1-1 By: Barrientos S.B. No. 790
1-2 (In the Senate - Filed February 20, 2001; February 21, 2001,
1-3 read first time and referred to Committee on Intergovernmental
1-4 Relations; April 9, 2001, reported adversely, with favorable
1-5 Committee Substitute by the following vote: Yeas 6, Nays 0;
1-6 April 9, 2001, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 790 By: Lindsay
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to participation in and benefits and administration of
1-11 retirement systems for firefighters in certain municipalities.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Article 2, Chapter 183, Acts of the 64th
1-14 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
1-15 Civil Statutes), is amended by adding Section 2.12 to read as
1-16 follows:
1-17 Sec. 2.12. GIFT, GRANT, OR BEQUEST. The board of trustees
1-18 may accept for the use and benefit of the fund a gift, grant, or
1-19 bequest of money or securities from any source.
1-20 SECTION 2. Subsection (b), Section 5.04, Chapter 183, Acts
1-21 of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
1-22 Vernon's Texas Civil Statutes), is amended to read as follows:
1-23 (b) The three percent factor used in this section may be
1-24 changed to some other percent if the change:
1-25 (1) is first approved by the board's actuary;
1-26 (2) is approved by the board of trustees;
1-27 (3) applies only to:
1-28 (A) firefighters who are employed on an active,
1-29 full-time basis in the fire department at the time of the change;
1-30 (B) firefighters [and those] who begin service
1-31 with the fire department after the change becomes effective; and
1-32 (C) members who retire under Section 5.06 of
1-33 this Act after the change becomes effective; and
1-34 (4) does not reduce a member's benefit for service
1-35 credit accumulated before the date of the change.
1-36 SECTION 3. Subsection (b), Section 5.06, Chapter 183, Acts
1-37 of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
1-38 Vernon's Texas Civil Statutes), is amended to read as follows:
1-39 (b) The retirement benefit payable to a member on retirement
1-40 under this section is the service retirement benefit described by
1-41 Section 5.04 of this Act, computed on the basis of the formula in
1-42 effect at the time of the member's retirement under this Act [the
1-43 member terminated employment with the fire department].
1-44 SECTION 4. Section 7.06, Chapter 183, Acts of the 64th
1-45 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
1-46 Civil Statutes), is amended to read as follows:
1-47 Sec. 7.06. PAYMENTS TO DEPENDENT PARENTS[; PAYMENT TO
1-48 ESTATE]. If a deceased member leaves no surviving spouse, no
1-49 surviving designated beneficiary, and no surviving children
1-50 entitled to receive a benefit under this Act but is survived by one
1-51 or more dependent parents, the dependent parent, or one of the
1-52 surviving parents designated by the board of trustees, is entitled
1-53 to receive a monthly benefit payment equal to the monthly amount
1-54 that would have been payable to a surviving spouse of the deceased.
1-55 All payments under this section cease on the death of the surviving
1-56 dependent parent.
1-57 SECTION 5. Article 7, Chapter 183, Acts of the 64th
1-58 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
1-59 Civil Statutes), is amended by adding Section 7.09 to read as
1-60 follows:
1-61 Sec. 7.09. SURVIVING BENEFICIARY OF CERTAIN UNMARRIED
1-62 MEMBERS. (a) On the death of a retiree or of a member who is
1-63 eligible for retirement but has not retired, a benefit is payable
1-64 under this section if:
2-1 (1) the retiree or member designated a beneficiary to
2-2 receive the benefit payable under this section on a form filed with
2-3 the fund; and
2-4 (2) this Act does not otherwise provide a benefit
2-5 payable to a surviving spouse or child of the member or retiree.
2-6 (b) The benefit payable under this section is an immediate
2-7 monthly benefit from the fund of 75 percent of the amount of the:
2-8 (1) retirement benefit that was being paid to the
2-9 retiree; or
2-10 (2) normal service retirement benefit that the member
2-11 would have received if the member had retired on the date of death.
2-12 (c) If the designated beneficiary of a retiree or member is
2-13 10 or more years younger than the retiree or member at the time of
2-14 the retiree's or member's death, the amount of the benefit payable
2-15 under Subsection (b) of this section shall be reduced to the
2-16 actuarial equivalent of the benefit that would have been payable if
2-17 the beneficiary and the retiree or member were the same age.
2-18 SECTION 6. Section 8.02, Chapter 183, Acts of the 64th
2-19 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
2-20 Civil Statutes), is amended to read as follows:
2-21 Sec. 8.02. ELECTION TO PARTICIPATE IN DROP. The election to
2-22 participate in the DROP shall be made in accordance with procedures
2-23 adopted by the board of trustees. The election may be made at any
2-24 time on or after the date the member becomes eligible for normal
2-25 service retirement under Section 5.01 of this Act or early
2-26 retirement under Section 5.05 of this Act and becomes effective on
2-27 the first day of the first month after the date of the election.
