By Gallegos S.B. No. 669 77R1440 GJH-D A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the establishment of a retirement system for officers 1-3 and employees of certain municipalities and of the retirement 1-4 system and the transfer of credit from one retirement system to the 1-5 established system. 1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-7 SECTION 1. DEFINITIONS. In this Act: 1-8 (1) "Authorized absence" means: 1-9 (A) each day an employee is absent due to an 1-10 approved holiday, vacation, accident, or sickness, if the employee 1-11 is continued on the employment rolls of the city or the pension 1-12 system, receives the employee's regular salary from the city or the 1-13 pension system for each day of absence, and remains eligible to 1-14 work on recovery or return; or 1-15 (B) any period that a person is on military 1-16 leave of absence under Section 18(a) of this Act, provided the 1-17 person complies with the requirements of that section. 1-18 (2) "Average monthly salary" means: 1-19 (A) the amount computed by dividing the sum of 1-20 the 78 highest biweekly salaries paid to an employee during years 1-21 of credited service by 36; or 1-22 (B) if there are fewer than 78 biweekly salaries 1-23 paid to an employee during the employee's period of credited 1-24 service, the amount computed by multiplying the average of all 2-1 biweekly salaries paid to the employee during the period of 2-2 credited service by 26 and dividing the product by 12. 2-3 (3) "Benefit accrual rate" means the percentage in 2-4 Section 10(d) or (e) of this Act for each year of a member's 2-5 credited service used to compute a pension or benefit. 2-6 (4) "City" means a municipality having a population of 2-7 more than 1.5 million. 2-8 (5) "Credited service" means each day of service and 2-9 prior service of a member for which: 2-10 (A) the city has and, for service in group A, 2-11 the member has made required contributions to the pension fund that 2-12 were not subsequently withdrawn; 2-13 (B) the member has purchased service credit or 2-14 converted service credit from group B to group A by paying into the 2-15 pension fund required amounts that were not subsequently withdrawn; 2-16 (C) the member has reinstated service under 2-17 Section 7(g) of this Act; and 2-18 (D) the member has previously made payments to 2-19 the pension fund that, under then existing provisions of law, make 2-20 the member eligible for credit for the service and that were not 2-21 subsequently withdrawn. 2-22 (6) "Deferred participant" means a person who: 2-23 (A) has separated from service; 2-24 (B) has at least five years of credited service 2-25 in the pension system; 2-26 (C) has not met the eligibility requirements for 2-27 a normal retirement pension; and 3-1 (D) has made an election under Section 17(c) of 3-2 this Act. 3-3 (7) "Dependent child" means an unmarried natural or 3-4 legally adopted child of a member, deferred participant, or retiree 3-5 who: 3-6 (A) was supported by the member, deferred 3-7 participant, or retiree; and 3-8 (B) is under 21 years of age or is totally and 3-9 permanently disabled from performing any full-time employment 3-10 because of an injury, illness, or retardation that began before the 3-11 child became 18 years of age and before the death of the member, 3-12 deferred participant, or retiree. 3-13 (8) "Disability" means the complete and permanent 3-14 inability of a member to perform the usual and customary duties 3-15 that the member has been performing as an employee, or any other 3-16 full-time duties for which the member is reasonably suited by 3-17 training or experience, as determined by the pension board on the 3-18 basis of a medical examination and any other evidence the pension 3-19 board determines is necessary. 3-20 (9) "Effective retirement date" means the first day 3-21 retirement begins for a member or deferred participant who is 3-22 eligible for retirement. If the pension system receives a member's 3-23 application for normal retirement before the member's separation 3-24 from service or not later than the 90th day after the date of the 3-25 member's separation from service, the effective retirement date is 3-26 the later of the first day of the month following the month of 3-27 separation or the date specified in the application. If the 4-1 pension system receives the member's application after the 90th day 4-2 after the date of the member's separation from service, the 4-3 effective retirement date is the later of the first day of the 4-4 month after the pension system receives the application or the date 4-5 specified in the application. The effective retirement date for a 4-6 member who qualifies for a service or ordinary disability 4-7 retirement is the later of the day following the member's last day 4-8 of credited service or the date the pension system receives the 4-9 member's request for disability retirement. 4-10 (10) "Eligible survivor" means a surviving spouse or 4-11 dependent child. 4-12 (11) "Employee" means any person, including an elected 4-13 official during the official's service to the city, who is eligible 4-14 under this Act and: 4-15 (A) who holds a municipal position or a position 4-16 with the pension system; 4-17 (B) whose name appears on a regular full-time 4-18 payroll of a city or of the pension fund; and 4-19 (C) who is paid a regular salary for services. 4-20 (12) "Marriage" means a marriage in which: 4-21 (A) a marriage certificate is recorded in the 4-22 records of the county clerk's office in the county in which the 4-23 marriage ceremony was performed; or 4-24 (B) in the case of a common-law marriage, a 4-25 marriage declaration is executed by the couple and recorded in the 4-26 records of the county clerk's office in the county in which the 4-27 couple resides. For separations from service after June 29, 2002, 5-1 a marriage that is evidenced by a declaration of common-law 5-2 marriage signed before a notary public after June 30, 2002, may not 5-3 be treated as effective before the date it was signed before the 5-4 notary public. 5-5 (13) "Member" means each active employee included in 5-6 the pension system, except for an employee who is ineligible under 5-7 Section 4 of this Act. 5-8 (14) "Military service" means active service in the 5-9 armed forces of the United States or wartime service in the armed 5-10 forces of the United States or in the allied forces, if credit for 5-11 military service has not been granted under any federal or other 5-12 state system or used in any other retirement system. 5-13 (15) "Pension" means a benefit payable to a retired 5-14 member out of the pension fund based on a disability or service 5-15 retirement. 5-16 (16) "Pension board" means the board of trustees of 5-17 the pension system created under Chapter 358, Acts of the 48th 5-18 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas 5-19 Civil Statutes), and reenacted and continued under this Act for the 5-20 purpose of administering the pension system. 5-21 (17) "Pension fund" means assets consisting of the 5-22 contributions made by the city, contributions made by any member, 5-23 and any income, profits, or other amounts resulting from the 5-24 investment of those contributions. 5-25 (18) "Pension system" means the retirement, 5-26 disability, and survivor benefit plans for municipal employees of a 5-27 city under this Act and employees under Section 3(d) of this Act. 6-1 (19) "Predecessor system" means the retirement system 6-2 authorized by Chapter 358, Acts of the 48th Legislature, Regular 6-3 Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes). 6-4 (20) "Previous service" means any service as an 6-5 employee, other than prior service, that preceded a member's 6-6 current period of employment. 6-7 (21) "Prior service" means any service performed as an 6-8 employee before September 1, 1943. 6-9 (22) "Retiree" means a former member of the pension 6-10 system who: 6-11 (A) has separated from service; 6-12 (B) has met the eligibility requirements for a 6-13 deferred retirement pension, normal retirement pension, or 6-14 disability pension under this Act; and 6-15 (C) is receiving a deferred retirement pension, 6-16 normal retirement pension, or disability pension under this Act 6-17 based on service that was credited to the person. 6-18 (23) "Salary" means base pay, longevity pay, and 6-19 shift-differential pay paid to an employee and attributable to 6-20 services rendered by the employee, regardless of how the employee 6-21 was paid. 6-22 (24) "Separation from service" means the cessation of 6-23 work for the city or the pension system in an eligible position 6-24 covered by this Act for any reason involving the person's removal 6-25 from the employment rolls of the city or the pension system, 6-26 including death, discharge, resignation, or retirement, the 6-27 effective date of which shall be certified by the city or the 7-1 pension system. The term includes the termination of employment. 7-2 (25) "Service" means each day of services and work 7-3 performed by an employee, including an authorized absence. The 7-4 term does not include a period in which a person: 7-5 (A) is a DROP participant; 7-6 (B) is suspended from duty without pay; 7-7 (C) is on leave of absence without pay; 7-8 (D) is ineligible for membership under Section 4 7-9 of this Act; or 7-10 (E) is separated from service. 7-11 (26) "Surviving spouse" means a person who was married 7-12 to a member, deferred participant, or retiree at the time of death 7-13 of the member, deferred participant, or retiree and before 7-14 separation from service by the member, deferred participant, or 7-15 retiree. 7-16 (27) "Trustee" means a trustee of the pension board. 7-17 SECTION 2. PENSION BOARD. (a) The pension board of the 7-18 predecessor system shall continue to administer, manage, and 7-19 operate the pension system, including directing investments and 7-20 overseeing the fund's assets. 7-21 (b) The pension system shall operate for the benefit of the 7-22 employees of a city and the pension system. The pension system 7-23 continues to operate regardless of whether the city's population 7-24 falls below the population required for the city. The pension 7-25 board is not subject to Title 9, Property Code. 7-26 (c) The pension board consists of 11 trustees as follows: 7-27 (1) the mayor of the city, or the director of the 8-1 civil service commission as the mayor's representative; 8-2 (2) the city treasurer or a person performing the 8-3 duties of treasurer; 8-4 (3) four municipal employees of the city who are 8-5 members of the pension system; 8-6 (4) two retirees, each of whom: 8-7 (A) has at least five years of credited service 8-8 in the pension system; 8-9 (B) receives a retirement pension from the 8-10 pension system; and 8-11 (C) is not an officer or employee of the city; 8-12 and 8-13 (5) three persons, each of whom: 8-14 (A) is a registered voter in the city; 8-15 (B) has been a resident of the city for the 8-16 three years preceding the date of initial appointment; and 8-17 (C) is not a city officer or employee. 8-18 (d) To serve as a trustee under Subsection (c)(3) of this 8-19 section, a person must be a member with at least five years of 8-20 credited service and be elected by the active members of the 8-21 pension system at an election called by the pension board. No more 8-22 than two of the employee trustees may be employees of the same 8-23 department. 8-24 (e) A person elected as an employee trustee under Subsection 8-25 (d) of this section who retires during the trustee's term shall 8-26 remain in office until the expiration of the term. Persons elected 8-27 as employee trustees serve staggered four-year terms, with the 9-1 terms of two of the trustees expiring in each even-numbered year. 9-2 Each employee trustee shall continue to serve until a successor is 9-3 qualified. 9-4 (f) A vacancy caused by an employee trustee's death, 9-5 resignation, or removal shall be filled by an appointment made by a 9-6 majority of the trustees elected by the members of the pension 9-7 system on a notarized affidavit of appointment submitted to the 9-8 executive director not later than the 10th day after the date the 9-9 vacancy occurs. The appointee serves for the remainder of the 9-10 unexpired term of the replaced trustee. If the notarized affidavit 9-11 of appointment is not timely submitted, the executive director 9-12 shall call an election to be held not later than the 90th day after 9-13 the date of the vacancy to elect an employee trustee to fill the 9-14 vacancy. 9-15 (g) To serve as a trustee under Subsection (c)(4) of this 9-16 section, a person must be elected by the retired members of the 9-17 pension system at an election called by the pension board. 9-18 (h) Persons elected as retiree trustees serve four-year 9-19 staggered terms, with the term of one trustee expiring in each 9-20 even-numbered year. 9-21 (i) Each retiree trustee serves until the retiree's 9-22 successor is qualified. A vacancy caused by a retiree trustee's 9-23 death, resignation, or removal shall be filled by appointment made 9-24 by the other trustee normally chosen by retiree election on a 9-25 notarized affidavit of appointment submitted to the executive 9-26 director not later than the 10th day after the date the vacancy 9-27 occurs. The appointee serves for the remainder of the unexpired 10-1 term of the replaced trustee. If the notarized affidavit of 10-2 appointment is not timely submitted, the executive director shall 10-3 call an election to be held not later than the 90th day after the 10-4 date of the vacancy to elect a retiree trustee to fill the vacancy. 10-5 (j) To serve as a trustee under Subsection (c)(5) of this 10-6 section, a person must be appointed by the governing body of the 10-7 city. Each trustee appointed under Subsection (c)(5) of this 10-8 section serves a two-year term. The appointment or reappointment 10-9 of both the appointed trustees shall take place in January of each 10-10 even-numbered year. A vacancy caused by an appointed trustee's 10-11 death, resignation, or removal shall be filled by the governing 10-12 body of the city. The appointee serves for the remainder of the 10-13 unexpired term of the replaced trustee. An appointed trustee may 10-14 not serve beyond the expiration of the two-year term other than by 10-15 appointment for a new term by the governing body of the city. 10-16 (k) Notwithstanding any other provision in this section, if 10-17 an eligible candidate for an elected trustee position on the 10-18 pension board is unopposed for an election, the election may not be 10-19 held for that position, and the pension board shall certify the 10-20 candidate as elected to the pension board on the executive 10-21 director's designation that the candidate is eligible to be a 10-22 trustee under this section and is unopposed for election. The 10-23 pension board's certification shall be effective on the day 10-24 following the date the preceding term for the trustee position 10-25 expires. 10-26 (l) Each trustee shall, at the first pension board meeting 10-27 following the trustee's most recent election or appointment, take 11-1 an oath of office that the trustee: 11-2 (1) will diligently and honestly administer the 11-3 pension system; and 11-4 (2) will not knowingly violate this Act or willingly 11-5 allow a violation of this Act to occur. 11-6 (m) A trustee serves without bond unless otherwise required 11-7 by law and may not receive compensation for service on the pension 11-8 board. The pension board by resolution may adopt a policy for 11-9 removal of a trustee. 11-10 (n) The person serving as a trustee under Subsection (c)(2) 11-11 of this section serves as the treasurer of the pension fund under 11-12 penalty of that person's official bond and oath of office. That 11-13 person's official bond to the city shall cover the person's 11-14 position as treasurer of the pension fund, and that person's 11-15 sureties are liable for the treasurer's actions pertaining to the 11-16 pension fund to the same extent as the sureties are liable under 11-17 the terms of the bond for other actions and conduct of the 11-18 treasurer. 11-19 (o) The pension board shall receive, manage, and disburse 11-20 the pension fund as provided by this Act and rules adopted by the 11-21 pension board. 11-22 (p) In each odd-numbered year, the pension board shall elect 11-23 from the elected trustees a chair, vice chair, and secretary. 11-24 (q) The pension board shall hold regular monthly meetings at 11-25 a time and place set by the chair. The chair, the secretary, or a 11-26 majority of the trustees may call a special meeting of the pension 11-27 board. 12-1 (r) The city shall allow city employees who are trustees to 12-2 promptly attend all pension board and committee meetings. The city 12-3 shall allow trustees the time required to travel to and attend 12-4 educational workshops, legislative hearings, and meetings regarding 12-5 proposed amendments to this Act if attendance is consistent with a 12-6 trustee's duty to the pension board. 