1-1 By: Armbrister S.B. No. 522
1-2 (In the Senate - Filed February 2, 2001; February 5, 2001,
1-3 read first time and referred to Committee on Intergovernmental
1-4 Relations; March 12, 2001, reported adversely, with favorable
1-5 Committee Substitute by the following vote: Yeas 6, Nays 0;
1-6 March 12, 2001, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 522 By: Lindsay
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to participation and credit in, contributions to, and
1-11 benefits and administration of the Texas Municipal Retirement
1-12 System.
1-13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-14 SECTION 1. Section 851.001, Government Code, is amended by
1-15 adding Subdivisions (17), (18), and (19), to read as follows:
1-16 (17) "Beneficiary" means a person designated by a
1-17 member, annuitant, or by statute to receive a benefit payable under
1-18 this subtitle as a result of the death of a member or annuitant.
1-19 (18) "Director" means the person appointed executive
1-20 director under Section 855.201.
1-21 (19) "Vested member" means a member who may withdraw
1-22 from employment with all participating municipalities, leave the
1-23 member's accumulated contributions on deposit with the retirement
1-24 system and, on meeting the age and length of service requirements,
1-25 file an application for retirement and begin to receive a service
1-26 retirement benefit.
1-27 SECTION 2. Section 852.106, Government Code, is amended by
1-28 amending Subsection (a) and adding Subsection (e) to read as
1-29 follows:
1-30 (a) Except as provided by this section,[:]
1-31 [(1)] a person who is elected to public office is not
1-32 an employee eligible for membership in the retirement system[; and]
1-33 [(2) a person is not an employee eligible for
1-34 membership and is not eligible to receive credited service in this
1-35 retirement system for service performed that makes a person
1-36 eligible for membership or is creditable in another pension fund or
1-37 retirement system that is at least partly supported at public
1-38 expense].
1-39 (e) A person may simultaneously be a member of this
1-40 retirement system and another state or local retirement system
1-41 authorized or established under Section 67, Article XVI, Texas
1-42 Constitution. However, a person may receive a benefit from this
1-43 system only to the extent that the amount of the benefit is
1-44 computed solely with respect to the member's compensation and
1-45 accumulated contributions as those terms are defined in this
1-46 subtitle. Service credited with or allowed by another retirement
1-47 system may not be counted for purposes of retirement eligibility in
1-48 this retirement system except in accordance with the provisions of
1-49 the proportionate retirement program described by Chapter 803.
1-50 SECTION 3. Subsection (g), Section 852.108, Government Code,
1-51 is amended to read as follows:
1-52 (g) If a person with credited service under this section
1-53 dies before a payment under Subsection (i) is made, the person's
1-54 beneficiary, or if there is no beneficiary surviving, the executor
1-55 or administrator of the person's estate, may elect payment as
1-56 provided by Section 854.105 [854.105(c)].
1-57 SECTION 4. Subsection (c), Section 852.109, Government Code,
1-58 is amended to read as follows:
1-59 (c) If a person with credited service under this section
1-60 dies before a payment under Subsection (e) is made, the person's
1-61 beneficiary, or if there is no beneficiary surviving, the executor
1-62 or administrator of the person's estate, may elect payment as
1-63 provided by Section 854.105 [854.105(c)].
1-64 SECTION 5. Subsection (f), Section 853.105, Government Code,
2-1 is amended to read as follows:
2-2 (f) Interest on a prior service credit is earned for each
2-3 whole calendar year beginning on the effective date of membership
2-4 and ending on the effective date of retirement. If a person
2-5 retires under this subtitle on a date other than December 31,
2-6 interest on a prior service credit is earned for the partial year
2-7 in which the retirement occurs, prorated from January 1 of the year
2-8 in which the retirement occurs to the effective date of retirement.
2-9 SECTION 6. Subsections (b), (c), and (d), Section 853.304,
2-10 Government Code, are amended to read as follows:
2-11 (b) After the retirement system receives a copy of a
2-12 municipality's ordinance described by Subsection (a), the
2-13 retirement system shall furnish to the municipality a report
2-14 containing the names of employees who, according to the retirement
2-15 system's records, are eligible to receive prior service credit for
2-16 probationary employment. [A member may claim prior service credit
2-17 under this section by filing a detailed statement of such service
2-18 with the city clerk or secretary of the municipality for which the
2-19 service was performed at any time within one year from the
2-20 effective date of the ordinance or resolution authorizing such
2-21 credit.]
