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INTRODUCED
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HOUSE COMMITTEE
SUBSTITUTE
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ARTICLE 1. FIREFIGHTERS'
RELIEF AND RETIREMENT FUND
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Same as introduced version.
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No
equivalent provision.
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SECTION 1.01. Section 1,
Article 6243e.2(1), Revised Statutes, is amended by amending Subdivisions
(1-a), (1-b), (3), (13-a), (15-a), (15-b), and (16) and adding Subdivisions
(1-c), (1-d), (1-e), (1-f), (1-g), (3-a), (3-b), (3-c), (3-d), (10-a),
(10-b), (11-a), (12-a), (12-b), (12-c), (12-d), (12-e), (12-f), (12-g),
(13-b), (13-c), (13-d), (13-e), (15-c), (15-d), (15-e), (15-f), (16-a),
(16-b), (16-c), (16-d), and (16-e) to read as follows:
(1-a) "Actuarial
data" includes:
(A) the census data,
assumption tables, disclosure of methods, and financial information that
are routinely used by the fund actuary for the fund's valuation studies or
an actuarial experience study under Section 13D of this article; and
(B) other data that is
reasonably necessary to implement Sections 13A through 13F of this article.
["Average monthly salary" means one thirty-sixth of the
member's salary as a firefighter for the member's highest 78 biweekly pay
periods during the member's participation in the fund or, if the member has
participated in the fund for less than three years, the total salary paid
to the member for the periods the member participated in the fund divided
by the number of months the member has participated in the fund. If a
member is not paid on the basis of biweekly pay periods, "average
monthly salary" is determined on the basis of the number of pay
periods under the payroll practices of the municipality sponsoring the fund
that most closely correspond to 78 biweekly pay periods.]
(1-b) "Actuarial
experience study" has the meaning assigned by Section 802.1014,
Government Code ["Beneficiary adult child" means a child
of a member by birth or adoption who:
[(A) is not an eligible
child; and
[(B) is designated a
beneficiary of a member's DROP account by valid designation under Section
5(j-1)].
(1-c) "Amortization
period" means the time period necessary to fully pay a liability
layer.
(1-d) "Amortization
rate" means the sum of the scheduled amortization payments for a given
fiscal year for the current liability layers divided by the projected
pensionable payroll for that fiscal year.
(1-e) "Assumed rate
of return" means the assumed market rate of return on fund assets,
which is seven percent per annum unless adjusted as provided by this
article.
(1-f) "Average
monthly salary" means, if the member has participated in the fund for:
(A) three or more years,
the total salary received by a member as a firefighter over the member's
last 78 biweekly pay periods ending before the earlier of the date:
(i) the member terminates
employment with the fire department, divided by 36; or
(ii) the member began
participation in the DROP, divided by 36; or
(B) fewer than three
years, the total salary paid to the member for the periods the member
participated in the fund divided by the number of months the member has
participated in the fund.
If a member is not paid on
the basis of biweekly pay periods, "average monthly salary" is
determined on the basis of the number of pay periods under the payroll
practices of the municipality sponsoring the fund that most closely
correspond to 78 biweekly pay periods.
(1-g) "Beneficiary
adult child" means a child of a member by birth or adoption who:
(A) is not an eligible
child; and
(B) is designated a
beneficiary of a member's DROP account by valid designation under Section
5(j-1).
(3) "Code" means
the federal Internal Revenue Code of 1986, as amended.
(3-a)
"Confidentiality agreement" means a letter agreement sent from
the municipal actuary or an independent actuary in which the municipal
actuary or the independent actuary, as applicable, agrees to comply with
the confidentiality provisions of this article.
(3-b)
"Corridor" means the range of municipal contribution rates that
are:
(A) equal to or greater
than the minimum contribution rate; and
(B) equal to or less than
the maximum contribution rate.
(3-c) "Corridor
margin" means five percentage points.
(3-d) "Corridor
midpoint" means the projected municipal contribution rate specified
for each fiscal year for 31 years in the initial risk sharing valuation
study under Section 13C of this article, and as may be adjusted under
Section 13E or 13F of this article, and in each case rounded to the nearest
hundredths decimal place.
(10-a) "Employer
normal cost rate" means the normal cost rate minus the member
contribution rate.
(10-b) "Estimated
municipal contribution rate" means the municipal contribution rate
estimated in a final risk sharing valuation study under Section 13B or 13C
of this article, as applicable, as required by Section 13B(a)(5) of this
article.
(11-a) "Fiscal
year," except as provided by Section 1B of this article, means a
fiscal year beginning on July 1 and ending on June 30.
(12-a) "Funded
ratio" means the ratio of the fund's actuarial value of assets divided
by the fund's actuarial accrued liability.
(12-b) "Legacy
liability" means the unfunded actuarial accrued liability:
(A) for the fiscal year
ending June 30, 2016, reduced to reflect:
(i) changes to benefits or
contributions under this article that took effect on the year 2017
effective date; and
(ii) payments by the
municipality and earnings at the assumed rate of return allocated to the
legacy liability from July 1, 2016, to July 1, 2017, excluding July 1, 2017;
and
(B) for each subsequent
fiscal year:
(i) reduced by the
contributions for that year allocated to the amortization of the legacy
liability; and
(ii) adjusted by the
assumed rate of return.
(12-c) "Level
percent of payroll method" means the amortization method that defines
the amount of the liability layer recognized each fiscal year as a level
percent of pensionable payroll until the amount of the liability layer
remaining is reduced to zero.
(12-d) "Liability
gain layer" means a liability layer that decreases the unfunded
actuarial accrued liability.
(12-e) "Liability
layer" means the legacy liability established in the initial risk
sharing valuation study under Section 13C of this article and the
unanticipated change as established in each subsequent risk sharing
valuation study prepared under Section 13B of this article.
(12-f) "Liability
loss layer" means a liability layer that increases the unfunded
actuarial accrued liability. For purposes of this article, the legacy
liability is a liability loss layer.
(12-g) "Maximum
contribution rate" means the rate equal to the corridor midpoint plus
the corridor margin.
(13-a) "Minimum
contribution rate" means the rate equal to the corridor midpoint minus
the corridor margin ["Normal retirement age" means the
earlier of:
[(A) the age at which the
member attains 20 years of service; or
[(B) the age at which the
member first attains the age of at least 50 years and at least 10 years of
service].
(13-b)
"Municipality" means a municipality in this state having a
population of more than 2 million.
(13-c) "Municipal
contribution rate" means a percent of pensionable payroll that is the
sum of the employer normal cost rate and the amortization rate for
liability layers, excluding the legacy liability, except as determined
otherwise under the express provisions of Sections 13E and 13F of this
article.
(13-d) "Normal cost
rate" means the salary weighted average of the individual normal cost
rates determined for the current active population plus an allowance for
projected administrative expenses. The allowance for projected
administrative expenses equals the administrative expenses divided by the
pensionable payroll for the previous fiscal year, provided the
administrative allowance may not exceed 1.25 percent of the pensionable
payroll for the current fiscal year unless agreed to by the municipality.
(13-e) "Normal
retirement age" means:
(A) for a member,
including a member who was hired before the year 2017 effective date and
who involuntarily separated from service but has been retroactively
reinstated in accordance with an arbitration, civil service, or court
ruling, hired before the year 2017 effective date, the age at which the
member attains 20 years of service; or
(B) except as provided by
Paragraph (A) of this subdivision, for a member hired or rehired on or
after the year 2017 effective date, the age at which the sum of the
member's age, in years, and the member's years of participation in the fund
equals at least 70.
(15-a) "Payoff
year" means the year a liability layer is fully amortized under the
amortization period. A payoff year may not be extended or accelerated for
a period that is less than one month. ["PROP" means the
post-retirement option plan under Section 5A of this article.]
(15-b) "Pensionable
payroll" means the aggregate salary of all the firefighters on active
service in an applicable fiscal year ["PROP account" means
the notional account established to reflect the credits and contributions
of a member or surviving spouse who has made a PROP election in accordance
with Section 5A of this article].
(15-c) "Price
inflation assumption" means:
(A) the most recent
headline consumer price index 10-year forecast published in the Federal
Reserve Bank of Philadelphia Survey of Professional Forecasters; or
(B) if the forecast
described by Paragraph (A) of this subdivision is not available, another
standard as determined by mutual agreement between the municipality and the
board.
(15-d) "Projected
pensionable payroll" means the estimated pensionable payroll for the
fiscal year beginning 12 months after the date of the risk sharing
valuation study prepared under Section 13B of this article at the time of
calculation by:
(A) projecting the prior
fiscal year's pensionable payroll forward two years using the current
payroll growth rate assumptions; and
(B) adjusting, if
necessary, for changes in population or other known factors, provided those
factors would have a material impact on the calculation, as determined by
the board.
(15-e) "PROP"
means the post-retirement option plan under Section 5A of this article.
(15-f) "PROP
account" means the notional account established to reflect the credits
and contributions of a member or surviving spouse who made a PROP election
in accordance with Section 5A of this article before the year 2017
effective date.
(16) "Salary"
means wages as defined by Section 3401(a) of the code, [the
amounts includable in gross income of a member] plus any amount not
includable in gross income under Section 104(a)(1), Section 125, Section
132(f), Section 402(g)(2) [402(e)(3) or (h)], Section 457
[403(b)], or Section 414(h)(2) [414(h)] of the code,
except that with respect to amounts earned on or after the year 2017
effective date, salary excludes overtime pay received by a member or the
amount by which the salary earned by a member on the basis of the member's
appointed position exceeds the salary of the member's highest tested rank.
(16-a) "Third
quarter line rate" means the corridor midpoint plus 2.5 percentage
points.
(16-b) "Ultimate
entry age normal" means an actuarial cost method under which a
calculation is made to determine the average uniform and constant
percentage rate of contributions that, if applied to the compensation of
each member during the entire period of the member's anticipated covered
service, would be required to meet the cost of all benefits payable on the
member's behalf based on the benefits provisions for newly hired
employees. For purposes of this definition, the actuarial accrued liability
for each member is the difference between the member's present value of
future benefits based on the tier of benefits that apply to the member and
the member's present value of future normal costs determined using the
normal cost rate.
(16-c) "Unfunded actuarial
accrued liability" means the difference between the actuarial accrued
liability and the actuarial value of assets. For purposes of this
definition:
(A) "actuarial
accrued liability" means the portion of the actuarial present value of
projected benefits attributed to past periods of member service based on
the cost method used in the risk sharing valuation study prepared under
Section 13B or 13C of this article, as applicable; and
(B) "actuarial value
of assets" means the value of fund investments as calculated using the
asset smoothing method used in the risk sharing valuation study prepared
under Section 13B or 13C of this article, as applicable.
(16-d)
"Unanticipated change" means, with respect to the unfunded
actuarial accrued liability in each subsequent risk sharing valuation study
prepared under Section 13B of this article, the difference between:
(A) the remaining balance
of all then-existing liability layers as of the date of the risk sharing
valuation study; and
(B) the actual unfunded
actuarial accrued liability as of the date of the risk sharing valuation
study.
(16-e) "Year 2017
effective date" means the date on which H.B. No. 43, Acts of the 85th
Legislature, Regular Session, 2017, took effect.
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No
equivalent provision.
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SECTION 1.02. Article
6243e.2(1), Revised Statutes, is amended by adding Sections 1A, 1B, and 1C
to read as follows:
Sec. 1A. INTERPRETATION
OF ARTICLE. This article, including Sections 2(p) and (p-1) of this
article, does not and may not be interpreted to:
(1) relieve the
municipality, the board, or the fund of their respective obligations under
Sections 13A through 13F of this article;
(2) reduce or modify the
rights of the municipality, the board, or the fund, including any officer
or employee of the municipality, board, or fund, to enforce obligations
described by Subdivision (1) of this section;
(3) relieve the
municipality, including any official or employee of the municipality, from:
(A) paying or directing
to pay required contributions to the fund under Section 13 or 13A of this
article or carrying out the provisions of Sections 13A through 13F of this
article; or
(B) reducing or modifying
the rights of the board and any officer or employee of the board or fund to
enforce obligations described by Subdivision (1) of this section;
(4) relieve the board or
fund, including any officer or employee of the board or fund, from any
obligation to implement a benefit change or carry out the provisions of
Sections 13A through 13F of this article; or
(5) reduce or modify the
rights of the municipality and any officer or employee of the municipality
to enforce an obligation described by Subdivision (4) of this section.
Sec. 1B. FISCAL YEAR. If
either the fund or the municipality changes its respective fiscal year, the
fund and the municipality may enter into a written agreement to change the
fiscal year for purposes of this article. If the fund and municipality
enter into an agreement described by this section, the parties shall, in
the agreement, adjust the provisions of Sections 13A through 13F of this
article to reflect that change.
Sec. 1C. CONFLICT OF
LAW. To the extent of a conflict between this article and any other law,
this article prevails.
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No
equivalent provision.
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SECTION 1.03. Section 2,
Article 6243e.2(1), Revised Statutes, is amended by amending Subsection (b)
and adding Subsection (t) to read as follows:
(b) The board of trustees of
the fund shall be known as the "(name of municipality) Firefighters'
Relief and Retirement Fund Board of Trustees" and the fund shall be
known as the "(name of municipality) Firefighters' Relief and
Retirement Fund." The board consists of 10 trustees, including:
(1) the mayor or an
appointed representative of the mayor;
(2) the director of
finance or the director of finance's designee [treasurer] of the
municipality or, if there is not a director of finance [treasurer],
the highest ranking employee of the municipality, excluding elected
officials, with predominately financial responsibilities, as determined by
the mayor, or that employee's designee [secretary, clerk, or other
person who by law, charter provision, or ordinance performs the duty of
treasurer of the municipality];
(3) five firefighters who
are members of the fund;
(4) one person who is a
retired firefighter and a member of the fund with at least 20 years of
participation; and
(5) two persons, each of
whom is a registered voter of the municipality, has been a resident of the
municipality for at least one year preceding the date of initial appointment,
and is not a municipal officer or employee.
(t) The officers and
employees of the municipality are fully protected and free of liability for
any action taken or omission made or any action or omission suffered by
them in good faith, objectively determined, in the performance of their
duties related to the fund. The protection from liability provided by this
subsection is cumulative of and in addition to any other constitutional,
statutory, or common law official or governmental immunity, defense, and
civil or procedural protection provided to the municipality as a
governmental entity and to a municipal official or employee as an official
or employee of a governmental entity. Except for a waiver expressly
provided by this article, this article does not grant an implied waiver of
any immunity.
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No
equivalent provision.
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SECTION 1.04. Article
6243e.2(1), Revised Statutes, is amended by adding Sections 2A and 2B to
read as follows:
Sec. 2A. QUALIFICATIONS
OF MUNICIPAL ACTUARY. (a) An actuary hired by the municipality for
purposes of this article must be an actuary from a professional service
firm who:
(1) is not already
engaged by the fund or any other pension system authorized under Article
6243g-4, Revised Statutes, or Chapter 88 (H.B. 1573), Acts of the 77th
Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil
Statutes), to provide actuarial services to the fund or pension system, as
applicable;
(2) has a minimum of 10
years of professional actuarial experience; and
(3) is a fellow of the
Society of Actuaries or a member of the American Academy of Actuaries and
who, in carrying out duties for the municipality, has met the applicable
requirements to issue statements of actuarial opinion.
(b) Notwithstanding
Subsection (a) of this section, the municipal actuary does not need to meet
any greater qualifications than those required by the board for the fund
actuary.