12-7 (s) Notice shall be given to all trustees of the pension 12-8 board, unless waived in writing, as to any proposed meeting by any 12-9 method reasonably calculated to give adequate notice of the 12-10 meeting. The notice may be delivered by mail, personal delivery, 12-11 or electronically transmitted notice, including facsimile, and 12-12 shall be properly addressed to each trustee. If a meeting occurs 12-13 that all trustees of the pension board attend, notice is not 12-14 necessary under this subsection. 12-15 (t) Each trustee is entitled to one vote on the pension 12-16 board. A majority of concurring votes present at any meeting of 12-17 the pension board is needed for a decision by the trustees. A 12-18 majority of the trustees is a quorum. A trustee who is a member 12-19 may not vote on any issue relating specifically to that trustee. 12-20 (u) The city shall provide full and timely information to 12-21 the pension board about employees as reasonably required by the 12-22 pension board to administer the pension fund and provide benefits 12-23 properly, including information relating to the hiring of 12-24 employees, members' service dates, compensation of members, 12-25 members' deaths, and terminations of employment. 12-26 (v) The pension board may purchase from an insurer licensed 12-27 to do business in this state an insurance policy that provides for 13-1 reimbursement of a trustee, officer, or employee of the pension 13-2 board for liability imposed for damages caused by an alleged act, 13-3 error, or omission committed in the individual's capacity as 13-4 fiduciary or cofiduciary of assets of the pension fund and for 13-5 costs and expenses incurred by a fiduciary or cofiduciary in 13-6 defense of a claim of an alleged act, error, or omission. A policy 13-7 of insurance purchased under this subsection may not provide for 13-8 reimbursement of a trustee, officer, or employee of the pension 13-9 board for liability imposed or expenses incurred because of the 13-10 individual's personal dishonesty, fraudulent breach of trust, lack 13-11 of good faith, intentional fraud or deception, or intentional 13-12 failure to act prudently. The cost of insurance coverage purchased 13-13 under this subsection shall be paid from money in the pension fund. 13-14 (w) If the insurance described in Subsection (v) of this 13-15 section is not in effect, the pension board may indemnify a 13-16 trustee, officer, or employee of the pension board for liability 13-17 imposed as damages because of an alleged act, error, or omission 13-18 committed in the individual's capacity as fiduciary or cofiduciary 13-19 of assets of the pension fund and for reasonable costs and expenses 13-20 incurred by a fiduciary or a cofiduciary in defense of a claim of 13-21 an alleged act, error, or omission. Indemnification may not extend 13-22 to liability imposed or expenses incurred by a trustee, officer, or 13-23 employee of the pension board because of the individual's personal 13-24 dishonesty, fraudulent breach of trust, lack of good faith, 13-25 intentional fraud or deception, or intentional failure to act 13-26 prudently. A determination of indemnification shall be made by a 13-27 majority vote of the pension board. If a proposed indemnification 14-1 is of a trustee, that trustee may not vote on the matter. In the 14-2 event the vote of the pension board results in a tie, the 14-3 indemnification shall be approved. The pension board may adopt a 14-4 policy establishing a method for presentation, approval, and 14-5 payment of claims for indemnification. Indemnification approved 14-6 under this subsection extends to acts, errors, and omissions of 14-7 trustees, officers, or employees of the predecessor system as long 14-8 as the alleged act, error, or omission occurs after July 1, 1989. 14-9 (x) The pension board shall manage the pension fund under 14-10 this Act and under the Internal Revenue Code of 1986, as amended, 14-11 and may: 14-12 (1) adopt, for the administration of the pension fund, 14-13 written rules and guidelines; 14-14 (2) interpret and construe this Act and any summary 14-15 plan, descriptions, or benefits procedures, except that each 14-16 construction must meet any qualification requirements established 14-17 under Section 401, Internal Revenue Code of 1986, as amended; 14-18 (3) correct any defect, supply any omission, and 14-19 reconcile any inconsistency that appears in this Act in a manner 14-20 and to the extent that the pension board considers expedient to 14-21 administer this Act for the greatest benefit of all members; 14-22 (4) determine all questions, whether legal or factual, 14-23 relating to eligibility for membership, service, or benefits or 14-24 relating to the administration of the pension fund to promote the 14-25 uniform administration of the pension fund for the benefit of all 14-26 members and retirees; and 14-27 (5) establish and maintain records necessary or 15-1 appropriate for the proper administration of the pension fund. 15-2 (y) The determination of any fact by the pension board and 15-3 the pension board's interpretation of this Act are final and 15-4 binding on any interested party, including members, deferred 15-5 participants, retirees, eligible survivors, beneficiaries, and the 15-6 city. 15-7 (z) The pension board shall determine the prior service to 15-8 be credited to each member of the pension system based on: 15-9 (1) the personnel records of the city; or 15-10 (2) affidavits, if the personnel records are 15-11 incomplete. 15-12 (aa) The pension board shall determine each member's 15-13 credited service based on the personnel and financial records of 15-14 the city and the records of the pension board. 15-15 (bb) The trustees and the executive director may rely on: 15-16 (1) tables, valuations, certificates, and reports 15-17 furnished by any actuary employed by the pension board; 15-18 (2) certificates and reports made by an accountant 15-19 selected or approved by the pension board; 15-20 (3) any report furnished by the treasurer; and 15-21 (4) opinions given by any legal counsel selected or 15-22 approved by the pension board. 15-23 (cc) The trustees, executive director, and employees of the 15-24 pension system are fully protected and free of liability for any 15-25 action taken or suffered by them in good faith in reliance on the 15-26 actuary, accountant, treasurer, or counsel, and the action is 15-27 conclusively binding on all employees, members, deferred 16-1 participants, retirees, eligible survivors, beneficiaries, and 16-2 other persons. 16-3 (dd) A gathering of any number of trustees to investigate, 16-4 research, or review prospective or current investments, without 16-5 formal action by the trustees, is not a deliberation or meeting 16-6 under Chapter 551, Government Code, and is not required to be open 16-7 to the public. 16-8 SECTION 3. ADDITIONAL POWERS OF PENSION BOARD. (a) If the 16-9 pension board determines that there is a surplus of funds in an 16-10 amount exceeding the current obligations of the pension fund, the 16-11 pension board may invest the surplus in the manner provided by 16-12 Chapter 802, Government Code. 16-13 (b) The pension board may contract with a person to perform 16-14 any investment, administrative, legal, medical, accounting, 16-15 clerical, or other service the pension board considers appropriate, 16-16 including: 16-17 (1) a certified public accountant or firm of certified 16-18 public accountants to perform an audit of the pension fund at times 16-19 and intervals the pension board considers necessary; 16-20 (2) a professional investment manager or firm of 16-21 managers as provided by Section 802.204, Government Code; 16-22 (3) an actuary or actuarial firm at times and for 16-23 purposes the pension board considers appropriate; and 16-24 (4) an attorney or law firm to advise, assist, or 16-25 represent the pension board in any legal matter relating to the 16-26 pension fund. 16-27 (c) A fee for a service or person contracted with under 17-1 Subsection (b) of this section may be paid from the pension fund. 17-2 (d) The pension board may hire employees as the pension 17-3 board considers advisable for the proper and efficient 17-4 administration of the system, including persons described in 17-5 Subsection (b) of this section, whose positions and salaries shall 17-6 be set by the pension board. 17-7 (e) The executive director hired by the pension board is the 17-8 plan administrator. 17-9 (f) The pension board shall compensate from the pension fund 17-10 the persons performing services under Subsections (d) and (e) of 17-11 this section and may provide other employee benefits that the 17-12 pension board considers proper. Any person employed by the pension 17-13 board under Subsection (d) or (e) of this section who has service 17-14 credits with the pension system at the time of the person's 17-15 employment by the pension board retains the person's status in the 17-16 pension system. Any person employed by the pension system who does 17-17 not have service credits with the pension system at the time of 17-18 employment is a group A member. The pension board shall adopt a 17-19 detailed annual budget detailing its proposed administrative 17-20 expenditures under this subsection for the next fiscal year. 17-21 (g) The pension board may institute legal action in the name 17-22 of the pension board on behalf of the pension system, including a 17-23 civil action to recover from any offending party, or from the 17-24 party's surety, money paid out or obtained from the pension fund 17-25 through fraud, misrepresentation, defalcation, theft, embezzlement, 17-26 or misapplication. 17-27 (h) The pension board may offset amounts received wrongly or 18-1 in error by a member, deferred participant, retiree, eligible 18-2 survivor, alternate payee, or beneficiary from future pension or 18-3 benefit payments payable to the person or the person's 18-4 beneficiaries. 18-5 (i) On written request from the chair, the city attorney 18-6 shall represent the pension board or the pension fund in any legal 18-7 matter. The city attorney may not be compensated from the pension 18-8 fund for providing representation. The pension board may employ, 18-9 if necessary, legal counsel instead of the city attorney or to 18-10 assist the city attorney and may pay reasonable compensation from 18-11 the pension fund. 18-12 (j) The pension board may obtain from any member, deferred 18-13 participant, retiree, eligible survivor, alternate payee, or 18-14 beneficiary any information the pension board considers necessary 18-15 for the proper administration of the pension system. The pension 18-16 board may require any member, survivor, or other person or entity 18-17 to furnish information the pension board requires for the 18-18 determination of benefits under this Act. If a person or entity 18-19 does not cooperate in the furnishing or obtaining of information, 18-20 the pension board may withhold payment of the pension or other 18-21 benefits until the pension board receives the information. 18-22 (k) On majority vote of the trustees, the pension board may 18-23 allocate among the trustees the responsibilities of the pension 18-24 board under this Act and may designate any person who is not a 18-25 trustee, including the executive director and other employees, to 18-26 carry out the responsibilities of the pension board under this Act. 18-27 (l) The pension board may by resolution make the 19-1 implementation of a provision of this Act contingent on receipt of 19-2 a favorable private letter ruling or favorable determination letter 19-3 from the Internal Revenue Service if the pension board determines 19-4 that the action is in the best interest of the pension system. 19-5 (m) It is intended that this Act be construed and 19-6 administered in a manner so that the pension system's benefit plan 19-7 will be considered a qualified plan under Section 401(a), Internal 19-8 Revenue Code of 1986, as amended. The pension board may adopt 19-9 rules that qualify the plan to the extent necessary for the pension 19-10 system to be a qualified plan. Rules adopted by the pension board 19-11 under this subsection are considered a part of the plan. In 19-12 determining qualification status under Section 401(a), Internal 19-13 Revenue Code of 1986, as amended, the pension system's benefit plan 19-14 shall be considered the primary retirement plan for members of the 19-15 pension system. 19-16 SECTION 4. INELIGIBLE INDIVIDUALS. Notwithstanding any 19-17 other provision of this Act, the following employees of the city or 19-18 of the pension system are not eligible to become members of the 19-19 pension system: 19-20 (1) persons on quasi-legislative, quasi-judicial, and 19-21 advisory pension boards and commissions; 19-22 (2) part-time employees, as defined by the city, other 19-23 than elected officials whose service is made part-time by law or 19-24 charter; 19-25 (3) seasonal employees; 19-26 (4) independent contractors, including consultants; 19-27 and 20-1 (5) employees in positions covered by any other 20-2 pension plan of the city to which the city contributes, including 20-3 employees who are excluded from membership in another pension plan 20-4 by action of the board of trustees of the other pension plan, 20-5 except to the extent that they are covered in another pension plan 20-6 only as a beneficiary. 20-7 SECTION 5. INDIVIDUALS ELIGIBLE FOR MEMBERSHIP. (a) 20-8 Individuals described in this section are eligible for membership 20-9 under this Act. 20-10 (b) Except as provided by Subsection (c) of this section and 20-11 Sections 4 and 6 of this Act, an employee is a group A member of 20-12 the pension system as a condition of employment if the employee: 20-13 (1) is hired or rehired as an employee by the city, 20-14 the predecessor system, or the pension system on or after September 20-15 1, 1999; 20-16 (2) was a member of the predecessor system before 20-17 September 1, 1981, under the terms of Chapter 358, Acts of the 48th 20-18 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas 20-19 Civil Statutes), and did not make an election before December 1, 20-20 1981, under Section 22(a) of that Act to receive a refund of 20-21 contributions and become a group B member; 20-22 (3) was a group A member who terminated employment 20-23 included in the predecessor system before May 3, 1991, elected 20-24 under Section 16, Chapter 358, Acts of the 48th Legislature, 20-25 Regular Session, 1943 (Article 6243g, Vernon's Texas Civil 20-26 Statutes), to leave the member's contributions in that pension 20-27 fund, met the minimum service requirements for retirement at an 21-1 attained age, was reemployed in a position included in the 21-2 predecessor system before September 1, 1999, and elected, not later 21-3 than the 30th day after the date reemployment began, to continue as 21-4 a group A member; 21-5 (4) became a member of, or resumed membership in, the 21-6 predecessor system as an employee or elected official of the city 21-7 after January 1, 1996, and before September 1, 1999, and elected by 21-8 submission of a signed and notarized form in a manner determined by 21-9 the pension board to become a group A member and to contribute a 21-10 portion of the person's salary to the pension fund as required by 21-11 Chapter 358, Acts of the 48th Legislature, Regular Session, 1943 21-12 (Article 6243g, Vernon's Texas Civil Statutes); or 21-13 (5) met the requirements of Section 3B, Chapter 358, 21-14 Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g, 21-15 Vernon's Texas Civil Statutes), or Subsection (f) of this section 21-16 for membership in group A. 21-17 (c) Except as otherwise provided by this section or Section 21-18 4 of this Act, an employee continues as a group B member of the 21-19 pension system as a condition of employment if the employee: 21-20 (1) was hired or rehired by the city or the 21-21 predecessor system after September 1, 1981, and before September 1, 21-22 1999, and did not make an election under Section 3A, Chapter 358, 21-23 Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g, 21-24 Vernon's Texas Civil Statutes), to become a group A member; or 21-25 (2) was a member of the predecessor system before 21-26 September 1, 1981, under the terms of Chapter 358, Acts of the 48th 21-27 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas 22-1 Civil Statutes), and made an election before December 1, 1981, 22-2 under Section 22 of that Act to receive a refund of contributions 22-3 and become a group B member. 22-4 (d) Except as otherwise provided by this section, Section 4 22-5 or 6 of this Act, or Section 22A, Chapter 358, Acts of the 48th 22-6 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas 22-7 Civil Statutes), any employee of the city or of the pension system 22-8 who is an executive official as defined by Section 6 of this Act is 22-9 a group C member of the pension system. A group C member is 22-10 subject to the same provisions that apply to group A members except 22-11 as otherwise provided by Section 6 of this Act. 22-12 (e) Any member or former member of the pension system 22-13 elected to an office of the city on or after September 1, 1999, 22-14 becomes a group A member and is eligible to receive credit for all 22-15 previous service on the same conditions as reemployed group A 22-16 members under Sections 7(c), (d), (e), and (f) of this Act, except 22-17 as otherwise provided by this Act. Notwithstanding any other 22-18 provision in this Act or in Chapter 358, Acts of the 48th 22-19 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas 22-20 Civil Statutes), consecutive terms of office of any elected member 22-21 who is elected to an office of the city are considered to be 22-22 continuous employment for purposes of this Act. 22-23 (f) Each group B member of the pension system may make an 22-24 irrevocable election on a date and in a manner determined by the 22-25 pension board to change membership from group B to group A: 22-26 (1) for future service only; or 22-27 (2) for future service and to convert all past group B 23-1 service to group A service and comply with the requirements of 23-2 Subsection (h) of this section. 