2-22 (c) As soon as practicable[,] after the municipality
2-23 receives a report under Subsection (b) [a member has filed a
2-24 statement of prior service under this section], the [affected]
2-25 municipality shall verify the information in the report [prior
2-26 service claimed] and certify to the retirement system [board of
2-27 trustees] the number of months of probationary employment to which
2-28 each employee listed on the report appears to be entitled
2-29 [creditable prior service (not exceeding six months) approved] and
2-30 the average monthly compensation paid to the member during the
2-31 period of probationary employment.
2-32 (d) The certification by the municipality must be received
2-33 by the retirement system not later than the first anniversary of
2-34 the effective date of the ordinance allowing the credit. After
2-35 receiving the [a] certification from the municipality described by
2-36 Subsection (c) [of prior service under this section and the average
2-37 compensation paid the member], the board of trustees shall
2-38 determine the prior service credit allowable to the member in the
2-39 manner provided in Section 853.105.
2-40 SECTION 7. Section 853.402, Government Code, is amended by
2-41 amending Subsection (f) and by adding Subsection (g) to read as
2-42 follows:
2-43 (f) Interest on an updated service credit is earned for each
2-44 whole calendar year beginning on the date the updated service
2-45 credit takes effect and ending on the effective date of retirement.
2-46 If a person retires under this subtitle on a date other than
2-47 December 31, interest on an updated service credit is earned for
2-48 the partial year in which the retirement occurs, prorated from
2-49 January 1 of the year in which the retirement occurs to the
2-50 effective date of retirement.
2-51 (g) If, before January 1, 1999, a person terminated
2-52 employment with a participating municipality without applying for
2-53 retirement or a refund of accumulated contributions and the person
2-54 did not perform credited service in each of the 36 months described
2-55 by Subsection (b)(1), the individual's updated service compensation
2-56 shall be computed as the average monthly compensation for the
2-57 number of months of credited service performed during the 36-month
2-58 period. If the person did not perform any service during the 36
2-59 months, the person's updated service compensation is computed as
2-60 the average monthly compensation for the number of months of
2-61 credited service performed during the 36-month period ending with
2-62 the last month of the calendar year of the member's most recent
2-63 service.
2-64 SECTION 8. Subsection (d), Section 854.002, Government Code,
2-65 is amended to read as follows:
2-66 (d) Notwithstanding any other provision of this subtitle,
2-67 instead of an annuity, a person will receive from the retirement
2-68 system a single payment equal to the sum of the following if on the
2-69 date of that person's retirement that sum is $10,000 [$5,000] or
3-1 less:
3-2 (1) any updated service credit or any prior service,
3-3 special prior service, or antecedent service credit for that person
3-4 on the date of retirement, plus accumulated interest;
3-5 (2) the amount credited to the person's individual
3-6 account in the employees saving fund; and
3-7 (3) the amount from the municipality accumulation fund
3-8 equal to the amount in the member's individual account or a greater
3-9 amount authorized by a participating municipality under Section
3-10 855.501.
3-11 SECTION 9. Section 854.003, Government Code, is amended by
3-12 amending Subsection (b) and by adding Subsection (h) to read as
3-13 follows:
3-14 (b) If a member dies before retirement and an annuity
3-15 becomes payable under Section 854.105 [has a valid optional
3-16 retirement annuity selection on file with the retirement system],
3-17 the member is considered to have retired on the last day of the
3-18 month immediately preceding the month in which death occurred,
3-19 except as provided by Subsection (h).
3-20 (h) If the person who is eligible to receive an annuity
3-21 under Subsection (b) is the member's surviving spouse, the person
3-22 may elect, by notifying the retirement system not later than the
3-23 180th day after the date of the member's death, to leave the
3-24 member's accumulated contributions on deposit with the retirement
3-25 system until the date the member would have been eligible for
3-26 service retirement. If a surviving spouse makes an election under
3-27 this subsection, the deceased member is considered to have retired
3-28 on the last day of the month in which the member would have
3-29 attained an age for service retirement eligibility. An election
3-30 under this subsection is revocable before the payment of the first
3-31 annuity payment by filing a written application approved by the
3-32 board of trustees to receive the member's accumulated
3-33 contributions.