Sec. 2B. REPORT ON
INVESTMENTS BY INDEPENDENT INVESTMENT CONSULTANT. At least once every
three years, the board shall hire an independent investment consultant to
conduct a review of fund investments and submit a report to the board and
the municipality concerning the review or demonstrate in the fund's annual
financial report that the review was conducted. The independent investment
consultant shall review and report on at least the following:
(1) the fund's compliance
with its investment policy statement, ethics policies, including policies
concerning the acceptance of gifts, and policies concerning insider
trading;
(2) the fund's asset
allocation, including a review and discussion of the various risks,
objectives, and expected future cash flows;
(3) the fund's portfolio
structure, including the fund's need for liquidity, cash income, real
return, and inflation protection and the active, passive, or index
approaches for different portions of the portfolio;
(4) investment manager
performance reviews and an evaluation of the processes used to retain and
evaluate managers;
(5) benchmarks used for
each asset class and individual manager;
(6) an evaluation of fees
and trading costs;
(7) an evaluation of any
leverage, foreign exchange, or other hedging transaction; and
(8) an evaluation of
investment-related disclosures in the fund's annual reports.
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SECTION 1.01. Section 3(d),
Article 6243e.2(1), Revised Statutes, is amended to read as follows:
(d) The board may have an
actuarial valuation performed each year, and for determining the
municipality's contribution rate as provided by Section 13(d) of this article, the board may adopt a new
actuarial valuation every three years [each year, except that an
actuarial valuation that will result in an increased municipal contribution
rate that is above the statutory minimum may be adopted only once every
three years, unless the governing body of the municipality consents to a
more frequent increase].
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SECTION 1.05. Section 3(d),
Article 6243e.2(1), Revised Statutes, is amended to read as follows:
(d) The board may have an
actuarial valuation performed each year, and for determining the
municipality's contribution rate as provided by Section 13A [13(d)] of this article, the
board may adopt a new actuarial valuation each
year
[, except that an
actuarial valuation that will result in an increased municipal contribution
rate that is above the statutory minimum may be adopted only once every
three years, unless the governing body of the municipality consents to a
more frequent increase].
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SECTION 1.02. Article
6243e.2(1), Revised Statutes, is amended by adding Section 3A to read as
follows:
Sec. 3A. ACTION
INCREASING AMORTIZATION PERIOD. (a) Notwithstanding any other provision
of this article, a rate of a member's or a municipality's contributions to
or a rate of interest or the amount of a fee required for the establishment
of credit in the fund may not be reduced or eliminated, a type of service
may not be made creditable in the fund, a limit on the maximum permissible
amount of a type of creditable service may not be removed or raised, a new
monetary benefit payable by the fund may not be established, and the
determination of the amount of a monetary benefit from the fund may not be
increased, if, as a result of the particular action, the time, as
determined by an actuarial valuation, required to amortize the unfunded
actuarial liabilities of the fund would be increased to a period that
exceeds 30 years.
(b) If the amortization
period for the unfunded actuarial liabilities of the fund exceeds 30 years
at the time an action described by Subsection (a) of this section is proposed,
the proposal may not be adopted if, as a result of the adoption, the
amortization period would be increased, as determined by an actuarial
valuation.
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No
equivalent provision.
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No
equivalent provision.
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SECTION 1.06. Article
6243e.2(1), Revised Statutes, is amended by adding Section 3A to read as
follows:
Sec. 3A. CERTAIN
ALTERATIONS BY LOCAL AGREEMENT. (a) Except as provided by Subsection (b)
of this section, the board is authorized, on behalf of the members or
beneficiaries of the fund, to alter benefit types or amounts, the means of
determining contribution rates, or the contribution rates provided under
this article if the alteration is included in a written agreement between
the board and the municipality. An agreement entered into under this section:
(1) must:
(A) if the agreement
concerns benefit increases, other than benefit increases that are the
result of Section 13E of this article, adhere to the processes and
standards set forth in Section 10 of this article; and
(B) operate prospectively
only; and
(2) may not, except as
provided by Sections 13A through 13F of this article, have the effect or
result of increasing the unfunded liability of the fund.
(b) In a written
agreement entered into between the municipality and the board under this section,
the parties may not:
(1) fundamentally alter
Sections 13A through 13F of this article;
(2) increase the assumed
rate of return to more than seven percent per year;
(3) extend the
amortization period of a liability layer to more than 30 years from the
first day of the fiscal year beginning 12 months after the date of the risk
sharing valuation study in which the liability layer is first recognized;
or
(4) allow a municipal
contribution rate in any year that is less than or greater than the municipal
contribution rate required under Section 13E or 13F of this article, as
applicable.
(c) If the board is
directed or authorized in Sections 13A through 13F of this article to
effect an increase or decrease to benefits or contributions, this article delegates
the authority to alter provisions concerning benefits and contributions
otherwise stated in this article in accordance with the direction or
authorization only to the extent the alteration is set forth in an order or
other written instrument and is consistent with this section, the code, and
other applicable federal law and regulations. The order or other written
instrument must be included in each applicable risk sharing valuation study
under Section 13B or 13C of this article, as applicable, adopted by the
board, and published in a manner that makes the order or other written
instrument accessible to the members.
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SECTION 1.03. Section 5,
Article 6243e.2(1), Revised Statutes, is amended by adding Subsection (s)
to read as follows:
(s) The board may adopt
rules, policies, or procedures that the board determines are necessary or
desirable to implement or administer this section, including rules that
limit the amount of a member's earnings under the DROP or that limit the
length of time a member may elect to participate in the DROP.
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No
equivalent provision.
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SECTION 1.04. Section 10,
Article 6243e.2(1), Revised Statutes, is amended to read as follows:
Sec. 10. NONSTATUTORY
BENEFIT INCREASES. The benefits provided by this article may be increased
if:
(1) an actuary selected by
the board who, if an individual, is a Fellow of the Society of Actuaries, a
Fellow of the Conference of Consulting Actuaries [in Public
Practice], or a member of the American Academy of Actuaries determines
that the increase complies with Section 3A of this article [cannot
reasonably be viewed as posing a material risk of jeopardizing the fund's
ability to pay any existing benefit];
(2) a majority of the
participating members of the fund vote for the increase by a secret ballot;
(3) the increase does not
deprive a member, without the member's written consent, of a right to
receive benefits that have already become fully vested and matured in a
member; and
(4) the State Pension Review
Board approves the determination by the actuary selected by the board that
the increase complies with Section 3A of this article [cannot
reasonably be viewed as posing a material risk of jeopardizing the fund's
ability to pay any existing benefit].
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No
equivalent provision.
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No
equivalent provision.
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SECTION 1.07. Section 4,
Article 6243e.2(1), Revised Statutes, is amended by amending Subsections
(a), (b), and (d) and adding Subsections (b-1) and (b-2) to read as
follows:
(a) A member [with at
least 20 years of participation] who terminates active service for any
reason other than death is entitled to receive a service pension provided
by this section if the member was:
(1) hired as a
firefighter before the year 2017 effective date, including a member who was
hired before the year 2017 effective date and who involuntarily separated
from service but has been retroactively reinstated in accordance with an
arbitration, civil service, or court ruling, at the age at which the member
attains 20 years of service; and
(2) except as provided by
Subdivision (1) of this subsection and subject to Subsection (b-2) of this
section, hired or rehired as a firefighter on or after the year 2017
effective date, when the sum of the member's age in years and the member's
years of participation in the fund equals at least 70.
(b) Except as otherwise
provided by Subsection (d) of this section, the monthly service pension for
a member described by:
(1) Subsection (a)(1) of
this section is equal to the sum of:
(A) the member's accrued
monthly service pension based on the member's years of participation before
the year 2017 effective date, determined under the law in effect on the
date immediately preceding the year 2017 effective date;
(B) 2.75 percent of the
member's average monthly salary multiplied by the member's years of
participation on or after the year 2017 effective date, for each year or
partial year of participation of the member's first 20 years of
participation; and
(C) two percent of the
member's average monthly salary multiplied by the member's years of
participation on or after the year 2017 effective date, for each year or
partial year of participation on or after the year 2017 effective date that
occurred after the 20 years of participation described by Paragraph (B) of
this subdivision; and
(2) Subsection (a)(2) of
this section is equal to the sum of:
(A) 2.25 percent of the
member's average monthly salary multiplied by the member's years or partial
years of participation for the member's first 20 years of participation;
and
(B) two percent of the
member's average monthly salary multiplied by the member's years or partial
years of participation for all years of participation that occurred after
the 20 years of participation described by Paragraph (A) of this
subdivision.
(b-1) For purposes of
Subsection (b) of this section, partial years shall be computed to the
nearest one-twelfth of a year.
(b-2) A member's monthly
service pension under Subsection (a)(2) of this section may not exceed 80
percent of the member's average monthly salary [A member who
terminates active service on or after November 1, 1997, and who has
completed at least 20 years of participation in the fund on the effective
date of termination of service is entitled to a monthly service pension,
beginning after the effective date of termination of active service, in an
amount equal to 50 percent of the member's average monthly salary, plus
three percent of the member's average monthly salary for each year of
participation in excess of 20 years, but not in excess of 30 years of
participation, for a maximum total benefit of 80 percent of the member's
average monthly salary].
(d) The total monthly
benefit payable to a retired or disabled member, other than a deferred
retiree or active member who has elected the DROP under Section 5(b) of
this article, or payable to an eligible survivor of a deceased member as
provided by Section 7(a) or 7(b) of this article, shall be increased by the
following amounts: by $100, beginning with the monthly payment made for
July 1999; by $25, beginning with the monthly payment made for July,
2000; and by $25, beginning with the monthly payment made for July 2001.
These additional benefits may not be increased under Section 11(c),
(c-1), or (c-2) of this article.
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|
No
equivalent provision.
|
SECTION 1.08. Section 5,
Article 6243e.2(1), Revised Statutes, is amended by amending Subsections
(a), (b), (c), (d), and (m) and adding Subsections (a-1), (b-1), (d-1),
(d-2), and (e-1) to read as follows:
(a) A member who is eligible
to receive a service pension under Section 4(a)(1) [4] of
this article and who remains in active service may elect to participate in
the deferred retirement option plan provided by this section. A member
who is eligible to receive a service pension under Section 4(a)(2) of this
article may not elect to participate in the deferred retirement option plan
provided by this section. On subsequently terminating active service, a
member who elected the DROP may apply for a monthly service pension under
Section 4 of this article, except that the effective date of the member's
election to participate in the DROP will be considered the member's
retirement date for determining the amount of the member's monthly service
pension. The member may also apply for any DROP benefit provided under
this section on terminating active service. An election to participate in
the DROP, once approved by the board, is irrevocable.
(a-1) The monthly benefit
of a [A] DROP participant who has at least 20 years of
participation on the year 2017 effective date [participant's monthly
benefit at retirement] is increased at retirement by two percent
of the amount of the member's original benefit for every full year of
participation in the DROP by the member for up to 10 years of
participation in the DROP. For a member's final year of participation,
but not beyond the member's 10th year in the DROP, if a full year of
participation is not completed, the member shall receive a prorated
increase of 0.166 percent of the member's original benefit for each month
of participation in that year. An increase provided by this subsection
does not apply to benefits payable under Subsection (l) of this section.
An increase under this subsection is applied to the member's benefit at
retirement and is not added to the member's DROP account. The total
increase under this subsection may not exceed 20 percent for 10 years of
participation in the DROP by the member.
(b) A member may elect to
participate in the DROP by complying with the election process established
by the board. The member's election may be made at any time beginning on
the date the member has completed 20 years of participation in the fund and
is otherwise eligible for a service pension under Section 4(a)(1) [4]
of this article. [The election becomes effective on the first day of
the month following the month in which the board approves the member's DROP
election.] Beginning on the first day of the month following the
month in which the member makes an election to participate in the DROP,
subject to board approval, and ending on the year 2017 effective date [of
the member's DROP election], amounts equal to the deductions made from
the member's salary under Section 13(c) of this article shall be credited
to the member's DROP account. Beginning after the year 2017 effective
date, amounts equal to the deductions made from the member's salary under
Section 13(c) of this article may not be credited to the member's DROP
account.
(b-1) On or after the
year 2017 effective date, an active [A] member may not
participate in the DROP for more than 13 [10] years. If a
DROP participant remains in active service after the 13th [10th]
anniversary of the effective date of the member's DROP election:
(1) [,]
subsequent deductions from the member's salary under Section 13(c) of this
article may not be credited to the member's DROP account; and
(2) the account shall
continue to be credited with earnings in accordance with Subsection (d) of
this section [and may not otherwise increase any benefit payable
from the fund for the member's service].
(c) After a member's DROP
election becomes effective, an amount equal to the monthly service pension
the member would have received under Section 4 of this article [and
Section 11(c) of this article], if applicable, had the member
terminated active service on the effective date of the member's DROP
election shall be credited to a DROP account maintained for the member.
That monthly credit to the member's DROP account shall continue until the
earlier of the date the member terminates active service or the 13th
[10th] anniversary of the [effective] date of the first
credit to the member's DROP account [election].
(d) A member's DROP account
shall be credited with earnings at an annual rate equal to 65 percent of
the compounded average annual return earned by the fund over the
five years preceding, but not including, the year during which the credit
is given. Notwithstanding the preceding, however, the credit to the
member's DROP account shall be at an annual rate of not less than 2.5
[five] percent [nor greater than 10 percent], irrespective of
actual earnings.
(d-1) Earnings credited
to a member's DROP account under Subsection (d) of this section [Those
earnings] shall be computed and credited at a time and in a manner determined
by the board, except that earnings shall be credited not less frequently
than once in each 13-month period and shall take into account partial years
of participation in the DROP[. If the member has not terminated active
service, the member's DROP account may not be credited with earnings after
the 10th anniversary of the effective date of the member's DROP election].
(d-2) A member may not
roll over accumulated unused sick or vacation time paid to the member as a
lump-sum payment after termination of active service into the member's DROP
account.
(e-1) In lieu of
receiving a lump-sum payment on termination from active service, a retired
member who has been a DROP participant or, if termination from active
service was due to the DROP participant's death, the surviving spouse of
the DROP participant may elect to leave the retired member's DROP account
with the fund and receive earnings credited to the DROP account in the
manner described by Subsection (d) of this section.
(m) A DROP participant with
a break in service may receive service credit within DROP for days worked
after the regular expiration of the maximum [permitted] DROP participation
period prescribed by this section. The service credit shall be
limited to the number of days in which the participant experienced a break
in service or the number of days required to constitute 13 [10]
years of DROP participation, whichever is smaller. A retired member who
previously participated in the DROP and who returns to active service is
subject to the terms of this section in effect at the time of the member's
return to active service.
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|
No
equivalent provision.
|
SECTION 1.09. Section 5A,
Article 6243e.2(1), Revised Statutes, is amended by adding Subsection (o)
to read as follows:
(o) Notwithstanding any
other provision of this article, on or after the year 2017 effective date:
(1) a PROP participant
may not have any additional amounts that the participant would otherwise
receive as a monthly service pension or other benefits under this article
credited to the participant's PROP account; and
(2) a person, including a
member or surviving spouse, may not elect to participate in the PROP.
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|
No
equivalent provision.
|
SECTION 1.10. Section 8,
Article 6243e.2(1), Revised Statutes, is amended to read as follows:
Sec. 8. DEFERRED PENSION AT
AGE 50; REFUND OF CONTRIBUTIONS. (a) On or after the year 2017
effective date, a [A] member who is hired as a firefighter
before the year 2017 effective date, including a member who was hired
before the year 2017 effective date and who involuntarily separated from
service but has been retroactively reinstated in accordance with an
arbitration, civil service, or court ruling, terminates active service
for any reason other than death with at least 10 years of participation,
but less than 20 years of participation, is entitled to a monthly deferred
pension benefit, beginning at age 50, in an amount equal to 1.7 percent of
the member's average monthly salary multiplied by the amount of the
member's years of participation.
(b) In lieu of the deferred
pension benefit provided under Subsection (a) of this section, a member who
terminates active service for any reason other than death with at least 10
years of participation, but less than 20 years of participation, may elect
to receive a lump-sum refund of the member's contributions to the fund with
interest computed at five percent, not compounded, for the member's
contributions to the fund made before the year 2017 effective date and
without interest for the member's contributions to the fund made on or
after the year 2017 effective date. A member's election to receive a
refund of contributions must be made on a form approved by the board. The
member's refund shall be paid as soon as administratively practicable after
the member's election is received.