23-3 (g) Each group A member with service in group B may make an 23-4 irrevocable election on a date and in a manner determined by the 23-5 pension board to convert all group B service to group A service and 23-6 to comply with the requirements of Subsection (h) of this section. 23-7 (h) A member who makes an election under Subsection (f) or 23-8 (g) of this section must pay into the pension fund all 23-9 contributions that would have been deducted as member contributions 23-10 to group A during the period that the person was a group B member, 23-11 as computed under Section 7(c), (d), (e), or (f) of this Act, 23-12 including required interest. Payment of these amounts must be 23-13 completed before the earliest of the date of the termination of the 23-14 member's employment or term in office, the date of the member's 23-15 retirement or death, or the fifth anniversary of the date of the 23-16 member's election under this section. If the payments are not 23-17 completed by that date, the member or the member's estate may 23-18 either make an immediate payment of the balance due or receive a 23-19 refund, without interest, of the amount the member paid as 23-20 contributions to group A for the period that the person was a group 23-21 B member. If a refund is paid under this subsection and the member 23-22 made the election under Subsection (f) of this section, the member 23-23 is considered to have been a group B member during the period 23-24 preceding the member's election and to have been a group A member 23-25 since the date of the member's election. If a refund is paid under 23-26 this subsection and the member made the election under Subsection 23-27 (g) of this section, all of the group B service that the member had 24-1 elected to convert to group A service reverts back to group B 24-2 service. 24-3 (i) A member who makes an election under Subsection (f)(1) 24-4 or (2) of this section shall pay required contributions under 24-5 Section 8 of this Act for all service after the date of the 24-6 election. 24-7 SECTION 6. GROUP C MEMBERSHIP, SERVICE REQUIREMENTS, AND 24-8 BENEFITS. (a) A group C member is subject to the provisions that 24-9 apply to group A members under this Act, except as otherwise 24-10 provided by this section. 24-11 (b) In this section: 24-12 (1) "Credited service" means the number of whole and 24-13 fractional years of a member's eligible service in group C as an 24-14 executive official after the executive official's effective date of 24-15 participation in group C for which member and employer 24-16 contributions are on deposit with the pension fund. 24-17 (2) "Effective date of participation in group C" means 24-18 September 1, 1999, except that for an employee who first becomes an 24-19 executive official and whose contributions to group C begin after 24-20 that date, the effective date of participation in group C is the 24-21 first date on which the employee qualifies as an executive official 24-22 and for which applicable contributions are made for service in 24-23 group C as an executive official. 24-24 (3) "Executive official" means a person in one of the 24-25 following categories: 24-26 (A) the chief administrative officer of the 24-27 city; 25-1 (B) the executive director of the pension 25-2 system; or 25-3 (C) a full-time appointed director of a 25-4 department of the city as designated by the governing body of the 25-5 city and approved by the pension board, other than a director who 25-6 is covered by another pension system to which the city contributes 25-7 or an acting director or the equivalent. 25-8 (4) "Group C" means the executive officials' plan 25-9 established under Chapter 358, Acts of the 48th Legislature, 25-10 Regular Session, 1943 (Article 6243g, Vernon's Texas Civil 25-11 Statutes), and reenacted and continued under this Act. 25-12 (c) An executive official becomes a member of group C on the 25-13 official's effective date of participation in group C, except that 25-14 a group A or group B member who is participating in the DROP under 25-15 Section 12 of this Act is ineligible to become a member of group C. 25-16 (d) A group C member receives two times the number of actual 25-17 years of credited service in group C solely for the purpose of 25-18 fulfilling the eligibility requirements for a deferred or normal 25-19 retirement pension in group C as provided by Subsection (e) of this 25-20 section. For all other computations under this Act, the actual 25-21 years of credited service in group C are used. 25-22 (e) A group C member who ceases to be an executive official 25-23 is eligible for a deferred or normal retirement pension beginning 25-24 on the member's effective retirement date when the member separates 25-25 from service and: 25-26 (1) fulfills the requirement for years of age and 25-27 years of credited service for a normal retirement pension under 26-1 Section 10(b) of this Act; or 26-2 (2) attains 65 years of age with any amount of group C 26-3 credited service. 26-4 (f) For purposes of group C service under this section, the 26-5 amount of the monthly: 26-6 (1) normal retirement pension for a group C member 26-7 equals the member's average monthly salary multiplied by two times 26-8 the benefit accrual rate in effect for group A members and that 26-9 product multiplied by the group C member's actual years of credited 26-10 service in group C; 26-11 (2) deferred retirement pension for a group C member 26-12 is computed under Subdivision (1) of this subsection, but based on 26-13 the member's average monthly salary and actual years of credited 26-14 service as of the member's last day of credited service and subject 26-15 to the provisions of this Act in effect on the member's last day of 26-16 credited service; 26-17 (3) ordinary disability pension for a group C member 26-18 under Section 13 of this Act is computed under Subdivision (1) of 26-19 this subsection; 26-20 (4) service disability pension for a group C member 26-21 under Section 13 of this Act is the greater of: 26-22 (A) the amount computed under Subdivision (1) of 26-23 this subsection; or 26-24 (B) the amount computed under Section 13(b) of 26-25 this Act; and 26-26 (5) survivor benefit for any eligible survivor of a 26-27 deceased group C member under Section 14(b) of this Act is computed 27-1 under Section 14(b), but based on the ordinary disability benefit 27-2 as computed under Subdivision (3) of this subsection. 27-3 (g) Any previous service of a group C member in group A or 27-4 group B is governed by the applicable group A or group B provisions 27-5 of this Act and may not be credited to group C, except as provided 27-6 in Subsection (i) of this section. Group C service may not be 27-7 credited to group A or group B. 27-8 (h) This section applies to a member only while the member 27-9 is an eligible executive official. A member who ceases to be an 27-10 executive official and transfers to or is rehired into a municipal 27-11 position covered by group A participates in group A, does not 27-12 forfeit group C service, and remains eligible for normal retirement 27-13 for group C service as provided under Subsection (e) of this 27-14 section. A former group C member is not eligible to participate in 27-15 group B. 27-16 (i) A group C member who has at least two years of 27-17 continuous credited service in group C is eligible to receive 27-18 credited service in group C, on application in a manner determined 27-19 by the pension board, for all periods of service before the group C 27-20 member's effective date of participation in group C in which the 27-21 member has otherwise met the definition of "executive official" 27-22 under Subsection (b)(3) of this section, provided that: 27-23 (1) if the service was in group A, the group C member 27-24 may not have received a refund of contributions unless the group C 27-25 member repaid refunded contributions under Sections 7(c), (d), (e), 27-26 and (f) of this Act or Section 5(j), Chapter 358, Acts of the 48th 27-27 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas 28-1 Civil Statutes); and 28-2 (2) if service was in group B, the group C member must 28-3 elect, at a time and in a manner determined by the pension board, 28-4 to purchase the service into group C and must purchase the service 28-5 in the same manner as the service would be purchased into group A 28-6 under Section 5(f) of this Act. 28-7 (j) If payments under Subsection (i)(1) of this section are 28-8 not timely made, the group C member may not receive credited 28-9 service in group C under this section for group A service. If 28-10 required payments under Subsection (i)(2) of this section are not 28-11 timely made, the group C member may not receive credited service in 28-12 group C under this section for group B service. 28-13 SECTION 7. SERVICE; CREDITED SERVICE. (a) Notwithstanding 28-14 any other provision of this Act, duplication of service or credited 28-15 service in group A, B, or C of the pension system or in the pension 28-16 system and any other defined benefit pension plan to which the city 28-17 contributes is prohibited. 28-18 (b) A member's service begins on the date the member first 28-19 performs services for the city, the pension system, or the 28-20 predecessor system as an eligible employee on or after September 1, 28-21 1943. A member's period of service terminates on the earliest of 28-22 the date of the member's: 28-23 (1) retirement; 28-24 (2) death; 28-25 (3) resignation; 28-26 (4) discharge; or 28-27 (5) other cessation of actual performance of services 29-1 for the city or for the pension system, other than an authorized 29-2 absence. 29-3 (c) Except as provided by Section 12 of this Act, a group A 29-4 member may pay into the pension fund and obtain credit for any 29-5 service with the city or the pension system for which credit is 29-6 otherwise allowable in group A under this Act, except that: 29-7 (1) no contributions were made by the member for the 29-8 service; or 29-9 (2) refunded contributions attributable to the service 29-10 have not been subsequently repaid. 29-11 (d) To establish service described by Subsection (c) of this 29-12 section that occurred before September 1, 1999, the member shall 29-13 pay a sum computed at the rate of four percent of the member's 29-14 salary, and the city shall pay into the pension fund an amount 29-15 equal to 18 percent of that salary for the same period. 29-16 (e) To establish service described by Subsection (c) of this 29-17 section that occurred on or after September 1, 1999, the member 29-18 shall pay a sum computed by multiplying the member's salary during 29-19 the service by the rate established by the pension board for member 29-20 contributions under Section 8 of this Act, and the city shall pay 29-21 into the pension fund an amount equal to the rate established for 29-22 city contributions under Section 8 of this Act multiplied by that 29-23 member's salary for the same period. 29-24 (f) In addition to the amounts to be paid by the member 29-25 under Subsection (d) or (e) of this section, the member shall also 29-26 pay interest on those amounts at the rate of six percent per year, 29-27 not compounded, from the date the contributions would have been 30-1 deducted, if made, or from the date contributions were refunded to 30-2 the date of repayment of those contributions into the pension fund. 30-3 (g) If a group B member separates from service before 30-4 completing five years of credited service, the member's service 30-5 credit is canceled at the time of separation. If the member is 30-6 reemployed by the city before the first anniversary of the date of 30-7 separation, all credit for previous service is restored. Any 30-8 member whose service credit is canceled under this subsection and 30-9 who is reemployed by the city after the first anniversary of the 30-10 date of separation receives one year of previous service credit in 30-11 group B for each full year of subsequent service up to the amount 30-12 of the previous service that was canceled. 30-13 (h) A group B member who was a group A member before 30-14 September 1, 1981, and who was eligible to purchase credit for 30-15 previous service under Chapter 358, Acts of the 48th Legislature, 30-16 Regular Session, 1943 (Article 6243g, Vernon's Texas Civil 30-17 Statutes), may purchase the service credit in group B by paying 30-18 into the pension fund an amount equal to six percent per year, not 30-19 compounded, on any contributions previously withdrawn for the 30-20 period from the date of withdrawal to the date of purchase. 30-21 SECTION 8. CONTRIBUTIONS. (a) Each group A member of the 30-22 pension system shall make monthly contributions during employment 30-23 in an amount determined by the pension board and expressed as a 30-24 percentage of salary. The contributions shall be deducted by the 30-25 employer from the salary of each member and paid to the pension 30-26 system for deposit in the pension fund. 30-27 (b) This section does not increase or decrease the 31-1 contribution obligation of any member that arose before September 31-2 1, 2001, or give rise to any claim for a refund for any 31-3 contributions made before that date. 31-4 (c) The employer shall pick up the contributions required of 31-5 group A members by Subsection (a) of this section for all salaries 31-6 earned after the effective date of this Act. The city shall pay the 31-7 pickup contributions to the pension system from the same source of 31-8 funds that is used for paying salaries to the members. The pickup 31-9 contributions are in lieu of contributions by group A members. The 31-10 city may pick up those contributions by a deduction from each group 31-11 A member's salary equal to the amount of the member's contributions 31-12 picked up by the city. Members may not choose to receive the 31-13 contributed amounts directly instead of having the contributed 31-14 amounts paid by the city to the pension system. An accounting of 31-15 member contributions picked up by the employer shall be maintained, 31-16 and the contributions shall be treated for all other purposes as if 31-17 the amount were a part of the member's salary and had been deducted 31-18 under this section. Contributions picked up under this subsection 31-19 shall be treated as employer contributions in determining tax 31-20 treatment of the amounts under the Internal Revenue Code of 1986, 31-21 as amended. 31-22 (d) The city shall make periodic payments into the pension 31-23 fund in an amount equal to the percentage contribution rate 31-24 multiplied by the combined salaries of all group A and group B 31-25 members of the pension fund. The contribution rate, expressed as a 31-26 percentage, shall be based on the results of actuarial valuations 31-27 made at least every three years. The city's contribution rate 32-1 shall consist of the normal cost plus the level percentage of 32-2 salary payments required to amortize the unfunded actuarial 32-3 liability over a period of 40 years from January 1, 1983, computed 32-4 on the basis of an actuarial reserve funding method approved by the 32-5 pension board. Notwithstanding any other provision of this Act, 32-6 the city's contribution rate, when added to any contributions with 32-7 respect to a qualified governmental excess benefit arrangement 32-8 maintained in accordance with Section 24 of this Act, may not be an 32-9 amount less than the greater of 10 percent of the combined salaries 32-10 of all members or two times the contribution rate of group A 32-11 members as provided in Subsection (a) of this section. 32-12 SECTION 9. CONTRIBUTION REFUNDS. (a) If any member's 32-13 employment by the city or the pension system is terminated for 32-14 other than a service disability before the completion of five years 32-15 of service with the city or the pension system, the member is not 32-16 eligible to receive a pension. 32-17 (b) The system shall refund to the terminated member the 32-18 amount paid by the member into the pension fund through salary 32-19 deduction or other authorized contributions, without interest, as 32-20 provided by Section 17 of this Act. 32-21 (c) If a member dies and there are no eligible survivors to 32-22 receive the allowance provided for in Section 14 of this Act, the 32-23 member's beneficiary or, if there is no beneficiary, the member's 32-24 estate shall receive the refund amount. 32-25 SECTION 10. NORMAL RETIREMENT PENSION. (a) For purposes of 32-26 this section, a pension under this section is referred to as a 32-27 normal retirement pension. 