3-34 SECTION 10. Section 854.007, Government Code, is amended to
3-35 read as follows:
3-36 Sec. 854.007. LIMITATION ON PAYMENT OF BENEFITS. If the
3-37 amount of a benefit payment under this subtitle would exceed the
3-38 limitations provided by Section 415, Internal Revenue Code of 1986,
3-39 and its subsequent amendments, and the regulations adopted under
3-40 that section, the retirement system shall reduce the amount of the
3-41 benefit to comply with that section [(a) In this section:]
3-42 [(1) "Annual benefit" means the total of all annuity
3-43 payments by the retirement system on behalf of a person who has
3-44 retired under this Subtitle during a calendar year, including any
3-45 distributive benefit payments.]
3-46 [(2) "Compensation" has the meaning assigned by
3-47 Section 415, Internal Revenue Code, and the regulations adopted
3-48 under that section, instead of the meaning assigned by Section
3-49 851.001.]
3-50 [(3) "Highest average annual compensation" means the
3-51 average compensation for the three consecutive calendar years of
3-52 service that produces the highest average.]
3-53 [(4) "Internal Revenue Code" means the Internal
3-54 Revenue Code of 1986 (Title 26, United States Code).]
3-55 [(b) If the amount of any benefit payment under this
3-56 subtitle would exceed the limitations provided by this section, the
3-57 retirement system shall reduce the amount of the benefit in
3-58 accordance with this section.]
3-59 [(c) Except as otherwise provided by this section, a benefit
3-60 is adjusted to an actuarially equivalent straight life annuity for
3-61 the purpose of determining limitations under this section. An
3-62 actuarial adjustment to a benefit is not required for the value of
3-63 a qualified joint and survivor annuity and the value of
3-64 postretirement cost-of-living increases made in accordance with
3-65 Section 415, Internal Revenue Code.]
3-66 [(d) Except as provided by Subsections (f), (h), and (i), an
3-67 annual benefit payable by the retirement system may not exceed
3-68 $115,641, or another amount as adjusted each January 1 by the
3-69 secretary of the treasury under Section 415 of the Internal Revenue
4-1 Code of 1986 (26 U.S.C. Section 415) for cost-of-living increases
4-2 after January 1, 1993.]
4-3 [(e) If payment of a benefit begins before a member attains
4-4 age 62, the dollar limitation is the actuarial equivalent of an
4-5 annual benefit beginning at age 62 as described by Subsection (d)
4-6 for a person at age 62. A reduction under this subsection may not
4-7 exceed that required by the Internal Revenue Code of 1986.]
4-8 [(f) If payment of a benefit begins after the member attains
4-9 age 65, the dollar limitation is the actuarial equivalent of an
4-10 annual benefit beginning at age 65 as described by Subsection
4-11 (d)(1).]
4-12 [(g) To determine actuarial equivalence, the interest rate
4-13 assumption under Subsection (c) or (e) is the greater of the rate
4-14 specified by Section 855.316(a) or five percent, and the interest
4-15 rate assumption under Subsection (f) is the lesser of those rates.]
4-16 [(h) The limitations provided by Subsections (d), (e), and
4-17 (f) do not apply to any portion of an annual benefit payable by the
4-18 retirement system that is paid from the balance in the member's
4-19 individual account in the employees saving fund as of December 31,
4-20 1983, or from interest credited to the member's account after
4-21 December 31, 1983, as a result of deposits before that date.]
4-22 [(i) This section may not be applied to reduce the annual
4-23 benefit payable to any person who retired under the retirement
4-24 system before January 1, 1994, or to reduce the vested accrued
4-25 benefit as of December 31, 1993, of any person who was a member of
4-26 the retirement system on that date.]
4-27 [(j) If the Internal Revenue Code is amended in such a
4-28 manner that limitations similar to those provided by this section
4-29 are not required of governmental retirement plans to constitute
4-30 qualified plans, the board of trustees may by rule eliminate all or
4-31 any portion of the limitations provided by this section.]
4-32 [(k) An employer may not provide employee retirement or
4-33 deferred benefits to the extent that, when considered together with
4-34 the benefits authorized by this subtitle as required by the
4-35 Internal Revenue Code, would result in the failure of the
4-36 retirement system's plan to meet federal qualification standards as
4-37 applied to governmental retirement plans.]
4-38 [(l) The annual benefit payable by the retirement system
4-39 that is otherwise limited by Subsection (d) may be increased each
4-40 year in accordance with cost-of-living adjustments by the secretary
4-41 of the treasury of the dollar limitation or the compensation
4-42 limitation, as long as the benefit does not exceed the amount that
4-43 would be payable without the limitation of Section 415 of the
4-44 Internal Revenue Code of 1986 (26 U.S.C. Section 415).]