(c) Except as provided by
Subsection (a) of this section, a [A] member who is hired or
rehired as a firefighter on or after the year 2017 effective date or a
member who terminates employment for any reason other than death before
the member has completed 10 years of participation is entitled only to a
refund of the member's contributions without interest and is not entitled
to a deferred pension benefit under this section or to any other benefit
under this article. The member's refund shall be paid as soon as
administratively practicable after the effective date of the member's
termination of active service.
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|
No
equivalent provision.
|
SECTION 1.11. Section 11,
Article 6243e.2(1), Revised Statutes, is amended by amending Subsection (c)
and adding Subsections (c-1), (c-2), (c-3), and (c-4) to read as follows:
(c) Subject to Subsection
(c-3) of this section and except as provided by Subsection (c-4) of this
section, beginning with the fiscal year ending June 30, 2021, the [The]
benefits, including survivor benefits, payable based on the service of a
member who has terminated active service and who is or would have
been at least 55 [48] years old, received or is receiving an
on-duty disability pension under Section 6(c) of this article, or died
under the conditions described by Section 7(c) of this article, shall be
increased [by three percent] in October of each year by a
percentage rate equal to the most recent five fiscal years' smoothed
return, as determined by the fund actuary, minus 500 basis points [and,
if the benefit had not previously been subject to that adjustment, in the
month of the member's 48th birthday].
(c-1) Subject to
Subsection (c-3) of this section and except as provided by Subsection (c-4)
of this section, for the fund's fiscal years ending June 30, 2018, and June
30, 2019, the benefits, including survivor benefits, payable based on the
service of a member who is or would have been at least 70 years old and who
received or is receiving a service pension under Section 4 of this article,
received or is receiving an on-duty disability pension under Section 6(c)
of this article, or died under the conditions described by Section 7(c) of
this article, shall be adjusted in October of each applicable fiscal year
by a percentage rate equal to the most recent five fiscal years' smoothed
return, as determined by the fund actuary, minus 500 basis points.
(c-2) Subject to
Subsection (c-3) of this section and except as provided by Subsection (c-4)
of this section, for the fund's fiscal year ending June 30, 2020, members
described by Subsection (c-1) of this section shall receive the increase
provided under Subsection (c) of this section.
(c-3) The percentage rate
prescribed by Subsections (c), (c-1), and (c-2) of this section may not be
less than zero percent or more than four percent, irrespective of the
return rate of the fund's investment portfolio.
(c-4) Each year after the
year 2017 effective date, a member who elects to participate in the DROP
under Section 5 of this article may not receive the increase provided under
Subsection (c), (c-1), or (c-2) of this section in any October during which
the member participates in the DROP.
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|
No
equivalent provision.
|
SECTION 1.12. The heading to
Section 13, Article 6243e.2(1), Revised Statutes, is amended to read as
follows:
Sec. 13. MEMBERSHIP AND MEMBER
CONTRIBUTIONS.
|
|
No
equivalent provision.
|
SECTION 1.13. Section 13(c),
Article 6243e.2(1), Revised Statutes, is amended to read as follows:
(c) Subject to
adjustments authorized by Section 13E or 13F of this article, each [Each]
member in active service shall make contributions to the fund in an amount
equal to 10.5 [8.35] percent of the member's salary at the
time of the contribution[, and as of July 1, 2004, in an amount equal to
nine percent of the member's salary at the time of the contribution].
The governing body of the municipality shall deduct the contributions from
the member's salary and shall forward the contributions to the fund as soon
as practicable.
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|
No
equivalent provision.
|
SECTION 1.14. Article
6243e.2(1), Revised Statutes, is amended by adding Sections 13A, 13B, 13C,
13D, 13E, 13F, and 13G to read as follows:
Sec. 13A. MUNICIPAL
CONTRIBUTIONS. (a) Beginning with the year 2017 effective date, the municipality
shall make contributions to the fund as provided by this section and
Section 13B, 13C, 13E, or 13F of this article, as applicable. The
municipality shall contribute:
(1) beginning with the
year 2017 effective date and ending with the fiscal year ending June 30,
2018, an amount equal to the municipal contribution rate, as determined in
the initial risk sharing valuation study conducted under Section 13C of
this article and adjusted under Section 13E or 13F of this article, as
applicable, multiplied by the pensionable payroll for the fiscal year; and
(2) for each fiscal year
after the fiscal year ending June 30, 2018, an amount equal to the
municipal contribution rate, as determined in a subsequent risk sharing
valuation study conducted under Section 13B of this article and adjusted
under Section 13E or 13F of this article, as applicable, multiplied by the
pensionable payroll for the applicable fiscal year.
(b) Except by written
agreement between the municipality and the board providing for an earlier
contribution date, at least biweekly, the municipality shall make the
contributions required by Subsection (a) of this section by depositing with
the fund an amount equal to the municipal contribution rate multiplied by
the pensionable payroll for the applicable biweekly period.
(c) With respect to each
fiscal year:
(1) the first
contribution by the municipality under this section for the fiscal year
shall be made not later than the date payment is made to firefighters for
their first full biweekly pay period beginning on or after the first day of
the fiscal year; and
(2) the final
contribution by the municipality under this section for the fiscal year
shall be made not later than the date payment is made to firefighters for
the final biweekly pay period of the fiscal year.
(d) In addition to the
amounts required under this section, the municipality may at any time
contribute additional amounts for deposit in the fund by entering into a
written agreement with the board.
Sec. 13B. RISK SHARING
VALUATION STUDIES. (a) The fund and the municipality shall separately
cause their respective actuaries to prepare a risk sharing valuation study
in accordance with this section and actuarial standards of practice. A
risk sharing valuation study must:
(1) be dated as of the
first day of the fiscal year in which the study is required to be prepared;
(2) be included in the
fund's standard valuation study prepared annually for the fund;
(3) calculate the
unfunded actuarial accrued liability of the fund;
(4) be based on actuarial
data provided by the fund actuary or, if actuarial data is not provided, on
estimates of actuarial data;
(5) estimate the
municipal contribution rate, taking into account any adjustments required
under Section 13E or 13F of this article for all applicable prior fiscal
years;
(6) subject to Subsection
(g) of this section, be based on the following assumptions and methods that
are consistent with actuarial standards of practice:
(A) an ultimate entry age
normal actuarial method;
(B) for purposes of
determining the actuarial value of assets:
(i) except as provided by
Subparagraph (ii) of this paragraph and Section 13E(c)(1) or 13F(c)(2) of
this article, an asset smoothing method recognizing actuarial losses and
gains over a five-year period applied prospectively beginning on the year
2017 effective date; and
(ii) for the initial risk
sharing valuation study prepared under Section 13C of this article, a
marked-to-market method applied as of June 30, 2016;
(C) closed layered
amortization of liability layers to ensure that the amortization period for
each layer begins 12 months after the date of the risk sharing valuation
study in which the liability layer is first recognized;
(D) each liability layer
is assigned an amortization period;
(E) each liability loss
layer amortized over a period of 30 years from the first day of the fiscal
year beginning 12 months after the date of the risk sharing valuation study
in which the liability loss layer is first recognized, except that the
legacy liability must be amortized from July 1, 2016, for a 30-year period
beginning July 1, 2017;
(F) the amortization
period for each liability gain layer being:
(i) equal to the
remaining amortization period on the largest remaining liability loss layer
and the two layers must be treated as one layer such that if the payoff
year of the liability loss layer is accelerated or extended, the payoff
year of the liability gain layer is also accelerated or extended; or
(ii) if there is no
liability loss layer, a period of 30 years from the first day of the fiscal
year beginning 12 months after the date of the risk sharing valuation study
in which the liability gain layer is first recognized;
(G) liability layers,
including the legacy liability, funded according to the level percent of
payroll method;
(H) the assumed rate of
return, subject to adjustment under Section 13E(c)(2) of this article or,
if Section 13C(g) of this article applies, adjustment in accordance with a
written agreement, except the assumed rate of return may not exceed seven
percent per annum;
(I) the price inflation
assumption as of the most recent actuarial experience study, which may be
reset by the board by plus or minus 50 basis points based on that actuarial
experience study;
(J) projected salary
increases and payroll growth rate set in consultation with the
municipality's finance director; and
(K) payroll for purposes
of determining the corridor midpoint and municipal contribution rate must
be projected using the annual payroll growth rate assumption; and
(7) be revised and
restated, if appropriate, not later than:
(A) the date required by
a written agreement entered into between the municipality and the board; or
(B) the 30th day after
the date required action is taken by the board under Section 13E or 13F of
this article to reflect any changes required by either section.
(b) As soon as
practicable after the end of a fiscal year, the fund actuary at the
direction of the fund and the municipal actuary at the direction of the
municipality shall separately prepare a proposed risk sharing valuation
study based on the fiscal year that just ended.
(c) Not later than
September 30 following the end of the fiscal year, the fund shall provide
to the municipal actuary, under a confidentiality agreement in which the
municipal actuary agrees to comply with the confidentiality provisions of
Section 17 of this article, the actuarial data described by Subsection
(a)(4) of this section.
(d) Not later than the
150th day after the last day of the fiscal year:
(1) the fund actuary, at
the direction of the fund, shall provide the proposed risk sharing
valuation study prepared by the fund actuary under Subsection (b) of this
section to the municipal actuary; and
(2) the municipal
actuary, at the direction of the municipality, shall provide the proposed
risk sharing valuation study prepared by the municipal actuary under
Subsection (b) of this section to the fund actuary.
(e) Each actuary
described by Subsection (d) of this section may provide copies of the proposed
risk sharing valuation studies to the municipality or to the fund, as
appropriate.
(f) If, after exchanging
proposed risk sharing valuation studies under Subsection (d) of this
section, it is found that the difference between the estimated municipal
contribution rate recommended in the proposed risk sharing valuation study
prepared by the fund actuary and the estimated municipal contribution rate
recommended in the proposed risk sharing valuation study prepared by the
municipal actuary for the corresponding fiscal year is:
(1) less than or equal to
two percentage points, the estimated municipal contribution rate
recommended by the fund actuary will be the estimated municipal
contribution rate for purposes of Subsection (a)(5) of this section, and the
proposed risk sharing valuation study prepared for the fund is considered
to be the final risk sharing valuation study for the fiscal year for the
purposes of this article; or
(2) greater than two
percentage points, the municipal actuary and the fund actuary shall have 20
business days to reconcile the difference, provided that, without the
mutual agreement of both actuaries, the difference in the estimated
municipal contribution rate recommended by the municipal actuary and the
estimated municipal contribution rate recommended by the fund actuary may
not be further increased and:
(A) if, as a result of
reconciliation efforts under this subdivision, the difference is reduced to
less than or equal to two percentage points:
(i) subject to any
adjustments under Section 13E or 13F of this article, as applicable, the
estimated municipal contribution rate proposed under the reconciliation by
the fund actuary will be the estimated municipal contribution rate for
purposes of Subsection (a)(5) of this section; and
(ii) the fund's risk
sharing valuation study is considered to be the final risk sharing
valuation study for the fiscal year for the purposes of this article; or
(B) if, after 20 business
days, the fund actuary and the municipal actuary are not able to reach a
reconciliation that reduces the difference to an amount less than or equal
to two percentage points, subject to any adjustments under Section 13E or
13F of this article, as applicable:
(i) the municipal actuary
at the direction of the municipality and the fund actuary at the direction
of the fund each shall deliver to the finance director of the municipality
and the executive director of the fund a final risk sharing valuation study
with any agreed-to changes, marked as the final risk sharing valuation
study for each actuary; and
(ii) not later than the
90th day before the first day of the next fiscal year, the finance director
and the executive director shall execute a joint addendum to the final risk
sharing valuation study received under Subparagraph (i) of this paragraph
that is a part of the final risk sharing valuation study for the fiscal
year for all purposes and reflects the arithmetic average of the estimated
municipal contribution rates for the fiscal year stated by the municipal
actuary and the fund actuary in the final risk sharing valuation study for
purposes of Subsection (a)(5) of this section.
(g) The assumptions and
methods used and the types of actuarial data and financial information used
to prepare the initial risk sharing valuation study under Section 13C of
this article shall be used to prepare each subsequent risk sharing
valuation study under this section, unless changed based on the actuarial
experience study conducted under Section 13D of this article.
(h) The actuarial data
provided under Subsection (a)(2) of this section may not include the
identifying information of individual members.
Sec. 13C. INITIAL RISK
SHARING VALUATION STUDIES; CORRIDOR MIDPOINT. (a) The fund and the
municipality shall separately cause their respective actuaries to prepare
an initial risk sharing valuation study that is dated as of July 1, 2016,
in accordance with this section. An initial risk sharing valuation study
must:
(1) except as otherwise
provided by this section, be prepared in accordance with Section 13B of
this article and, for purposes of Section 13B(a)(4) of this article, be
based on actuarial data as of June 30, 2016, or, if actuarial data is not
provided, on estimates of actuarial data; and
(2) project the corridor
midpoint for 31 fiscal years beginning with the fiscal year beginning July
1, 2017.
(b) If the initial risk
sharing valuation study has not been prepared consistent with this section
before the year 2017 effective date, as soon as practicable after the year
2017 effective date:
(1) the fund shall
provide to the municipal actuary, under a confidentiality agreement, the
necessary actuarial data used by the fund actuary to prepare the proposed
initial risk sharing valuation study; and
(2) not later than the
30th day after the date the municipal actuary receives the actuarial data:
(A) the municipal
actuary, at the direction of the municipality, shall provide a proposed
initial risk sharing valuation study to the fund actuary; and
(B) the fund actuary, at
the direction of the fund, shall provide a proposed initial risk sharing
valuation study to the municipal actuary.
(c) If, after exchanging
proposed initial risk sharing valuation studies under Subsection (b)(2) of
this section, it is determined that the difference between the estimated
municipal contribution rate for any fiscal year recommended in the proposed
initial risk sharing valuation study prepared by the fund actuary and the
estimated municipal contribution rate for any fiscal year recommended in
the proposed initial risk sharing valuation study prepared by the municipal
actuary is:
(1) less than or equal to
two percentage points, the estimated municipal contribution rate for that
fiscal year recommended by the fund actuary will be the estimated municipal
contribution rate for purposes of Section 13B(a)(5) of this article; or
(2) greater than two
percentage points, the municipal actuary and the fund actuary shall have 20
business days to reconcile the difference and:
(A) if, as a result of
reconciliation efforts under this subdivision, the difference in any fiscal
year is reduced to less than or equal to two percentage points, the
estimated municipal contribution rate recommended by the fund actuary for
that fiscal year will be the estimated municipal contribution rate for
purposes of Section 13B(a)(5) of this article; or
(B) if, after 20 business
days, the municipal actuary and the fund actuary are not able to reach a
reconciliation that reduces the difference to an amount less than or equal
to two percentage points for any fiscal year:
(i) the municipal actuary
at the direction of the municipality and the fund actuary at the direction
of the fund each shall deliver to the finance director of the municipality
and the executive director of the fund a final initial risk sharing
valuation study with any agreed-to changes, marked as the final initial
risk sharing valuation study for each actuary; and
(ii) the finance director
and the executive director shall execute a joint addendum to the final
initial risk sharing valuation study that is a part of each final initial
risk sharing valuation study for all purposes and that reflects the
arithmetic average of the estimated municipal contribution rate for each
fiscal year in which the difference was greater than two percentage points
for purposes of Section 13B(a)(5) of this article.
(d) In preparing the
initial risk sharing valuation study, the municipal actuary and fund
actuary shall:
(1) adjust the actuarial
value of assets to be equal to the market value of assets as of July 1,
2016; and
(2) assume benefit and
contribution changes under this article as of the year 2017 effective date.
