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A BILL TO BE ENTITLED
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AN ACT
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relating to retirement under public retirement systems for |
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employees of certain municipalities. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 1, Chapter 451, Acts of the 72nd |
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Legislature, Regular Session, 1991 (Article 6243n, Vernon's Texas |
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Civil Statutes), is amended to read as follows: |
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Sec. 1. SCOPE. (a) A retirement system is established by |
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this Act for employees of each municipality having a population of |
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more than 760,000 [600,000] and less than 860,000. |
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(b) Any [700,000; provided, however, that once such pension
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system becomes operative in any city, any] right or privilege |
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accruing to any member of a retirement system established by this |
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Act is [thereunder shall be] a vested right according to the terms |
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of this Act [and the same shall not be denied or abridged thereafter
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through any change in population of any such city taking such city
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out of the population bracket as herein prescribed, and said
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pension system shall continue to operate and function regardless of
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whether or not any future population exceeds or falls below said
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population bracket]. |
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(c) This Act continues to apply to a municipality described |
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by Subsection (a) and a retirement system established by this Act |
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continues to operate regardless of any change in the municipality's |
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population. |
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SECTION 2. Section 2, Chapter 451, Acts of the 72nd |
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Legislature, Regular Session, 1991 (Article 6243n, Vernon's Texas |
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Civil Statutes), is amended to read as follows: |
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Sec. 2. DEFINITIONS. The following words and phrases have |
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the meanings assigned by this section unless a different meaning is |
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plainly required by the context: |
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(1) "Accumulated deposits" means the amount standing |
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to the credit of a member derived from the deposits required to be |
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made by the member to the retirement system improved annually by |
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interest credited at a rate determined by the retirement board from |
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time to time upon the advice of the retirement board's actuary and |
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credited as of December 31 to amounts standing to the credit of the |
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member on January 1 of the same calendar year. |
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(2) "Actual retirement date" means the last day of the |
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month during which a member retires. |
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(3) "Actuarial equivalent" means any benefit of equal |
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present value when computed on the basis of actuarial tables |
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adopted by the retirement board from time to time upon the advice of |
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the retirement board's actuary. The actuarial tables adopted for |
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this purpose shall be tables that are acceptable to the Internal |
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Revenue Service and be clearly identified by resolution adopted by |
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the retirement board. |
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(4) "Actuary" means the technical advisor of the |
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retirement board regarding the operations which are based on |
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mortality, service, and compensation experience. |
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(5) "Agency of the municipality" means any agency or |
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instrumentality of the municipality or governmental or publicly |
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owned legal entity created by the municipality, before or after |
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[subsequent to] the effective date of this Act, to perform or |
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provide a public service or function and that employs at least one |
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employee to provide services or accomplish its public purpose. |
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(6) "Approved medical leave of absence" means any |
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absence authorized in writing by the member's employer for the |
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purpose of enabling the member to obtain medical care or treatment |
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or to recover from any sickness or injury. |
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(7) "Authorized leave of absence" means military leave |
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of absence, including a period of not more than 90 days after the |
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date of release from active military duty, or any other leave of |
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absence during which a member is otherwise authorized by law to |
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continue making contributions to the system. The term does not |
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include an approved medical leave of absence. |
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(8) "Average final compensation" means the average |
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monthly compensation, as defined and limited by Subdivision (12) of |
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this section, less overtime, incentive, and terminal pay, plus, (i) |
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amounts picked up by the employer pursuant to Section 10(e) of this |
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Act, and (ii) amounts that would be included in wages but for an |
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election under Section 125(d), 132(f)(4), 402(e)(3), 402(h)(1)(B), |
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402(k), or 457(b) of the code, [not otherwise included in the
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member's taxable income by reason of either an election under a
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"cafeteria" plan as described in Section 125 of the code or
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deferrals under a plan of deferred compensation within the scope of
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Section 457 of the code, to the extent not in excess of $12,500 for
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persons who first become members after 1995 that is earned by a
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member] during, as applicable: |
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(A) if the member has 120 months or more of |
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membership service, the 36 months of membership service which |