4-45 [(m) The limitations provided by this section may not be
4-46 applied to reduce the benefit of any person whose retirement
4-47 benefits payable under this and all other defined benefit plans of
4-48 the member's employer do not exceed $10,000, plus the benefit
4-49 provided under Subsection (h), for the plan year or for any
4-50 previous plan year and who has not at any time participated in a
4-51 defined contribution plan maintained by the person's employer].
4-52 SECTION 11. Section 854.008, Government Code, is amended by
4-53 amending Subsection (a) and adding Subsections (f) and (g) to read
4-54 as follows:
4-55 (a) A member who is eligible for service retirement and who
4-56 terminates employment with all participating municipalities may
4-57 apply for a partial lump-sum distribution under this section. The
4-58 board of trustees may adopt rules to allow the beneficiary of a
4-59 deceased member who at the time of death was eligible for service
4-60 retirement but had not retired to make the same election that the
4-61 member could have made under this section at the time of
4-62 retirement.
4-63 (f) If a benefit payable under this section is subject to a
4-64 domestic relations order that the retirement system determines is
4-65 qualified under Section 804.003, the alternate payee under that
4-66 order may elect to receive a partial lump-sum distribution under
4-67 Subsection (g).
4-68 (g) The partial lump-sum distribution under Subsection (f)
4-69 shall be paid as a single payment, payable at the same time as the
5-1 first monthly annuity payment paid to the alternate payee, and
5-2 shall be deducted from the sum used in computing the alternate
5-3 payee's annuity. The amount of the lump-sum distribution shall be
5-4 equal to the monthly payments, excluding any distributive benefit
5-5 payments that the alternate payee would otherwise have received,
5-6 during the:
5-7 (1) 12 months after the effective date of the member's
5-8 retirement;
5-9 (2) 24 months after the effective date of the member's
5-10 retirement; or
5-11 (3) 36 months after the effective date of the member's
5-12 retirement.
5-13 SECTION 12. Section 854.102, Government Code, is amended by
5-14 adding Subsection (h) to read as follows:
5-15 (h) A member is eligible to retire and receive a service
5-16 retirement annuity if the member is at least 60 years old and has
5-17 at least five years of credited service in the retirement system
5-18 that is performed for one or more municipalities to which the
5-19 five-year vesting provision under Section 854.205 applies.
5-20 SECTION 13. Subsection (b), Section 854.103, Government
5-21 Code, is amended to read as follows:
5-22 (b) A standard service retirement annuity is payable
5-23 throughout the life of a retiree. [If a retiree dies before 60
5-24 monthly payments of a standard service retirement annuity have been
5-25 made, the remainder of the 60 monthly payments are payable to the
5-26 retiree's designated beneficiary.]
5-27 SECTION 14. Section 854.104, Government Code, is amended by
5-28 amending Subsection (c) and by adding Subsections (h), (i), and (j)
5-29 to read as follows:
5-30 (c) An eligible person may select an optional annuity that
5-31 provides that:
5-32 (1) after the retiree's death, the reduced annuity is
5-33 payable throughout the life of a person designated by the retiree;
5-34 (2) after the retiree's death, one-half of the reduced
5-35 annuity is payable throughout the life of a person designated by
5-36 the retiree;
5-37 (3) if the retiree dies before 120 monthly annuity
5-38 payments have been made, the remainder of the 120 payments are
5-39 payable to the retiree's beneficiary or, if one does not exist, to
5-40 the retiree's estate;
5-41 (4) if the retiree dies before 180 monthly annuity
5-42 payments have been made, the remainder of the 180 payments are
5-43 payable to the retiree's beneficiary or, if one does not exist, to
5-44 the retiree's estate;
5-45 (5) after the retiree's death, three-fourths
5-46 [two-thirds] of the reduced annuity is payable throughout the life
5-47 of a person designated by the retiree; or
5-48 (6) if the retiree dies before 60 monthly payments
5-49 have been made, the remainder of the 60 payments are payable to the
5-50 retiree's beneficiary or, if one does not exist, to the retiree's
5-51 estate [the annuity is payable only during the retiree's lifetime].
5-52 (h) Subsection (i) applies only to a person who retired
5-53 before September 1, 1997, and who elected, at retirement, to
5-54 receive a reduced annuity that is payable until the death of the
5-55 last to die of the retiree and a person designated as a beneficiary
5-56 under Subsection (e).
