By: Truitt H.B. No. 2559

A BILL TO BE ENTITLED

AN ACT

relating to the powers and duties of the Employees Retirement System of Texas.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 659.102(c), Government Code, is amended to read as follows:

(c) The supplemental optional benefits program may include:

(1) a group coverage plan for permanent life insurance, catastrophic illness insurance, or disability insurance;

(2) [,] prepaid legal services; [,] or

(3) a qualified transportation benefit.

SECTION 2. Subchapter A, Chapter 811, Government Code, is amended by adding Section 811.010 to read as follows:

Sec. 811.010. TRAVIS COUNTY VENUE; TWO-YEAR LIMITATION. Subject to and without waiving the retirement system's sovereign immunity from suit or liability or the official immunity from liability of the trustees, officers, and employees of the retirement system under Section 811.007, for any action by or against the retirement system, the trustees, officers, or employees of the retirement system, or an administrator, carrier, or other governmental agency acting in cooperation with or on behalf of the retirement system:

(1) venue is in Travis County; and

(2) the statute of limitations is two years unless otherwise specifically provided by law.

SECTION 3. Section 814.008(a), Government Code, is amended to read as follows:

(a) A retiree receiving an optional service or disability retirement annuity approved by the board of trustees or described by Section 814.108(c)(1), [or] (c)(2), or (c)(5) may change the designated beneficiary as provided by this section for the benefits payable after the retiree's death.

SECTION 4. Subchapter A, Chapter 814, Government Code, is amended by adding Section 814.012 to read as follows:

Sec. 814.012. DISPOSITION OF UNCLAIMED BENEFICIARY BENEFITS. If, as of the fourth anniversary of the death of a member or annuitant, the retirement system has not paid benefits and a claim for benefits is not pending with the retirement system based on the death of the member or annuitant, the accumulated contributions of the deceased member or the balance of the reserve for the deceased annuitant reverts to the benefit of the retirement system. The retirement system shall transfer funds reverted under this section to the state contribution account.

SECTION 5. Sections 814.108(c), (g), and (h), Government Code, are amended to read as follows:

(c) An eligible person may select [any optional retirement annuity approved by the board of trustees, or may select] one of the following options, which provides [provide] that:

(1) after the retiree's death, the reduced annuity is payable in the same amount throughout the life of the person designated by the retiree before retirement;

(2) after the retiree's death, one-half of the reduced annuity is payable throughout the life of the person designated by the retiree before retirement;

(3) if the retiree dies before 60 monthly annuity payments have been made, the remainder of the 60 payments are payable to one or more designees or, if one does not exist, to the retiree's estate; [or]

(4) if the retiree dies before 120 monthly annuity payments have been made, the remainder of the 120 payments are payable to one or more designees or, if one does not exist, to the retiree's estate; or

(5) after the retiree's death, three-fourths of the reduced annuity is payable throughout the life of the person designated by the retiree before retirement.

(g) Except as provided by Section 814.008 or 814.1081, a person who selected an optional service retirement annuity approved by the board of trustees or an optional service retirement annuity described by Subsection (c)(1), [or] (c)(2), or (c)(5) may not change or revoke a beneficiary designation after the person's effective date of retirement.

(h) A beneficiary designation that names a former spouse as beneficiary for a guaranteed optional annuity described by Subsection (c)(3) or (c)(4) is invalid unless the designation is made after the date of the divorce.

SECTION 6. Section 814.1081(a), Government Code, is amended to read as follows:

(a) A person who retired and selected an optional service retirement annuity [approved by the board of trustees or an optional service retirement annuity] described by Section 814.108(c)(1), [or] (c)(2), or (c)(5) may change the optional annuity selection to the selection of a standard service retirement annuity by filing with the retirement system a request to change the annuity selection, if the retiree designated a person as beneficiary who:

(1) was not at the time of designation and is not currently the retiree's spouse or child; or

(2) has executed since the designation a transfer and release, approved by a court of competent jurisdiction pursuant to a divorce decree, of the beneficiary's interest in the annuity and is not currently the retiree's spouse or child.

SECTION 7. Section 814.202, Government Code, is amended by adding Subsection (g) to read as follows:

(g) A member otherwise eligible to receive a disability retirement annuity may not receive the annuity if the member is:

(1) still earning a salary or wage from the employment for which the member is claiming disability; or

(2) on leave without pay from the employment for which the member is claiming disability.