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yielded the highest average during the last 120 months of |
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membership service; |
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(B) if the member has less than 120 months of |
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membership service, but has at least 36 months of membership |
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service, then the average during the 36 months which yield the |
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highest average; or |
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(C) if the member does not have 36 months of |
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membership service, then the average during the member's months of |
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membership service. |
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The term does not include annual compensation in excess |
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of the dollar limit under Section 401(a)(17) of the code for any |
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employee who first becomes a member in a year commencing after 1995, |
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and that compensation shall be disregarded in determining average |
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final compensation. Any reduction for overtime, incentive, and |
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terminal pay shall not cause a member's compensation to be less than |
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the limit under Section 401(a)(17) of the code to the extent that |
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the compensation has already been reduced in accordance with |
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Subdivision (12). The dollar limitation shall be adjusted for cost |
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of living increases as provided under Section 401(a)(17) of the |
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code. |
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(9) "Beneficiary" means the member's designated |
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beneficiary. If there is no effective beneficiary designation on |
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the date of the member's death, or if the designated beneficiary |
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predeceases the member (or dies as a result of the same event that |
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caused the member's death and does not survive the member by 48 |
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hours), the member's spouse or, if the member does not have a |
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spouse, the member's estate shall be the beneficiary. |
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(10) "Board" means the boards of directors of an |
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employer that is not a municipality as described in Section 1 of |
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this Act. |
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(11) "Code" means the United States Internal Revenue |
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Code of 1986 (26 U.S.C. Section 1 et seq.) and its successors. |
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(12) "Compensation" means, with respect to any member, |
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such member's wages, within the meaning of Section 3401(a) of the |
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code (for purposes of income tax withholding at the source) but |
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determined without regard to any rules that limit the remuneration |
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included in wages based on the nature or location of the employment |
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or the services performed (such as the exception for agricultural |
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labor in Section 3401(a)(2) of the code). Compensation in excess of |
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the dollar limit under Section 401(a)(17) of the code shall be |
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disregarded in determining the compensation of [$12,500 per month
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for] any employee who first becomes a member in a year commencing |
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after 1995 [shall be disregarded]. The dollar [$12,500] limitation |
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shall be adjusted for cost of living increases as provided under |
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Section 401(a)(17) of the code. |
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(13) "Consumer price index" means the Consumer Price |
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Index for Urban Wage Earners and Clerical Workers (United States |
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City Average, All Items) published monthly by the Bureau of Labor |
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Statistics, United States Department of Labor, or its successor in |
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function. |
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(14) "Creditable service" means the total of prior |
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service, membership service, redeemed service, and service |
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purchased under Section 6 of this Act. |
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(15) "Current service annuity" means a series of equal |
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monthly payments payable for the member's life after retirement for |
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creditable [membership] service from funds of the retirement system |
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equal to: |
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(A) for Group A members, one-twelfth of the |
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product of 3.0 [2.7] percent [or a higher percentage established by
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the retirement board under Section 10(g) of this Act] of a member's |
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average final compensation multiplied by the number of months of |
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creditable [membership] service; and |
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(B) for Group B members, one-twelfth of the |
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product of 2.5 percent of a member's average final compensation |
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multiplied by the number of months of creditable service. |
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(16) "Deposits" means the amounts required to be paid |
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by members in accordance with the provisions of this Act. |
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(17) "Designated beneficiary" means any person, |
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trust, or estate properly designated on a form provided by the |
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retirement system by a member to receive benefits from the system in |
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the event of the member's death. If the member is married, an |
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individual other than the member's spouse may be the designated |
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beneficiary only if the spouse consents to such designation in the |
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form and manner prescribed by the retirement board. |
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(18) "Disability retirement" means the termination of |
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employment of a member because of disability with a disability |
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retirement allowance as provided in Section 8 of this Act. |
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(18A) "Early retirement annuity" means an annuity that |
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is the actuarial equivalent of a current service annuity that would |
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otherwise be payable at age 65 under this Act but that is reduced |
