BILL ANALYSIS |
C.S.H.B. 1884 |
By: Callegari |
Pensions |
Committee Report (Substituted) |
BACKGROUND AND PURPOSE
The Texas Legislature periodically evaluates the laws relating to the Teacher Retirement System of Texas (TRS) and makes changes to address the needs of the legislature and TRS. C.S.H.B. 1884 seeks to revise applicable laws relating to the operation and administration of TRS.
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RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
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ANALYSIS
C.S.H.B. 1884 amends the Government Code to revise the existing conditions for the eligibility of a member of the Teacher Retirement System of Texas (TRS) to retire and receive a standard service retirement annuity. The bill establishes that such a member is eligible to retire and receive such an annuity under either of the following conditions: the member is at least 65 years old and has at least five years of service credit in TRS or the member is at least 62 years old, has at least five years of service credit in the retirement system, and the sum of the member's age and amount of service credit in TRS equals 80. The bill removes provisions establishing a member's eligibility at the minimum ages of 60 and 50 with the requisite number of years of service to meet the rule of 80 and revises provisions relating to the percentage reductions in the standard annuity that are based on a member's age at the date of retirement and the minimum years of service credit. The bill decreases the standard annuity by five percent for each year of age under 62 years for a member who is eligible to retire regardless of age, either because the member meets the rule of 80 with at least five years of service credit or because the member has at least 30 years of service. The bill decreases the standard annuity by two percent for each year of age under 62 for a retiree who is eligible to retire regardless of age for either of those reasons who has at least five years of TRS service credit on or before August 31, 2104, and retires on or after September 1, 2014. The bill repeals certain provisions relating to a TRS member who becomes a member of TRS on or after September 1, 2007.
C.S.H.B. 1884 exempts from its provisions revising these eligibility requirements a person who retires under TRS on or after September 1, 2014, and who meets one or more of the following requirements on or before August 31, 2014: the person has attained age 50; the person's age and amount of service credit in the retirement system equal 70 or greater; or the person has at least 25 years of service credit in TRS. The bill restricts such eligibility determinations to service actually credited in TRS, the Employees Retirement System of Texas (ERS), or a retirement system participating in the proportionate retirement program on or before August 31, 2014. The bill specifies that purchased service credit in TRS is not considered actually credited if the service credit is established only after completion of an installment payment plan under which any installment payment is required to be made after August 31, 2014, but provides that such service credit is considered actually credited if payment in full for the purchase of service credit is made by a direct rollover or otherwise on or before August 31, 2014, or if payment in full by direct rollover or otherwise is made after that date and the member's request to purchase service credit occurred on or before August 31, 2014, and payment to purchase the service credit is made in accordance with uniform administrative requirements established by TRS. The bill provides that the reduction will be two percent for each year the member is less than age 60, instead of the five percent reduction for each year the member is less than age 60, for eligible TRS members who otherwise would be subject to the provisions removed by the bill that apply to a person who becomes a member of TRS on or after September 1, 2007.
C.S.H.B. 1884, effective September 1, 2013, requires TRS to make a one-time cost-of-living adjustment payable to annuitants receiving a monthly death or retirement benefit annuity. The bill establishes that in order to be eligible for the adjustment a person must be, on the effective date of the adjustment and disregarding any forfeiture of benefits, eligible to receive a standard annuity or disability retirement annuity payment, an optional service or disability retirement annuity payment as either a retiree or beneficiary, an annuity payment for certain beneficiaries of deceased active members or disability retirees, or an alternate payee annuity payment under a qualified domestic relations order. The bill specifies that in order for a retiree annuitant or a beneficiary under an optional retirement payment plan to be eligible for the cost-of-living adjustment, the annuitant must be living on the effective date of the adjustment and the effective date of the TRS member's retirement must have been on or before August 31, 1994. The bill specifies that in order for a beneficiary of a deceased active member or disability retiree to be eligible for the cost-of-living adjustment, the annuitant must be living on the effective date of the adjustment and the TRS member's date of death must have been on or before August 31, 1994. The bill specifies that in order for an alternate payee under a qualified domestic relations order to be eligible for the cost-of-living adjustment, the effective date of the election to receive the annuity payment must be on or before August 31, 1994.
C.S.H.B. 1884 establishes that a cost-of-living adjustment does not apply to payments made under statutory provisions prescribing annuity payments for retirees who receive a standard annuity in an amount fixed by statute, for disability retirees with less than 10 years of service credit, for disability retirees who receive a disability annuity in an amount fixed by statute, for active member survivor beneficiaries who receive a survivor annuity in an amount fixed by statute, for retiree survivor beneficiaries who receive a survivor annuity in an amount fixed by statute, or for participants in the deferred retirement option plan with regard to payments from their deferred retirement option plan accounts. The bill requires the cost-of-living adjustment to be made beginning with an annuity payable for the month of September 2013 and limits the amount of the adjustment to the lesser of an amount equal to three percent of the monthly benefit subject to the increase or $100 a month. The bill requires the TRS board of trustees to determine the eligibility for and the amount of any adjustment in monthly annuities in accordance with the bill's provisions regarding cost-of-living adjustments.