5-57 (i) If both the retiree and the beneficiary described in
5-58 Subsection (h) are alive, they may jointly elect in the manner
5-59 provided by Subsection (j) to modify the annuity being received.
5-60 An annuity modified under this subsection:
5-61 (1) begins with the first payment after one calendar
5-62 month has passed since the date the form under Subsection (j) is
5-63 filed, with the amount of the monthly payments, while the
5-64 beneficiary is alive, being the actuarial equivalent of the
5-65 previous annuity; and
5-66 (2) increases to the amount of the standard service
5-67 retirement annuity that the retiree would otherwise be entitled to
5-68 receive if the retiree had not selected the optional annuity with
5-69 adjustments made for any postretirement increase in that benefit
6-1 and becomes payable the month following the month in which the
6-2 beneficiary dies and continues until the retiree dies.
6-3 (j) To make the election under Subsection (i), the retiree
6-4 and beneficiary must execute and acknowledge, as provided by this
6-5 subsection, a form stating that they are requesting a modification
6-6 under Subsection (i) and that they understand that the modified
6-7 annuity will be smaller than the standard service annuity while
6-8 they are both living and if the beneficiary survives the member.
6-9 The acknowledgment must be on a form prescribed by the board of
6-10 trustees and be made before a notary public or other officer
6-11 authorized to take acknowledgments. The retiree and beneficiary
6-12 must file the executed form with the retirement system before
6-13 January 1, 2003.
6-14 SECTION 15. Section 854.105, Government Code, is amended to
6-15 read as follows:
6-16 Sec. 854.105. SELECTION OF OPTIONAL SERVICE RETIREMENT
6-17 ANNUITY. (a) A vested member [who is eligible for service
6-18 retirement] may, while continuing to perform service for a
6-19 participating municipality or after terminating all service, file
6-20 with the board of trustees, on a form prescribed by the board, a
6-21 selection of an optional service retirement annuity available under
6-22 Section 854.104 and a designation of beneficiary or a designation
6-23 of beneficiary without selecting a retirement option. An annuity
6-24 selected as provided by this section is payable [on the member's
6-25 retirement or] on the member's death before retirement.
6-26 (b) A member may change a selection of an optional annuity
6-27 or a designation of beneficiary at any time before the member's
6-28 retirement or death in the same manner that the original selection
6-29 or [and] designation was [were] made.
6-30 (c) If a member eligible under this section to select an
6-31 optional service retirement annuity dies before retirement without
6-32 having made a selection, the beneficiary designated under
6-33 Subsection (a) may select an optional annuity in the same manner
6-34 as if the member had made the selection, subject only to the
6-35 requirements of the Internal Revenue Code of 1986, and its
6-36 subsequent amendments, as to the length of time over which the
6-37 payments can be made.
6-38 (d) If a beneficiary has not been designated under
6-39 Subsection (a), the member's surviving spouse may elect to receive
6-40 a refund of the member's accumulated contributions or [select] an
6-41 optional annuity in the same manner as if the member had made the
6-42 selection.
6-43 (e) If a beneficiary has not been designated under
6-44 Subsection (a) and no surviving spouse exists, the member's
6-45 surviving children jointly may elect to receive:
6-46 (1) a refund of the member's accumulated
6-47 contributions; or
6-48 (2) an optional annuity in the same manner as if the
6-49 member had made the selection, subject only to the requirements of
6-50 the Internal Revenue Code of 1986, and its subsequent amendments,
6-51 as to the length of time over which the payments can be made.
6-52 (f) If there is no surviving spouse or surviving child and
6-53 no beneficiary designated under Subsection (a) exists, the last
6-54 person designated by the member as a beneficiary on a form filed
6-55 with the retirement system may elect to receive:
6-56 (1) a refund of the member's accumulated
6-57 contributions; or
6-58 (2) an optional annuity in the same manner as if the
6-59 member had made the selection, subject only to the requirements of
6-60 the Internal Revenue Code of 1986, and its subsequent amendments,
6-61 as to the length of time over which the payments can be made.
6-62 (g) If there is not a person who is eligible to make a
6-63 selection under Subsections (c)-(f), the executor or administrator
6-64 of the member's estate may elect:
6-65 (1) for an estate beneficiary to receive the optional
6-66 annuity under Section 854.104(c)(4), in which case the member will
6-67 be considered to have retired on the last day of the month
6-68 immediately preceding the month in which death occurred; or
6-69 (2) for the estate to receive a refund of the member's
7-1 accumulated contributions under Section 854.501, in which case the
7-2 member will be considered to have been a contributing member at the
7-3 time of death.