SECTION 8. Section 814.203, Government Code, is amended to read as follows:

Sec. 814.203. CERTIFICATION OF DISABILITY. (a) As soon as practicable after an application for disability retirement is filed, the medical board shall evaluate the medical and other pertinent information regarding the member's application. If the medical board finds that the member is mentally or physically incapacitated for the further performance of duty, as supported by substantial, objective, medical evidence, and that the incapacity is likely to be permanent, the medical board shall issue a certification of disability and submit it to the executive director. A certification under this section is admissible in a contested case under Section 815.511 without proving the medical board as experts.

(b) For purposes of this subchapter, a member is incapacitated for the further performance of duty if the member has demonstrably sought and been denied workplace accommodation of the disability in accordance with applicable law, and the member is physically or mentally unable to continue to hold the position occupied or to hold any other position offering comparable pay. The employee's education, training, and experience must be considered when making a determination of incapacity under this subchapter.

(c) For the purposes of this section, "comparable pay" means 80 percent or more of the member's final state employment base pay before deductions for taxes or deferred compensation under state and federal law, including any longevity or hazardous duty pay, but excluding the monetary value of any insurance or retirement benefits. Comparable pay may be adjusted by the retirement system to account for adjustments in state pay rates.

SECTION 9. Subchapter C, Chapter 815, Government Code, is amended by adding Section 815.214 to read as follows:

Sec. 815.214. SUBPOENA. Notwithstanding any other law, the executive director or the executive director's designee may issue a subpoena that conforms to Rule 176, Texas Rules of Civil Procedure, including a preappeal investigative subpoena or any subpoena otherwise authorized by the Texas Rules of Civil Procedure, that the executive director or designee determines necessary to protect the interests of a program or system administered by the retirement system.

SECTION 10. Section 815.301, Government Code, is amended by adding Subsections (g), (h), and (i) to read as follows:

(g) In awarding contracts to private professional investment managers under Subsection (c) or otherwise acquiring private financial services, the board of trustees shall make a good faith effort to award contracts to or acquire services from qualified emerging fund managers.

(h) For purposes of Subsection (g):

(1) "Emerging fund manager" means a private professional investment manager that manages assets of not more than $2 billion.

(2) "Private financial services" includes pension fund management, consulting, investment advising, brokerage services, hedge fund management, private equity fund management, and real estate investment.

(i) The retirement system shall report to the board of trustees on the methods and results of the system's efforts to hire emerging fund managers, including data disaggregated by race, ethnicity, gender, and fund size.

SECTION 11. Section 815.307, Government Code, as amended by Chapters 1103 (H.B. 2240) and 1111 (H.B. 2359), Acts of the 78th Legislature, Regular Session, 2003, is reenacted to read as follows:

Sec. 815.307. DUTY OF CARE. The assets of the retirement system shall be invested and reinvested without distinction as to their source in accordance with Section 67, Article XVI, Texas Constitution. A determination of whether the board of trustees has exercised prudence with respect to an investment decision must be made taking into consideration the investment of all assets of the trust or all assets of the collective investment vehicle, as applicable, over which the board has management and control, rather than considering the prudence of a single investment of the trust or the collective investment vehicle, as applicable.

SECTION 12. Section 815.512, Government Code, is amended to read as follows:

Sec. 815.512. PROTECTION FROM DOUBLE OR MULTIPLE LIABILITY. (a) The executive director may cause an action for interpleader [a suit] concerning a claim to be filed on behalf of the retirement system in a district court in Travis County to protect the system from double or multiple liability if the executive director determines that a claim may expose the retirement system to such liability.

(b) A person may not pursue a counterclaim or other cause of action against the retirement system or its trustees, officers, employees, carriers, or administering firms in connection with the transactions and occurrences related to the interpleader action.

(c) A person who files suit against the retirement system or its trustees, officers, employees, carriers, or administering firms is liable for the costs and attorney's fees incurred in violation of Subsection (b).

SECTION 13. Subchapter F, Chapter 815, Government Code, is amended by adding Section 815.515 to read as follows:

Sec. 815.515. DISPOSITION OF UNCLAIMED CONTRIBUTIONS OF FORMER MEMBERS. (a) Subject to Chapters 803 and 805, if the retirement system has not received a demand for a refund of the accumulated contributions of a member in accordance with Subchapter B, Chapter 812, before the seventh anniversary of the member's last day of service, the retirement system may refund the accumulated contributions to the member or the member's heirs. If the member or the member's heirs cannot be found, the member's accumulated contributions revert to the retirement system.