33-1 (b) A group A or group B member of the pension system who 33-2 terminates employment is eligible for a normal retirement pension 33-3 beginning on the member's effective retirement date after the date 33-4 the member completes at least five years of credited service and 33-5 attains either: 33-6 (1) 62 years of age; or 33-7 (2) a combination of years of age and years of 33-8 credited service, including parts of years, the sum of which equals 33-9 the number 70. 33-10 (c) A group C member of the pension system who terminates 33-11 employment is eligible for a normal retirement pension beginning on 33-12 the member's effective retirement date as provided by Section 6(e) 33-13 of this Act. 33-14 (d) The amount of the monthly normal retirement pension 33-15 payable to an eligible retired group A member is equal to the 33-16 member's average monthly salary multiplied by 3-1/4 percent for 33-17 each year of the member's years of credited service in group A 33-18 during the member's first 10 years of service, 3-1/2 percent for 33-19 each of the member's years of credited service in group A during 33-20 the member's next 10 years of service, and 4-1/4 percent for each 33-21 year of credited service of the member in group A during the 33-22 member's years of service in excess of 20 years. For purposes of 33-23 this subsection, service credit is rounded to the nearest 33-24 one-twelfth of a year. The normal retirement pension of a retired 33-25 group A member may not exceed 90 percent of the member's average 33-26 monthly salary. 33-27 (e) The amount of the monthly normal retirement pension 34-1 payable to an eligible retired group B member equals the member's 34-2 average monthly salary multiplied by 1-3/4 percent for each year of 34-3 the member's years of credited service in group B during the 34-4 member's first 10 years of service, 2 percent for each of the 34-5 member's years of credited service in group B during the member's 34-6 next 10 years of service, and 2-3/4 percent for each year of 34-7 credited service of the member in group B during the member's years 34-8 of service in excess of 20 years. For purposes of this subsection, 34-9 service credit is rounded to the nearest one-twelfth of a year. 34-10 The normal retirement pension of a retired group B member may not 34-11 exceed 90 percent of the member's average monthly salary. 34-12 (f) The amount of the monthly normal retirement pension 34-13 payable to a retired group C member is computed as provided by 34-14 Section 6 of this Act. 34-15 (g) Notwithstanding any other provision of this Act, the 34-16 total normal retirement pension of a retired member with credited 34-17 service in group A, group B, or group C may not exceed 90 percent 34-18 of the member's average monthly salary. 34-19 (h) For future payments only, pension and survivor benefits 34-20 for all retirees and eligible survivors shall be increased annually 34-21 by four percent, not compounded, for all persons receiving a 34-22 pension or survivor benefit as of January 1 of the year in which 34-23 the increase is made. 34-24 (i) A member receiving a normal retirement pension is 34-25 considered to have resigned and shall be removed from the regular 34-26 full-time employment rolls of the city or the pension system not 34-27 later than the day before the member's effective retirement date. 35-1 SECTION 11. GROUP B RETIREMENT OPTIONS. (a) A group B 35-2 member who terminated employment with the city or the predecessor 35-3 system before September 1, 1997, must elect before the member's 35-4 effective retirement date whether to have the member's normal 35-5 retirement pension or early retirement pension paid under one of 35-6 the options provided by Subsection (b) of this section. The 35-7 election may be revoked, in a manner and at a time established by 35-8 the pension board, not later than the 60th day before the member's 35-9 effective retirement date. 35-10 (b) The normal retirement pension or early retirement 35-11 pension may be one of the following actuarially equivalent amounts: 35-12 (1) option 1: a reduced pension payable to the member, 35-13 then on the member's death one-half of the amount of that reduced 35-14 pension is payable to the member's designated survivor, for life; 35-15 (2) option 2: a reduced pension payable to the member, 35-16 then on the member's death that same reduced pension is payable to 35-17 the member's designated survivor, for life; and 35-18 (3) option 3: a reduced pension payable to the member, 35-19 and if the member dies within 10 years, the pension is paid to the 35-20 member's designated survivor for the remainder of the 10-year 35-21 period beginning on the member's effective retirement date. 35-22 (c) If a former group B member who has made the election 35-23 provided by Subsection (b) of this section dies after terminating 35-24 employment with at least five years of credited service but before 35-25 attaining the age required to begin receiving a normal or early 35-26 retirement pension, the person's designated survivor is eligible 35-27 for the benefits provided by the option selected by the former 36-1 member at the time of separation from service. The benefits first 36-2 become payable to an eligible designated survivor on the date the 36-3 former member would have become eligible to begin receiving a 36-4 pension. 36-5 (d) If a former group B member under Subsection (a) of this 36-6 section does not elect one of the options under Subsection (b) of 36-7 this section, a survivor benefit is not payable. 36-8 SECTION 12. DEFERRED RETIREMENT OPTION PLAN. (a) In this 36-9 section: 36-10 (1) "DROP" means the deferred retirement option plan 36-11 established under Chapter 358, Acts of the 48th Legislature, 36-12 Regular Session, 1943 (Article 6243g, Vernon's Texas Civil 36-13 Statutes), and reenacted and continued under this Act. 36-14 (2) "DROP account" means a notional account 36-15 established for a DROP participant that is used solely as an 36-16 accounting convention to aid in the computation of the DROP 36-17 participant's DROP benefit. The DROP account may only be used for 36-18 accounting purposes, and there is no actual separation of assets of 36-19 the pension fund before the distribution of the DROP participant's 36-20 DROP benefit. 36-21 (3) "DROP benefit" means a DROP participant's total 36-22 DROP account balance at the time the DROP participant terminates 36-23 employment. 36-24 (4) "DROP election date" means the date the pension 36-25 system receives a member's election to participate in the DROP in 36-26 the manner and form determined by the pension system and approved 36-27 by the pension board. 37-1 (5) "DROP entry date" means the date a member ceases 37-2 to earn service credit and begins earning credit for the member's 37-3 DROP account, which is the later of the date the member is eligible 37-4 to participate in the DROP, the date requested by the member, or 37-5 October 1, 1997, as approved by the pension board. The DROP entry 37-6 date is the first day of a month and is determined by the normal 37-7 retirement eligibility requirements of this Act or of Chapter 358, 37-8 Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g, 37-9 Vernon's Texas Civil Statutes), as applicable, in effect on the 37-10 requested DROP entry date. 37-11 (6) "DROP participant" means a pension system member 37-12 who is participating in the DROP. 37-13 (b) A member who is eligible to receive a normal retirement 37-14 pension under this Act and who is in active service with the city 37-15 or the pension system, or a person who is eligible to receive a 37-16 normal retirement pension under this Act and who has been separated 37-17 from service for less than 30 days and has not otherwise been 37-18 granted a pension or benefit, may file with the pension system an 37-19 election to participate in the DROP and receive a DROP benefit 37-20 under procedures established by the pension board. An election to 37-21 participate in the DROP is irrevocable except as provided by 37-22 Subsection (j) of this section. 37-23 (c) A member who is required to make payments to the pension 37-24 system to purchase service or to convert service is eligible to 37-25 participate in the DROP only to the extent that the member is 37-26 eligible to participate in the DROP without regard to the service 37-27 covered by the payment obligation, but must complete the 38-1 obligation. If the payment obligation is not fully met, the 38-2 member's participation in the DROP is determined as though the 38-3 payment obligation was not entered into. A member who is 38-4 participating in the DROP may not change membership from one group 38-5 to another group, convert service from one group to another group, 38-6 purchase service credit, or make a claim to purchase military 38-7 service. 38-8 (d) Credited service and normal retirement benefits cease to 38-9 accrue on the day preceding the member's DROP entry date. The 38-10 period of a member's DROP participation, unless revoked as provided 38-11 by Subsection (j) of this section, begins on the DROP participant's 38-12 DROP entry date and ends on the date of the DROP participant's last 38-13 day of active service with the city or the pension system. On the 38-14 first day of the month following the month in which the pension 38-15 board approves the member's DROP election, the DROP election 38-16 becomes effective and the pension board shall establish a DROP 38-17 account for the DROP participant. For each month during the period 38-18 of DROP participation before a DROP participant's termination of 38-19 employment, the following amounts shall be credited to the DROP 38-20 participant's DROP account, including prorated amounts for partial 38-21 months of service: 38-22 (1) an amount equal to what would have been the DROP 38-23 participant's monthly normal retirement benefit if the DROP 38-24 participant had retired on the DROP participant's DROP entry date, 38-25 except that the monthly amount shall be computed based on the DROP 38-26 participant's credited service and average monthly salary as of the 38-27 DROP entry date and the benefit accrual rates and maximum allowable 39-1 benefit applicable on the DROP election date, with the 39-2 cost-of-living adjustments that would apply if the DROP participant 39-3 had retired on the DROP participant's DROP entry date; 39-4 (2) for a group A member, the member's contributions 39-5 to the pension fund required under Section 8 of this Act during the 39-6 member's participation in the DROP; and 39-7 (3) interest on the DROP participant's DROP account 39-8 balance computed at a rate determined by the pension board and 39-9 compounded at intervals designated by the pension board, but at 39-10 least once in each 13-month period. 39-11 (e) The monthly amount credited under Subsection (d)(1) of 39-12 this section may not include any amount that is intended to help 39-13 defray an increase in group medical insurance costs as described by 39-14 Section 15(a) of this Act. In any year in which a supplemental 39-15 payment is made to retirees under Section 15(b) of this Act, an 39-16 amount equal to the amount of the supplemental payment that would 39-17 have been made to the DROP participant if the DROP participant had 39-18 retired on the DROP entry date shall be credited to the DROP 39-19 participant's DROP account. 39-20 (f) The period for credits to a DROP participant's DROP 39-21 account includes each month beginning with the DROP participant's 39-22 DROP entry date through the date the DROP participant terminates 39-23 employment with the city or the pension system. Credits may not be 39-24 made to a DROP participant's DROP account for a period that occurs 39-25 after the date the DROP participant terminates employment, except 39-26 that interest at a rate determined by the pension board may be paid 39-27 on the person's undistributed DROP account balance after the date 40-1 the person terminates employment. 40-2 (g) A DROP participant who terminates employment is eligible 40-3 to elect to receive the DROP participant's DROP benefit in a lump 40-4 sum, in substantially equal periodic payments, or in a partial lump 40-5 sum followed by substantially equal periodic payments. The pension 40-6 board shall determine a reasonable time for lump-sum and periodic 40-7 payments of the DROP benefit. An election concerning single 40-8 lump-sum or partial payments as provided by this subsection must 40-9 satisfy the requirements of Section 401(a)(9), Internal Revenue 40-10 Code of 1986, as amended. All distributions and changes in the 40-11 form of distribution must be made in a manner and at a time that 40-12 complies with that provision of the Internal Revenue Code of 1986, 40-13 as amended. 40-14 (h) If a DROP participant dies before the full distribution 40-15 of the DROP participant's DROP account balance, the undistributed 40-16 DROP account balance shall be distributed to the DROP participant's 40-17 surviving spouse, if any, in a lump-sum payment within a reasonable 40-18 time after the pension board has determined that the surviving 40-19 spouse is eligible for the distribution. If there is no surviving 40-20 spouse, the DROP participant's beneficiary, as designated in the 40-21 manner and on a form established by the pension board, is eligible 40-22 to receive the deceased DROP participant's undistributed DROP 40-23 account balance in a lump-sum payment within a reasonable time 40-24 after the pension board has determined that the beneficiary is 40-25 eligible for the distribution. If no beneficiary is designated, 40-26 the undistributed DROP account balance shall be distributed to the 40-27 member's estate. 41-1 (i) A DROP participant is ineligible for disability benefits 41-2 provided by this Act. 41-3 (j) An election to participate in the DROP is irrevocable, 41-4 except that: 41-5 (1) if a DROP participant is approved for a service 41-6 disability pension, the DROP participant's DROP election is 41-7 automatically revoked; 41-8 (2) if a DROP participant dies, the surviving spouse, 41-9 if any, or the beneficiary, if any, may elect to revoke the DROP 41-10 participant's DROP election, at a time and in a manner determined 41-11 by the pension board, only if the revocation occurs before a 41-12 distribution from the DROP participant's DROP account or the 41-13 payment of a survivor benefit under this Act or Chapter 358, Acts 41-14 of the 48th Legislature, Regular Session, 1943 (Article 6243g, 41-15 Vernon's Texas Civil Statutes); and 41-16 (3) a DROP participant approved by the pension board 41-17 of the predecessor system before September 1, 1999, to participate 41-18 in the DROP may make a one-time, irrevocable election before 41-19 termination of employment, on a date and in a manner determined by 41-20 the pension board, to revoke the DROP election and waive any and 41-21 all rights associated with the DROP election. 41-22 (k) On revocation of a DROP election under Subsection (j) of 41-23 this section, the DROP account balance becomes zero, and a 41-24 distribution of DROP benefits may not be made to the member, the 41-25 member's surviving spouse, or the member's beneficiaries. In the 41-26 event of revocation, the benefits based on the member's service are 41-27 determined as if the member's DROP election had never occurred. 42-1 (l) Under a rule adopted by the pension board under this 42-2 section, the surviving spouse of a deceased member or, if the 42-3 member has no surviving spouse, the designated beneficiary of the 42-4 deceased member may make the DROP election that the deceased member 42-5 would have been eligible to make the day before the member's death 42-6 and may receive the DROP distribution in a lump sum within a 42-7 reasonable time after the pension board has determined that the 42-8 surviving spouse or designated beneficiary is eligible for the 42-9 distribution. A DROP election by the surviving spouse or 42-10 designated beneficiary under this subsection may not be made after 42-11 the sixth month after the date of the member's death. An election 42-12 may not be made under this subsection if a survivor benefit or 42-13 other distribution has been made with respect to the deceased 42-14 member. Notwithstanding any other provision, an election made 42-15 under this subsection is irrevocable. 42-16 (m) If an unanticipated actuarial cost occurs in 42-17 administering the DROP, the pension board, on the advice of the 42-18 pension system's actuary, may take action necessary to mitigate the 42-19 unanticipated cost, including refusal to accept additional 42-20 elections to participate in the plan. The pension system shall 42-21 continue to administer the plan for the DROP participants 42-22 participating in the plan before the date of the mitigating action. 