7-4 SECTION 16. Subsection (a), Section 854.106, Government
7-5 Code, is amended to read as follows:
7-6 (a) If a surviving spouse, or the executor or administrator
7-7 of a member's estate, would be entitled to make an election under
7-8 Section 854.105 [854.105(c)] because of the death of the member,
7-9 the heirs of the deceased member may make that election if:
7-10 (1) no surviving spouse exists;
7-11 (2) no petition for the appointment of a personal
7-12 representative of the member is pending or has been granted;
7-13 (3) 30 days have elapsed since the death of the
7-14 member;
7-15 (4) the value of the entire assets of the member's
7-16 estate, excluding homestead and exempt property, does not exceed
7-17 $50,000;
7-18 (5) there are not more than three heirs; and
7-19 (6) on file with the retirement system is a certified
7-20 copy of a small estates affidavit that has been approved and filed
7-21 in accordance with Section 137, Texas Probate Code, or an original
7-22 affidavit as described by Subsection (b).
7-23 SECTION 17. Subchapter B, Chapter 854, Government Code, is
7-24 amended by adding Sections 854.107 and 854.108 to read as follows:
7-25 Sec. 854.107. DESIGNATION OF BENEFICIARY AFTER RETIREMENT
7-26 UNDER STRAIGHT LIFE OR GUARANTEED TERM ANNUITY. (a) This section
7-27 applies only to a retiree who marries after the date of the
7-28 person's retirement and who at the time of retirement selected
7-29 either:
7-30 (1) a service or disability retirement annuity that
7-31 would be payable throughout the retiree's life and would not be
7-32 paid after the retiree's death, except as provided by Section
7-33 854.502; or
7-34 (2) a service or disability retirement annuity that
7-35 would be payable throughout the retiree's life and, if the retiree
7-36 dies before 60, 120, or 180 monthly annuity payments, as
7-37 appropriate, have been made, would be payable for the remainder of
7-38 those months.
7-39 (b) A retiree described under Subsection (a) may replace
7-40 the annuity by selecting an optional retirement annuity under
7-41 Section 854.104(c)(1), (2), or (5) and by designating the person's
7-42 spouse as beneficiary in the same manner as an annuity selection
7-43 and designation of beneficiary may be made before retirement.
7-44 (c) The selection under Subsection (b) must be filed with
7-45 the retirement system before the first anniversary of the date of
7-46 the marriage unless the postretirement marriage occurred before
7-47 January 1, 2002, in which case the selection must be filed with the
7-48 retirement system before January 1, 2003.
7-49 (d) A person may make a postretirement designation of a
7-50 beneficiary under this section only once.
7-51 (e) The retirement system shall adjust the monthly payments
7-52 of the annuity under the option selected to an actuarial equivalent
7-53 amount of the annuity being paid immediately before the change in
7-54 benefit option and beneficiary selection.
7-55 (f) The selection of an optional annuity and designation of
7-56 a beneficiary under this section is not effective if the retiree or
7-57 beneficiary dies before the date the change is to take effect.
7-58 Sec. 854.108. DESIGNATION OF BENEFICIARY AFTER RETIREMENT
7-59 UNDER JOINT AND SURVIVOR ANNUITY. (a) This section applies only
7-60 to a retiree who:
7-61 (1) at the time of retirement selected an optional
7-62 annuity providing that, after the retiree's death, payments would
7-63 be made to a beneficiary throughout the remaining life of the
7-64 beneficiary and the beneficiary predeceases the retiree;
7-65 (2) marries after the date of the person's retirement;
7-66 and
7-67 (3) has not previously replaced an annuity under this
7-68 section.
7-69 (b) A retiree described by Subsection (a) may replace an
8-1 annuity by selecting an optional annuity under Section
8-2 854.104(c)(1), (2), or (5) and designating the person's spouse as
8-3 beneficiary in the same manner as an annuity selection and
8-4 designation of beneficiary may be made before retirement.
8-5 (c) The selection under Subsection (b) must be filed with
8-6 the retirement system before the first anniversary of the date of
8-7 the marriage unless the postretirement marriage occurred before
8-8 January 1, 2002, in which case the selection must be filed with the
8-9 retirement system before January 1, 2003.
