affidavit that has been approved and filed
15-14 in accordance with Section 137, Texas Probate Code, or an original
15-15 affidavit as described by Subsection (b).
15-16 SECTION 16. Subchapter B, Chapter 854, Government Code, is
15-17 amended by adding Sections 854.107 and 854.108 to read as follows:
15-18 Sec. 854.107. DESIGNATION OF BENEFICIARY AFTER RETIREMENT
15-19 UNDER STRAIGHT LIFE OR GUARANTEED TERM ANNUITY. (a) This section
15-20 applies only to a retiree who marries after the date of the
15-21 person's retirement and who at the time of retirement selected
15-22 either:
15-23 (1) a service or disability retirement annuity that
15-24 would be payable throughout the retiree's life and would not be
15-25 paid after the retiree's death, except as provided by Section
15-26 854.502; or
15-27 (2) a service or disability retirement annuity that
16-1 would be payable throughout the retiree's life and, if the retiree
16-2 dies before 60, 120, or 180 monthly annuity payments, as
16-3 appropriate, have been made, would be payable for the remainder of
16-4 those months.
16-5 (b) A retiree described under Subsection (a) may replace
16-6 the annuity by selecting an optional retirement annuity under
16-7 Section 854.104(c)(1), (2), or (5) and by designating the person's
16-8 spouse as beneficiary in the same manner as an annuity selection
16-9 and designation of beneficiary may be made before retirement.
16-10 (c) The selection under Subsection (b) must be filed with
16-11 the retirement system before the first anniversary of the date of
16-12 the marriage unless the postretirement marriage occurred before
16-13 January 1, 2002, in which case the selection must be filed with the
16-14 retirement system before January 1, 2003.
16-15 (d) A person may make a postretirement designation of a
16-16 beneficiary under this section only once.
16-17 (e) The retirement system shall adjust the monthly payments
16-18 of the annuity under the option selected to an actuarial equivalent
16-19 amount of the annuity being paid immediately before the change in
16-20 benefit option and beneficiary selection.
16-21 (f) The selection of an optional annuity and designation of
16-22 a beneficiary under this section is not effective if the retiree or
16-23 beneficiary dies before the date the change is to take effect.
16-24 Sec. 854.108. DESIGNATION OF BENEFICIARY AFTER RETIREMENT
16-25 UNDER JOINT AND SURVIVOR ANNUITY. (a) This section applies only to
16-26 a retiree who:
16-27 (1) at the time of retirement selected an optional
17-1 annuity providing that, after the retiree's death, payments would
17-2 be made to a beneficiary throughout the remaining life of the
17-3 beneficiary and the beneficiary predeceases the retiree;
17-4 (2) marries after the date of the person's retirement;
17-5 and
17-6 (3) has not previously replaced an annuity under this
17-7 section.
17-8 (b) A retiree described by Subsection (a) may replace an
17-9 annuity by selecting an optional annuity under Section
17-10 854.104(c)(1), (2), or (5) and designating the person's spouse as
17-11 beneficiary in the same manner as an annuity selection and
17-12 designation of beneficiary may be made before retirement.
17-13 (c) The selection under Subsection (b) must be filed with
17-14 the retirement system before the first anniversary of the date of
17-15 the marriage unless the postretirement marriage occurred before
17-16 January 1, 2002, in which case the selection must be filed with the
17-17 retirement system before January 1, 2003.
17-18 (d) The retirement system shall adjust the monthly payments
17-19 of the annuity under the option selected to an actuarial equivalent
17-20 amount of the annuity being paid immediately before the change in
17-21 benefit option and beneficiary selection.
17-22 (e) The selection of an optional annuity and designation of
17-23 a beneficiary under this section is not effective if the retiree or
17-24 beneficiary dies before the date the change is to take effect.
17-25 SECTION 17. Section 854.202, Government Code, is amended by
17-26 adding Subsection (j) to read as follows:
17-27 (j) A member is eligible to retire and receive a service
18-1 retirement annuity if the member:
18-2 (1) is at least 60 years of age; and
18-3 (2) has at least five years of credited service
18-4 performed for one or more municipalities to which the five-year
18-5 vesting provision under Section 854.205 applies.
18-6 SECTION 18. Subchapter C, Chapter 854, Government Code, is
18-7 amended by adding Section 854.205 to read as follows:
18-8 Sec. 854.205. FIVE-YEAR VESTING. (a) This section applies
18-9 to each municipality unless the municipality's governing board
18-10 files with the board of trustees before December 31, 2001, an
18-11 election to not provide for five-year vesting. A governing board
18-12 that elects to not provide five-year vesting may revoke that
18-13 election by sending notice to the board of trustees to provide for
18-14 five-year vesting.
18-15 (b) After December 31, 2001, a member may terminate covered
18-16 employment and remain eligible to retire and receive a service
18-17 retirement annuity at any time after the member attains 60 years of
18-18 age if the member has at least five years of credited service
18-19 performed for one or more municipalities to which the five-year
18-20 vesting provision under this section applies.
18-21 SECTION 19. Section 854.304(c), Government Code, is amended
18-22 to read as follows:
18-23 (c) A standard disability retirement annuity is payable
18-24 throughout the life of a retiree. [If a retiree dies before 60
18-25 monthly payments of a standard disability retirement annuity have
18-26 been made, the remainder of the 60 monthly payments is payable to
18-27 the retiree's designated beneficiary.] When a retiree who receives
19-1 an annuity under this section dies, an additional benefit may be
19-2 payable under Section 854.502.