(e) If the municipal
actuary does not prepare an initial risk sharing valuation study for
purposes of this section, the fund actuary's initial risk sharing valuation
study will be used as the final risk sharing valuation study for purposes
of this article unless the municipality did not prepare a proposed initial
risk sharing valuation study because the fund actuary did not provide the
necessary actuarial data in a timely manner. If the municipality did not
prepare a proposed initial risk sharing valuation study because the fund
actuary did not provide the necessary actuarial data in a timely manner,
the municipal actuary shall have 60 days to prepare the proposed initial
risk sharing valuation study on receipt of the necessary information.
(f) If the fund actuary
does not prepare a proposed initial risk sharing valuation study for
purposes of this section, the proposed initial risk sharing valuation study
prepared by the municipal actuary will be the final risk sharing valuation
study for purposes of this article.
(g) The municipality and
the board may agree on a written transition plan for resetting the corridor
midpoint:
(1) if at any time the
funded ratio is equal to or greater than 100 percent; or
(2) for any fiscal year
after the payoff year of the legacy liability.
(h) If the municipality
and the board have not entered into an agreement described by Subsection
(g) of this section in a given fiscal year, the corridor midpoint will be
the corridor midpoint determined for the 31st fiscal year in the initial
risk sharing valuation study prepared in accordance with this section.
(i) If the municipality
makes a contribution to the fund of at least $5 million more than the
amount that would be required by Section 13A(a) of this article, a
liability gain layer with the same remaining amortization period as the
legacy liability is created and the corridor midpoint shall be decreased by
the amortized amount in each fiscal year covered by the liability gain
layer produced divided by the projected pensionable payroll.
Sec. 13D. ACTUARIAL
EXPERIENCE STUDIES. (a) At least once every four years, the fund actuary
at the direction of the fund shall conduct an actuarial experience study in
accordance with actuarial standards of practice. The actuarial experience
study required by this subsection must be completed not later than
September 30 of the year in which the study is required to be conducted.
(b) Except as otherwise
expressly provided by Sections 13B(a)(6)(A)-(I) of this article, actuarial
assumptions and methods used in the preparation of a risk sharing valuation
study, other than the initial risk sharing valuation study, shall be based
on the results of the most recent actuarial experience study.
(c) Not later than the
180th day before the date the board may consider adopting any assumptions
and methods for purposes of Section 13B of this article, the fund shall
provide the municipal actuary with a substantially final draft of the
fund's actuarial experience study, including:
(1) all assumptions and
methods recommended by the fund actuary; and
(2) summaries of the
reconciled actuarial data used in creation of the actuarial experience
study.
(d) Not later than the
60th day after the date the municipality receives the final draft of the
fund's actuarial experience study under Subsection (c) of this section, the
municipal actuary and fund actuary shall confer and cooperate on reconciling
and producing a final actuarial experience study. During the period
prescribed by this subsection, the fund actuary may modify the recommended
assumptions in the draft actuarial experience study to reflect any changes
to assumptions and methods to which the fund actuary and the municipal
actuary agree.
(e) At the municipal
actuary's written request, the fund shall provide additional actuarial data
used by the fund actuary to prepare the draft actuarial experience study,
provided that confidential data may only be provided subject to a
confidentiality agreement in which the municipal actuary agrees to comply
with the confidentiality provisions of Section 17 of this article.
(f) The municipal actuary
at the direction of the municipality shall provide in writing to the fund
actuary and the fund:
(1) any assumptions and
methods recommended by the municipal actuary that differ from the
assumptions and methods recommended by the fund actuary; and
(2) the municipal
actuary's rationale for each method or assumption the actuary recommends
and determines to be consistent with standards adopted by the Actuarial
Standards Board.
(g) Not later than the
30th day after the date the fund actuary receives the municipal actuary's
written recommended assumptions and methods and rationale under Subsection
(f) of this section, the fund shall provide a written response to the
municipality identifying any assumption or method recommended by the
municipal actuary that the fund does not accept. If any assumption or
method is not accepted, the fund shall recommend to the municipality the
names of three independent actuaries for purposes of this section.
(h) An actuary may only
be recommended, selected, or engaged by the fund as an independent actuary
under this section if the person:
(1) is not already
engaged by the municipality, the fund, or any other pension system
authorized under Article 6243g-4, Revised Statutes, or Chapter 88 (H.B.
1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h,
Vernon's Texas Civil Statutes), to provide actuarial services to the
municipality, the fund, or another pension system referenced in this
subdivision;
(2) is a member of the
American Academy of Actuaries; and
(3) has at least five
years of experience as an actuary working with one or more public
retirement systems with assets in excess of $1 billion.
(i) Not later than the
20th day after the date the municipality receives the list of three
independent actuaries under Subsection (g) of this section, the
municipality shall identify and the fund shall hire one of the listed
independent actuaries on terms acceptable to the municipality and the fund
to perform a scope of work acceptable to the municipality and the fund. The
municipality and the fund each shall pay 50 percent of the cost of the
independent actuary engaged under this subsection. The municipality shall
be provided the opportunity to participate in any communications between
the independent actuary and the fund concerning the engagement, engagement
terms, or performance of the terms of the engagement.
(j) The independent
actuary engaged under Subsection (i) of this section shall receive on
request from the municipality or the fund:
(1) the fund's draft
actuarial experience study, including all assumptions and methods
recommended by the fund actuary;
(2) summaries of the
reconciled actuarial data used to prepare the draft actuarial experience
study;
(3) the municipal
actuary's specific recommended assumptions and methods together with the
municipal actuary's written rationale for each recommendation;
(4) the fund actuary's
written rationale for its recommendations; and
(5) if requested by the
independent actuary and subject to a confidentiality agreement in which the
independent actuary agrees to comply with the confidentiality provisions of
Section 17 of this article, additional confidential actuarial data.
(k) Not later than the
30th day after the date the independent actuary receives all the requested
information under Subsection (j) of this section, the independent actuary
shall advise the fund and the municipality whether it agrees with the
assumption or method recommended by the municipal actuary or the
corresponding method or assumption recommended by the fund actuary,
together with the independent actuary's rationale for making the
determination. During the period prescribed by this subsection, the
independent actuary may discuss recommendations in simultaneous
consultation with the fund actuary and the municipal actuary.
(l) The fund and the
municipality may not seek any information from any prospective independent
actuary about possible outcomes of the independent actuary's review.
(m) If an independent
actuary has questions or concerns regarding an engagement entered into
under this section, the independent actuary shall simultaneously consult
with both the municipal actuary and the fund actuary regarding the
questions or concerns. This subsection does not limit the fund's
authorization to take appropriate steps to complete the engagement of the independent
actuary on terms acceptable to both the fund and the municipality or to
enter into a confidentiality agreement with the independent actuary, if
needed.
(n) If the board does not
adopt an assumption or method recommended by the municipal actuary or fund
actuary, including an assumption or method to which the independent actuary
agrees, the municipal actuary is authorized to use that recommended
assumption or method in connection with preparation of a subsequent risk
sharing valuation study under Section 13B of this article until the next
actuarial experience study is conducted.
Sec. 13E. MUNICIPAL
CONTRIBUTION RATE WHEN ESTIMATED MUNICIPAL CONTRIBUTION RATE LOWER THAN
CORRIDOR MIDPOINT; AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a) This
section governs the determination of the municipal contribution rate
applicable in a fiscal year if the estimated municipal contribution rate is
lower than the corridor midpoint.
(b) If the funded ratio
is:
(1) less than 90 percent,
the municipal contribution rate for the fiscal year equals the corridor
midpoint; or
(2) equal to or greater
than 90 percent and the municipal contribution rate is:
(A) equal to or greater
than the minimum contribution rate, the estimated municipal contribution
rate is the municipal contribution rate for the fiscal year; or
(B) except as provided by
Subsection (e) of this section, less than the minimum contribution rate for
the corresponding fiscal year, the municipal contribution rate for the
fiscal year equals the minimum contribution rate achieved in accordance
with Subsection (c) of this section.
(c) For purposes of
Subsection (b)(2)(B) of this section, the following adjustments shall be
applied sequentially to the extent required to increase the estimated
municipal contribution rate to equal the minimum contribution rate:
(1) first, adjust the
actuarial value of assets equal to the current market value of assets, if
making the adjustment causes the municipal contribution rate to increase;
(2) second, under a
written agreement between the municipality and the board entered into not
later than April 30 before the first day of the next fiscal year, reduce
the assumed rate of return;
(3) third, under a
written agreement between the municipality and the board entered into not
later than April 30 before the first day of the next fiscal year,
prospectively restore all or part of any benefit reductions or reduce
increased employee contributions, in each case made after the year 2017
effective date; and
(4) fourth, accelerate
the payoff year of the existing liability loss layers, including the legacy
liability, by accelerating the oldest liability loss layers first, to an
amortization period that is not less than 10 years from the first day of
the fiscal year beginning 12 months after the date of the risk sharing
valuation study in which the liability loss layer is first recognized.
(d) If the funded ratio
is:
(1) equal to or greater
than 100 percent:
(A) all existing
liability layers, including the legacy liability, are considered fully amortized
and paid;
(B) the applicable fiscal
year is the payoff year for the legacy liability; and
(C) for each fiscal year
subsequent to the fiscal year described by Paragraph (B) of this
subdivision, the corridor midpoint shall be determined as provided by
Section 13C(g) of this article; and
(2) greater than 100
percent in a written agreement between the municipality and the fund, the
fund may reduce member contributions or increase pension benefits if, as a
result of the action:
(A) the funded ratio is
not less than 90 percent; and
(B) the municipal
contribution rate is not more than the minimum contribution rate.
(e) Except as provided by
Subsection (f) of this section, if an agreement under Subsection (d) of
this section is not reached on or before April 30 before the first day of
the next fiscal year, before the first day of the next fiscal year the
board shall reduce member contributions and implement or increase
cost-of-living adjustments, but only to the extent that the municipal
contribution rate is set at or below the minimum contribution rate and the
funded ratio is not less than 90 percent.
(f) If any member
contribution reduction or benefit increase under Subsection (e) of this
section has occurred within the previous three fiscal years, the board may
not make additional adjustments to benefits, and the municipal contribution
rate must be set to equal the minimum contribution rate.
Sec. 13F. MUNICIPAL
CONTRIBUTION RATE WHEN ESTIMATED MUNICIPAL CONTRIBUTION RATE EQUAL TO OR
GREATER THAN CORRIDOR MIDPOINT; AUTHORIZATION FOR CERTAIN ADJUSTMENTS.
(a) This section governs the determination of the municipal contribution
rate in a fiscal year when the estimated municipal contribution rate is
equal to or greater than the corridor midpoint.
(b) If the estimated
municipal contribution rate is:
(1) less than or equal to
the maximum contribution rate for the corresponding fiscal year, the
estimated municipal contribution rate is the municipal contribution rate;
or
(2) except as provided by
Subsection (d) or (e) of this section, greater than the maximum
contribution rate for the corresponding fiscal year, the municipal
contribution rate equals the corridor midpoint achieved in accordance with
Subsection (c) of this section.
(c) For purposes of Subsection
(b)(2) of this section, the following adjustments shall be applied
sequentially to the extent required to decrease the estimated municipal
contribution rate to equal the corridor midpoint:
(1) first, if the payoff
year of the legacy liability was accelerated under Section 13E(c) of this
article, extend the payoff year of existing liability loss layers, by
extending the most recent loss layers first, to a payoff year not later
than 30 years from the first day of the fiscal year beginning 12 months after
the date of the risk sharing valuation study in which the liability loss
layer is first recognized; and
(2) second, adjust the
actuarial value of assets to the current market value of assets, if making
the adjustment causes the municipal contribution rate to decrease.
(d) If the municipal
contribution rate after adjustment under Subsection (c) of this section is
greater than the third quarter line rate:
(1) the municipal
contribution rate equals the third quarter line rate; and
(2) to the extent necessary
to comply with Subdivision (1) of this subsection, the municipality and the
board shall enter into a written agreement to increase member contributions
and make other benefit or plan changes not otherwise prohibited by
applicable federal law or regulations.
(e) If an agreement under
Subsection (d)(2) of this section is not reached on or before April 30
before the first day of the next fiscal year, before the start of the next
fiscal year to which the municipal contribution rate would apply, the board,
to the extent necessary to set the municipal contribution rate equal to the
third quarter line rate, shall:
(1) increase member
contributions and decrease cost-of-living adjustments;
(2) increase the normal
retirement age; or
(3) take any combination
of actions authorized under Subdivisions (1) and (2) of this subsection.
(f) If the municipal
contribution rate remains greater than the corridor midpoint in the third
fiscal year after adjustments are made in accordance with Subsection (d)(2)
of this section, in that fiscal year the municipal contribution rate equals
the corridor midpoint achieved in accordance with Subsection (g) of this
section.
(g) The municipal
contribution rate must be set at the corridor midpoint under Subsection (f)
of this section by:
(1) in the risk sharing
valuation study for the third fiscal year described by Subsection (f) of
this section, adjusting the actuarial value of assets to equal the current
market value of assets, if making the adjustment causes the municipal contribution
rate to decrease; and
(2) under a written
agreement entered into between the municipality and the board:
(A) increasing member
contributions; and
(B) making any other
benefit or plan changes not otherwise prohibited by applicable federal law
or regulations.
(h) If an agreement under
Subsection (g)(2) of this section is not reached on or before April 30
before the first day of the next fiscal year, before the start of the next
fiscal year, the board, to the extent necessary to set the municipal
contribution rate equal to the corridor midpoint, shall:
(1) increase member
contributions and decrease cost-of-living adjustments;
(2) increase the normal
retirement age; or
(3) take any combination
of actions authorized under Subdivisions (1) and (2) of this subsection.
Sec. 13G. INTERPRETATION
OF CERTAIN RISK SHARING PROVISIONS; UNILATERAL DECISIONS AND ACTIONS
PROHIBITED. (a) Nothing in this article, including Section 2(p) or (p-1)
of this article and any authority of the board to construe and interpret
this article, to determine any fact, to take any action, or to interpret
any terms used in Sections 13A through 13F of this article, may alter or
change Sections 13A through 13F of this article.
(b) No unilateral
decision or action by the board is binding on the municipality and no
unilateral decision or action by the municipality is binding on the fund
with respect to the application of Sections 13A through 13F of this article
unless expressly provided by a provision of those sections. Nothing in this
subsection is intended to limit the powers or authority of the board.
(c) Section 10 of this
article does not apply to a benefit increase under Section 13E of this
article, and Section 10 of this article is suspended while Sections 13A
through 13F of this article are in effect.
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No
equivalent provision.
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SECTION 1.15. Section 17,
Article 6243e.2(1), Revised Statutes, is amended by adding Subsections (f),
(g), (h), (i), and (j) to read as follows:
(f) To carry out the
provisions of Sections 13A through 13F of this article, the board and the
fund must provide the municipal actuary under a confidentiality agreement
the actuarial data used by the fund actuary for the fund's actuarial
valuations or valuation studies and other data as agreed to between the
municipality and the fund that the municipal actuary determines is
reasonably necessary for the municipal actuary to perform the studies
required by Sections 13A through 13F of this article. Actuarial data
described by this subsection does not include information described by
Subsection (a) of this section.
(g) A risk sharing
valuation study prepared by either the municipal actuary or the fund
actuary under Sections 13A through 13F of this article may not:
(1) include information
described by Subsection (a) of this section; or
(2) provide confidential
or private information regarding specific individuals or be grouped in a
manner that allows confidential or private information regarding a specific
individual to be discerned.
(h) The information, data,
and document exchanges under Sections 13A through 13F of this article have
all the protections afforded by applicable law and are expressly exempt
from the disclosure requirements under Chapter 552, Government Code, except
as may be agreed to by the municipality and fund in a written agreement.
(i) Subsection (h) of
this section does not apply to final risk sharing valuation studies
prepared under Section 13B or 13C of this article.