2-28 At the same time that a member makes an election to participate in
2-29 the DROP, the member must agree in writing to terminate service
2-30 with the fire department on a date not later than the seventh
2-31 [fifth] anniversary of the effective date of the election under
2-32 this section. An agreement to terminate service is binding on the
2-33 member and the fire department, except that the member may
2-34 terminate active service at any time before the date selected. An
2-35 election to participate in the DROP has no effect on either the
2-36 municipality's or the member's contributions under Section 10.01 of
2-37 this Act.
2-38 SECTION 7. Subsections (c) and (d), Section 8.06, Chapter
2-39 183, Acts of the 64th Legislature, Regular Session, 1975 (Article
2-40 6243e.1, Vernon's Texas Civil Statutes), are amended to read as
2-41 follows:
2-42 (c) If a member elects to participate in the DROP under this
2-43 section:
2-44 (1) the board of trustees shall cause to be credited
2-45 to a DROP account maintained within the fund for the benefit of
2-46 that person an amount equal to the credits that the member's DROP
2-47 account would have received, including interest, if the member had
2-48 established the DROP account after becoming eligible for service
2-49 retirement, but not more than seven [five] years before the
2-50 effective date of the person's retirement;
2-51 (2) the date used in computations under Subdivision
2-52 (1) of this section as if the member had established the DROP
2-53 account on that date is the effective date of the member's election
2-54 to participate in the DROP;
2-55 (3) the member will receive payments from the member's
2-56 DROP account as the member may select under Section 8.05 of this
2-57 Act; and
2-58 (4) the member's DROP account shall be credited with
2-59 interest as provided by Section 8.05 of this Act.
2-60 (d) If a member who did not establish a DROP account under
2-61 this section but was eligible to do so dies before retirement, the
2-62 surviving spouse, if any, of that member may elect to participate
2-63 in the DROP if the surviving spouse has not received any benefit
2-64 payments under Section 7.01 of this Act. If a surviving spouse
2-65 makes an election under this subsection:
2-66 (1) the board of trustees shall cause to be paid to
2-67 the surviving spouse in a lump sum, as soon as administratively
2-68 possible after the fund receives notice of the election, an amount
2-69 equal to the credits that the member's DROP account would have
3-1 received, including interest, if the member had established the
3-2 DROP account after becoming eligible for service retirement, but
3-3 not more than seven [five] years before the date of the member's
3-4 death; and
3-5 (2) the amount of the benefit payable to the surviving
3-6 spouse under Section 7.03 of this Act is 75 percent of the benefit
3-7 the member would have been eligible to receive if the member had
3-8 established the DROP account on becoming eligible for service
3-9 retirement, but not more than seven [five] years before the date of
3-10 the member's death.
3-11 SECTION 8. Section 9.03, Chapter 183, Acts of the 64th
3-12 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
3-13 Civil Statutes), is amended to read as follows:
3-14 Sec. 9.03. LIMITATION ON PAYMENT OF BENEFITS. (a) If the
3-15 [The] amount of [the payment of] any benefit payment under this Act
3-16 [that] would exceed the limitations provided by Section 415 of the
3-17 Internal Revenue Code of 1986, and the regulations adopted under
3-18 that [set forth in this] section, the board of trustees shall
3-19 reduce the amount of the benefit as needed to comply [be reduced in
3-20 accordance] with that [this] section.
3-21 (b) [In this section:]
3-22 [(1) "Compensation" has the meaning provided by
3-23 Section 415 of the Internal Revenue Code and the regulations
3-24 adopted under that section, instead of the meaning provided by
3-25 Section 1.02 of this Act, but as to any person who begins
3-26 participation on or after December 31, 1995, "compensation"
3-27 excludes any payments received in excess of $150,000 in a calendar
3-28 year, indexed pursuant to Section 401(a)(17) of the Internal
3-29 Revenue Code.]
3-30 [(2) "Highest average annual compensation" means the
3-31 average compensation for the three consecutive calendar years of
3-32 service with the fire department that produces the highest average.]
3-33 [(d) If payment of a benefit begins before a member attains
3-34 age 55, the annual benefit may not exceed the greater of:]
3-35 [(1) the actuarial equivalent of a $75,000 annual
3-36 benefit beginning at age 55;]
3-37 [(2) the actuarial equivalent of a $90,000 annual
3-38 benefit beginning at age 62; or]
3-39 [(3) $50,000.]
3-40 [(e) If a member does not have at least 15 years of service
3-41 credit as a firefighter with the fire department, the $50,000
3-42 limitation provided by Subsection (d) of this section is
3-43 inapplicable.]
3-44 [(f) If payment of a benefit begins when or after a member
3-45 attains age 55 but before the member attains age 62, the annual
3-46 benefit may not exceed the greater of:]
3-47 [(1) the actuarial equivalent of a $90,000 annual
3-48 benefit beginning at age 62; or]
3-49 [(2) $75,000.]
3-50 [(g) If payment of a benefit begins when or after a member
3-51 attains age 62 but before the member attains age 65, the annual
3-52 benefit may not exceed $90,000.]