(b) The retirement system shall credit any amounts that revert to the retirement system under Subsection (a) to the state contribution account.

(c) The board of trustees may adopt rules to implement and administer this section.

SECTION 14. Section 837.003, Government Code, is amended by adding Subsection (e) to read as follows:

(e) At the time a service retirement, disability retirement, or death benefit annuity becomes payable, the retirement system shall refund any contributions, interest, or membership fees used to establish service credit that is not used in computing the amount of the annuity.

SECTION 15. Section 838.106, Government Code, is amended by adding Subsection (c) to read as follows:

(c) For the purpose of Subsection (a)(1), the term of a member leaving judicial office ends December 31 regardless of the date on which the member's successor takes the oath of office.

SECTION 16. Section 839.103(a), Government Code, is amended to read as follows:

(a) Instead of a service retirement annuity payable under Section 839.102, a retiring member may elect to receive [an optional service retirement annuity provided by the board of trustees or] one of the following optional service retirement annuities, actuarially reduced to an actuarially equivalent value and consisting of:

(1) an annuity payable during the retiring member's life and continuing after death in the same amount, throughout the life of one person designated by the retiring member before retirement;

(2) an annuity payable during the retiring member's life and continuing after death in an amount equal to one-half of the amount payable during the retiring member's life, throughout the life of one person designated by the retiring member before retirement;

(3) an annuity payable for the greater of the rest of the retiring member's life or 60 months; [or]

(4) an annuity payable for the greater of the rest of the retiring member's life or 120 months; or

(5) an annuity payable during the retiring member's life and continuing after death in an amount equal to three-fourths of the amount payable during the retiring member's life, throughout the life of one person designated by the retiring member before retirement.

SECTION 17. Section 840.303, Government Code, as amended by Chapters 1103 (H.B. 2240) and 1111 (H.B. 2359), Acts of the 78th Legislature, Regular Session, 2003, is reenacted to read as follows:

Sec. 840.303. DUTY OF CARE. The assets of the retirement system shall be invested and reinvested without distinction as to their source in accordance with Section 67, Article XVI, Texas Constitution. A determination of whether the board of trustees has exercised prudence with respect to an investment decision must be made taking into consideration the investment of all assets of the trust or all assets of the collective investment vehicle, as applicable, over which the board has management and control, rather than considering the prudence of a single investment of the trust or the collective investment vehicle, as applicable.

SECTION 18. Section 1551.102(d), Insurance Code, is amended to read as follows:

(d) An individual is eligible to participate in the group benefits program as provided by Subsection (a) if [the individual]:

(1) the individual retires under the optional retirement program established by Chapter 830, Government Code;

(2) the individual has [, with] at least 10 years of eligible service credit; [and]

(3) the individual actively [(2)] receives [or is eligible to receive] an annuity under that program; and

(4) the individual:

(A) is at least 65 years of age, or would have been eligible to retire and receive a service or disability retirement annuity from the Teacher Retirement System of Texas or the Employees Retirement System of Texas in an amount such that the sum of the person's age and amount of service credit, including months of age and credit, equals or exceeds the number 80 or would have been eligible to retire and receive a disability retirement annuity from the Teacher Retirement System of Texas or the Employees Retirement System of Texas, if the individual had not elected to participate in the optional retirement program; or

(B) is disabled as determined by the Employees Retirement System of Texas based on at least 10 years of eligible service credit.

SECTION 19. Section 1551.155, Insurance Code, is amended by adding Subsections (c) and (d) to read as follows:

(c) A person who is the surviving spouse of an individual may secure group health coverage without evidence of the person's insurability if the individual was eligible to participate in the group benefits program under Section 1551.101 or 1551.102 but was not participating at the time of the individual's death.

(d) A surviving spouse seeking group coverage under Subsection (c):

(1) must apply for the coverage not later than the 30th day after the date on which the individual who was eligible to participate in the group benefits program dies; and

(2) shall pay for the coverage at the group rate as provided by Subsection (b).

SECTION 20. The heading to Section 1551.156, Insurance Code, is amended to read as follows:

Sec. 1551.156. COVERAGE OPTIONS FOR SURVIVING DEPENDENT [WHEN THERE IS NO SURVIVING SPOUSE].