(j) Before a union
contract is approved by the municipality, the mayor of the municipality
shall cause the municipal actuaries to deliver to the mayor a report
estimating the impact of the proposed union contract on fund costs.
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SECTION 1.05. Section 13(d),
Article 6243e.2(1), Revised Statutes, is amended to read as follows:
(d) The municipality shall
make contributions to the fund once every two weeks in an amount equal to
the product of the contribution rate certified by the board and the
aggregate salaries paid to members of the fund during the period for which
the contribution is made. The board shall certify the municipality's
contribution rate for each year or portion of a year based on the results
of actuarial valuations made at least every three years. The
municipality's contribution rate shall be composed of the normal cost plus
the level percentage of salary payment required to amortize the unfunded
actuarial liability over a [constant] period that does not exceed
[of] 30 years [computed on the basis of an acceptable actuarial
reserve funding method approved by the board]. Notwithstanding any
other provision of this article, the contributions by the municipality,
when added to any contributions with respect to a qualified governmental
excess benefit arrangement maintained in accordance with Section 14(c) of
this article, may not be less than twice the amount paid into the fund by
contributions of the members.
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SECTION 1.16. Repeals Sections
13(d) and (e), Article 6243e.2(1), Revised Statutes.
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No
equivalent provision.
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SECTION 1.17. The
firefighters' relief and retirement fund established under Article
6243e.2(1), Revised Statutes, shall require the fund actuary to prepare the
first actuarial experience study required under Section 13D, Article
6243e.2(1), Revised Statutes, as added by this Act, not later than September
30, 2020.
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ARTICLE 2. POLICE OFFICERS'
PENSION SYSTEM
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Same as introduced version.
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SECTION 2.01. Article
6243g-4, Revised Statutes, is amended by adding Section 6A to read as
follows:
Sec. 6A. ACTION
INCREASING AMORTIZATION PERIOD. (a) Notwithstanding any other provision
of this article, a rate of a member's or a city's contributions to or a
rate of interest or the amount of a fee required for the establishment of
credit in the pension system may not be reduced or eliminated, a type of service
may not be made creditable in the pension system, a limit on the maximum
permissible amount of a type of creditable service may not be removed or
raised, a new monetary benefit payable by the pension system may not be
established, and the determination of the amount of a monetary benefit from
the pension system may not be increased, if, as a result of the particular
action, the time, as determined by an actuarial valuation, required to
amortize the unfunded actuarial liabilities of the pension system would be
increased to a period that exceeds 30 years.
(b) If the amortization
period for the unfunded actuarial liabilities of the pension system exceeds
30 years at the time an action described by Subsection (a) of this section
is proposed, the proposal may not be adopted if, as a result of the
adoption, the amortization period would be increased, as determined by an
actuarial valuation.
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No
equivalent provision.
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No
equivalent provision.
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SECTION 2.01. Section 1,
Article 6243g-4, Revised Statutes, is amended to read as follows:
Sec. 1. PURPOSE. The
purpose of this article is to restate and amend the provisions of former
law creating and governing a police officers pension system in each city in
this state having a population of two [1.5] million or more,
according to the most recent federal decennial census, and to reflect
changes agreed to by the city and the board of trustees of the pension
system under Section 27 of this article. The pension system shall continue
to operate regardless of whether the city's population falls below two
[1.5] million.
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No
equivalent provision.
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SECTION 2.02. Article
6243g-4, Revised Statutes, is amended by adding Section 1A to read as
follows:
Sec. 1A. INTERPRETATION
OF ARTICLE. This article does not and may not be interpreted to:
(1) relieve the city, the
board, or the pension system of their respective obligations under Sections
9 through 9E of this article;
(2) reduce or modify the
rights of the city, the board, or the pension system, including any officer
or employee of the city, board, or pension system, to enforce obligations
described by Subdivision (1) of this section;
(3) relieve the city,
including any official or employee of the city, from:
(A) paying or directing
to pay required contributions to the pension system under Section 8 or 9 of
this article or carrying out the provisions of Sections 9 through 9E of
this article; or
(B) reducing or modifying
the rights of the board and any officer or employee of the board or pension
system to enforce obligations described by Subdivision (1) of this section;
(4) relieve the pension
system or board, including any officer or employee of the pension system or
board, from any obligation to implement a benefit change or carry out the
provisions of Sections 9 through 9E of this article; or
(5) reduce or modify the
rights of the city and any officer or employee of the city to enforce an
obligation described by Subdivision (4) of this section.
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No
equivalent provision.
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SECTION 2.03. Section 2,
Article 6243g-4, Revised Statutes, is amended by amending Subdivisions (1),
(2), (3), (4-a), (11), (13), (14-a), (17), (17-a), and (22) and adding
Subdivisions (1-a), (1-b), (1-c), (4-b), (4-c), (4-d), (5-a), (5-b), (5-c),
(10-a), (10-b), (10-c), (10-d), (12-a), (13-a), (13-b), (13-c), (13-d),
(13-e), (13-f), (14-b), (14-c), (15-a), (15-b), (16-a), (16-b), (17-b),
(17-c), (17-d), (17-e), (24), (25), (26), (27), (28), and (29) to read as
follows:
(1) "Active
member" means an employee of the city within [a person
employed as a classified police officer by] the police department of a
city subject to this article, in a classified or appointed position,
except for a person in an appointed position who opts out of the plan, a
person who is a part-time, seasonal, or temporary employee, or a
person who elected to remain a member of a pension system described by
Chapter 88, Acts of the 77th Legislature, Regular Session, 2001 (Article
6243h, Vernon's Texas Civil Statutes). The term does not include a person
who is a member of another pension system of the same city, except to the
extent provided by Section [15(j) or] 18 of this article.
(1-a) "Actuarial
data" includes:
(A) the census data,
assumption tables, disclosure of methods, and financial information that
are routinely used by the pension system actuary for the pension system's
valuation studies or an actuarial experience study under Section 9C of this
article; and
(B) other data that is
reasonably necessary to implement Sections 9 through 9E of this article, as
agreed to by the city and the board.
(1-b) "Actuarial
experience study" has the meaning assigned by Section 802.1014,
Government Code.
(1-c) "Amortization
period" means the time period necessary to fully pay a liability
layer.
(2) "Amortization
rate" means the sum of the scheduled amortization payments for a given
fiscal year for the current liability layers divided by the projected
pensionable payroll for that fiscal year. ["Average total
direct pay" means an amount determined by dividing the following sum
by 12:
[(A) the highest biweekly
pay received by a member for any single pay period in the last 26 pay
periods in which the member worked full-time, considering only items of
total direct pay that are included in each paycheck, multiplied by 26;
plus
[(B) the total direct
pay, excluding all items of the type included in Paragraph (A) received
during the same last 26 biweekly pay periods.]
(3) "Assumed rate of
return" means the assumed market rate of return on pension system
assets, which is seven percent per annum unless adjusted as provided by
this article ["Base salary" means the monthly base pay
provided for the classified position in the police department held by the
member].
(4-a) "Catastrophic
injury" means a sudden, violent, life-threatening, duty-related injury
sustained by an active member that is due to an externally caused motor
vehicle accident, gunshot wound, aggravated assault, or other external
event or events and results, as supported by evidence, in one of the
following conditions:
(A) total, complete, and
permanent loss of sight in one or both eyes;
(B) total, complete, and
permanent loss of the use of one or both feet at or above the
ankle;
(C) total, complete, and
permanent loss of the use of one or both hands at or above the
wrist;
(D) injury to the spine that
results in a total, permanent, and complete paralysis of both
arms, both legs, or one arm and one leg; or
(E) an externally caused
physical traumatic injury to the brain rendering the member physically or
mentally unable to perform the member's duties as a police officer.
(4-b) "City"
means a city subject to this article.
(4-c) "City
contribution rate" means a percent of pensionable payroll that is the
sum of the employer normal cost rate and the amortization rate for liability
layers, excluding the legacy liability, except as determined otherwise
under the express provisions of Sections 9D and 9E of this article.
(4-d)
"Classified" means any person classified by the city as a police
officer.
(5-a)
"Corridor" means the range of city contribution rates that are:
(A) equal to or greater
than the minimum contribution rate; and
(B) equal to or less than
the maximum contribution rate.
(5-b) "Corridor
margin" means five percentage points.
(5-c) "Corridor
midpoint" means the projected city contribution rate specified for
each fiscal year for 31 years in the initial risk sharing valuation study
under Section 9B of this article, as may be adjusted under Section 9D or 9E
of this article, and in each case rounded to the nearest hundredths decimal
place.
(10-a) "Employer
normal cost rate" means the normal cost rate minus the member
contribution rate.
(10-b) "Estimated
city contribution rate" means the city contribution rate estimated in
a final risk sharing valuation study under Section 9A or 9B of this
article, as applicable, as required by Section 9A(a)(5) of this article.
(10-c) "Fiscal
year," except as provided by Section 2A of this article, means a
fiscal year beginning July 1 and ending June 30.
(10-d) "Final
average pay" means the pay received by a member over the last 78
biweekly pay periods ending before the earlier of:
(A) the date the member
terminates employment with the police department, divided by 36; or
(B) the date the member
began participation in DROP, divided by 36.
(11) "Former
member" means a person who was once an active member, eligible for
benefits [vested] or not, but who terminated active member
status and received a refund of member contributions.
(12-a) "Funded
ratio" means the ratio of the pension system's actuarial value of
assets divided by the pension system's actuarial accrued liability.
(13) "Inactive
member" means a person who has separated from service and is
eligible to receive [has a vested right to] a service pension
from the pension system but is not eligible for an immediate service
pension. The term does not include a former member.
(13-a) "Legacy
liability" means the unfunded actuarial accrued liability as of June
30, 2016, as reduced to reflect:
(A) changes to benefits
and contributions under this article that took effect on the year 2017
effective date;
(B) the deposit of
pension obligation bond proceeds on December 31, 2017;
(C) payments by the city
and earnings at the assumed rate of return allocated to the legacy
liability from July 1, 2016, to July 1, 2017, excluding July 1, 2017; and
(D) for each subsequent
fiscal year, contributions for that year allocated to the amortization of
the legacy liability and adjusted by the assumed rate of return.
(13-b) "Level
percent of payroll method" means the amortization method that defines
the amount of the liability layer recognized each fiscal year as a level
percent of pensionable payroll until the amount of the liability layer
remaining is reduced to zero.
(13-c) "Liability
gain layer" means a liability layer that decreases the unfunded
actuarial accrued liability.
(13-d) "Liability
layer" means the legacy liability established in the initial risk
sharing valuation study under Section 9B of this article and the
unanticipated change as established in each subsequent risk sharing
valuation study prepared under Section 9A of this article.
(13-e) "Liability
loss layer" means a liability layer that increases the unfunded
actuarial accrued liability. For purposes of this article, the legacy
liability is a liability loss layer.
(13-f) "Maximum
contribution rate" means the rate equal to the corridor midpoint plus
the corridor margin.
(14-a) "Minimum
contribution rate" means the rate equal to the corridor midpoint minus
the corridor margin.
(14-b) "Normal cost
rate" means the salary weighted average of the individual normal cost
rates determined for the current active population plus an allowance for
projected administrative expenses. The allowance for projected
administrative expenses equals the administrative expenses divided by the
pensionable payroll for the previous fiscal year, provided the
administrative allowance may not exceed one percent of pensionable payroll
for the current fiscal year unless agreed to by the city.
(14-c) "Normal
retirement age" means:
(A) for a member hired
before October 9, 2004, including a member hired before October 9, 2004,
who involuntarily separated from service but was retroactively reinstated
under an arbitration, civil service, or court ruling after October 9, 2004,
the earlier of:
(i) [(A)] the
age at which the member attains 20 years of service; or
(ii) [(B)] the
age at which the member first attains both the age of at least 60 and at
least 10 years of service; or
(B) except as provided by
Paragraph (A) of this subdivision, for a member hired or rehired on or
after October 9, 2004, the age at which the sum of the member's age in
years and years of service equals at least 70.
(15-a) "Pay,"
unless the context requires otherwise, means wages as defined by Section
3401(a) of the code, plus any amounts that are not included in gross income
by reason of Section 104(a)(1), 125, 132(f), 402(g)(2), 457, or 414(h)(2)
of the code, less any pay received for overtime work, exempt time pay,
strategic officer staffing program pay, motorcycle allowance, clothing
allowance, or mentor pay. The definition of "pay" for purposes of
this article may only be amended by written agreement of the board and the
city under Section 27 of this article.
(15-b) "Payoff year"
means the year a liability layer is fully amortized under the amortization
period. A payoff year may not be extended or accelerated for a period that
is less than one month.
(16-a) "Pension
obligation bond" means a bond issued in accordance with Chapter 107,
Local Government Code.
(16-b) "Pensionable
payroll" means the combined salaries paid to active members during an
applicable fiscal year.
(17) "Pension
system" or "system," unless the context requires
otherwise, means the retirement and disability plan for employees of
any police department subject to this article.
(17-a) "Police
department" means one or more law enforcement agencies designated as a
police department by a city.
(17-b) "Price
inflation assumption" means:
(A) the most recent
headline consumer price index 10-year forecast published in the Federal
Reserve Bank of Philadelphia Survey of Professional Forecasters; or
(B) if the forecast
described by Paragraph (A) of this subdivision is not available, another
standard as determined by mutual agreement between the city and the board
entered into under Section 27 of this article.
(17-c) "Projected
pensionable payroll" means the estimated pensionable payroll for the
fiscal year beginning 12 months after the date of the risk sharing valuation
study prepared under Section 9A of this article, as applicable, at the time
of calculation by:
(A) projecting the prior
fiscal year's pensionable payroll projected forward two years by using the
current payroll growth rate assumptions; and
(B) adjusting, if
necessary, for changes in population or other known factors, provided those
factors would have a material impact on the calculation, as determined by
the board.
(17-d) "Retired
member" means a member who has separated from service and who is
eligible to receive an immediate service or disability pension under this
article.
(17-e) "Salary"
means pay provided for the classified position in the police department
held by the member.
(22) "Surviving
spouse" means a person who was married to an active, inactive, or
retired member at the time of the member's death and, in the case of a
marriage or remarriage after the member's retirement, [an inactive
or retired member, before the member's separation from service or] for
a period of at least five consecutive years [before the retired
or inactive member's death].
(24) "Third quarter
line rate" means the corridor midpoint plus 2.5 percentage points.
(25) "Trustee"
means a member of the board.
(26) "Ultimate entry
age normal" means an actuarial cost method under which a calculation
is made to determine the average uniform and constant percentage rate of
contributions that, if applied to the compensation of each member during
the entire period of the member's anticipated covered service, would be
required to meet the cost of all benefits payable on the member's behalf
based on the benefits provisions for newly hired employees. For purposes
of this definition, the actuarial accrued liability for each member is the
difference between the member's present value of future benefits based on
the tier of benefits that apply to the member and the member's present
value of future normal costs determined using the normal cost rate.
(27) "Unfunded
actuarial accrued liability" means the difference between the
actuarial accrued liability and the actuarial value of assets. For purposes
of this definition:
(A) "actuarial
accrued liability" means the portion of the actuarial present value of
projected benefits attributed to past periods of member service based on
the cost method used in the risk sharing valuation study prepared under
Section 9A or 9B of this article, as applicable; and
(B) "actuarial value
of assets" means the value of pension system investments as calculated
using the asset smoothing method used in the risk sharing valuation study
prepared under Section 9A or 9B of this article, as applicable.
(28) "Unanticipated
change" means, with respect to the unfunded actuarial accrued
liability in each subsequent risk sharing valuation study prepared under
Section 9A of this article, the difference between:
(A) the remaining balance
of all then-existing liability layers as of the date of the risk sharing
valuation study; and
(B) the actual unfunded
actuarial accrued liability as of the date of the risk sharing valuation
study.