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based on the member's actual age in years and months. |
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(18B) "Early retirement eligible member" means a |
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member of Group B that: |
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(A) is at least 55 years of age; and |
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(B) has at least 10 years of creditable service, |
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excluding nonqualified permissive service credit. |
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(19) "Employer" means the municipality described in |
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Section 1 of this Act, the retirement board, or an agency of the |
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municipality. |
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(20) "Fund" means the trust fund containing the |
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aggregate of the assets of Fund No. 1 and Fund No. 2. |
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(21) "Fund No. 1" means the fund in which shall be kept |
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all accumulated deposits of members who have not withdrawn from the |
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system. |
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(22) "Fund No. 2" means the fund in which shall be kept |
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all money contributed by the city on behalf of city employees, by an |
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agency of the municipality on behalf of the agency's employees, and |
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by the retirement board on behalf of retirement board employees, |
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interest earned thereon, and all accumulations and earnings of the |
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system. |
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(23) "Governing body" means the city council of the |
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municipality described in Section 1 and its successors as |
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constituted from time to time. |
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(23A) "Group A" means the group of members of the |
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retirement system that includes each member who: |
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(A) began membership service on or after January |
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1, 1941, and on or before December 31, 2011; or |
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(B) returned to full-time employment on or after |
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January 1, 2012, and: |
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(i) was previously a member of Group A; |
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(ii) ceased to be a member of the retirement |
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system; |
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(iii) received a distribution of the |
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member's accumulated deposits; and |
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(iv) reinstated all of the member's prior |
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membership service credit. |
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(23B) "Group B" means the group of members of the |
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retirement system that includes each member who: |
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(A) began membership service on or after January |
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1, 2012; or |
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(B) returned to full-time employment on or after |
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January 1, 2012, and: |
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(i) was previously a member of Group A; |
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(ii) ceased to be a member of the retirement |
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system; |
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(iii) received a distribution of the |
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member's accumulated deposits; and |
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(iv) has not reinstated all of the member's |
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prior membership service credit. |
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(25) "Investment consultant" means the person or |
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entity that monitors the investment performance of the system and |
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provides such other services as requested by the retirement board. |
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(26) "Investment manager" means the persons or |
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entities that have the power to manage, acquire, or dispose of |
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assets of the fund on behalf of the retirement system and that |
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acknowledge fiduciary responsibility to the system in writing. An |
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investment manager must be a person, firm, or corporation |
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registered as an investment adviser under the Investment Advisers |
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Act of 1940, a bank, or an insurance company qualified to manage, |
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acquire or dispose of assets under the laws of more than one state |
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including this state that meets the requirements of Section |
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802.204, Government Code. |
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(27) "Life annuity" means a series of equal monthly |
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payments, payable after retirement for a member's life, consisting |
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of a combination of prior service pension and current service |
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annuity, or early retirement annuity, to which the member is |
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entitled. |
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(28) "Life annuity (modified cash refund)" means a |
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life annuity providing that, in the event of death of the retired |
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member before that member has received payments under the life |
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annuity totaling the amount of that member's accumulated deposits |
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at the date of retirement, the excess of such accumulated deposits |
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over the payments made shall be paid in one lump sum to the member's |
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designated beneficiary. |
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(29) "Malfeasance" means willful misconduct or the |
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knowingly improper performance of any act, duty, or responsibility |
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under this Act, including non-performance, that interrupts, |
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interferes with, or attempts to interfere with the administration, |
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operation, and management of the retirement system or any person's |
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duties under this Act. |
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(30) "Member" means any: |
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(A) regular full-time employee of an employer; |
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and |
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(B) former regular full-time employee who has not |
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withdrawn the member's accumulated deposits from the system. |
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In any case of doubt regarding the eligibility of any |
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employee to become or remain a member of the retirement system, or |