8-10 (d) The retirement system shall adjust the monthly payments
8-11 of the annuity under the option selected to an actuarial equivalent
8-12 amount of the annuity being paid immediately before the change in
8-13 benefit option and beneficiary selection.
8-14 (e) The selection of an optional annuity and designation of
8-15 a beneficiary under this section is not effective if the retiree or
8-16 beneficiary dies before the date the change is to take effect.
8-17 SECTION 18. Section 854.202, Government Code, is amended by
8-18 adding Subsection (j) to read as follows:
8-19 (j) A member is eligible to retire and receive a service
8-20 retirement annuity if the member:
8-21 (1) is at least 60 years of age; and
8-22 (2) has at least five years of credited service
8-23 performed for one or more municipalities to which the five-year
8-24 vesting provision under Section 854.205 applies.
8-25 SECTION 19. Subchapter C, Chapter 854, Government Code, is
8-26 amended by adding Section 854.205 to read as follows:
8-27 Sec. 854.205. FIVE-YEAR VESTING. (a) This section applies
8-28 to each municipality unless the municipality's governing board
8-29 files with the board of trustees before December 31, 2001, an
8-30 election to not provide for five-year vesting. A governing board
8-31 that elects to not provide five-year vesting may revoke that
8-32 election by sending notice to the board of trustees to provide for
8-33 five-year vesting.
8-34 (b) After December 31, 2001, a member may terminate covered
8-35 employment and remain eligible to retire and receive a service
8-36 retirement annuity at any time after the member attains an
8-37 applicable age as provided by law if the member has at least five
8-38 years of credited service performed for one or more municipalities
8-39 to which the five-year vesting provision under this section
8-40 applies.
8-41 SECTION 20. Subsection (c), Section 854.304, Government
8-42 Code, is amended to read as follows:
8-43 (c) A standard disability retirement annuity is payable
8-44 throughout the life of a retiree. [If a retiree dies before 60
8-45 monthly payments of a standard disability retirement annuity have
8-46 been made, the remainder of the 60 monthly payments is payable to
8-47 the retiree's designated beneficiary.] When a retiree who receives
8-48 an annuity under this section dies, an additional benefit may be
8-49 payable under Section 854.502.
8-50 SECTION 21. Subsection (c), Section 854.305, Government
8-51 Code, is amended to read as follows:
8-52 (c) An eligible person may select an optional annuity under
8-53 Section 854.104(c) [that provides that:]
8-54 [(1) after the retiree's death, the reduced annuity is
8-55 payable throughout the life of a person designated by the retiree;]
8-56 [(2) after the retiree's death, one-half of the
8-57 reduced annuity is payable throughout the life of a person
8-58 designated by the retiree;]
8-59 [(3) if the retiree dies before 120 monthly annuity
8-60 payments have been made, the remainder of the 120 payments are
8-61 payable to the retiree's beneficiary or, if one does not exist, to
8-62 the retiree's estate;]
8-63 [(4) if the retiree dies before 180 monthly annuity
8-64 payments have been made, the remainder of the 180 payments are
8-65 payable to the retiree's beneficiary or, if one does not exist, to
8-66 the retiree's estate;]
8-67 [(5) after the retiree's death, two-thirds of the
8-68 reduced annuity is payable throughout the life of a person
8-69 designated by the retiree; or]
9-1 [(6) the annuity is payable only during the retiree's
9-2 lifetime].
9-3 SECTION 22. Section 854.605, Government Code, is amended by
9-4 adding Subsection (c) to read as follows:
9-5 (c) If a member or retiree who has designated a beneficiary
9-6 to receive supplemental death benefits under Section 854.603 or
9-7 854.604 subsequently designates a different beneficiary to receive
9-8 other benefits under this subtitle in the event of the death of the
9-9 member or retiree, the supplemental death benefits shall be paid to
9-10 the subsequently designated beneficiary unless the member or
9-11 retiree contemporaneously or subsequently designates another
9-12 beneficiary to receive the supplemental death benefit.
9-13 SECTION 23. Section 855.201, Government Code, is amended to
9-14 read as follows:
9-15 Sec. 855.201. EXECUTIVE DIRECTOR. (a) The board of
9-16 trustees shall appoint an executive [a] director.
9-17 (b) The executive director shall:
9-18 (1) manage and administer the retirement system under
9-19 the supervision and direction of the board; and
9-20 (2) invest the assets of the system.
9-21 (c) The board of trustees may delegate to the executive
9-22 director powers and duties in addition to those stated by
9-23 Subsection (b).