19-3 SECTION 20. Section 854.305(c), Government Code, is amended
19-4 to read as follows:
19-5 (c) An eligible person may select an optional annuity under
19-6 Section 854.104(c) [that provides that:]
19-7 [(1) after the retiree's death, the reduced annuity is
19-8 payable throughout the life of a person designated by the retiree;]
19-9 [(2) after the retiree's death, one-half of the
19-10 reduced annuity is payable throughout the life of a person
19-11 designated by the retiree;]
19-12 [(3) if the retiree dies before 120 monthly annuity
19-13 payments have been made, the remainder of the 120 payments are
19-14 payable to the retiree's beneficiary or, if one does not exist, to
19-15 the retiree's estate;]
19-16 [(4) if the retiree dies before 180 monthly annuity
19-17 payments have been made, the remainder of the 180 payments are
19-18 payable to the retiree's beneficiary or, if one does not exist, to
19-19 the retiree's estate;]
19-20 [(5) after the retiree's death, two-thirds of the
19-21 reduced annuity is payable throughout the life of a person
19-22 designated by the retiree; or]
19-23 [(6) the annuity is payable only during the retiree's
19-24 lifetime].
19-25 SECTION 21. Section 854.605, Government Code, is amended by
19-26 adding Subsection (c) to read as follows:
19-27 (c) If a member or retiree who has designated a beneficiary
20-1 to receive supplemental death benefits under Section 854.603 or
20-2 854.604 subsequently designates a different beneficiary to receive
20-3 other benefits under this subtitle in the event of the death of the
20-4 member or retiree, the supplemental death benefits shall be paid to
20-5 the subsequently designated beneficiary unless the member or
20-6 retiree contemporaneously or subsequently designates another
20-7 beneficiary to receive the supplemental death benefit.
20-8 SECTION 22. Section 855.201, Government Code, is amended to
20-9 read as follows:
20-10 Sec. 855.201. EXECUTIVE DIRECTOR. (a) The board of trustees
20-11 shall appoint an executive [a] director.
20-12 (b) The executive director shall:
20-13 (1) manage and administer the retirement system under
20-14 the supervision and direction of the board; and
20-15 (2) invest the assets of the system.
20-16 (c) The board of trustees may delegate to the executive
20-17 director powers and duties in addition to those stated by
20-18 Subsection (b).
20-19 (d) The executive director annually shall:
20-20 (1) prepare an itemized budget showing the amount
20-21 required to pay the retirement system's expenses for the following
20-22 fiscal year; and
20-23 (2) submit the report to the board for review,
20-24 amendment, and adoption.
20-25 SECTION 23. Subchapter D, Chapter 855, Government Code, is
20-26 amended by adding Section 855.3011 to read as follows:
20-27 Sec. 855.3011. SECURITIES LENDING. (a) The board of
21-1 trustees, in the exercise of its discretion to manage the assets of
21-2 the retirement system, may select a person, including a commercial
21-3 bank or depository trust company, to lend retirement system
21-4 securities as provided by this section and rules adopted by the
21-5 board of trustees.
21-6 (b) To be eligible to lend securities under this section, a
21-7 person must:
21-8 (1) be experienced in the operations of a fully
21-9 secured securities lending program;
21-10 (2) maintain capital adequate in the prudent judgment
21-11 of the retirement system to assure the safety of the securities;
21-12 (3) execute an indemnification agreement, satisfactory
21-13 in form and content to the retirement system, fully indemnifying
21-14 the retirement system against any loss resulting from borrower
21-15 default or the failure of the securities lending agent to properly
21-16 execute the agent's responsibilities under the applicable
21-17 securities lending agreement;
21-18 (4) require any securities broker or dealer to whom
21-19 the agent lends securities belonging to the retirement system to
21-20 deliver and maintain with the custodian collateral in the form of
21-21 cash or United States Government securities eligible for book
21-22 entry, the market value of which must equal not less than 100
21-23 percent of the market value, from time to time, of the loaned
21-24 securities; and
21-25 (5) comply with the guidelines adopted by the board of
21-26 trustees relating to the investment of cash collateral, borrower
21-27 limits, and other items.
22-1 SECTION 24. Subchapter G, Chapter 855, Government Code, is
22-2 amended by adding Section 855.608 to read as follows:
22-3 Sec. 855.608. FULL BENEFIT ARRANGEMENT. (a) A separate fund
22-4 for the payment of benefits under Section 415(m) of the Internal
22-5 Revenue Code of 1986, and its subsequent amendments, is created
22-6 solely for the purpose of providing benefits to participants equal
22-7 to the amount by which the participant's annual benefit otherwise
22-8 payable under this subtitle exceeds the limitation on benefits
22-9 imposed by Section 415 of the Internal Revenue Code of 1986, and
22-10 its subsequent amendments.
22-11 (b) The board of trustees shall administer this section.
22-12 Except as otherwise provided by this section, the board of trustees
22-13 has the same rights, duties, and responsibilities concerning the
22-14 full benefits arrangement as it has for the trust fund.
22-15 (c) Money for the payment of benefits to a participant under
22-16 this section shall be transferred to the separate fund created by
22-17 this section from the municipality accumulation fund account of the
22-18 municipality that employed the member. The monthly amount to pay
22-19 benefits under this section shall be transferred at least 15 days
22-20 before the date of a monthly payment to a person receiving annuity
22-21 benefits under this section.
22-22 (d) The full benefits arrangement shall be administered as a
22-23 governmental excess benefit arrangement. The board of trustees may
22-24 adopt rules for the efficient administration of this section and to
22-25 maintain compliance with Section 415(m) of the Internal Revenue
22-26 Code of 1986, and its subsequent amendments.
22-27 SECTION 25. Section 854.204, Government Code, is repealed.
23-1 SECTION 26. (a) Except as provided by Subsection (b) of this
23-2 section, this Act takes effect January 1, 2002.
23-3 (b) Section 854.205, Government Code, as added by this Act,
23-4 takes effect September 1, 2001.