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the assignment of a member to a group, the decision of the |
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retirement board is final. |
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(31) "Membership service" means the period of time on |
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or after January 1, 1941, during which a person is or was employed |
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as a regular full-time employee or is or was on an authorized leave |
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of absence and who is eligible for participation in the system and |
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pays into and keeps on deposit the amounts of money prescribed to be |
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paid by the member into the system. The term includes redeemed |
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membership service. |
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(32) "Normal retirement age" means: |
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(A) for members of Group A: |
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(i) age 62; |
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(ii) [(B)] 55 years of age with 20 years of |
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creditable service; or |
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(iii) [(C)] 23 years of creditable service, |
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regardless of years of age; and |
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(B) for members of Group B: |
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(i) 62 years of age with 30 years of |
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creditable service, excluding nonqualified permissive service |
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credit; or |
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(ii) 65 years of age with five years of |
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creditable service, excluding nonqualified permissive service |
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credit. |
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(33) "Normal retirement date" means: |
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(A) for members of Group A, the earlier of the |
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date a member attains a normal retirement age or the date on which |
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the member has completed 23 years of creditable service; and |
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(B) for members of Group B, the date the member |
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reaches normal retirement age under Subdivision (32)(B) of this |
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section [or a lesser number of years of creditable service
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established by the retirement board under Section 10(g) of this
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Act]. |
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(34) "Prior service" means membership service as an |
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employee of the city: |
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(A) rendered by a person prior to January 1, |
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1941, for which a pension credit is allowable under prior law |
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governing the retirement system of that city; and |
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(B) which for a person after January 1, 1941, |
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includes redeemed membership [prior] service. |
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(35) "Prior service pension" means a series of equal |
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monthly payments payable from funds of the retirement system for a |
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member's life after retirement for prior service equal to |
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one-twelfth of the product of 3.0 [2.7] percent [or a greater
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percentage established by the retirement board under Section 10(g)
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of this Act] of the member's average monthly earnings during a |
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period of five years preceding January 1, 1941, multiplied by the |
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number of months of prior service. [On retirement at an age other
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than normal retirement age, the monthly prior service pension
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herein prescribed shall be the actuarial equivalent thereof at the
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member's actual retirement date, based on the schedule or schedules
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of payments approved by the actuary and adopted by the retirement
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board and in effect on the member's actual retirement date.] |
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(36) "Qualified domestic relations order" has the |
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meaning assigned by Section 804.001, Government Code, and its |
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subsequent amendments. |
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(37) "Redeemed membership service" means membership |
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service reinstated in accordance with Section 5(e) of this Act. |
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(38) "Redeemed prior service" means prior service |
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reinstated in accordance with Section 5(e) of this Act. |
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(39) "Regular full-time employee" means an individual |
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who is employed by the municipality, an agency of the municipality, |
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or the retirement board who is not a commissioned civil service |
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police officer or fire fighter, a fire or police cadet employed |
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under civil service procedures, the mayor, or a member of the |
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governing body; who serves in a position that is classified in the |
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annual budget of an employer for employment for the full calendar |
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year; and who works or is budgeted for 30 hours or more in a normal |
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40-hour work week. The term does not include an individual whose |
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position is classified as seasonal or temporary by the employer, |
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even if the individual works 30 hours or more in a normal 40-hour |
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work week in which the individual is employed. |
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(40) "Retired member" means a person who because of |
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creditable service or age is qualified to receive and who has |
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retired and is eligible to continue receiving a retirement |
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allowance as provided by this Act. |
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(41) "Retirement" means the termination of employment |
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of a member after the member becomes entitled to receive a |
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retirement allowance in accordance with the provisions of this Act. |
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(42) "Retirement allowance" means the life annuity |
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(modified cash refund) to which a member may be entitled under this |
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Act, including annuities payable on disability retirement. |
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(43) "Retirement board" means the board of trustees of |
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the retirement and pensioning system herein created for the purpose |