9-24 (d) The executive director annually shall:
9-25 (1) prepare an itemized budget showing the amount
9-26 required to pay the retirement system's expenses for the following
9-27 fiscal year; and
9-28 (2) submit the report to the board for review,
9-29 amendment, and adoption.
9-30 SECTION 24. Section 855.301, Government Code, is amended by
9-31 adding Subsection (c) to read as follows:
9-32 (c) The board of trustees, in the exercise of its discretion
9-33 to manage the assets of the retirement system, may select one or
9-34 more commercial banks or other entities experienced in short-term
9-35 cash management to invest the system's cash balances through its
9-36 short-term investment fund or funds and in such short-term
9-37 securities as the board of trustees determines and as authorized by
9-38 this section.
9-39 SECTION 25. Subchapter D, Chapter 855, Government Code, is
9-40 amended by adding Section 855.3011 to read as follows:
9-41 Sec. 855.3011. SECURITIES LENDING. (a) The board of
9-42 trustees, in the exercise of its discretion to manage the assets of
9-43 the retirement system, may select a person, including a commercial
9-44 bank or depository trust company, to lend retirement system
9-45 securities as provided by this section and rules adopted by the
9-46 board of trustees.
9-47 (b) To be eligible to lend securities under this section, a
9-48 person must:
9-49 (1) be experienced in the operations of a fully
9-50 secured securities lending program;
9-51 (2) maintain capital adequate in the prudent judgment
9-52 of the retirement system to assure the safety of the securities;
9-53 (3) execute an indemnification agreement, satisfactory
9-54 in form and content to the retirement system, fully indemnifying
9-55 the retirement system against any loss resulting from borrower
9-56 default or the failure of the securities lending agent to properly
9-57 execute the agent's responsibilities under the applicable
9-58 securities lending agreement;
9-59 (4) require any securities broker or dealer to whom
9-60 the agent lends securities belonging to the retirement system to
9-61 deliver and maintain with the custodian collateral in the form of
9-62 cash or United States government securities eligible for book
9-63 entry, the market value of which must equal not less than 100
9-64 percent of the market value, from time to time, of the loaned
9-65 securities; and
9-66 (5) comply with the guidelines adopted by the board of
9-67 trustees relating to the investment of cash collateral, borrower
9-68 limits, and other items.
9-69 SECTION 26. Subchapter G, Chapter 855, Government Code, is
10-1 amended by adding Section 855.608 to read as follows:
10-2 Sec. 855.608. FULL BENEFIT ARRANGEMENT. (a) A separate
10-3 fund for the payment of benefits under Section 415(m), Internal
10-4 Revenue Code of 1986, and its subsequent amendments, is created
10-5 solely for the purpose of providing benefits to participants equal
10-6 to the amount by which the participant's annual benefit otherwise
10-7 payable under this subtitle exceeds the limitation on benefits
10-8 imposed by Section 415, Internal Revenue Code of 1986, and its
10-9 subsequent amendments.
10-10 (b) The board of trustees shall administer this section.
10-11 Except as otherwise provided by this section, the board of trustees
10-12 has the same rights, duties, and responsibilities concerning the
10-13 full benefits arrangement as it has for the trust fund.
10-14 (c) Money for the payment of benefits to a participant under
10-15 this section shall be transferred to the separate fund created by
10-16 this section from the municipality accumulation fund account of the
10-17 municipality that employed the member. If the benefit is payable
10-18 as a result of service with more than one participating
10-19 municipality, there shall be transferred from the municipality
10-20 accumulation fund account of each such municipality the amount
10-21 chargeable to that municipality for the member. The monthly amount
10-22 to pay benefits under this section shall be transferred at least 15
10-23 days before the date of a monthly payment to a person receiving
10-24 annuity benefits under this section.
10-25 (d) The full benefits arrangement shall be administered as a
10-26 governmental excess benefit arrangement. The board of trustees may
10-27 adopt rules for the efficient administration of this section and to
10-28 maintain compliance with Section 415(m), Internal Revenue Code of
10-29 1986, and its subsequent amendments.
10-30 SECTION 27. Section 854.204, Government Code, is repealed.
10-31 SECTION 28. (a) Except as provided by Subsection (b) of
10-32 this section, this Act takes effect January 1, 2002.
10-33 (b) Section 854.205, Government Code, as added by this Act,
10-34 takes effect September 1, 2001.
10-35 * * * * *