42-23 (n) A former DROP participant who is rehired by the city or 42-24 the pension system following termination of employment is not 42-25 eligible to participate in the DROP. 42-26 (o) On termination of employment, a DROP participant shall 42-27 receive a normal retirement pension under Section 10 of this Act or 43-1 under Section 11, 22A, or 24 of Chapter 358, Acts of the 48th 43-2 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas 43-3 Civil Statutes), as those sections read on the day preceding the 43-4 participant's DROP entry date, as applicable, except that the 43-5 credited service under that section is the member's credited 43-6 service as of the day before the member's DROP entry date, the 43-7 benefit accrual rate applicable to the credited service shall be 43-8 the benefit accrual rate in effect on the member's DROP election 43-9 date, the maximum allowable benefit shall be the maximum allowable 43-10 benefit in effect on the member's DROP election date, and the 43-11 member's average monthly salary is the average monthly salary 43-12 determined as of the date of the member's termination of 43-13 employment. The DROP participant's normal retirement pension is 43-14 increased by any cost-of-living adjustments applied to the monthly 43-15 credit to the member's DROP account under Subsection (d)(1) of this 43-16 section during the member's participation in the DROP. 43-17 Cost-of-living adjustments applicable to periods after the date of 43-18 the DROP participant's termination of employment are based on the 43-19 DROP participant's normal retirement pension computed under this 43-20 subsection, excluding any cost-of-living adjustments. 43-21 (p) If a DROP election is not revoked under Subsection (j) 43-22 of this section, the survivor benefit payable to an eligible 43-23 survivor of a deceased DROP participant under Section 14 of this 43-24 Act is computed as a percentage of the monthly ordinary disability 43-25 pension that the member would have been eligible to receive had the 43-26 member suffered a disability the day before the member's DROP entry 43-27 date, except that the ordinary disability pension is computed based 44-1 on the DROP participant's credited service as of the day before the 44-2 DROP participant's DROP entry date, the benefit accrual rate 44-3 applicable to the credited service as of the DROP participant's 44-4 DROP election date, and the DROP participant's average monthly 44-5 salary as of the date of the DROP participant's death. A surviving 44-6 spouse, if any, of a DROP participant who dies from a cause 44-7 directly resulting from a specific incident in the performance of 44-8 the DROP participant's duties for the city or the pension system is 44-9 ineligible to receive enhanced survivor benefits under Section 44-10 14(c) of this Act unless the DROP election is revoked under 44-11 Subsection (j)(2) of this section and the surviving spouse receives 44-12 a survivor benefit as otherwise provided by this subsection. 44-13 (q) The pension board may adopt rules for the implementation 44-14 and operation of the DROP, including rules regarding the payment of 44-15 DROP benefits. 44-16 SECTION 13. DISABILITY PENSIONS. (a) A member who has 44-17 completed five or more years of credited service and who becomes 44-18 disabled is eligible, regardless of age, for an ordinary 44-19 disability retirement and shall receive a monthly disability 44-20 pension computed in accordance with Section 10(d) for group A 44-21 members and Section 10(e) for group B members. 44-22 (b) A member who is disabled by reason of a personal injury 44-23 sustained or a hazard undergone as a result of, and while in the 44-24 performance of, the member's employment duties at some definite 44-25 place and at some definite time on or after the date of becoming a 44-26 member, without serious and wilful misconduct on the member's part, 44-27 is eligible for a service disability retirement and shall receive 45-1 a monthly disability pension equal to the greater of: 45-2 (1) the monthly normal retirement pension computed 45-3 under Section 10(d) of this Act for a group A member or Section 45-4 10(e) for a group B member; or 45-5 (2) 20 percent of the member's monthly salary on the 45-6 date the injury occurred or the hazard was undergone. 45-7 (c) In addition to the monthly disability pension under 45-8 Subsection (b)(2) of this section, a group A member shall receive 45-9 one percent of the salary under Subsection (b)(2) of this section 45-10 for each year of credited service. The total disability pension 45-11 computed under Subsection (b)(2) of this section may not exceed the 45-12 greater of: 45-13 (1) 40 percent of that monthly salary; or 45-14 (2) the monthly normal retirement pension computed in 45-15 accordance with Section 10(d) for a group A member or Section 10(e) 45-16 for a group B member. 45-17 (d) A disability pension may be granted under this section 45-18 to a member only if the member is unable to perform work or 45-19 services as an employee due to the disability. A member who is 45-20 granted a disability pension is considered to have resigned and 45-21 shall be removed from the employment rolls of the city or the 45-22 pension system not later than the last day of the month in which 45-23 the disability pension is approved. 45-24 (e) A person retired for disability under this Act or a 45-25 person receiving survivor benefits as a disabled dependent child 45-26 under this Act shall file an annual report of employment activities 45-27 and earnings with the pension board. The pension board shall 46-1 establish the form of the report and the time for filing the 46-2 report. If the amount of the earnings added to the disability 46-3 pension being received by the member exceeds the amount of the 46-4 monthly salary of the member at the time of the member's separation 46-5 from service, as adjusted annually by cost-of-living adjustments 46-6 equal to the percentage change in the Consumer Price Index for All 46-7 Urban Consumers for the preceding year, as determined by the United 46-8 States Department of Labor, but not to exceed the cost-of-living 46-9 adjustment provided by Section 10(h) of this Act, the pension board 46-10 may reduce the amount of the pension. A disability pension 46-11 recipient is not required to submit the annual affidavit of 46-12 employment activities and earnings after the recipient reaches: 46-13 (1) the date on which the recipient would be eligible 46-14 to retire, if Section 10(b) or (c) applied to the recipient; or 46-15 (2) 65 years of age. 46-16 (f) A member may not receive a disability pension and a 46-17 deferred or normal retirement pension at the same time. If a member 46-18 who has at least five years of credited service is eligible for a 46-19 disability pension, the member's disability ceases to exist, and 46-20 the member does not return to work for the city, the member is 46-21 eligible to receive a deferred or normal retirement pension, 46-22 beginning on the later of the member's effective retirement date or 46-23 the date the disability ceases. The deferred or normal retirement 46-24 pension is based on actual credited service up to the time of 46-25 disability and is computed based on the schedule of benefits and 46-26 provisions in effect on the person's last day of credited service. 46-27 (g) A former member who is retired for disability or a 47-1 person receiving survivor benefits as a disabled dependent child 47-2 under this Act is subject at all times to reexamination by the 47-3 pension board and shall submit to an examination the pension board 47-4 requires. If the disability retiree or dependent child who is 47-5 receiving survivor benefits as a disabled child refuses to submit 47-6 to a required examination, the pension board may order that 47-7 payments be suspended, up to and including discontinuation of the 47-8 disability pension or survivor benefit. If the pension board 47-9 determines that a member who has been retired for a disability or a 47-10 person who is receiving survivor benefits as a disabled dependent 47-11 child recovers so that the member or person is able to perform the 47-12 usual and customary duties formerly handled by the member or person 47-13 or other full-time duties that could be performed by the member or 47-14 person, the pension board shall suspend or discontinue pension or 47-15 survivor benefit payments. 47-16 (h) The result of an examination, report by a physician, or 47-17 report of employment activities and earnings shall be considered by 47-18 the pension board in determining whether the benefits shall be 47-19 continued, increased if less than the maximum provided, decreased, 47-20 or discontinued. The pension board may reduce, suspend, or 47-21 discontinue all benefits to a person receiving benefits under this 47-22 section who, after notice from the pension board: 47-23 (1) fails to appear for a required examination; 47-24 (2) fails to file a report of employment activities 47-25 and earnings or another related report requested by the pension 47-26 board; or 47-27 (3) files a materially false or misleading report of 48-1 employment activities and earnings or examination result or other 48-2 report, as determined by the pension board. 48-3 (i) To apply for a disability pension, a person must be a 48-4 member or a former member whose separation from service occurred 48-5 not more than 30 days before the date the pension system receives 48-6 the person's request to apply for a disability pension as a result 48-7 of a disability that arose during employment, except that a member 48-8 may not apply for a disability pension after the sixth month after 48-9 the date of the member's last day of credited service. 48-10 SECTION 14. SURVIVING SPOUSE AND DEPENDENT CHILD MONTHLY 48-11 ALLOWANCE. (a) Except as provided by Section 12 of this Act, the 48-12 pension board shall order survivor benefits to be paid in the form 48-13 of a monthly allowance under this section if: 48-14 (1) a member or former member dies from any cause 48-15 after the completion of five years of credited service with the 48-16 city or the pension system; 48-17 (2) while in the service of the city or the pension 48-18 system, a member dies from any cause directly resulting from a 48-19 specific incident in the performance of the member's duty; or 48-20 (3) a member dies after the date the member retires on 48-21 a pension because of length of service or a disability and the 48-22 member leaves an eligible survivor. 48-23 (b) A surviving spouse of a member or former member who dies 48-24 after having completed five years of credited service with the city 48-25 or the pension system, but before beginning to receive retirement 48-26 benefits, is eligible for a sum equal to 100 percent of the 48-27 retirement benefits to which the deceased member or former member 49-1 would have been eligible had the member been totally disabled with 49-2 an ordinary disability at the time of the member's last day of 49-3 credited service, except that the allowance payable to the 49-4 surviving spouse may not be less than $100 a month. 49-5 (c) A surviving spouse of a member who dies from a cause 49-6 directly resulting from a specific incident in the performance of 49-7 the member's duty with the city or the pension system, without 49-8 serious or wilful misconduct on the member's part, is eligible for 49-9 a sum equal to 100 percent of the deceased member's final average 49-10 salary. 49-11 (d) A surviving spouse of a retiree who dies after having 49-12 received retirement benefits is eligible for a sum equal to 100 49-13 percent of the retirement benefits being received at the time of 49-14 the retiree's death. The cost-of-living adjustment in the survivor 49-15 benefit under Section 10(h) of this Act is computed based on the 49-16 unadjusted normal retirement pension of the deceased retiree. 49-17 (e) If there is a surviving spouse, each dependent child 49-18 shall receive a survivor benefit equal to 10 percent of the pension 49-19 the member would have received if the member had been disabled at 49-20 the time of death up to a maximum of 20 percent for all dependent 49-21 children, except that if the total amount payable to the surviving 49-22 spouse and dependent children is greater than 100 percent of the 49-23 benefit the member would have received, the percentage of benefits 49-24 payable to the surviving spouse shall be reduced so that the total 49-25 amount is not greater than 100 percent of the benefit the member 49-26 would have received, and the reduction shall continue until the 49-27 total amount payable to the surviving spouse and dependent child, 50-1 if any, would not be greater than 100 percent of the benefit the 50-2 member would have received. 50-3 (f) If there is no surviving spouse, each dependent child is 50-4 eligible to receive a survivor benefit equal to 50 percent of the 50-5 amount of the surviving spouse benefit had there been a surviving 50-6 spouse, not to exceed 100 percent of the surviving spouse benefit 50-7 for all dependent children in the aggregate. 50-8 (g) Benefits for a dependent child are payable to the 50-9 guardian of the child, except that the pension board may approve 50-10 the payment of benefits to a child who is at least 18 years of age. 50-11 As used in this subsection, "guardian" means the person who has the 50-12 primary responsibility for a child's care and support, including 50-13 the surviving parent, a legal guardian, a managing conservator, or 50-14 any other person with a similar legal relationship to the child. 50-15 (h) If a retiree dies and there is no eligible survivor, the 50-16 retiree's spouse, if any, or if there is no spouse, the retiree's 50-17 estate, is eligible to receive a lump-sum payment of the 50-18 unamortized balance of the retiree's accrued employee 50-19 contributions, if any, other than contributions after the DROP 50-20 entry date, as determined by an amortization schedule and method 50-21 approved by the pension board. A pension payable to a retiree 50-22 ceases on the last day of the month preceding the month of the 50-23 retiree's death. A survivor benefit payable to an eligible 50-24 survivor is effective on the first day of the month of the 50-25 retiree's death and ceases on the month preceding the month of the 50-26 eligible survivor's death or on the last day of the month in which 50-27 the survivor ceases to be eligible to receive a survivor's benefit. 51-1 SECTION 15. ANNUITY INCREASE. (a) In addition to the 51-2 postretirement increases under Section 10(h) of this Act, the 51-3 pension board may increase annuities payable under this Act by an 51-4 amount that does not exceed the annual increase in the amount of 51-5 premiums being paid under a group insurance program provided for 51-6 retirees of the city. 51-7 (b) The pension board may distribute a supplemental payment 51-8 to all retirees and eligible survivors who are receiving annuities 51-9 as of January 1 of the year in which the supplemental payment is 51-10 made. The supplemental payment shall be credited to DROP 51-11 participants who are participating in DROP as of January 1 of the 51-12 year in which the supplemental payment is made, if the pension 51-13 board's actuary determines that as of the end of any fiscal year: 51-14 (1) the value of the pension system's assets exceeds 51-15 the amount of the pension system's accrued liability; 51-16 (2) the pension system has met the actuarial 51-17 investment assumption for the previous fiscal year; and 51-18 (3) the issuance of the supplemental check will not 51-19 cause the city's contribution rate to increase. 51-20 (c) A person may not receive more than one supplemental 51-21 payment as a result of the person's status as: 51-22 (1) a retiree and eligible survivor; or 51-23 (2) a DROP participant and eligible survivor. 51-24 SECTION 16. LUMP-SUM BENEFIT PAYMENT. (a) Notwithstanding 51-25 any other provision of this Act, the pension board may pay to a 51-26 member, deferred participant, eligible survivor, alternate payee, 51-27 or beneficiary in a lump-sum payment the present value of any 52-1 benefit payable to such a person that is less than $10,000 instead 52-2 of paying any other benefit payable under this Act. If the lump-sum 52-3 present value of the benefit is at least $5,000 but less than 52-4 $10,000, the pension board may make a lump-sum payment only on 52-5 written request by the member, deferred participant, eligible 52-6 survivor, alternate payee, or other beneficiary. The pension board 52-7 shall make any payment under this subsection as soon as practicable 52-8 after eligibility under this section has been determined by the 52-9 pension board. 52-10 (b) The pension board shall adopt actuarial assumptions, 52-11 including an interest rate, to be used in determining lump-sum 52-12 present values and amounts distributable under this section. 52-13 (c) If the pension board determines that available resources 52-14 in the pension fund are inadequate to make lump-sum payments, 52-15 payments under this section shall be made monthly in amounts the 52-16 pension board determines. 52-17 (d) Payments under this section may not be made for a 52-18 benefit that was being paid by the predecessor system or this 52-19 pension system. 52-20 (e) A member who is reemployed by the city or the pension 52-21 system and who has at least two years of continuous credited 52-22 service after reemployment may reinstate service for which the 52-23 member received a lump-sum payment under this section by paying 52-24 into the pension fund the amount of the lump-sum payment, plus 52-25 interest on that amount at the rate of six percent per year, not 52-26 compounded, from the date the lump-sum payment was made to the 52-27 member until the date of repayment to the pension fund. 53-1 (f) The actuarial value of a lump-sum payment is determined 53-2 as of the last day of credited service or September 1, 1995, 53-3 whichever is later. 