3-53 [(h) If payment of a benefit begins when or after a member
3-54 attains age 65, the annual benefit may not exceed the actuarial
3-55 equivalent of a $90,000 annual benefit beginning at age 65.]
3-56 [(i) The $90,000 and $50,000 limitations provided by this
3-57 section are automatically adjusted to the amounts determined by the
3-58 secretary of the treasury in effect at the time of the member's
3-59 retirement.]
3-60 [(j) To determine the actuarial equivalent of a benefit
3-61 under this section, the interest rate assumption is the rate not to
3-62 exceed five percent that is adopted by the board of trustees in the
3-63 proper administration of the fund.]
3-64 [(k)] A person's vested accrued benefit in effect on
3-65 September 1, 1995, may not be reduced under this section.
3-66 SECTION 9. Subsection (b), Section 9.04, Chapter 183, Acts
3-67 of the 64th Legislature, Regular Session, 1975 (Article 6243e.1,
3-68 Vernon's Texas Civil Statutes), is amended to read as follows:
3-69 (b) If an adjustment under Subsection (a) of this section
4-1 would exceed [one-half of] one percent of a person's benefit, the
4-2 portion of the adjustment that exceeds [one-half of] one percent of
4-3 the benefit may not be made under this section unless the board's
4-4 actuary has advised the board of trustees that the adjustment would
4-5 not impair the financial stability of the fund and the adjustment
4-6 has been approved by the affirmative vote of a majority of the
4-7 board of trustees. If an adjustment under Subsection (a) of this
4-8 section would be [one-half of] one percent or less of a person's
4-9 benefit, the adjustment may not be made under this section unless
4-10 the board's actuary has advised the board of trustees that the
4-11 adjustment would not impair the financial stability of the fund.
4-12 SECTION 10. Article 9, Chapter 183, Acts of the 64th
4-13 Legislature, Regular Session, 1975 (Article 6243e.1, Vernon's Texas
4-14 Civil Statutes), is amended by adding Section 9.10 to read as
4-15 follows:
4-16 Sec. 9.10. OPTIONAL RETIREMENT ANNUITY. (a) An optional
4-17 retirement annuity is an annuity that is certified by the board's
4-18 actuary to be the actuarial equivalent of the annuity provided
4-19 under Section 5.04 of this Act and the survivor's benefits provided
4-20 under Article 7 of this Act. An optional retirement annuity is
4-21 payable throughout the life of the retiree.
4-22 (b) Instead of the annuity payable under Section 5.04 of
4-23 this Act, a member who retires may elect to receive an optional
4-24 retirement annuity approved by the board of trustees under this
4-25 section.
4-26 (c) The survivor's benefits provided under Article 7 of this
4-27 Act are not payable on the death of a retiree who elects an
4-28 optional retirement annuity under this section.
4-29 (d) The board of trustees by rule may provide that:
4-30 (1) an optional retirement annuity is payable after a
4-31 member's death throughout the life of a person designated by the
4-32 member; or
4-33 (2) if a retiree dies before a fixed number of monthly
4-34 annuity payments are made, the remaining number of payments are
4-35 payable to the retiree's designated beneficiary or, if a designated
4-36 beneficiary does not exist, to the retiree's estate.
4-37 (e) To elect an optional retirement annuity, a member must
4-38 make the election and designate a beneficiary on a form prescribed
4-39 by the board of trustees. The member must file the form with the
4-40 board on or before the effective date of the member's retirement.
4-41 (f) Except as provided by Subsections (g), (h), and (i) of
4-42 this section, if a member elects an optional retirement annuity
4-43 that, on the member's death, pays to the member's spouse an amount
4-44 that is less than 75 percent of the annuity that is payable during
4-45 the joint lives of the member and the member's spouse, the spouse
4-46 must consent to the election. The spouse's consent must be in
4-47 writing and witnessed by an officer or employee of the fund or
4-48 acknowledged by a notary public.
4-49 (g) If a member's spouse has been adjudicated incompetent,
4-50 the consent required under Subsection (f) of this section may be
4-51 given by the spouse's guardian.
4-52 (h) If a physician determines that a member's spouse is not
4-53 mentally capable of managing the spouse's affairs, the consent
4-54 required under Subsection (f) of this section may be given by the
4-55 member if the member would be qualified to serve as a guardian of
4-56 the spouse and the board of trustees determines that a guardianship
4-57 of the estate is not necessary.
4-58 (i) Spousal consent under Subsection (f) of this section is
4-59 not required if the board of trustees determines that:
4-60 (1) a spouse does not exist;
4-61 (2) the spouse cannot be located;
4-62 (3) the first anniversary of the marriage will not
4-63 occur before the date the annuity first becomes payable; or
4-64 (4) a former spouse is entitled to receive a portion
4-65 of the member's optional retirement benefit under a qualified
4-66 domestic relations order.
4-67 SECTION 11. This Act takes effect September 1, 2001.
4-68 * * * * *