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of administering the retirement system. |
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(44) "Retirement system," "retirement and pensioning |
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system," "pension system," or "system" means the retirement and |
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pensioning system created by this Act for a municipality governed |
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by this Act or a retirement system established under this Act. |
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(45) "Year of creditable service" means a 12-month |
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period of creditable service determined in accordance with uniform |
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and nondiscriminatory rules established by the retirement board. |
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SECTION 3. Section 3, Chapter 451, Acts of the 72nd |
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Legislature, Regular Session, 1991 (Article 6243n, Vernon's Texas |
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Civil Statutes), is amended to read as follows: |
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Sec. 3. ESTABLISHMENT AND APPLICABILITY. Subject to the |
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authority granted the retirement board in Section 7(d) of this |
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Act:[,] |
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(1) members who retired, and the beneficiaries of |
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members who died, prior to October 1, 2011 [1999], shall continue to |
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receive the same retirement allowances or benefits they were |
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entitled to receive prior to that date, together with any benefit |
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increase authorized under this Act; |
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(2) members of the retirement system on or before |
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December 31, 2011, shall be enrolled as members of Group A; and |
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(3) persons that first become members of the |
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retirement system on or after January 1, 2012, shall be enrolled in |
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Group B. |
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SECTION 4. Subsections (b), (c), and (e), Section 5, |
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Chapter 451, Acts of the 72nd Legislature, Regular Session, 1991 |
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(Article 6243n, Vernon's Texas Civil Statutes), are amended to read |
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as follows: |
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(b) Membership in the retirement system consists of Groups A |
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and B, each of which consists of the following groups: |
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(1) the active-contributory members group, which |
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consists of all members, other than those on authorized leave of |
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absence, who are making deposits; |
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(2) the active-noncontributory members group, which |
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consists of all employees on approved medical leave of absence and |
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all employees of an employer, other than inactive-contributory |
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members, who have been active-contributory members but who are no |
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longer so because they are not regular full-time employees; |
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(3) the inactive-contributory members group, which |
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consists of all members who are on an authorized leave of absence |
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and who continue to make deposits into the retirement system during |
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their absence; |
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(4) the inactive-noncontributory members group, which |
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consists of all members whose status as an employee has been |
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terminated before retirement or disability retirement but who are |
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still entitled to or who may become entitled to, or whose |
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beneficiary may become entitled to, benefits from the retirement |
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system; and |
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(5) the retired members group, which consists of all |
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members who have retired and who are receiving or who are entitled |
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to receive a retirement allowance. |
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(c) A [An active-noncontributory] member becomes an |
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active-contributory member immediately on resuming employment as a |
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regular full-time employee or on returning from an approved medical |
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leave of absence, as applicable. A member who resumes regular |
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full-time employment is assigned to the group for which the member |
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is qualified under Subdivisions (23A) and (23B), Section 2 of this |
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Act. |
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(e) Any person who has ceased to be a member and has received |
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a distribution of the person's accumulated deposits may have the |
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person's membership service in the original group in which the |
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membership service was earned [or prior service] reinstated if the |
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person is reemployed as a regular full-time employee [for a
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continuous period of 24 months] and deposits into the system[,
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within a reasonable period established by the retirement board on a
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uniform and nondiscriminatory basis,] the accumulated deposits |
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withdrawn by that person, together with an interest payment equal |
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to the amount withdrawn multiplied by an interest factor. The |
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interest factor is equal to the annually compounded interest rate |
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assumed to have been earned by the fund beginning with the month and |
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year in which the person withdrew the person's accumulated deposits |
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and ending with the month and year in which the deposit under this |
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subsection is made. The interest rate assumed to have been earned |
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by the fund for any period is equal to the interest rate credited |
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for that period to the accumulated deposits of members, divided by |
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0.75. |
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SECTION 5. Section 6, Chapter 451, Acts of the 72nd |
|
Legislature, Regular Session, 1991 (Article 6243n, Vernon's Texas |
|
Civil Statutes), is amended by amending Subsections (c) and (f) and |
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adding Subsections (e-1), (e-2), and (e-3) to read as follows: |
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(c)(1) Uniformed service creditable in the retirement |