53-4 SECTION 17. TERMINATION OF EMPLOYMENT; DEATH; REEMPLOYMENT. 53-5 (a) A member who terminates employment with the city involuntarily 53-6 due to a reduction in workforce, as determined by the pension 53-7 board, before the member becomes eligible for a normal retirement 53-8 pension or attains five years of credited service, by written 53-9 notice to the pension board, may make an irrevocable election to 53-10 leave the person's contributions in the pension fund until the 53-11 first anniversary of the date of termination. If during that period 53-12 the person is reemployed by the city, all rights and service credit 53-13 as a member shall be immediately restored without penalty. If 53-14 reemployment with the city does not occur before the first 53-15 anniversary of the date of termination, all payments made by the 53-16 person into the pension fund by salary deductions or other 53-17 authorized contributions shall be refunded to the person without 53-18 interest. If the person is subsequently reemployed, the person may 53-19 have credit restored, subject to the provisions applicable at the 53-20 time of reemployment. 53-21 (b) A member who leaves employment voluntarily, before 53-22 becoming eligible for a normal retirement or disability pension, 53-23 ceases to be a member of the pension system and shall be refunded 53-24 all eligible payments made by the member into the pension fund by 53-25 salary deductions or other authorized contributions, without 53-26 interest, subject to this section. 53-27 (c) A member whose employment is terminated for a reason 54-1 other than death or receipt of a retirement or disability pension 54-2 after the completion of five years of credited service may elect, 54-3 in a manner determined by the pension board, to receive a deferred 54-4 retirement pension that begins on the member's effective retirement 54-5 date after the member attains either 62 years of age or a 54-6 combination of years of age and years of credited service, 54-7 including parts of years, the sum of which equals the number 70. 54-8 The amount of monthly benefit shall be computed in the same manner 54-9 as for a normal retirement pension, but based on average monthly 54-10 salary and credited service as of the member's last day of credited 54-11 service and subject to the provisions of this Act or Chapter 358, 54-12 Acts of 48th Legislature, Regular Session, 1943 (Article 6243g, 54-13 Vernon's Texas Civil Statutes), in effect on the member's last day 54-14 of credited service. 54-15 (d) If a member dies while still employed by the city, 54-16 whether eligible for a pension or not, and Sections 12 and 14 of 54-17 this Act do not apply, all of the member's rights in the pension 54-18 fund shall be satisfied by the refund to the member's designated 54-19 beneficiary, if any, or if there is no designated beneficiary, to 54-20 the member's estate, of all eligible payments, if any, made by the 54-21 member into the pension fund, without interest. 54-22 (e) The provisions of Section 14 of this Act concerning 54-23 payments to eligible survivors apply in the case of any former 54-24 member who has made the election permitted by Subsection (c) of 54-25 this section and who dies before reaching the age at which the 54-26 former member would be eligible to receive a pension. If there is 54-27 no eligible survivor of the former member, all of the former 55-1 member's rights in the pension fund shall be satisfied by the 55-2 refund to the former member's designated beneficiary, if any, or if 55-3 there is no designated beneficiary, to the former member's estate, 55-4 of all eligible payments made by the former member into the pension 55-5 fund by way of employee contributions, without interest. 55-6 (f) This Act does not change the status of any former member 55-7 of the predecessor system whose services with the city or the 55-8 pension system were terminated under Chapter 358, Acts of the 48th 55-9 Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas 55-10 Civil Statutes), except as otherwise expressly provided. Refunds 55-11 of contributions made under this section shall be paid to the 55-12 departing member, the member's beneficiary, or the member's estate 55-13 on written request and approval by the pension board in a lump sum, 55-14 except that if the pension board determines that funds are 55-15 insufficient to justify the lump-sum payment, the payment shall be 55-16 refunded on a monthly basis in amounts determined by the pension 55-17 board. 55-18 (g) If a deferred participant is reemployed by the city or 55-19 the pension system before receiving a deferred retirement pension 55-20 or if a retiree is reemployed by the city or the pension system, 55-21 Subsections (h) and (j) of this section apply to the computation of 55-22 the member's pension following the member's subsequent separation 55-23 from service. 55-24 (h) If a member described in Subsection (g) of this section 55-25 accrues not more than two years of continuous credited service 55-26 after reemployment: 55-27 (1) the portion of the member's deferred or normal 56-1 retirement pension attributable to the member's period of credited 56-2 service accrued before the date of the member's original separation 56-3 from service is computed on the basis of the applicable provisions 56-4 of this Act or the predecessor system that were in effect on the 56-5 member's last day of credited service for the original period of 56-6 credited service; 56-7 (2) the portion of the member's deferred or normal 56-8 retirement pension attributable to the member's period of credited 56-9 service accrued after the date of the member's reemployment by the 56-10 city or the pension system is computed on the basis of the 56-11 applicable provisions of this Act or the predecessor system in 56-12 effect on the member's last day of credited service for the 56-13 subsequent period of credited service; and 56-14 (3) the disability pension or survivor benefit 56-15 attributable to the member's period of credited service accrued 56-16 both before the date of the member's original separation from 56-17 service and after the date of the member's reemployment by the city 56-18 or the pension system is computed on the basis of the applicable 56-19 provisions of this Act or the predecessor system that were in 56-20 effect on the member's last day of credited service for the 56-21 original period of credited service. 56-22 (i) Subject to Subsection (l) of this section, the 56-23 disability pension or survivor benefit under Subsection (h)(3) of 56-24 this section is computed by adding the following amounts: 56-25 (1) the amount of the benefit derived from the 56-26 member's credited service accrued after the date of reemployment 56-27 based on the benefit accrual rate in effect on the member's last 57-1 day of original credited service in the group in which the member 57-2 participated on the member's last day of subsequent credited 57-3 service; and 57-4 (2) the amount of the benefit the member, beneficiary, 57-5 or eligible survivor was eligible to receive based on the member's 57-6 original credited service and the provisions in effect on the 57-7 member's last day of original credited service. 57-8 (j) If the member accrues more than two years of continuous 57-9 credited service after reemployment, for purposes of future payment 57-10 only, a deferred retirement pension, normal retirement pension, 57-11 disability pension, or survivor benefit is computed on the basis of 57-12 the applicable provisions of this Act or the predecessor system in 57-13 effect on the member's last day of credited service for the 57-14 subsequent service. 57-15 (k) Notwithstanding any other provision of this Act, if a 57-16 retiree is reemployed by the city or the pension system and becomes 57-17 a member, the retiree's pension under this Act ceases on the day 57-18 before the date the retiree is reemployed. Payment of the pension 57-19 shall be suspended during the period of reemployment and may not 57-20 begin until the month following the month in which the reemployed 57-21 retiree subsequently terminates employment. On subsequent 57-22 separation, benefits payable are computed under Subsections (h) and 57-23 (j) of this section. If the reemployed retiree receives any pension 57-24 during the period of reemployment, the retiree shall return all of 57-25 the pension received during that period to the pension system not 57-26 later than the 30th day after the date of receipt. If the 57-27 reemployed retiree does not timely return all of the pension, the 58-1 pension board shall offset the amount not returned against the 58-2 payment of any future retirement pension, disability pension, or 58-3 survivor benefit payable on behalf of the reemployed retiree. 58-4 (l) If a member is covered by Subsection (h) of this section 58-5 and has made an election or was eligible to make an election under 58-6 Section 11 of this Act or an optional annuity election under 58-7 Section 29, Chapter 358, Acts of the 48th Legislature, Regular 58-8 Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), or 58-9 has received a pension computed on the basis of an optional annuity 58-10 election, the optional annuity election, including any designation 58-11 of an eligible designated survivor, governs the payment of any 58-12 pension or benefit, and no other survivor benefit is payable. If a 58-13 member meets the requirements of Subsection (j) of this section and 58-14 has made an optional annuity election or has received a pension 58-15 computed on the basis of an optional annuity election, the optional 58-16 annuity election, including any designation of an eligible 58-17 designated survivor, shall control the payment of any pension or 58-18 benefit, and no other survivor benefit is payable unless the member 58-19 elects, not later than the 90th day after the date of the 58-20 separation of employment and before payment of a pension, to revoke 58-21 the optional annuity election for future payment of benefits. If 58-22 revocation occurs, any survivor benefit is paid under Subsection 58-23 (j) of this section. 58-24 (m) If a member's service is terminated before the member 58-25 has completed five years of service for any reason other than 58-26 death, a city workforce reduction as described by Subsection (a) of 58-27 this section, or a service disability, the member: 59-1 (1) forfeits the member's accrued pension, service and 59-2 credited service, and any benefit payable under this Act; and 59-3 (2) shall be refunded, on written request, the amount 59-4 paid by the member into the pension fund as employee contributions, 59-5 without interest, in full satisfaction of the member's rights under 59-6 this Act. 59-7 (n) This section does not allow retroactive payment of any 59-8 benefits or other amounts under this section to any member, 59-9 retiree, deferred participant, beneficiary, eligible survivor, 59-10 estate, or other person or entity. 59-11 (o) After separation from service, a member is subject to 59-12 the schedule of benefits and provisions in effect on the member's 59-13 last day of credited service, except as otherwise expressly 59-14 provided by this Act. 59-15 (p) A person receiving or eligible for a survivor benefit 59-16 under this Act is subject to the schedule of benefits and 59-17 provisions in effect on the last day of credited service of the 59-18 deceased participant for whom the person is claiming survivor 59-19 status, except as otherwise expressly provided by this Act. 59-20 SECTION 18. MILITARY SERVICE CREDIT. (a) Notwithstanding 59-21 any other provision of this Act, contributions, benefits, and 59-22 service with respect to service in the uniformed services, as 59-23 defined in 38 U.S.C. Section 4301 et seq., of a member who is 59-24 eligible for reemployment rights with the city under 38 U.S.C. 59-25 Section 4301 et seq. for the service shall be provided in 59-26 accordance with Section 414(u), Internal Revenue Code of 1986, as 59-27 amended. 60-1 (b) The city shall make the employer contributions to the 60-2 pension fund for the employee's membership for each month of 60-3 service credit in which the member is engaged in service in a 60-4 uniformed service described by Subsection (a) of this section, 60-5 based on the member's rate of monthly compensation as of the date 60-6 the member left the member's position. 60-7 (c) A member who has active military service for which the 60-8 member is not eligible for reemployment rights with the city under 60-9 38 U.S.C. Section 4301 et seq. may receive credited service for the 60-10 active military service on proper action by the pension board if 60-11 the member: 60-12 (1) has completed at least five years of credited 60-13 service in the pension system; 60-14 (2) obtains, at the member's cost, a report approved 60-15 by the pension board of the actuarial cost of the service for which 60-16 the member claims credit, with service time expressed as a number 60-17 of whole months; and 60-18 (3) pays the actuarially determined cost of the 60-19 service under Subdivision (2) of this subsection as approved by the 60-20 pension board, plus all administrative costs associated with 60-21 crediting the service, if any, plus six percent interest from the 60-22 due date of the amounts until the date full payment is made to the 60-23 pension fund, with the payments made before: 60-24 (A) the fifth anniversary of the date the claim 60-25 for service is made, if a member does not terminate employment 60-26 before the fifth anniversary; or 60-27 (B) the 60th day after the date employment is 61-1 terminated, if a member terminates employment before the fifth 61-2 anniversary of the date the claim for service is made. 61-3 (d) The military service credited under Subsection (c) of 61-4 this section: 61-5 (1) may not exceed a total of 60 months; 61-6 (2) may be claimed as service in group A only if the 61-7 member is a group A member or group C member at the time the member 61-8 claims the service; and 61-9 (3) may be claimed as service in group B only if the 61-10 member is a group B member at the time the member claims the 61-11 service. 61-12 SECTION 19. MULTIPLE PENSIONS; TRANSFER OF EMPLOYMENT. (a) 61-13 The pension board may authorize a member to make a one-time 61-14 irrevocable election, on a date and in a manner established by the 61-15 pension board, to cease to be a member of the pension system and, 61-16 for future service only, to become a member of the retirement 61-17 system governed by Article 6243e.2(1), Revised Statutes, or Article 61-18 6243g-4, Revised Statutes, or a successor statute to either of 61-19 those laws, if the member: 61-20 (1) was a member of the pension system as authorized 61-21 under Section 16B, Chapter 358, Acts of the 48th Legislature, 61-22 Regular Session, 1943 (Article 6243g, Vernon's Texas Civil 61-23 Statutes); 61-24 (2) is in a position covered by another retirement 61-25 system to which the city contributes; and 61-26 (3) has not begun to receive payment of benefits from 61-27 the pension system. 62-1 (b) A person who does not make an election to cease 62-2 membership in the pension system under Subsection (a) of this 62-3 section remains a member of the pension system as authorized under 62-4 this Act. 62-5 (c) A person who makes an election to cease membership in 62-6 the pension system is considered to have separated from service on 62-7 the date of the election established by the pension board. 62-8 (d) Notwithstanding any other provision of this Act, 62-9 duplication of any pension or benefit payable from the pension 62-10 system and any pension or benefit payable under another defined 62-11 benefit pension plan to which the city contributes is not 62-12 permitted. Any pension or benefit payable to any person under 62-13 another defined benefit pension plan, based on a period of service 62-14 for which credited service is given under this Act, is deducted 62-15 from the total pension or benefit otherwise payable to the 62-16 participant under this Act, except that the pension or benefit may 62-17 not be reduced to an amount less than the amount that would have 62-18 been payable if the period of service had been excluded from 62-19 service. 