By: Seliger  S.B. No. 642
         (In the Senate - Filed February 14, 2011; February 23, 2011,
  read first time and referred to Committee on State Affairs;
  March 28, 2011, reported favorably by the following vote:  Yeas 5,
  Nays 3; March 28, 2011, sent to printer.)
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to optional annuity increases for certain retirees and
  beneficiaries of the Texas Municipal Retirement System.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 853.404, Government Code, is amended by
  amending Subsection (c) and adding Subsection (f) to read as
  follows:
         (c)  The governing body of a participating municipality that
  adopts an ordinance under Section 854.203 providing for increased
  annuities effective January 1 of a designated year may further
  provide in the ordinance that increases in annuities will be
  credited effective January 1 of each year following the designated
  year based on recomputations made as provided by Section 854.203(b) 
  [854.203(b)(1)] for each year following the initial computation,
  and using the fraction specified in the ordinance as required under
  Section 854.203(b) [854.203(b)(2)] in the recomputations.
         (f)  If an ordinance described by Subsection (c) will cease
  to be in effect for a future year, or if an increase in annuities
  specified in an ordinance described by Subsection (c) will be
  changed or discontinued as provided by this section, the governing
  body of the participating municipality shall provide notice to
  members and annuitants by regular mail not later than the 60th day
  before the date on which the ordinance will cease to be in effect or
  the increase will be changed or discontinued. For an annuitant who
  receives a periodic check or advice of deposit from the retirement
  system by regular mail, the notice required by this subsection must
  be included with the annuitant's check or advice of deposit.
         SECTION 2.  Section 854.203, Government Code, is amended by
  amending Subsections (b) and (f) and adding Subsection (b-1) to
  read as follows:
         (b)  The amount of annuity increase under this section is
  computed by one of the following methods:
               (1)  as the sum of the prior and current service
  annuities on the effective date of retirement of the person on whose
  service the annuities are based, multiplied by:
                     (A) [(1)]  the percentage change in the Consumer
  Price Index for All Urban Consumers, published by the Bureau of
  Labor Statistics of the United States Department of Labor, from
  December of the year immediately preceding the effective date of
  the person's retirement to the December that is 13 months before the
  effective date of the ordinance providing the increase; and
                     (B) [(2)]  30 percent, 50 percent, or 70 percent,
  as specified by the governing body in the ordinance, except that if
  the governing body has specified a different percentage in an
  ordinance adopted under Section 853.404(c) and in effect on
  December 31, 1999, the percentage used in computing annuity
  increases for retirees of that municipality remains in effect until
  changed or discontinued under Section 853.404; or
               (2)  as the sum of the prior and current service
  annuities of the person on whose service the annuities are based on
  the effective date of the annuity increase multiplied by the
  percentage increase specified in the ordinance adopted by the
  governing body, except that an adjustment to an annuity after the
  annuity starting date for annuity increases under this subdivision
  may not cause an annuitant's annuity to exceed the amount that the
  annuitant would be entitled to had the maximum amount of the annuity
  increase allowed under Subdivision (1) been applied to the
  annuitant's annuity.
         (b-1)  An increase under Subsection (b)(2) applies to all
  annuities for which the effective date of retirement of the person
  on whose service the annuity is based is at least 12 months before
  the effective date of the increase.  Notwithstanding any other
  provision of this subtitle, each distribution of a benefit under
  this subtitle must be determined and made in accordance with
  Section 401(a)(9), Internal Revenue Code of 1986. The board of
  trustees may adopt rules it considers necessary to comply with the
  distribution requirements.
         (f)  An increase granted to an annuitant under Subsection
  (b)(2), or the [The] amount by which an increase under Subsection
  (b)(1) [this section] exceeds all previously granted increases to
  an annuitant is:
               (1)  payable as a prior service annuity;
               (2)  [, is] an obligation of the municipality's account
  in the municipality accumulation fund;[,] and
               (3)  [is] subject to reduction under Section
  855.308(f).
         SECTION 3.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution.  If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect September 1, 2011.
 
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