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system is any service required to be credited by the Uniformed |
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Services Employment and Reemployment Rights Act of 1994 (38 U.S.C. |
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Section 4301 et seq.), as amended, and certain federal duty service |
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in the armed forces of the United States performed before the |
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beginning of employment with the employer, other than service as a |
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student at a service academy, as a member of the reserves, or any |
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continuous active military service lasting less than 90 days. A |
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member may use uniformed service to establish creditable service |
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subject to the conditions of Subdivisions (2)-(6) of this |
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subsection. |
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(2) A member may establish uniformed creditable |
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service for an authorized leave of absence from employment for |
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military service under this subsection by making periodic payments |
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or a lump-sum payment. If the member elects to make periodic |
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payments, the member shall make, each pay period during the period |
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that the member is on authorized leave, a deposit in an amount equal |
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to the amount of the member's deposit for the last complete pay |
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period that the member was paid by the employer as a regular |
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full-time employee. If the member elects to make a lump-sum |
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payment, the member and the employer shall, not later than the fifth |
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anniversary of the date the member returns to employment with the |
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employer, make separate lump-sum payments equal to the total amount |
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of the contributions the member would have made if the member had |
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made periodic contributions. A lump-sum payment may not exceed the |
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amount required under the Uniformed Services Employment and |
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Reemployment Rights Act of 1994 (38 U.S.C. Section 4301 et seq.), as |
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amended, if the member makes the contributions within the time |
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required by that Act. The employee's employer shall make |
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contributions to the retirement fund as though the member has |
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continued employment at the salary of the member for the last |
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complete pay period before the absence for military service. The |
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employer's contributions shall be made each pay period if the |
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member is making periodic payments during the period. During an |
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authorized leave of absence, the member accrues membership service |
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for the pay periods in which the member makes a deposit. Membership |
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service credit for a lump-sum payment accrues at the time of |
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payment. |
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(3) A member may establish uniformed creditable |
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service for active federal duty service in the armed forces of the |
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United States, other than service as a student at a service academy, |
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as a member of the reserves, or any continuous active military |
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service lasting less than 90 days, performed before the first day of |
|
employment of the member's most recent membership in the retirement |
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system or its predecessor system. To establish creditable service |
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under this subdivision, the member must contribute a lump-sum |
|
payment equal to 25 percent of the estimated cost of the retirement |
|
benefits the member will be entitled to receive. The retirement |
|
board will determine the required contribution based on a procedure |
|
recommended by the actuary and approved by the retirement board. |
|
(4) A member is not eligible to establish uniformed |
|
service credit unless the member was released from active military |
|
duty under conditions other than dishonorable. |
|
(5) A member may not establish creditable service in |
|
the retirement system for uniformed service for more than the |
|
greater of the creditable service required under the Uniformed |
|
Services Employment and Reemployment Rights Act of 1994 (38 U.S.C. |
|
Section 4301 et seq.), as amended, or 48 months of creditable |
|
service in the retirement system for uniformed service under this |
|
subsection. A member is not precluded from purchasing qualified |
|
military service to which the member is entitled solely because the |
|
member, before beginning a leave of absence for qualified military |
|
service, purchased creditable service for military service |
|
performed before becoming employed by the employer. |
|
(6) After the member makes the deposit required by |
|
this subsection, the retirement system shall grant the member one |
|
month of creditable service for each month of creditable uniformed |
|
service established under this subsection. |
|
(e-1) An active contributory member that is eligible for |
|
retirement may file a written application to convert to creditable |
|
service at retirement all or part of the member's sick leave accrued |
|
with the employer that is eligible for conversion. The application |
|
must be approved by the retirement board. The member may not |
|
convert sick leave for which the member is entitled to be paid by |
|
the employer. Sick leave hours may be converted in pay period |
|
increments for the purpose of increasing creditable service that is |
|
used in the calculation of benefits. Sick leave hours may not be |
|
used to reach retirement eligibility. Both the employer and the |
|
member must make the equivalent amount of retirement contributions |
|
that would have been made had the sick hours been exercised and used |
|
as sick leave hours. |
|
(e-2) Nonqualified permissive creditable service may be |
|
purchased only as provided by this subsection. A member may |
|
purchase nonqualified permissive creditable service: |
|
(1) only to the extent permitted under both this |
|
subsection and Section 415(n) of the code; |
|
(2) in an amount that: |
|
(A) for each purchase, is not less than one |
|
month; and |
|
(B) when all amounts purchased under this |
|
subsection are combined, is not more than 60 months; and |
|
(3) only if the member has reinstated all prior |
|
membership service in: |
|
(A) Groups A and B if the member was initially |
|
enrolled as a member of Group A, but ceased to be a member of Group |
|
A, by: |
|
(i) first reinstating all prior membership |
|
service in Group A; |
|
(ii) next reinstating all prior membership |
|
service in Group B; and |
|
(iii) then purchasing the nonqualified |
|
permissive creditable service; or |
|
(B) Group B, if the member was initially enrolled |
|
as a member of Group B, by: |
|
(i) first reinstating all prior membership |
|
service in Group B; and |
|
(ii) then purchasing the nonqualified |
|
permissive creditable service. |
|
(e-3) Nonqualified permissive creditable service purchased |
|
by members of Group B is not included in the creditable service |
|
required to qualify a member for normal or early retirement |
|
eligibility. |
|
(f) The full actuarial cost of noncontributory creditable |