62-20 SECTION 20. SERVICE FOR FORMERLY INELIGIBLE EMPLOYEES. (a) 62-21 A member who was ineligible to be a member under Section 4(d), 62-22 Chapter 358, Acts of the 48th Legislature, Regular Session, 1943 62-23 (Article 6243g, Vernon's Texas Civil Statutes), before September 1, 62-24 1999, because the member was receiving a pension from another 62-25 pension system of the city to which the city contributes may 62-26 purchase credited service solely in group A for otherwise eligible 62-27 service previously disallowed by Section 4(d), Chapter 358, Acts of 63-1 the 48th Legislature, Regular Session, 1943 (Article 6243g, 63-2 Vernon's Texas Civil Statutes), if the member: 63-3 (1) has been continuously employed by the city since 63-4 the date of reemployment into a municipal position that became 63-5 covered by Chapter 358, Acts of the 48th Legislature, Regular 63-6 Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), on 63-7 September 1, 1999, by removal of the prohibition under Section 63-8 4(d), Chapter 358, Acts of the 48th Legislature, Regular Session, 63-9 1943 (Article 6243g, Vernon's Texas Civil Statutes); 63-10 (2) would have been eligible to be a member and 63-11 receive service for the municipal employment before September 1, 63-12 1999, but for the prohibition under Section 4(d), Chapter 358, Acts 63-13 of the 48th Legislature, Regular Session, 1943 (Article 6243g, 63-14 Vernon's Texas Civil Statutes); 63-15 (3) was a member in group A on September 1, 1999, and 63-16 on September 1, 2001; 63-17 (4) makes written application, in a manner and time 63-18 determined by the pension board, to receive credited service in 63-19 group A for all otherwise eligible service; and 63-20 (5) on approval by the pension board, pays into the 63-21 pension fund all contributions that would have been deducted or 63-22 picked up as member contributions during the period of claimed 63-23 service as described by Section 7(c) of this Act, including 63-24 required interest. 63-25 (b) Payments of the amounts required under this section must 63-26 be completed by the earliest of: 63-27 (1) the date of the member's termination of employment 64-1 or term in office; 64-2 (2) the date of the member's retirement or death; or 64-3 (3) the fifth anniversary of the date of the member's 64-4 approved claim for credited service under this section. 64-5 (c) If the payments are not completed within the period 64-6 described by Subsection (b) of this section, the member or the 64-7 member's estate may either make an immediate payment of the balance 64-8 due or receive a refund, without interest, of the member's 64-9 contributions to group A for the claimed service. If the refund is 64-10 paid, the member is considered to have never been eligible for 64-11 credit for the service claimed under this section. 64-12 SECTION 21. REDUCTION OF BENEFITS; DISSOLUTION OF SYSTEM. (a) 64-13 If the pension board determines that the pension fund is seriously 64-14 depleted, the pension board may proportionately and temporarily 64-15 reduce the benefits of all retirees, eligible survivors, alternate 64-16 payees, and beneficiaries. 64-17 (b) The amount of any reduction under Subsection (a) of this 64-18 section shall be paid to the retirees, eligible survivors, 64-19 alternate payees, and beneficiaries if the pension board determines 64-20 that the pension fund is sufficiently reestablished to pay the 64-21 amounts. 64-22 (c) If the reserve and surplus in the pension fund become 64-23 exhausted and the payouts of the pension fund exceed the income to 64-24 the pension fund, the governing body of the city by ordinance may 64-25 dissolve the pension system and require liquidation of the pension 64-26 system without any liability to the city. 64-27 (d) Any retiree or eligible survivor receiving a retirement 65-1 pension or survivor benefit may, at that person's option, receive a 65-2 smaller retirement pension or survivor benefit after properly 65-3 making a request in writing to the pension board. 65-4 SECTION 22. EXEMPTION FROM EXECUTION, ATTACHMENT, OR OTHER 65-5 WRIT. (a) No portion of the pension fund, either before or after 65-6 its order of disbursement by the pension board, and no amount due 65-7 or to become due to any retiree, eligible survivor, or beneficiary, 65-8 may be held, seized, taken, detained, or levied on by, or subjected 65-9 to, execution, attachment, garnishment, injunction, or any other 65-10 writ. No order or decree, or any process or proceeding, may be 65-11 issued by a court of this state for the payment or satisfaction in 65-12 whole or in part out of the pension fund of a debt, damage, claim, 65-13 demand, or judgment against any member, retiree, eligible survivor, 65-14 or other person. The pension fund and any claim on the pension fund 65-15 may not be directly or indirectly assigned or transferred. Any 65-16 attempt to transfer or assign the pension fund or any part of the 65-17 pension fund, and any claim on the pension fund, is void. The 65-18 pension fund shall be sacredly held, kept, and disbursed only for 65-19 the purposes provided by this Act, except that a retiree or 65-20 eligible survivor may have deducted from that person's pension or 65-21 survivor benefit an amount required by law or a voluntary amount 65-22 authorized by law and the pension board. 65-23 (b) This section does not prevent the division of benefits 65-24 accrued by a member under any court order determined by the pension 65-25 board or its designee to be a qualified domestic relations order 65-26 and the payment of a share of a retiree's benefits or contributions 65-27 to an alternate payee in accordance with the order. 66-1 (c) This section does not prevent the offset of amounts 66-2 received wrongly or in error against future pension or benefit 66-3 payments under Section 3(h) of this Act. 66-4 SECTION 23. FEDERAL TAX QUALIFICATION OF PENSION FUND; 66-5 MAXIMUM BENEFITS FROM PENSION FUND. (a) The pension fund is 66-6 intended to qualify under Section 401(a), Internal Revenue Code of 66-7 1986, as amended, and is for the exclusive benefit of the members 66-8 and retirees and their eligible survivors. No part of the corpus or 66-9 income of the pension fund may ever be used for or diverted to any 66-10 purpose other than for the benefit of members and retirees and 66-11 their eligible survivors as provided by this Act. 66-12 (b) A member, retiree, or eligible survivor of the pension 66-13 system may not accrue a retirement pension, disability retirement 66-14 allowance, survivor benefit, death benefit allowance, DROP benefit, 66-15 or any other benefit under this Act in excess of the benefit limits 66-16 applicable to the pension fund under Section 415, Internal Revenue 66-17 Code of 1986, as amended. The pension board shall reduce the amount 66-18 of any benefit that exceeds those limits by the amount of the 66-19 excess. If total benefits under the pension fund and the benefits 66-20 and contributions to which any member is eligible under any other 66-21 qualified plan maintained by the city that employs the member would 66-22 otherwise exceed the applicable limits under Section 415, Internal 66-23 Revenue Code of 1986, as amended, the benefits the member would 66-24 otherwise receive from the pension fund shall be reduced to the 66-25 extent necessary so that the benefits do not exceed the benefit 66-26 limits under Section 415, Internal Revenue Code of 1986, as 66-27 amended. 67-1 (c) Any member, retiree, or eligible survivor who receives 67-2 any distribution that is an eligible rollover distribution as 67-3 defined by Section 402(c)(4), Internal Revenue Code of 1986, as 67-4 amended, is eligible to have that distribution transferred directly 67-5 to another eligible retirement plan of the member's, retiree's, or 67-6 eligible survivor's choice on providing direction to the pension 67-7 system regarding that transfer in accordance with procedures 67-8 established by the pension board. 67-9 (d) The total salary taken into account for any purpose for 67-10 any member or retiree of the pension system may not exceed $200,000 67-11 for any year for an eligible participant, or $150,000 a year for an 67-12 ineligible participant. These dollar limits shall be adjusted from 67-13 time to time in accordance with guidelines provided by the United 67-14 States secretary of the treasury. For purposes of this subsection, 67-15 an eligible participant is a person who first became a member of 67-16 the predecessor system before 1996, and an ineligible participant 67-17 is a member who is not an eligible participant. 67-18 (e) Accrued benefits under this Act become 100 percent 67-19 nonforfeitable for a member on the date the member has completed 67-20 five years of credited service, except as otherwise provided by 67-21 law. If the pension system or the pension fund is terminated or 67-22 partially terminated, or city contributions to the pension fund are 67-23 discontinued completely, there may not be a reversion of funds to 67-24 the city. On the complete or partial termination or discontinuance 67-25 of city contributions, the pension fund held by the pension system 67-26 shall be used exclusively for benefits for members, deferred 67-27 participants, retirees, and their eligible survivors, and the 68-1 affected employees' rights to the benefits, to the extent funded, 68-2 shall be nonforfeitable if not already nonforfeitable under this 68-3 subsection. 68-4 (f) Amounts representing forfeited benefits of terminated 68-5 members may not be used to increase benefits payable from the 68-6 pension fund, but may be used to reduce contributions for future 68-7 plan years. 68-8 (g) Distributions of benefits must begin not later than 68-9 April 1 of the year following the calendar year during which the 68-10 member becomes 70-1/2 years of age or terminates employment with 68-11 the employer, if later, and must otherwise conform to Section 68-12 401(a)(9), Internal Revenue Code of 1986, as amended. 68-13 (h) If the amount of any benefit is to be determined on the 68-14 basis of actuarial assumptions that are not otherwise specifically 68-15 set forth for that purpose in this Act, the actuarial assumptions 68-16 to be used are those earnings and mortality assumptions being used 68-17 on the date of the determination by the pension fund's actuary and 68-18 approved by the pension board. The actuarial assumptions being used 68-19 at any particular time shall be attached as an addendum to a copy 68-20 of this Act and treated for all purposes as a part of the Act. The 68-21 actuarial assumptions may be changed by the pension fund's actuary 68-22 at any time if approved by the pension board. A change in 68-23 actuarial assumptions may not result in any decrease in benefits 68-24 accrued as of the effective date of the change. 68-25 (i) To the extent permitted by law, the pension board may 68-26 adjust the benefits of retirees and eligible survivors by 68-27 increasing any benefit that was reduced because of Section 415, 69-1 Internal Revenue Code of 1986, as amended. If Section 415, Internal 69-2 Revenue Code of 1986, as amended, is amended to permit the payment 69-3 of amounts previously precluded under that section, the pension 69-4 board may adjust the benefits of retirees and eligible survivors, 69-5 including restoring benefits previously denied. Benefits paid under 69-6 this subsection are not extra compensation earned after retirement 69-7 but are the delayed payment of benefits earned before retirement. 69-8 (j) The pension board may make any change in this Act to the 69-9 extent that the change is necessary to ensure compliance with the 69-10 qualification requirements of Section 401, Internal Revenue Code of 69-11 1986, as amended, or any other federal law. 69-12 SECTION 24. EXCESS BENEFIT PLAN. (a) A separate, 69-13 nonqualified, unfunded excess benefit plan is reenacted and 69-14 continued outside the pension fund. 69-15 (b) In this section: 69-16 (1) "Excess benefit participant" means any retiree 69-17 whose retirement benefits, as determined on the basis of all 69-18 qualified plans without regard to the limitations provided by 69-19 Section 23 of this Act and comparable provisions of other qualified 69-20 plans, would exceed the maximum benefit permitted under Section 69-21 415, Internal Revenue Code of 1986, as amended. 69-22 (2) "Excess benefit plan" means the separate, 69-23 nonqualified, unfunded excess benefit plan that is continued under 69-24 this section, that was created under the predecessor system for the 69-25 benefit of eligible members, as amended or restated from time to 69-26 time, and that is intended to be a qualified governmental excess 69-27 benefit arrangement within the meaning of Section 415(m), Internal 70-1 Revenue Code of 1986, as amended. 70-2 (3) "Maximum benefit" means the retirement benefit a 70-3 retiree and the surviving spouse or dependent child of a retiree or 70-4 deceased member or retiree are eligible to receive from all 70-5 qualified plans in any month after giving effect to Section 23 of 70-6 this Act and any similar provision of any other qualified plan 70-7 designed to conform to Section 415, Internal Revenue Code of 1986, 70-8 as amended. 70-9 (4) "Qualified plan" means the fund and any other plan 70-10 that is maintained by the city for the exclusive benefit of some or 70-11 all of the members of the fund and that has been found by the 70-12 Internal Revenue Service to be qualified or has been treated by the 70-13 city as a qualified plan under Section 401, Internal Revenue Code 70-14 of 1986, as amended. 70-15 (5) "Unrestricted benefit" means the monthly 70-16 retirement benefit a retiree and the surviving spouse and dependent 70-17 child of a retiree or deceased member or retiree would have 70-18 received under the terms of all qualified plans, except for the 70-19 limitations provided by Section 23 of this Act and any similar 70-20 provision of any other qualified plan designed to conform to 70-21 Section 415, Internal Revenue Code of 1986, as amended. 70-22 (c) An excess benefit participant who is receiving benefits 70-23 from the pension fund is eligible for a monthly benefit under the 70-24 excess benefit plan in an amount equal to the lesser of: 70-25 (1) the member's unrestricted benefit less the maximum 70-26 benefit; or 70-27 (2) the amount by which the member's monthly benefit 71-1 from the pension fund has been reduced because of the limitations 71-2 provided by Section 415, Internal Revenue Code of 1986, as amended. 71-3 (d) If a surviving spouse or dependent child is eligible for 71-4 preretirement or postretirement survivor benefits under a qualified 71-5 plan after the date of the death of an excess benefit participant, 71-6 the surviving spouse or dependent child is eligible for a monthly 71-7 benefit under the excess benefit plan equal to the benefit 71-8 determined in accordance with this Act, without regard to the 71-9 limitations provided by Section 23 of this Act or Section 415, 71-10 Internal Revenue Code of 1986, as amended, less the maximum 71-11 benefit. 71-12 (e) Any benefit to which a person is eligible under this 71-13 section shall be paid at the same time and in the same manner as 71-14 the benefit that would have been paid from the pension fund if 71-15 payment of the benefit from the pension fund had not been precluded 71-16 by Section 23 of this Act. An excess benefit participant or a 71-17 beneficiary of the participant may not, under any circumstances, 71-18 elect to defer receipt of all or any part of a payment due under 71-19 this section. 71-20 (f) The pension board shall administer the excess benefit 71-21 plan, and the executive director shall carry out the business of 71-22 the board with respect to the plan. Except as otherwise provided 71-23 by this section, the rights, duties, and responsibilities of the 71-24 pension board and the executive director are the same for the plan 71-25 as for the pension fund. 71-26 (g) The consultants, independent auditors, attorneys, and 71-27 actuaries selected to perform services for the pension fund shall 72-1 perform services for the excess benefit plan, but their fees for 72-2 services may not be paid by the pension fund. The actuary engaged 72-3 to perform services for the pension fund shall advise the pension 72-4 board of the amount of benefits that may not be provided from the 72-5 pension fund solely by reason of the limitations provided by 72-6 Section 415, Internal Revenue Code of 1986, as amended, and of the 72-7 amount of employer contributions that will be made to the plan 72-8 rather than to the pension fund. 72-9 (h) Contributions may not accumulate under the excess 72-10 benefit plan to pay future retirement benefits. The executive 72-11 director shall reduce each payment of employer contributions that 72-12 would otherwise be made to the pension fund under Section 8 of this 72-13 Act by the amount determined to be necessary to meet the 72-14 requirements for retirement benefits under the plan, including 72-15 reasonable administrative expenses, until the next payment of 72-16 municipal contributions is expected to be made to the pension fund. 72-17 The employer shall pay to the plan, from the withheld 72-18 contributions, not earlier than the 30th day before the date each 72-19 distribution of monthly retirement benefits is required to be made 72-20 from the plan, the amount necessary to satisfy the obligation to 72-21 pay monthly retirement benefits from the plan. The executive 72-22 director shall satisfy the obligation of the plan to pay retirement 72-23 benefits from the employer contributions transferred for that 72-24 month. 