C.S.H.B. 1884 decreases from five to two percent the annual, prorated interest rate creditable to a member's account in TRS's deferred retirement option during the period of participation in the plan and until all benefits are distributed. The bill decreases from five to two percent the annual interest rate used to calculate the monthly interest earned on a member's contribution to the member's individual account within TRS. The bill specifies the rate of contributions for each TRS member, and provides that for service rendered on or after September 1, 2014, the rate of contributions for each member is the greater of 6.4 percent of the member's annual compensation or a percent of the member's annual compensation equal to the state contribution rate, but prohibits a member contribution from exceeding 6.9 percent. The bill removes provisions granting the TRS board of trustees the authority to increase the rate of contributions for each TRS member to not more than 6.58 percent of the member's annual compensation under certain conditions, prohibiting the TRS board of trustees from making a supplemental payment or imposing an increase in the rate of contributions if the board finds that after making the payment and imposing the increase the amortization period for the unfunded actuarial liabilities of the retirement system would exceed 30 years by one or more years, and granting authority to the board to delay making a supplemental payment required or authorized by the legislature by law as necessary to make certain determinations.
C.S.H.B. 1884 requires an employer, for each member the employer reports to TRS and for whom the employer is not making contributions to the federal Old-Age, Survivors, and Disability Insurance (OASDI) program, to contribute monthly to TRS for each such member an amount equal to one percent of the member's compensation. The bill requires the employer, in addition to any contributions required under statutory provisions prescribing contributions based on compensation above the statutory minimum, to make a monthly contribution to TRS for each member entitled to the minimum salary for certain school personnel under applicable current or former Education Code provisions an amount equal to one percent of the statutory minimum salary determined under those provisions. The bill specifies that such contributions are subject to the requirements of statutory provisions prescribing interest due from certain employers for unpaid or undocumented membership fees and contributions and must be used to fund the normal cost of TRS. The bill excludes an employer that is an institution of higher education from these provisions.
C.S.H.B. 1884 amends the Insurance Code, for purposes of the Texas Public School Retired Employees Group Benefits Act, to make a service retiree and any dependent of a service retiree ineligible to participate in an optional group health benefit plan, unless the retiree is at least 62 years of age or older and is ineligible under the Texas Employees Group Benefits Act and the State University Employees Uniform Insurance Benefits Act and meets other conditions prescribed in statute relating to taking a service retirement under TRS. The bill authorizes such a retiree, on the date the retiree reaches 62 years of age and under rules adopted by the trustee, to enroll in any coverage tier under the group program and to enroll, in the same coverage tier, the retiree's dependents who are enrolled in the group program as of the date the retiree reaches 62 years of age. The bill exempts from these provisions a person who takes a service retirement under TRS on or after September 1, 2014, and for whom, on or before August 31, 2014, the sum of the person's age and amount of service credit in the retirement system equals 70 or greater or who, on or before August 31, 2014, has at least 25 years of service credit in TRS. The bill restricts such eligibility determinations to service actually credited in TRS or ERS on or before August 31, 2014. The bill specifies that purchased service credit in TRS is not considered actually credited if the service credit is established only after completion of an installment payment plan under which any installment payment is required to be made after August 31, 2014, but provides that such service credit is considered actually credited if payment in full for the purchase of service credit is made by a direct rollover or otherwise on or before August 31, 2014, or if payment in full by direct rollover or otherwise is made after that date and the member's request to purchase service credit occurred on or before August 31, 2014, and payment to purchase the service credit is made in accordance with uniform administrative requirements established by TRS.
C.S.H.B. 1884, effective September 1, 2013, repeals a provision in the Texas School Employees Uniform Group Health Coverage Act requiring the coverage provided under a primary care coverage plan to be comparable in scope and, to the greatest extent possible, in cost to the coverage provided under the Texas Employees Group Benefits Act.
C.S.H.B. 1884 repeals the following provisions: · Sections 824.202(a-1) and (b-1), Government Code · Section 1579.103, Insurance Code
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EFFECTIVE DATE
Except as otherwise provided, September 1, 2014.
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COMPARISON OF ORIGINAL AND SUBSTITUTE
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While C.S.H.B. 1884 may differ from the original in minor or nonsubstantive ways, the following comparison is organized and highlighted in a manner that indicates the substantial differences between the introduced and committee substitute versions of the bill.
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