|
service purchased as provided by Subsections [Subsection] (e), |
|
(e-1), (e-2), and (e-3) of this section is payable by the member |
|
purchasing the credit. |
|
SECTION 6. Section 7, Chapter 451, Acts of the 72nd |
|
Legislature, Regular Session, 1991 (Article 6243n, Vernon's Texas |
|
Civil Statutes), is amended by amending Subsections (a), (l), and |
|
(z), and adding Subsections (a-1) and (ii) to read as follows: |
|
(a) Except as provided by Subsection (b) of this section, a |
|
member who retires on or after the member's normal retirement date |
|
for the group in which the member is enrolled, or a member of Group B |
|
eligible for early retirement who retires, and applies in writing |
|
for a retirement allowance shall receive the [a] life annuity |
|
(modified cash refund) or the early retirement annuity to which the |
|
member is entitled. An annuity begins [beginning] on the last day |
|
of the month after the month in which the member retired. Unless |
|
Section 8 of this Act applies, or the member is an early retirement |
|
eligible member of Group B, a member whose employment by the |
|
employer terminates before the member's normal retirement date is |
|
entitled to a distribution of the member's accumulated deposits in |
|
a single lump sum. On receiving that distribution, a member is not |
|
entitled to any other benefit under this Act. If a member has at |
|
least five years of creditable service and does not withdraw the |
|
member's accumulated deposits, the member is entitled to a life |
|
annuity (modified cash refund) beginning on the first day of the |
|
month after the month in which the member's normal retirement date |
|
occurs. |
|
(a-1) If not already nonforfeitable, a member's retirement |
|
benefit becomes nonforfeitable at normal retirement age. |
|
(l) A member may file a written designation, which, if |
|
approved by the retirement board, shall entitle the member, on |
|
retirement, to receive the actuarial equivalent of the life annuity |
|
in the form of one of the following options: |
|
(1) Option I. 100 Percent Joint and Survivor Annuity. |
|
This option is a reduced monthly annuity payable to the member but |
|
with the provision that on the member's death the annuity shall be |
|
continued throughout the life of and be paid to such person as the |
|
member shall designate before the member's actual retirement date. |
|
(2) Option II. 50 Percent Joint and Survivor Annuity. |
|
This option is a reduced monthly annuity payable to the member but |
|
with the provision that on the member's death one-half of the |
|
annuity shall be continued throughout the life of and be paid to |
|
such person as the member shall designate before the member's |
|
actual retirement date. |
|
(3) Option III. 66-2/3 Percent Joint and Survivor |
|
Annuity. This option is a reduced monthly annuity payable to the |
|
member but with the provision that on the member's death two-thirds |
|
of the annuity shall be continued throughout the life of and be paid |
|
to such person as the member shall designate before the member's |
|
actual retirement date. |
|
(4) Option IV. Joint and 66-2/3 Percent Last Survivor |
|
Annuity. This option is a reduced monthly annuity payable to the |
|
member but with the provision that two-thirds of the annuity to |
|
which the member would be entitled shall be continued throughout |
|
the life of and be paid to the survivor after the death of either the |
|
member or such person as the member shall designate before the |
|
member's actual retirement date. |
|
(5) Option V. 15-Year Certain and Life Annuity. This |
|
option is a reduced annuity payable to the member for life. In the |
|
event of the member's death before 180 monthly payments have been |
|
made, the remainder of the 180 payments shall be paid to the |
|
member's beneficiary or, if there is no beneficiary, to the member's |
|
estate. |
|
(6) Option VI. Equivalent Benefit Plan. If a member |
|
requests in writing, any other form of benefit or benefits may be |
|
paid either to the member or to such person or persons as the member |
|
shall designate before the member's actual retirement date, |
|
provided that the benefit plan requested by the member is certified |
|
by the actuary for the system to be the actuarial equivalent of the |
|
life annuity with guaranteed refund of the retired member's |
|
accumulated deposits. If, on the death of the member and all other |
|
persons entitled to receive payments under an optional benefit, the |
|
member's accumulated deposits as of the member's actual retirement |
|
date exceed the sum of all payments made under that optional |
|
benefit, that excess shall be paid in one lump sum to the member's |
|
beneficiary. A member selecting this option may elect to receive |
|
(i) either a life annuity or one of the actuarially equivalent |
|
annuities described by Subdivisions (1)-(5) and (ii) a lump-sum |
|
payment upon retirement. If a member requests a lump-sum payment, |
|
the annuity requested by the member shall be actuarially reduced as |
|
a result of the lump-sum payment. The lump-sum payment may not |
|
exceed an amount equal to the total amount of 60 monthly life |
|
annuity payments. Active-contributory members that reach normal |
|
retirement age may upon retirement elect to participate in a |
|
backward deferred retirement option program ("backward DROP") that |
|
permits a minimum participation period of one month and a maximum |
|
participation period of 60 months. This deferred retirement option |
|
is subject to retirement board policies issued in compliance with |
|
the code. No interest will be paid on, or added to, any backward |
|
DROP payment. |
|
(z) If the person designated in writing by the member under |
|
Option I, Option II, or Option III, or, excluding a joint and last |
|
survivor option, any retirement option that includes a joint and |
|
survivor option, predeceases the retired member, the reduced |
|
annuity of a retired member who selected the optional lifetime |
|
retirement annuity shall be increased to the standard service |
|
retirement annuity that the retiree would have been entitled to |
|
receive if the retired member had not selected Option I, Option II, |
|
or Option III. The standard service retirement annuity shall be |
|
appropriately adjusted for early retirement and for the |
|
postretirement increases in retirement benefits. The increase in |
|
the annuity under this subsection is payable to the retired member |
|
for life and begins with the later of the monthly payment made to |
|
the retired member for the month following the month in which the |
|
person designated by the member dies or the month following the |
|
month in which the retired member gives the system notice of the |
|
designated person's death. |
|
(ii) If a member dies while performing qualified military |
|
service, the beneficiaries of the member are entitled to any |
|
additional benefits, other than benefit accruals relating to the |
|
qualified military service, that would have been provided if the |
|
member had returned from the military leave of absence and then |
|
terminated employment on account of death. |
|
SECTION 7. Section 9, Chapter 451, Acts of the 72nd |
|
Legislature, Regular Session, 1991 (Article 6243n, Vernon's Texas |
|
Civil Statutes), is amended by amending Subsection (a) and adding |
|
Subsections (c) through (g) to read as follows: |
|
(a) Notwithstanding any other provisions of this Act, the |
|
annual benefit provided with respect to any member may not exceed |
|
the benefits allowed for a government-defined benefit plan |
|
qualified under Section 401 [415] of the code. The maximum benefits |
|
allowed under this section shall increase each year to the extent |
|
permitted by annual cost of living increase adjustments announced |
|
by the United States secretary of the treasury under Section 415(d) |
|
of the code and the increased benefit limits shall apply to members |
|
who have terminated employment, including members who have |
|
commenced to receive benefits, before the effective date of the |
|
adjustment. |
|
(c) A member who retires after reaching normal retirement |
|
age and continues or resumes employment with an employer in a |
|
position that is required to participate in another retirement |
|
system maintained by the employer continues to be eligible to |
|
receive the retirement allowance provided under this Act. |
|
(d) The retirement board shall suspend the retirement |
|
allowance of a retired member who resumes employment with an |
|
employer within the period of time prescribed by the retirement |
|
board in the board's policy, or who resumes employment after |
|
retirement as a regular full-time employee of an employer. The |
|
retirement board shall reinstate the member's retirement allowance |