(29) "Year 2017
effective date" means the date on which H.B. No. 43, Acts of the 85th
Legislature, Regular Session, 2017, took effect.
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No
equivalent provision.
|
SECTION 2.04. Article
6243g-4, Revised Statutes, is amended by adding Sections 2A and 2B to read
as follows:
Sec. 2A. FISCAL YEAR. If
either the pension system or the city changes its respective fiscal year,
the pension system and the city shall enter into a written agreement under
Section 27 of this article to adjust the provisions of Sections 9 through
9E of this article to reflect that change for purposes of this article.
Sec. 2B. CONFLICT OF
LAW. To the extent of a conflict between this article and any other law,
this article prevails.
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No
equivalent provision.
|
SECTION 2.05. Section 3(b),
Article 6243g-4, Revised Statutes, is amended to read as follows:
(b) The board is composed of
seven members as follows:
(1) the administrative head
of the city or the administrative head's authorized representative;
(2) three employees of the
police department having membership in the pension system, elected by the
active, inactive, and retired members of the pension system;
(3) two retired members who
are receiving pensions from the system and are not officers or employees of
the city, elected by the active, inactive, and retired members of the
pension system; and
(4) the director of
finance [treasurer] of the city or the person discharging the
duties of the director of finance, or the director's designee [city
treasurer].
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No
equivalent provision.
|
SECTION 2.06. Section 3,
Article 6243g-4, Revised Statutes, is amended by amending Subsection (b)
and adding Subsections (i) and (j) to read as follows:
(b) The board is composed of
seven members as follows:
(1) the administrative head
of the city or the administrative head's authorized representative;
(2) three employees of the
police department having membership in the pension system, elected by the
active, inactive, and retired members of the pension system;
(3) two retired members who
are receiving pensions from the system, who are elected by the active,
inactive, and retired members of the pension system, and who are
not:
(A) officers or
employees of the city; or
(B) current or former
employees of any other fund or pension system authorized under:
(i) Article 6243e.2(1),
Revised Statutes; or
(ii) Chapter 88 (H.B.
1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h,
Vernon's Texas Civil Statutes) [, elected by the active, inactive,
and retired members of the pension system]; and
(4) the treasurer of the
city or the person discharging the duties of the city treasurer.
(i) If a candidate for
either an active or retired board member position does not receive a
majority vote for that position, a runoff election for that position shall
be held. The board shall establish a policy for general and runoff
elections for purposes of this subsection.
(j) Beginning with the
year 2017 effective date:
(1) the term of office
for a board member in the phase-down program A or B shall be one year; and
(2) a board member who
subsequently enters phase-down program A or B and has served at least one
year of the member's current term shall vacate the member's seat and may
run for reelection.
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No
equivalent provision.
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SECTION 2.07. Section 4,
Article 6243g-4, Revised Statutes, is amended to read as follows:
Sec. 4. BOARD MEMBER LEAVE
AND COMPENSATION. (a) The city shall allow active members who are
trustees to promptly attend all board and committee meetings. The city
shall allow trustees the time required to travel to and attend educational
workshops and legislative hearings and to attend to other pension system
business, including meetings regarding proposed amendments to this article,
if attendance is consistent with a trustee's duty to the board [Elected
members of the board who are employees of the city's police department are
entitled to leave from their employer to attend to the official business of
the pension system and are not required to report to the city or any other
governmental entity regarding travel or the official business of the
pension system, except when on city business].
(b) [If the city
employing an elected board member would withhold any portion of the salary
of the member who is attending to official business of the pension system,
the pension system may elect to adequately compensate the city for the loss
of service of the member. If the board, by an affirmative vote of at least
four board members, makes this election, the amounts shall be remitted from
the fund to the city, and the city shall pay the board member's salary as
if no loss of service had occurred.
[(c)] The board, by an
affirmative vote of at least four board members, may elect to reimburse
board members who are not employees of the city for their time while
attending to official business of the pension system. The amount of any
reimbursement may not exceed $750 [$350] a month for each
affected board member.
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No
equivalent provision.
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SECTION 2.08. Article
6243g-4, Revised Statutes, is amended by adding Sections 5A and 5B to read
as follows:
Sec. 5A. QUALIFICATIONS
OF CITY ACTUARY. (a) An actuary hired by the city for purposes of this
article must be an actuary from a professional service firm who:
(1) is not already
engaged by the pension system or any other fund or pension system
authorized under Article 6243e.2(1), Revised Statutes, or Chapter 88 (H.B.
1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h,
Vernon's Texas Civil Statutes), to provide actuarial services to the
pension system or other fund or pension system, as applicable;
(2) has a minimum of 10
years of professional actuarial experience; and
(3) is a member of the
American Academy of Actuaries or a fellow of the Society of Actuaries and
meets the applicable requirements to issue statements of actuarial opinion.
(b) Notwithstanding
Subsection (a) of this section, the city actuary must at least meet the
qualifications required by the board for the pension system actuary. The
city actuary is not required to have greater qualifications than those of
the pension system actuary.
Sec. 5B. LIABILITY OF
CERTAIN PERSONS. (a) The trustees, executive director, and employees of
the pension system are fully protected from and free of liability for any
action taken or suffered by them that were performed in good faith and in
reliance on an actuary, accountant, counsel, or other professional service
provider, or in reliance on records provided by the city.
(b) The officers and
employees of the city are fully protected and free of liability for any
action taken or suffered by the officer or employee, as applicable, in good
faith and on reliance on an actuary, accountant, counsel, or other
professional service provider.
(c) The protection from
liability provided by this section is cumulative of and in addition to any
other constitutional, statutory, or common law official or governmental
immunity, defense, and civil or procedural protection provided to the city
or pension system as a governmental entity and to a city or pension system
official or employee as an official or employee of a governmental entity.
Except for a waiver expressly provided by this article, this article does
not grant an implied waiver of any immunity.
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No
equivalent provision.
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SECTION 2.09. Section 6,
Article 6243g-4, Revised Statutes, is amended by amending Subsections (f)
and (g) and adding Subsections (f-1), (i), and (j) to read as follows:
(f) The board has full
discretion and authority to:
(1) administer the
pension system;
(2) [, to]
construe and interpret this article and any summary plan descriptions or
benefits procedures;
(3) subject to Section 9F
of this article, correct any defect, supply any omission, and reconcile any
inconsistency that appears in this article;[,] and
(4) take [to do]
all other acts necessary to carry out the purpose of this article in a
manner and to the extent that the board considers expedient to administer
this article for the greatest benefit of all members.
(f-1) Except as provided
by Section 9F of this article, all [All] decisions of the board under
Subsection (f) of this section are final and binding on all affected
parties.
(g) The board, if reasonably
necessary in the course of performing a board function, may issue
process or subpoena a witness or the production of a book, record, or
other document as to any matter affecting retirement, disability, or
death benefits under any pension plan provided by the pension system.
The presiding officer of the board may issue, in the name of the board, a
subpoena only if a majority of the board approves. The presiding officer
of the board, or the presiding officer's designee, shall administer an oath
to each witness. A peace officer shall serve a subpoena issued by the
board. If the person to whom a subpoena is directed fails to comply, the
board may bring suit to enforce the subpoena in a district court of the
county in which the person resides or in the county in which the book,
record, or other document is located. If the district court finds that
good cause exists for issuance of the subpoena, the court shall order
compliance. The district court may modify the requirements of a subpoena
that the court finds are unreasonable. Failure to obey the order of the
district court is punishable as contempt.
(i) If the board or its
designee determines that any person to whom a payment under this article is
due is a minor or is unable to care for the person's affairs because of a
physical or mental disability, and if the board or its designee, as
applicable, determines the person does not have a guardian or other legal
representative and that the estate of the person is insufficient to justify
the expense of establishing a guardianship, or continuing a guardianship
after letters of guardianship have expired, then until current letters of
guardianship are filed with the pension system, the board or its designee,
as applicable, may make the payment:
(1) to the spouse of the
person, as trustee for the person;
(2) to an individual or
entity actually providing for the needs of and caring for the person, as
trustee for the person; or
(3) to a public agency or
private charitable organization providing assistance or services to the
aged or incapacitated that agrees to accept and manage the payment for the
benefit of the person as a trustee.
(j) The board or its
designee is not responsible for overseeing how a person to whom payment is
made under Subsection (i) of this section uses or otherwise applies the
payments. Payments made under Subsection (i) of this section constitute a
complete discharge of the pension system's liability and obligation to the
person on behalf of whom payment is made.
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No
equivalent provision.
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SECTION 2.10. Section 8(a),
Article 6243g-4, Revised Statutes, is amended to read as follows:
(a) Subject to
adjustments authorized by Section 9D or 9E of this article, each [Each]
active member of the pension system shall pay into the system each month 10.5
[8-3/4] percent of the member's [total direct] pay. The
payments shall be deducted by the city from the salary of each active
member each payroll period and paid to the pension system. Except for the
repayment of withdrawn contributions under Section 17(f) [or 18(c)(3)]
of this article and rollovers permitted by Section 17(h) of this article, a
person may not be required or permitted to make any payments into the
pension system after the person separates from service.
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SECTION 2.02. Section 9(a),
Article 6243g-4, Revised Statutes, is amended to read as follows:
(a) The city shall make [substantially equal] contributions to the fund [as soon
as administratively feasible after] each
payroll period in an amount equal to the product of the contribution
rate certified by the board and the aggregate salaries paid to members of
the pension system during the period for which the contribution is made.
The board shall certify the city's contribution rate for each year or
portion of a year based on the results of actuarial valuations made at
least every three years.
For
each fiscal year ending after June 30, 2005, the city's minimum
contribution shall be the normal cost plus the [greater of
16 percent of the members' total direct pay or the] level percentage of salary payment required to
amortize the unfunded actuarial liability over a [constant] period that does not exceed [of]
30 years [computed on the
basis of an acceptable actuarial reserve funding method approved by the
board]. [However, for the fiscal year ending June 30, 2002, the
city's contribution shall be $32,645,000, for the fiscal year ending June
30, 2003, the city's contribution shall be $34,645,000, for the fiscal year
ending June 30, 2004, the city's contribution shall be $36,645,000, and for
the fiscal year ending June 30, 2005, the city's contribution shall be 16
percent of the members' total direct pay.]
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
|
SECTION 2.11. Section 9,
Article 6243g-4, Revised Statutes, is amended to read as follows:
Sec. 9. CONTRIBUTIONS BY THE
CITY.
(See text following added
Subsec. (d) below.)
(a) For each fiscal year ending after June 30,
2005, the city's minimum contribution shall be the greater of 16 percent of
the members' total direct pay or the level percentage of salary payment
required to amortize the unfunded actuarial liability over a constant
period of 30 years computed on the basis of an acceptable actuarial
reserve funding method approved by the board. However, for the fiscal year
ending June 30, 2002, the city's contribution shall be $32,645,000, for the
fiscal year ending June 30, 2003, the city's contribution shall be
$34,645,000, for the fiscal year ending June 30, 2004, the city's
contribution shall be $36,645,000, and for the fiscal year ending June 30,
2005, the city's contribution shall be 16 percent of the members' total
direct pay].
Beginning with the year
2017 effective date, the city shall make contributions to the pension
system for deposit into the fund as provided by this section and Section
9A, 9B, 9D, or 9E of this article, as applicable. The city shall
contribute:
(1) beginning with the
year 2017 effective date and ending with the fiscal year ending June 30,
2018, an amount equal to the city contribution rate, as determined in the
initial risk sharing valuation study conducted under Section 9B of this
article and adjusted under Section 9D or 9E of this article, as applicable,
multiplied by the pensionable payroll for the fiscal year; and
(2) for each fiscal year
after the fiscal year ending June 30, 2018, an amount equal to the city
contribution rate, as determined in a subsequent risk sharing valuation
study conducted under Section 9A of this article and adjusted under Section
9D or 9E of this article, as applicable, multiplied by the pensionable
payroll for the applicable fiscal year.
(b) Except by written
agreement between the city and the board under Section 27 of this article
providing for an earlier contribution date, at least biweekly, the city
shall make the contributions required by Subsection (a) of this section by
depositing with the pension system an amount equal to the city contribution
rate multiplied by the pensionable payroll for the biweekly period.
(c) With respect to each
fiscal year:
(1) the first
contribution by the city under this section for the fiscal year shall be
made not later than the date payment is made to employees for their first
full biweekly pay period beginning on or after the first day of the fiscal
year; and
(2) the final
contribution by the city under this section for the fiscal year shall be
made not later than the date payment is made to employees for the final
biweekly pay period of the fiscal year.
(d) In addition to the
amounts required under this section, the city may at any time contribute
additional amounts to the pension system for deposit in the pension fund by
entering into a written agreement with the board in accordance with Section
27 of this article [The city
shall make substantially equal contributions to the fund as soon as
administratively feasible after each payroll period.
(e) [(c)] The
governing body of a city to which this article applies by ordinance or
resolution may provide that the city pick up active member contributions
required by Section 8 of this article so that the contributions of all
active members of the pension system qualify as picked-up contributions
under Section 414(h)(2) of the code. If the governing body of a city
adopts an ordinance or resolution under this section, the city, the board,
and any other necessary party shall implement the action as soon as
practicable. Contributions picked up as provided by this subsection shall
be included in the determination of an active member's [total direct]
pay, deposited to the individual account of the active member on whose
behalf they are made, and treated for all purposes, other than federal tax
purposes, in the same manner and with like effect as if they had been
deducted from the salary of, and made by, the active member.
(f) Only amounts paid by
the city to the pension system shall be credited against any amortization
schedule of payments due to the pension system under this article.
(g) Subsection (f) of
this section does not affect changes to an amortization schedule of a
liability layer under Section 9A(a)(6)(F), 9B(i), or 9D(c)(4) of this
article.
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No
equivalent provision.
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SECTION 2.12. Article
6243g-4, Revised Statutes, is amended by adding Sections 9A, 9B, 9C, 9D,
9E, and 9F to read as follows:
Sec. 9A. RISK SHARING
VALUATION STUDIES. (a) The pension system and the city shall separately
cause their respective actuaries to prepare a risk sharing valuation study
in accordance with this section and actuarial standards of practice. A risk
sharing valuation study must:
(1) be dated as of the
first day of the fiscal year in which the study is required to be prepared;
(2) be included in the
pension system's standard valuation study prepared annually for the pension
system;
(3) calculate the
unfunded actuarial accrued liability of the pension system;
(4) be based on actuarial
data provided by the pension system actuary or, if actuarial data is not
provided, on estimates of actuarial data;
(5) estimate the city
contribution rate, taking into account any adjustments required under
Section 9D or 9E of this article for all applicable prior fiscal years;
(6) subject to Subsection
(g) of this section, be based on the following assumptions and methods that
are consistent with actuarial standards of practice:
(A) an ultimate entry age
normal actuarial method;
(B) for purposes of
determining the actuarial value of assets:
(i) except as provided by
Subparagraph (ii) of this paragraph and Section 9D(c)(1) or 9E(c)(2) of
this article, an asset smoothing method recognizing actuarial losses and
gains over a five-year period applied prospectively beginning on the year
2017 effective date; and
(ii) for the initial risk
sharing valuation study prepared under Section 9B of this article, a
marked-to-market method applied as of June 30, 2016;
(C) closed layered
amortization of liability layers to ensure that the amortization period for
each layer begins 12 months after the date of the risk sharing valuation
study in which the liability layer is first recognized;
(D) each liability layer
is assigned an amortization period;
(E) each liability loss
layer amortized over a period of 30 years from the first day of the fiscal
year beginning 12 months after the date of the risk sharing valuation study
in which the liability loss layer is first recognized, except that the
legacy liability must be amortized from July 1, 2016, for a 30-year period
beginning July 1, 2017;
(F) the amortization
period for each liability gain layer being:
(i) equal to the
remaining amortization period on the largest remaining liability loss layer
and the two layers must be treated as one layer such that if the payoff
year of the liability loss layer is accelerated or extended, the payoff
year of the liability gain layer is also accelerated or extended; or
(ii) if there is no
liability loss layer, a period of 30 years from the first day of the fiscal
year beginning 12 months after the date of the risk sharing valuation study
in which the liability gain layer is first recognized;
(G) liability layers,
including the legacy liability, funded according to the level percent of
payroll method;
(H) the assumed rate of
return, subject to adjustment under Section 9D(c)(2) of this article or, if
Section 9B(g) of this article applies, adjustment in accordance with a
written agreement entered into under Section 27 of this article, except the
assumed rate of return may not exceed seven percent per annum;
(I) the price inflation
assumption as of the most recent actuarial experience study, which may be
reset by the board by plus or minus 50 basis points based on that actuarial
experience study;
(J) projected salary
increases and payroll growth rate set in consultation with the city's
finance director; and
(K) payroll for purposes
of determining the corridor midpoint and city contribution rate must be
projected using the annual payroll growth rate assumption; and
(7) be revised and
restated, if appropriate, not later than:
(A) the date required by
a written agreement entered into between the city and the board; or
(B) the 30th day after
the date required action is taken by the board under Section 9D or 9E of
this article to reflect any changes required by either section.