SECTION 21. Section 1551.156, Insurance Code, is amended by adding Subsections (d) and (e) to read as follows:

(d) A person who is a surviving dependent of an annuitant may secure group health coverage after the death of the annuitant without evidence of the person's insurability if the annuitant was eligible to participate in the group benefits program of a retirement system named in this chapter but was not participating at the time of the individual's death.

(e) A surviving dependent seeking group coverage under Subsection (d):

(1) must apply for the coverage not later than the 30th day after the date on which the individual who was eligible to participate in the group benefits program dies; and

(2) shall pay for the coverage at the group rate as provided by Subsection (b).

SECTION 22. Section 1551.354, Insurance Code, is amended by amending Subsection (b) and adding Subsections (c) and (d) to read as follows:

(b) The executive director may cause the filing of an action for interpleader [a suit] concerning the claim in a district court in Travis County on behalf of the Employees Retirement System of Texas to protect the group coverage plan from double or multiple liability.

(c) A person may not pursue a counterclaim or other cause of action against the retirement system or its trustees, officers, employees, carriers, or administering firms in connection with the transactions and occurrences related to the interpleader action.

(d) A person who files suit against the retirement system or its trustees, officers, employees, carriers, or administering firms is liable for the costs and attorney's fees incurred in violation of Subsection (c).

SECTION 23. Subchapter H, Chapter 1551, Insurance Code, is amended by adding Section 1551.362 to read as follows:

Sec. 1551.362. SUBPOENA. Notwithstanding any other law, the executive director or the executive director's designee may issue a subpoena that conforms to Rule 176, Texas Rules of Civil Procedure, including a preappeal investigative subpoena or any subpoena otherwise authorized by the Texas Rules of Civil Procedure, that the executive director or designee determines necessary to protect the interests of a program or system administered by the retirement system.

SECTION 24. Section 1551.401, Insurance Code, is amended by adding Subsection (g) to read as follows:

(g) Except as provided by Section 1551.259(d), the retirement system may deposit to the credit of the fund any unclaimed money on a finding that a good faith effort has been made to locate the person entitled to the money.

SECTION 25. The following laws are repealed:

(1) Section 812.006, Government Code;

(2) Section 833.1035(c), Government Code;

(3) Section 833.104, Government Code;

(4) Section 835.1015(c), Government Code;

(5) Section 838.1035(c), Government Code;

(6) Section 838.104, Government Code;

(7) Section 840.1025(c), Government Code;

(8) Section 840.1027(c), Government Code; and

(9) Section 1551.221, Insurance Code.

SECTION 26. Sections 811.010 and 815.214, Government Code, and Section 1551.362, Insurance Code, as added by this Act, and Sections 815.512, Government Code, and 1551.354, Insurance Code, as amended by this Act, apply only to an action filed by or against the Employees Retirement System of Texas, the trustees, officers, or employees of the retirement system, or an administrator, carrier, or other governmental agency acting in cooperation with or on behalf of the retirement system on or after the effective date of this Act. An action filed before the effective date of this Act is governed by the law in effect when the action was filed, and that law is continued in effect for that purpose.

SECTION 27. Section 814.203(b), Government Code, as added by this Act, applies only to an application for disability retirement filed with the Employees Retirement System of Texas on or after the effective date of this Act. An application filed before the effective date of this Act is subject to the law in effect on the date the application was filed, and that law is continued in effect for that purpose.

SECTION 28. Section 837.003(e), Government Code, as added by this Act, applies only to a service retirement, disability retirement, or death benefit annuity that becomes payable by the Judicial Retirement System of Texas Plan Two on or after the effective date of this Act. A service retirement, disability retirement, or death benefit annuity that becomes payable by the Judicial Retirement System of Texas Plan Two before the effective date of this Act is governed by the law in effect on the date the annuity becomes payable, and that law is continued in effect for that purpose.

SECTION 29. Section 838.106(c), Government Code, as added by this Act, applies only to the establishment of service credit by a member of the Judicial Retirement System of Texas Plan Two who leaves office on or after the effective date of this Act. The establishment of service credit of a member of the Judicial Retirement System of Texas Plan Two who leaves office before the effective date of this Act is governed by the law in effect when the member leaves office, and that law is continued in effect for that purpose.

SECTION 30. This Act takes effect September 1, 2009.