|
as provided under Subsection (f) of this section. |
|
(e) The retirement board shall suspend the retirement |
|
allowance of a retired member who resumes employment with an |
|
employer in a position that is not required to participate in |
|
another retirement system maintained by an employer, and who is not |
|
a regular full-time employee of an employer, if the member works |
|
for, or is compensated by, an employer for more than 1,508 hours in |
|
any rolling 12-month period after the member resumes employment |
|
with the employer. The retirement board shall reinstate the |
|
member's retirement allowance as provided under Subsection (f) of |
|
this section. |
|
(f) A member whose retirement allowance is suspended under |
|
Subsection (d) or (e) of this section may apply in writing for |
|
reinstatement of the retirement allowance when the member retires |
|
again. The retirement system shall calculate the reinstated |
|
retirement allowance based on the member's total creditable |
|
service, reduced actuarially to reflect the gross amount of total |
|
retirement allowance paid to the member prior to suspension of the |
|
retirement allowance. |
|
(g) The retirement system and the employer shall adopt and |
|
amend procedures for the exchange of information in order to |
|
implement the provisions of this section. |
|
SECTION 8. Subsection (a), Section 10, Chapter 451, Acts of |
|
the 72nd Legislature, Regular Session, 1991 (Article 6243n, |
|
Vernon's Texas Civil Statutes), is amended to read as follows: |
|
(a) Each active-contributory member shall make deposits to |
|
the retirement system at a rate equal to eight [seven] percent of |
|
the member's base compensation, pay, or salary, exclusive of |
|
overtime, incentive, or terminal pay or at a higher contribution |
|
rate approved by a majority vote of regular full-time employee |
|
members. Deposits shall be made by payroll deduction each pay |
|
period. If a regular full-time employee works at least 75 percent |
|
of a normal 40-hour work week but less than the full 40 hours, the |
|
employee shall make deposits as though working a normal 40-hour |
|
work week even though the rate of contribution may exceed eight |
|
[seven] percent of the employee's actual compensation, pay, or |
|
salary, and the employee's average final compensation shall be |
|
computed on the basis of the compensation, pay, or salary for a |
|
normal 40-hour work week. No deposits may be made nor membership |
|
service credit received for periods during which an employee's |
|
authorized normal work week is less than 75 percent of a normal |
|
40-hour work week. A person who is eligible for |
|
inactive-contributory membership status and who chooses to be an |
|
inactive-contributory member shall make deposits to the retirement |
|
system each pay period in an amount that is equal to the amount of |
|
the member's deposit for the last complete pay period that the |
|
member was a regular full-time employee. The regular full-time |
|
employee members may increase, by a majority vote of all such |
|
members voting at an election to consider an increase in |
|
contributions, each member's contributions above eight [seven] |
|
percent or above the higher rate in effect and approved by majority |
|
vote in whatever amount the retirement board recommends. Each |
|
employer shall contribute amounts equal to eight [seven] percent of |
|
the compensation, pay, or salary of each active-contributory member |
|
and each inactive-contributory member employed by the employer, |
|
exclusive of overtime, incentive, or terminal pay, or a higher |
|
contribution rate agreed to by the employer. If a regular full-time |
|
employee of the employer works at least 75 percent of a normal |
|
40-hour work week but less than the full 40 hours, the employer |
|
shall make contributions for that employee as though that employee |
|
works a normal 40-hour work week even though the rate of |
|
contribution may exceed eight [seven] percent of that employee's |
|
actual compensation, pay, or salary. The governing body of the city |
|
may authorize the city to make additional contributions to the |
|
system in whatever amount the governing body may determine. If the |
|
governing body authorizes additional contributions to the system by |
|
the city for city employees, the board of each other employer shall |
|
[may] increase the contributions for such employer's respective |
|
employees by the same percentage. Employer contributions shall be |
|
made each pay period. |
|
SECTION 9. Section 12, Chapter 451, Acts of the 72nd |
|
Legislature, Regular Session, 1991 (Article 6243n, Vernon's Texas |
|
Civil Statutes), is amended by adding Subsection (d-1) and amending |
|
Subsection (e) to read as follows: |
|
(d-1) Members of the retirement system that are enrolled in |
|
Group A shall have the rights and be entitled to the benefits |
|
provided under this Act for members of Group A. Members of the |
|
retirement system that are enrolled in Group B shall have the rights |
|
and be entitled to the benefits provided under this Act for members |
|
of Group B. A member may not be a member of both Group A and Group B. |
|
(e) Notwithstanding any provision of this Act to the |
|
contrary that would otherwise limit a distributee's election, a |
|
distributee may elect, at the time and in the manner prescribed by |
|
the retirement board, to have any portion of an eligible rollover |
|
distribution paid directly to an eligible retirement plan specified |
|
by the distributee in a direct rollover. For purposes of this |
|
subsection: |
|
(1) An eligible rollover distribution is any |
|
distribution of all or any portion of the balance to the credit of |
|
the distributee, except that an eligible rollover distribution does |
|
not include: |
|
(A) any distribution that is one of a series of |
|
substantially equal periodic payments (not less frequently than |
|
annually) made over the life (or life expectancy) of the |
|
distributee or the joint lives (or joint life expectancies) of the |
|
distributee and the distributee's designated beneficiary; |
|
(B) any series of payments for a specified period |
|
of ten years or more; |
|
(C) any distribution to the extent such |
|
distribution is required under Section 401(a)(9) of the code; or |
|
(D) the portion of any distribution that is not |
|
includable in gross income unless the distributee directs that the |
|
eligible rollover distribution be transferred directly to a |
|
qualified trust that is part of a defined contribution plan that |
|
agrees to separately account for the portion that is includable in |
|
gross income and the portion that is not, or to an individual |
|
retirement account or individual annuity [(determined without
|
|
regard to the exclusion for net unrealized appreciation with
|
|
respect to employer securities)]. |
|
(2) An "eligible retirement plan" is an individual |
|
retirement account described in Section 408(a) of the code, an |
|
individual retirement annuity described in Section 408(b) of the |
|
code, an annuity plan described in Section 403(a) of the code, [or] |
|
a qualified trust described in Section 401(a) of the code, an |
|
eligible deferred compensation plan described in Section 457(b) of |
|
the code that is maintained by an eligible employer described in |
|
Section 457(e)(1)(A) of the code, or an annuity contract described |
|
in Section 403(b) of the code, that accepts the distributee's |
|
eligible rollover distribution. However, in the case of an |
|
eligible rollover distribution to a designated beneficiary who is |
|
not the surviving spouse, or the spouse or former spouse under a |
|
qualified domestic relations order, an eligible retirement plan is |
|
an individual retirement account or individual retirement annuity |
|
only. |
|
(3) A "distributee" includes an employee or former |
|
employee. In addition, the employee's or former employee's |
|
surviving spouse or designated beneficiary and the employee's or |
|
former employee's spouse or former spouse who is the alternate |
|
payee under a qualified domestic relations order, as defined in |
|
Section 414(p) of the code, are distributees with regard to the |
|
interest of the spouse or the former spouse. |
|
(4) A "direct rollover" is a payment by the retirement |
|
system to the eligible retirement plan specified by the |
|
distributee. |
|
SECTION 10. The following laws are repealed: |
|
(1) Subsection (p), Section 9, Chapter 451, Acts of |
|
the 72nd Legislature, Regular Session, 1991 (Article 6243n, |
|
Vernon's Texas Civil Statutes); and |
|
(2) Subsection (g), Section 10, Chapter 451, Acts of |
|
the 72nd Legislature, Regular Session, 1991 (Article 6243n, |
|
Vernon's Texas Civil Statutes). |
|
SECTION 11. 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 October 1, 2011. |