(b) As soon as
practicable after the end of a fiscal year, the pension system actuary at
the direction of the pension system and the city actuary at the direction
of the city shall separately prepare a proposed risk sharing valuation
study based on the fiscal year that just ended.
(c) Not later than
September 30 following the end of the fiscal year, the pension system shall
provide to the city actuary, under a confidentiality agreement with the
board in which the city actuary agrees to comply with the confidentiality
provisions of Section 29 of this article, the actuarial data described by
Subsection (a)(4) of this section.
(d) Not later than the
150th day after the last day of the fiscal year:
(1) the pension system
actuary, at the direction of the pension system, shall provide the proposed
risk sharing valuation study prepared by the pension system actuary under
Subsection (b) of this section to the city actuary; and
(2) the city actuary, at
the direction of the city, shall provide the proposed risk sharing
valuation study prepared by the city actuary under Subsection (b) of this
section to the pension system actuary.
(e) Each actuary
described by Subsection (d) of this section may provide copies of the
proposed risk sharing valuation studies to the city or to the pension
system, as appropriate.
(f) If, after exchanging
proposed risk sharing valuation studies under Subsection (d) of this
section, it is found that the difference between the estimated city
contribution rate recommended in the proposed risk sharing valuation study
prepared by the pension system actuary and the estimated city contribution
rate recommended in the proposed risk sharing valuation study prepared by
the city actuary for the corresponding fiscal year is:
(1) less than or equal to
two percentage points, the estimated city contribution rate recommended by
the pension system actuary will be the estimated city contribution rate for
purposes of Subsection (a)(5) of this section, and the proposed risk
sharing valuation study prepared for the pension system is considered to be
the final risk sharing valuation study for the fiscal year for the purposes
of this article; or
(2) greater than two
percentage points, the city actuary and the pension system actuary shall
have 20 business days to reconcile the difference, provided that without
the mutual agreement of both actuaries, the difference in the estimated
city contribution rate recommended by the city actuary and the estimated
city contribution rate recommended by the pension system actuary may not be
further increased and:
(A) if, as a result of
reconciliation efforts under this subdivision, the difference is reduced to
less than or equal to two percentage points:
(i) the estimated city
contribution rate proposed under the reconciliation by the pension system
actuary will be the estimated city contribution rate for purposes of
Subsection (a)(5) of this section; and
(ii) the pension system's
risk sharing valuation study is considered to be the final risk sharing valuation
study for the fiscal year for the purposes of this article; or
(B) if, after 20 business
days, the pension system actuary and the city actuary are not able to reach
a reconciliation that reduces the difference to an amount less than or
equal to two percentage points:
(i) the city actuary at
the direction of the city and the pension system actuary at the direction
of the pension system each shall deliver to the finance director of the
city and the executive director of the pension system a final risk sharing
valuation study with any agreed-to changes, marked as the final risk
sharing valuation study for each actuary; and
(ii) not later than the
90th day before the first day of the next fiscal year, the finance director
and the executive director shall execute a joint addendum to the final risk
sharing valuation study received by them under Subparagraph (i) of this
paragraph that is a part of the final risk sharing valuation study for the
fiscal year for all purposes and reflects the arithmetic average of the
estimated city contribution rates for the fiscal year stated by the city
actuary and the pension system actuary in the final risk sharing valuation
study for purposes of Subsection (a)(5) of this section, and for reporting
purposes the pension system may treat the pension system actuary's risk
sharing valuation study with the addendum as the final risk sharing
valuation study.
(g) The assumptions and
methods used and the types of actuarial data and financial information used
to prepare the initial risk sharing valuation study under Section 9B of
this article shall be used to prepare each subsequent risk sharing
valuation study under this section, unless changed based on the actuarial
experience study conducted under Section 9C of this article.
(h) The actuarial data
provided under Subsection (a)(2) of this section may not include the
identifying information of individual members.
Sec. 9B. INITIAL RISK
SHARING VALUATION STUDIES; CORRIDOR MIDPOINT. (a) The pension system and
the city shall separately cause their respective actuaries to prepare an
initial risk sharing valuation study that is dated as of July 1, 2016, in
accordance with this section. An initial risk sharing valuation study
must:
(1) except as otherwise
provided by this section, be prepared in accordance with Section 9A of this
article and, for purposes of Section 9A(a)(4) of this article, be based on
actuarial data as of June 30, 2016; and
(2) project the corridor
midpoint for 31 fiscal years beginning with the fiscal year beginning July
1, 2017.
(b) If the initial risk
sharing valuation study has not been prepared consistent with this section
before the year 2017 effective date, as soon as practicable after the year
2017 effective date:
(1) the pension system
shall provide to the city actuary, under a confidentiality agreement, the
necessary actuarial data used by the pension system actuary to prepare the
proposed initial risk sharing valuation study; and
(2) not later than the
30th day after the date the city's actuary receives the actuarial data:
(A) the city actuary, at
the direction of the city, shall provide a proposed initial risk sharing
valuation study to the pension system actuary; and
(B) the pension system
actuary, at the direction of the pension system, shall provide a proposed
initial risk sharing valuation study to the city actuary.
(c) If, after exchanging
proposed initial risk sharing valuation studies under Subsection (b)(2) of
this section, it is determined that the difference between the estimated
city contribution rate for any fiscal year recommended in the proposed
initial risk sharing valuation study prepared by the pension system actuary
and in the proposed initial risk sharing valuation study prepared by the
city actuary is:
(1) less than or equal to
two percentage points, the estimated city contribution rate for that fiscal
year recommended by the pension system actuary will be the estimated city
contribution rate for purposes of Section 9A(a)(5) of this article; or
(2) greater than two
percentage points, the city actuary and the pension system actuary shall
have 20 business days to reconcile the difference and:
(A) if, as a result of
reconciliation efforts under this subdivision, the difference in any fiscal
year is reduced to less than or equal to two percentage points, the
estimated city contribution rate recommended by the pension system actuary
for that fiscal year will be the estimated city contribution rate for
purposes of Section 9A(a)(5) of this article; or
(B) if, after 20 business
days, the city actuary and the pension system actuary are not able to reach
a reconciliation that reduces the difference to an amount less than or
equal to two percentage points for any fiscal year:
(i) the city actuary at
the direction of the city and the pension system actuary at the direction
of the pension system each shall deliver to the finance director of the
city and the executive director of the pension system a final initial risk
sharing valuation study with any agreed-to changes, marked as the final initial
risk sharing valuation study for each actuary; and
(ii) the finance director
and the executive director shall execute a joint addendum to the final
initial risk sharing valuation study that is a part of each final initial
risk sharing valuation study for all purposes and that reflects the
arithmetic average of the estimated city contribution rate for each fiscal
year in which the difference was greater than two percentage points for
purposes of Section 9A(a)(5) of this article, and for reporting purposes
the pension system may treat the pension system actuary's initial risk
sharing valuation study with the addendum as the final initial risk sharing
valuation study.
(d) In preparing the
initial risk sharing valuation study, the city actuary and pension system
actuary shall:
(1) adjust the actuarial
value of assets to be equal to the market value of assets as of July 1,
2016;
(2) assume the issuance
of planned pension obligation bonds by December 31, 2017; and
(3) assume benefit and
contribution changes contemplated by this article as of the year 2017
effective date.
(e) If the city actuary
does not prepare an initial risk sharing valuation study for purposes of
this section, the pension system actuary's initial risk sharing valuation
study will be used as the final risk sharing valuation study for purposes
of this article unless the city did not prepare a proposed initial risk
sharing valuation study because the pension system actuary did not provide
the necessary actuarial data in a timely manner. If the city did not
prepare a proposed initial risk sharing valuation study because the pension
system actuary did not provide the necessary actuarial data in a timely
manner, the city actuary shall have 60 days to prepare the proposed initial
risk sharing valuation study on receipt of the necessary information.
(f) If the pension system
actuary does not prepare a proposed initial risk sharing valuation study
for purposes of this section, the proposed initial risk sharing valuation
study prepared by the city actuary will be the final risk sharing valuation
study for purposes of this article.
(g) The city and the
board may agree on a written transition plan for resetting the corridor
midpoint:
(1) if at any time the
funded ratio is equal to or greater than 100 percent; or
(2) for any fiscal year
after the payoff year of the legacy liability.
(h) If the city and the
board have not entered into an agreement described by Subsection (g) of
this section in a given fiscal year, the corridor midpoint will be the corridor
midpoint determined for the 31st fiscal year in the initial risk sharing
valuation study prepared in accordance with this section.
(i) If the city makes a
contribution to the pension system of at least $5 million more than the
amount that would be required by Section 9(a) of this article, a liability
gain layer with the same remaining amortization period as the legacy
liability is created and the corridor midpoint shall be decreased by the
amortized amount in each fiscal year covered by the liability gain layer
produced divided by the projected pensionable payroll.
(j) Notwithstanding any
other provision of this article, including Section 9F of this article:
(1) if the city fails to
deliver the proceeds of pension obligation bonds totaling $750 million on
or before January 2, 2018, the board shall have 30 days from January 2,
2018, to rescind, prospectively, any or all benefit changes made effective
under H.B. No. 43, Acts of the 85th Legislature, Regular Session, 2017, as
of the year 2017 effective date, or to reestablish the deadline for the
delivery of pension obligation bond proceeds, reserving the right to
rescind the benefit changes authorized by this subdivision if the bond
proceeds are not delivered by the reestablished deadline; and
(2) subject to Subsection
(k) of this section, if the board rescinds benefit changes under
Subdivision (1) of this subsection or pension obligation bond proceeds are
not delivered on or before the deadline or reestablished deadline
prescribed by Subdivision (1) of this subsection, the initial risk sharing
valuation study shall be prepared again and restated without assuming the
delivery of the pension obligation bond proceeds, the extended time for
delivery of pension obligation bond proceeds, or the rescinded benefit
changes, as applicable, and the resulting city contribution rate will
become effective in the fiscal year following the completion of the
restated initial risk sharing valuation study.
(k) The restated initial
risk sharing valuation study required under Subsection (j)(2) of this
section must be completed at least 30 days before the start of the fiscal
year:
(1) ending June 30, 2019,
if the board does not reestablish the deadline under Subsection (j)(1) of
this section; or
(2) immediately following
the reestablished deadline, if the board reestablishes the deadline under
Subsection (j)(1) of this section and the city fails to deliver the pension
obligation bond proceeds described by Subsection (j)(1) of this section by
the reestablished deadline.
Sec. 9C. ACTUARIAL
EXPERIENCE STUDIES. (a) At least once every four years, the pension
system actuary at the direction of the pension system shall conduct an
actuarial experience study in accordance with actuarial standards of
practice. The actuarial experience study required by this subsection must
be completed not later than September 30 of the year in which the study is
required to be conducted.
(b) Except as otherwise
expressly provided by Sections 9A(a)(6)(A)-(I) of this article, actuarial
assumptions and methods used in the preparation of a risk sharing valuation
study, other than the initial risk sharing valuation study, shall be based
on the results of the most recent actuarial experience study.
(c) Not later than the
180th day before the date the board may consider adopting any assumptions
and methods for purposes of Section 9A of this article, the pension system
shall provide the city actuary with a substantially final draft of the
pension system's actuarial experience study, including:
(1) all assumptions and
methods recommended by the pension system's actuary; and
(2) summaries of the
reconciled actuarial data used in creation of the actuarial experience
study.
(d) Not later than the
60th day after the date the city receives the final draft of the pension
system's actuarial experience study under Subsection (c) of this section,
the city actuary and pension system actuary shall confer and cooperate on
reconciling and producing a final actuarial experience study. During the
period prescribed by this subsection, the pension system actuary may modify
the recommended assumptions in the draft actuarial experience study to
reflect any changes to assumptions and methods to which the pension system
actuary and the city actuary agree.
(e) At the city actuary's
written request, the pension system shall provide additional actuarial data
used by the pension system actuary to prepare the draft actuarial
experience study, provided that confidential data may only be provided
subject to a confidentiality agreement in which the city actuary agrees to
comply with the confidentiality provisions of Section 29 of this article.
(f) The city actuary at
the direction of the city shall provide in writing to the pension system
actuary and the pension system:
(1) any assumptions and
methods recommended by the city actuary that differ from the assumptions
and methods recommended by the pension system actuary; and
(2) the city actuary's
rationale for each method or assumption the actuary recommends and
determines to be consistent with standards adopted by the Actuarial
Standards Board.
(g) Not later than the
30th day after the date the pension system actuary receives the city
actuary's written recommended assumptions and methods and rationale under
Subsection (f) of this section, the pension system shall provide a written
response to the city identifying any assumption or method recommended by
the city actuary that the pension system does not accept. If any
assumption or method is not accepted, the pension system shall recommend to
the city the names of three independent actuaries for purposes of this
section.
(h) An actuary may only
be recommended, selected, or engaged by the pension system as an
independent actuary under this section if the person:
(1) is not already engaged
by the city, the pension system, or any other fund or pension system
authorized under Article 6243e.2(1), Revised Statutes, or Chapter 88 (H.B.
1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h,
Vernon's Texas Civil Statutes), to provide actuarial services to the city,
the pension system, or another fund or pension system referenced in this
subdivision;
(2) is a member of the
American Academy of Actuaries; and
(3) has at least five
years of experience as an actuary working with one or more public
retirement systems with assets in excess of $1 billion.
(i) Not later than the
20th day after the date the city receives the list of three independent
actuaries under Subsection (g) of this section, the city shall identify and
the pension system shall hire one of the listed independent actuaries on
terms acceptable to the city and the pension system to perform a scope of
work acceptable to the city and the pension system. The city and the
pension system each shall pay 50 percent of the cost of the independent
actuary engaged under this subsection. The city shall be provided the
opportunity to participate in any communications between the independent
actuary and the pension system concerning the engagement, engagement terms,
or performance of the terms of the engagement.
(j) The independent
actuary engaged under Subsection (i) of this section shall receive on
request from the city or the pension system:
(1) the pension system's
draft actuarial experience study, including all assumptions and methods
recommended by the pension system actuary;
(2) summaries of the
reconciled actuarial data used to prepare the draft actuarial experience
study;
(3) the city actuary's
specific recommended assumptions and methods together with the city actuary's
written rationale for each recommendation;
(4) the pension system
actuary's written rationale for its recommendations; and
(5) if requested by the
independent actuary and subject to a confidentiality agreement in which the
independent actuary agrees to comply with the confidentiality provisions of
this article, additional confidential actuarial data.
(k) Not later than the
30th day after the date the independent actuary receives all the requested
information under Subsection (j) of this section, the independent actuary
shall advise the pension system and the city whether it agrees with either
the assumption or method recommended by the city actuary or the
corresponding method or assumption recommended by the pension system
actuary, together with the independent actuary's rationale for making the
determination. During the period prescribed by this subsection, the
independent actuary may discuss recommendations in simultaneous
consultation with the pension system actuary and the city actuary.