72-25 (i) Employer contributions otherwise required to be made to 72-26 the pension fund under Section 8 of this Act and to any other 72-27 qualified plan shall be divided into those contributions required 73-1 to pay retirement benefits under this section and those 73-2 contributions paid into and accumulated to pay the maximum benefits 73-3 required under the qualified plan. Employer contributions made to 73-4 provide retirement benefits under this section may not be 73-5 commingled with the money of the pension fund or any other 73-6 qualified plan. 73-7 (j) Benefits under this section are exempt from execution, 73-8 attachment, garnishment, assignment, injunction, and any other writ 73-9 in the same manner as retirement annuities under Section 22 of this 73-10 Act and may not be paid to a person other than to the person who 73-11 would have received the benefits from the pension fund except for 73-12 the limitations provided by Section 23 of this Act. 73-13 SECTION 25. EMPLOYEES ON RETIREMENT WHEN ACT TAKES EFFECT. 73-14 (a) Any person receiving a retirement benefit from the predecessor 73-15 system immediately before the effective date of this Act shall 73-16 continue to receive the same benefit amount the person was entitled 73-17 to receive under the predecessor system. 73-18 (b) This Act does not change the status of any former member 73-19 receiving a pension, or who is eligible to receive a pension, from 73-20 the city or the pension system under the predecessor system, unless 73-21 otherwise expressly provided by this Act. 73-22 SECTION 26. CONFIDENTIAL INFORMATION. (a) Records that are 73-23 in the custody of the pension system concerning an individual 73-24 member, deferred participant, retiree, eligible survivor, 73-25 beneficiary, or alternate payee are not public information under 73-26 Chapter 552, Government Code, and may not be disclosed in a form 73-27 identifiable to a specific individual unless: 74-1 (1) the information is disclosed to: 74-2 (A) the individual or the individual's attorney, 74-3 guardian, executor, administrator, or conservator, or another 74-4 person who the executive director determines is acting in the 74-5 interest of the individual or the individual's estate; 74-6 (B) a spouse or former spouse of the individual 74-7 and the executive director determines that the information is 74-8 relevant to the spouse's or former spouse's interest in a member's 74-9 accounts or benefits or other amounts payable by the pension 74-10 system; 74-11 (C) a governmental official or employee and the 74-12 executive director determines that disclosure of the information 74-13 requested is reasonably necessary to the performance of the duties 74-14 of the official or employee; or 74-15 (D) a person authorized by the individual in 74-16 writing to receive the information; or 74-17 (2) the information is disclosed under a subpoena and 74-18 the executive director determines that the individual will have a 74-19 reasonable opportunity to contest the subpoena. 74-20 (b) This section does not prevent the disclosure of the 74-21 status or identity of an individual as a member, former member, 74-22 deferred participant, retiree, deceased participant, eligible 74-23 survivor, beneficiary, or alternate payee of the pension system. 74-24 (c) The executive director may designate other employees of 74-25 the pension system to make the necessary determinations under 74-26 Subsection (a) of this section. 74-27 (d) A determination and disclosure under Subsection (a) of 75-1 this section does not require notice to the individual member, 75-2 deferred participant, retiree, eligible survivor, beneficiary, or 75-3 alternate payee. 75-4 SECTION 27. POWER OF ATTORNEY. (a) A person eligible for 75-5 payment of a pension or other benefits administered by the pension 75-6 system may direct the pension system to treat as the authorized 75-7 representative of the person concerning the disposition of the 75-8 pension or other benefits an attorney-in-fact under a power of 75-9 attorney that the pension system determines complies with Section 75-10 490, Texas Probate Code. 75-11 (b) If the power of attorney under Subsection (a) of this 75-12 section is revoked, the pension system is not liable for payments 75-13 made to or actions taken at the request of the attorney-in-fact 75-14 before the date the pension system receives written notice that the 75-15 power of attorney has been revoked. 75-16 SECTION 28. PROPORTIONATE RETIREMENT PROGRAM WITH 75-17 PARTICIPATING RETIREMENT SYSTEMS. (a) The pension board may 75-18 establish a program of proportionate retirement benefits subject to 75-19 the requirements of this section. 75-20 (b) In this section: 75-21 (1) "Combined service credit" means the combined sum 75-22 of an eligible participant's service credit in each participating 75-23 retirement system in which the participant has service credit and 75-24 for which the total satisfies the length-of-service requirements 75-25 for normal service retirement from that system at the eligible 75-26 participant's attained age. 75-27 (2) "Eligible participant" means a person who is or 76-1 has been a member of the pension system and who is actively 76-2 employed by the city and covered by a participating retirement 76-3 system at the time of full participation by the three retirement 76-4 systems established by Article 6243e.2(1), Revised Statutes, 76-5 Article 6243g-4, Revised Statutes, a successor statute to either of 76-6 those laws, and this Act. An eligible participant does not include 76-7 any individual who: 76-8 (A) is in retirement or DROP status; 76-9 (B) is receiving a retirement pension; or 76-10 (C) is in a probationary or trainee firefighter 76-11 or police officer position. 76-12 (3) "Full participation" means that a retirement 76-13 system has met the requirements of a participating retirement 76-14 system. 76-15 (4) "Maximum benefit" means the maximum total amount 76-16 of benefits payable to an eligible participant who has used 76-17 combined service credit to qualify for benefits from a 76-18 participating retirement system, which is 90 percent of the 76-19 participant's average monthly compensation at the time the 76-20 participant ceases employment in a position covered by the pension 76-21 system. 76-22 (5) "Participating retirement system" means a 76-23 retirement system that is established by Article 6243e.2(1), 76-24 Revised Statutes, Article 6243g-4, Revised Statutes, a successor 76-25 statute to either of those laws, or this Act and that recognizes 76-26 and allows the use of combined service credit and disability 76-27 determinations to provide proportionate retirement benefits in its 77-1 system for an eligible participant under the provisions of this 77-2 Act. 77-3 (6) "Service credit" means service that is credited by 77-4 the rules of a participating retirement system and that may be used 77-5 to meet length-of-service requirements for service retirement in 77-6 the system, except that service credit that would otherwise be 77-7 allowed by more than one participating retirement system for the 77-8 same service period is counted only once in determining the amount 77-9 of a person's combined service credit and applies as service credit 77-10 only in the participating retirement system in which the person 77-11 first established the service credit. 77-12 (c) Participation by the pension system in the proportionate 77-13 retirement program is voluntary. The pension board may elect to 77-14 participate in the proportionate retirement program by adopting a 77-15 resolution. If a resolution is adopted, the pension board shall 77-16 notify the other participating retirement systems of the election. 77-17 The effective date of participation in the proportionate retirement 77-18 program for which an election is made is the first day of the third 77-19 month after the month in which notice is given. Participation in 77-20 the proportionate retirement program by the pension system may be 77-21 terminated for any reason by adoption of a pension board 77-22 resolution, except that the proportionate retirement program will 77-23 be continued by the pension system for eligible participants who 77-24 are actively employed at the time of the termination and who remain 77-25 actively employed. On adoption of a resolution of termination, the 77-26 pension board shall notify the other participating retirement 77-27 systems of the termination. The effective date of termination from 78-1 the proportionate retirement program is the first day of the month 78-2 following the month in which notice of termination is given. 78-3 (d) An eligible participant's combined service credit may be 78-4 used only for determining eligibility for a normal retirement 78-5 pension under this Act and may not be used in determining 78-6 eligibility for DROP participation, a disability pension, survivor 78-7 benefits, or any type of benefit other than a normal retirement 78-8 pension, nor may combined service credit be used in determining the 78-9 amount of any type of pension or benefit. The amount of a pension 78-10 or benefit payable by the pension system is determined according 78-11 to, and in the manner prescribed by, this Act and the rules 78-12 established by the pension board and is based solely on an eligible 78-13 participant's service credit in the pension system and allowable 78-14 maximum benefit. The pension board has sole responsibility and 78-15 discretion to determine the eligibility of eligible participants 78-16 for benefits, including whether sufficient combined service credit 78-17 exists to qualify eligible participants for proportionate 78-18 retirement benefits from the pension system and the amount and 78-19 duration of proportionate retirement benefits payable by the 78-20 pension system. 78-21 (e) A person who withdraws pension contributions from a 78-22 participating retirement system ceases to be a member of that 78-23 participating retirement system. Membership and service credit for 78-24 which contributions were withdrawn or otherwise forfeited may be 78-25 reestablished under the statutes and rules governing that system. 78-26 To be counted as combined service credit, all service in a 78-27 participating retirement system for which the person withdrew 79-1 contributions or that was otherwise forfeited must be reinstated in 79-2 accordance with the statutes and rules applicable to that system. 79-3 A lump-sum distribution is governed by the statutes and rules 79-4 applicable to the particular retirement system that distributed the 79-5 lump-sum payment. 79-6 (f) A person who has service credit in another participating 79-7 retirement system for which the person is receiving or may become 79-8 eligible to receive a benefit is not eligible to vote in a pension 79-9 board election or hold a position on the pension board. 79-10 (g) The pension board shall make determinations regarding an 79-11 eligible participant's combined service credit based on the 79-12 certified records of a participating retirement system, including 79-13 the pension system, and of the city. 79-14 (h) The provisions of Section 17 of this Act relating to 79-15 termination of employment do not apply to an eligible participant 79-16 to the extent the participant is separated from service covered by 79-17 the pension system during a period for which the participant earns 79-18 service credit in another participating retirement system for 79-19 service performed for the city in an amount sufficient to meet the 79-20 length-of-service requirement, using combined service credit, for a 79-21 retirement benefit from the participating retirement system. 79-22 (i) A proportionate retirement benefit may be paid by the 79-23 pension system under the proportionate retirement program to an 79-24 eligible participant who fulfills the requirements for receiving a 79-25 proportionate retirement benefit in the pension system using 79-26 combined service credit only if the participant is eligible to 79-27 receive and has applied for proportionate retirement benefits from 80-1 the applicable other participating retirement systems. An eligible 80-2 participant may not become eligible to receive a proportionate 80-3 retirement benefit from the pension system while employed in a 80-4 position covered by the pension system. 80-5 (j) The pension system is governed solely by its own 80-6 statutory provisions, policies, and procedures relating to 80-7 disability benefit determinations for members who apply for a 80-8 disability pension from the pension system, except that the pension 80-9 system shall pay a proportionate amount of the ordinary disability 80-10 benefit attributable to the service credited under the pension 80-11 system, based on the schedule of benefits in effect under this Act 80-12 or Chapter 358, Acts of the 48th Legislature, Regular Session, 1943 80-13 (Article 6243g, Vernon's Texas Civil Statutes), as applicable, on 80-14 the eligible participant's last day of credited service as a member 80-15 in the pension system if: 80-16 (1) the eligible participant has combined service 80-17 credit from any other participating retirement system in addition 80-18 to the pension system; 80-19 (2) the eligible participant files for a disability 80-20 pension for the first time as a member of the other participating 80-21 retirement system; 80-22 (3) the eligible participant is otherwise eligible for 80-23 a disability pension in both participating retirement systems; 80-24 (4) the eligible participant receives a determination 80-25 from the pension board of trustees of the other participating 80-26 pension system that the person has a disability that is of a type 80-27 recognized by the pension system; and 81-1 (5) the other participating retirement system grants 81-2 the disability pension. 81-3 (k) If the disability is determined to be service-related, 81-4 the pension system shall pay only the ordinary disability benefit 81-5 amount. The pension board has the right to require examinations, 81-6 reports, and any other information permitted under this Act for the 81-7 administration and payment of disability benefits and the right to 81-8 reduce, suspend, or terminate a benefit accordingly. The benefit 81-9 allowed under this subsection and Subsection (j) of this section is 81-10 payable only if the other participating retirement systems 81-11 authorize and pay a disability benefit under the same circumstances 81-12 as provided by this subsection. A person who is receiving a 81-13 disability benefit from a participating retirement system is not 81-14 eligible for a disability pension under this Act, except as 81-15 provided by this subsection and Subsection (j) of this section. 81-16 (l) Creditable military service, if any, will be credited in 81-17 the pension system only as provided by this Act and only if the 81-18 service is not credited in any other participating retirement 81-19 system. 81-20 (m) If the pension board elects to participate in the 81-21 proportionate retirement program under this section, the pension 81-22 board shall adopt rules for implementing and administering the 81-23 proportionate retirement program. 81-24 (n) A person may not receive a benefit under this section in 81-25 an amount that is greater than the amount of the benefits accrued 81-26 by the person in the absence of this section. A survivor benefit 81-27 otherwise payable under Section 14(c) of this Act on behalf of a 82-1 person who has used combined service credit to qualify for benefits 82-2 from at least one participating retirement system shall be computed 82-3 and payable as provided by Section 14(b) of this Act. 82-4 SECTION 29. Chapter 358, Acts of the 48th Legislature, 82-5 Regular Session, 1943 (Article 6243g, Vernon's Texas Civil 82-6 Statutes), is repealed. 82-7 SECTION 30. (a) This Act continues in effect each municipal 82-8 employees pension fund established under Chapter 358, Acts of the 82-9 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's 82-10 Texas Civil Statutes), as that law existed before repeal by this 82-11 Act. 82-12 (b) All assets, service credit reports, and liabilities 82-13 relating to persons who are covered by the predecessor system 82-14 immediately before the effective date of this Act are transferred 82-15 to the pension system created by this Act. 82-16 SECTION 31. A member of the pension board of trustees serving 82-17 under Chapter 358, Acts of the 48th Legislature, Regular Session, 82-18 1943 (Article 6243g, Vernon's Texas Civil Statutes), before the 82-19 effective date of this Act continues to serve on the pension board 82-20 created under this Act until the expiration of the term for which 82-21 the member was elected or appointed under Chapter 358, Acts of the 82-22 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's 82-23 Texas Civil Statutes). 82-24 SECTION 32. (a) Section 14(d) of this Act applies only to 82-25 deaths that occur on or after the effective date of this Act, 82-26 without regard to the date of a member's separation from service. 82-27 (b) Section 10(h) of this Act applies only to the payment of 83-1 pension and survivor benefits on or after the effective date of 83-2 this Act, without regard to the date of a member's death or 83-3 separation from service. 83-4 SECTION 33. This Act takes effect immediately if it receives 83-5 a vote of two-thirds of all the members elected to each house, as 83-6 provided by Section 39, Article III, Texas Constitution. If this 83-7 Act does not receive the vote necessary for immediate effect, this 83-8 Act takes effect September 1, 2001.