(l) The pension system
and the city may not seek any information from any prospective independent
actuary about possible outcomes of the independent actuary's review.
(m) If an independent
actuary has questions or concerns regarding an engagement entered into
under this section, the independent actuary shall simultaneously consult
with both the city actuary and the pension system actuary regarding the
questions or concerns. This subsection does not limit the pension system's
authorization to take appropriate steps to complete the engagement of the
independent actuary on terms acceptable to both the pension system and the
city or to enter into a confidentiality agreement with the independent
actuary, if needed.
(n) If the board does not
adopt an assumption or method recommended by the city actuary or pension
system actuary, including an assumption or method to which the independent
actuary agrees, the city actuary is authorized to use that recommended
assumption or method in connection with preparation of a subsequent risk
sharing valuation study under Section 9A of this article until the next
actuarial experience study is conducted.
Sec. 9D. CITY
CONTRIBUTION RATE WHEN ESTIMATED CITY CONTRIBUTION RATE LOWER THAN CORRIDOR
MIDPOINT; AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a) This section governs
the determination of the city contribution rate applicable in a fiscal year
if the estimated city contribution rate is lower than the corridor
midpoint.
(b) If the funded ratio
is:
(1) less than 90 percent,
the city contribution rate for the fiscal year equals the corridor
midpoint; or
(2) equal to or greater
than 90 percent and the city contribution rate is:
(A) equal to or greater
than the minimum contribution rate, the estimated city contribution rate is
the city contribution rate for the fiscal year; or
(B) except as provided by
Subsection (e) of this section, less than the minimum contribution rate for
the corresponding fiscal year, the city contribution rate for the fiscal
year equals the minimum contribution rate achieved in accordance with
Subsection (c) of this section.
(c) For purposes of
Subsection (b)(2)(B) of this section, the following adjustments shall be
applied sequentially to the extent required to increase the estimated city
contribution rate to equal the minimum contribution rate:
(1) first, adjust the
actuarial value of assets equal to the current market value of assets, if
making the adjustment causes the city contribution rate to increase;
(2) second, under a
written agreement between the city and the board entered into under Section
27 of this article not later than April 30 before the first day of the next
fiscal year, reduce the assumed rate of return;
(3) third, under a
written agreement between the city and the board entered into under Section
27 of this article no later than April 30 before the first day of the next
fiscal year, prospectively restore all or part of any benefit reductions or
reduce increased employee contributions, in each case made after the year
2017 effective date; and
(4) fourth, accelerate
the payoff year of the existing liability loss layers, including the legacy
liability, by accelerating the oldest liability loss layers first, to an
amortization period that is not less than 10 years from the first day of
the fiscal year beginning 12 months after the date of the risk sharing
valuation study in which the liability loss layer is first recognized.
(d) If the funded ratio
is:
(1) equal to or greater
than 100 percent:
(A) all existing
liability layers, including the legacy liability, are considered fully
amortized and paid;
(B) the applicable fiscal
year is the payoff year for the legacy liability; and
(C) for each fiscal year
subsequent to the fiscal year described by Paragraph (B) of this
subdivision, the corridor midpoint shall be determined as provided by
Section 9B(g) of this article; and
(2) greater than 100
percent in a written agreement between the city and the pension system
under Section 27 of this article, the pension system may reduce member
contributions or increase pension benefits if, as a result of the action:
(A) the funded ratio is
not less than 90 percent; and
(B) the city contribution
rate is not more than the minimum contribution rate.
(e) Except as provided by
Subsection (f) of this section, if an agreement under Subsection (d) of
this section is not reached on or before April 30 before the first day of
the next fiscal year, before the first day of the next fiscal year the
board shall reduce member contributions and implement or increase cost of
living adjustments, but only to the extent that the city contribution rate
is set at or below the minimum contribution rate and the funded ratio is
not less than 90 percent.
(f) If any member
contribution reduction or benefit increase under Subsection (e) of this
section has occurred within the previous three fiscal years, the board may
not make additional adjustments to benefits, and the city contribution rate
must be set to equal the minimum contribution rate.
Sec. 9E. CITY
CONTRIBUTION RATE WHEN ESTIMATED CITY CONTRIBUTION RATE EQUAL TO OR GREATER
THAN CORRIDOR MIDPOINT; AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a) This
section governs the determination of the city contribution rate in a fiscal
year when the estimated city contribution rate is equal to or greater than
the corridor midpoint.
(b) If the estimated city
contribution rate is:
(1) less than or equal to
the maximum contribution rate for the corresponding fiscal year, the
estimated city contribution rate is the city contribution rate; or
(2) except as provided by
Subsection (d) or (e) of this section, greater than the maximum
contribution rate for the corresponding fiscal year, the city contribution
rate equals the corridor midpoint achieved in accordance with Subsection
(c) of this section.
(c) For purposes of
Subsection (b)(2) of this section, the following adjustments shall be
applied sequentially to the extent required to decrease the estimated city
contribution rate to equal the corridor midpoint:
(1) first, if the payoff
year of the legacy liability was accelerated under Section 9D(c) of this
article, extend the payoff year of existing liability loss layers, by
extending the most recent loss layers first, to a payoff year not later
than 30 years from the first day of the fiscal year beginning 12 months
after the date of the risk sharing valuation study in which the liability
loss layer is first recognized; and
(2) second, adjust the
actuarial value of assets to the current market value of assets, if making
the adjustment causes the city contribution rate to decrease.
(d) If the city
contribution rate after adjustment under Subsection (c) of this section is
greater than the third quarter line rate:
(1) the city contribution
rate equals the third quarter line rate; and
(2) to the extent
necessary to comply with Subdivision (1) of this subsection, the city and
the board shall enter into a written agreement under Section 27 of this
article to increase member contributions and make other benefits or plan
changes not otherwise prohibited by applicable federal law or regulations.
(e) If an agreement under
Subsection (d)(2) of this section is not reached on or before April 30
before the first day of the next fiscal year, before the start of the next
fiscal year to which the city contribution rate would apply, the board, to
the extent necessary to set the city contribution rate equal to the third
quarter line rate, shall:
(1) increase member
contributions and decrease cost-of-living adjustments;
(2) increase the normal
retirement age; or
(3) take any combination
of the actions authorized under Subdivisions (1) and (2) of this
subsection.
(f) If the city
contribution rate remains greater than the corridor midpoint in the third
fiscal year after adjustments are made in accordance with an agreement
under Subsection (d)(2) of this section, in that fiscal year the city
contribution rate equals the corridor midpoint achieved in accordance with
Subsection (g) of this section.
(g) The city contribution
rate must be set at the corridor midpoint under Subsection (f) of this
section by:
(1) in the risk sharing
valuation study for the third fiscal year described by Subsection (f) of
this section, adjusting the actuarial value of assets to equal the current
market value of assets, if making the adjustment causes the city
contribution rate to decrease; and
(2) under a written
agreement entered into between the city and the board under Section 27 of
this article:
(A) increasing member
contributions; and
(B) making any other
benefits or plan changes not otherwise prohibited by applicable federal law
or regulations.
(h) If an agreement under
Subsection (g)(2) of this section is not reached on or before April 30
before the first day of the next fiscal year, before the start of the next
fiscal year, the board, to the extent necessary to set the city
contribution rate equal to the corridor midpoint, shall:
(1) increase member
contributions and decrease cost-of-living adjustments;
(2) increase the normal
retirement age; or
(3) take any combination
of the actions authorized under Subdivisions (1) and (2) of this
subsection.
Sec. 9F. UNILATERAL
DECISIONS AND ACTIONS PROHIBITED. (a) Notwithstanding Section 6(f) or 5B
of this article, the board may not change, terminate, or modify Sections 9
through 9E of this article.
(b) No unilateral
decision or action by the board is binding on the city and no unilateral
decision or action by the city is binding on the pension system with
respect to the application of Sections 9 through 9E of this article unless expressly
provided by a provision of those sections. Nothing in this subsection is
intended to limit the powers or authority of the board.
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No
equivalent provision.
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SECTION 2.13. Article
6243g-4, Revised Statutes, is amended by adding Section 10A to read as
follows:
Sec. 10A. REPORT ON
INVESTMENTS BY INDEPENDENT INVESTMENT CONSULTANT. (a) At least once every
three years, the board shall hire an independent investment consultant,
including an independent investment consulting firm, to conduct a review of
pension system investments and submit a report to the board and the city
concerning that review. The independent investment consultant shall
review and report on at least the following:
(1) the pension system's
compliance with its investment policy statement, ethics policies, including
policies concerning the acceptance of gifts, and policies concerning
insider trading;
(2) the pension system's
asset allocation, including a review and discussion of the various risks,
objectives, and expected future cash flows;
(3) the pension system's
portfolio structure, including the system's need for liquidity, cash
income, real return, and inflation protection and the active, passive, or
index approaches for different portions of the portfolio;
(4) investment manager
performance reviews and an evaluation of the processes used to retain and
evaluate managers;
(5) benchmarks used for
each asset class and individual manager;
(6) evaluation of fees
and trading costs;
(7) evaluation of any
leverage, foreign exchange, or other hedging transaction; and
(8) an evaluation of
investment-related disclosures in the pension system's annual reports.
(b) When the board
retains an independent investment consultant under this section, the
pension system may require the consultant to agree in writing to maintain
the confidentiality of:
(1) information provided
to the consultant that is reasonably necessary to conduct a review under
this section; and
(2) any nonpublic
information provided for the pension system for the review.
(c) The costs for the
investment report required by this section must be paid from the fund.
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No
equivalent provision.
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SECTION 2.14. Sections 11(a)
and (c), Article 6243g-4, Revised Statutes, are amended to read as follows:
(a) A member who returns to
service after an interruption in service is eligible for [entitled
to] credit for the previous service to the extent provided by Section 17
or 19 of this article.
(c) A member may not have
any service credited for unused sick leave, vacation pay, [or]
accumulated overtime, or equivalent types of pay until the date the
member retires, at which time the member may apply some or all of the
service to satisfy the requirements for retirement, although the member
otherwise could not meet the service requirement without the credit.
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SECTION 2.03. Sections 12(c)
and (e), Article 6243g-4, Revised Statutes, are amended to read as follows:
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
(c) Except as provided by Section 6A of this
article,
the [The]
pension
payable to each retired member
of
the
pension
system shall be adjusted annually, effective April 1 of each year,
upward at a rate determined by board
rule [equal to
two-thirds of any
percentage increase in the Consumer Price Index for All Urban Consumers for
the preceding year]. [The amount of the annual adjustment may not
be less than three percent or more than eight percent of the pension being
paid immediately before the adjustment, notwithstanding a greater or lesser
increase in the consumer price index.]
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
(e) Subject to Section 6A of this article,
at [At] the end of each calendar year beginning after 1998, and
subject to the conditions provided by this subsection, the pension system
shall make a 13th benefit payment to each person
who is receiving a service
pension. The amount of the 13th payment shall be the same as the last
monthly payment received by the retiree or survivor before issuance of the
payment, except the payment received by any person who has been in pay
status for less than 12 months shall be for a prorated amount determined by
dividing the amount of the last payment received by 12 and multiplying this
amount by the number of months the person has been in pay status. [The 13th payment may be made only for
those calendar years in which:
[(1) the assets held by
the fund will equal or exceed its liabilities after the 13th payment is
made;
[(2) the rate of return
on the fund's assets exceeded 9.25 percent for the last fiscal year ending
before the payment; and
[(3) the payment will not
cause an increase in the contribution the city would have been required to
make if the 13th payment had not been made.]
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
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SECTION 2.15. Section 12,
Article 6243g-4, Revised Statutes, is amended by amending Subsections (a),
(b), (c), (d), (e), (h), and (i) and adding Subsections (b-1), (b-2),
(b-3), (c-1), (c-2), (j), (k), (l), and (m) to read as follows:
(a) A member who separates
from service after attaining normal retirement age [earning 20 or
more years of service] is eligible to receive a monthly service
pension, beginning in the month of separation from service. A member who
separates from service as a classified police officer with the city
after November 23, 1998, after earning 10 or more but less than 20 years of
service in [any of] the [city's] pension system [systems]
and who complies with all applicable requirements of Section 19 of this article
is eligible to receive a monthly service pension, beginning in the month
the individual attains normal retirement [60 years of] age.
An individual may not receive a pension under this article while still an
active member[, except as provided by Subsection (f) of this section].
All service pensions end with the month in which the retired member dies.
The city shall supply all personnel, financial, and payroll records
necessary to establish the member's eligibility for a benefit, the member's
credited service, and the amount of the benefit. The city must provide
those records in the format specified by the pension system.
(b) Except as otherwise
provided by this section, including Subsection (b-3) of this section,
the monthly service pension of a member who:
(1) is hired before
October 9, 2004, including a member hired before October 9, 2004, who
involuntarily separated from service but has been retroactively reinstated
under arbitration, civil service, or a court ruling, [that becomes
due after May 1, 2001,] is equal to the sum of:
(A) 2.75 percent of
the member's final average [total direct] pay multiplied
by the member's years or partial years of service [or, if the member
retired before November 24, 1998, 2.75 percent of the member's base salary,]
for [each of] the member's first 20 years of service; and
(B) [, plus an
additional] two percent of the member's final average [total
direct] pay multiplied by the member's years or partial years of
service for the member's years of service in excess of the 20 years of
service described by Paragraph (A) of this subdivision; or
(2) except as provided by
Subdivision (1) of this subsection and subject to Subsection (b-3) of this
section, is hired or rehired as an active member on or after October 9,
2004, is equal to the sum of:
(A) 2.25 percent of the
member's final average pay multiplied by the member's years or partial
years of service for the member's first 20 years of service; and
(B) two percent of the
member's final average pay multiplied by the member's years or partial
years of service in excess of 20 years of service described by Paragraph
(A) of this subdivision [for each of the member's subsequent years
of service, computed to the nearest one-twelfth of a year].
(b-1) A member who [separates
from service after November 23, 1998, including a member who was a DROP
participant, and] begins to receive a monthly service pension under
Subsection (b)(1) of this section shall also receive a one-time
lump-sum payment of $5,000 at the same time the first monthly pension
payment is made. The lump-sum payment under this subsection is not
available to a member who has previously received a $5,000 payment under
this section or Section 16 of this article. A member described by
Subsection (b)(2) of this section may not receive the lump-sum payment
described by this subsection.
(b-2) For purposes of
Subsections (b) and (b-1) of this section, partial years shall be computed
to the nearest one-twelfth of a year.
(b-3) A member's monthly
service pension determined under Subsection (b)(2) of this section may not
exceed 80 percent of the member's final average pay.
(c) Subject to Subsection (c-2) of this section,
beginning with the fiscal year ending June 30, 2021, the [The]
pension payable to a [each] retired member or survivor who is 55 years of age or older as
of April 1 of the applicable fiscal year, a member or survivor who received
benefits or survivor benefits before June 8, 1995, or a survivor of an
active member who dies from a cause connected with the performance of the
member's duties [of the
pension system] shall be adjusted annually, effective April 1 of
each year, upward at a rate equal to the
most recent five fiscal years' smoothed return, as determined by the
pension system actuary, minus 500 basis points [two-thirds of
any percentage increase in the Consumer Price Index for All Urban Consumers
for the preceding year. The amount of the annual adjustment may not be less
than three percent or more than eight percent of the pension being paid
immediately before the adjustment, notwithstanding a greater or lesser
increase in the consumer price index].
(c-1) Subject to
Subsection (c-2) of this section, for the pension system's fiscal years
ending June 30, 2018, June 30, 2019, and June 30, 2020, the pension payable
to each retired member or survivor who is 70 years of age or older shall be
adjusted annually, effective April 1 of each year, upward at a rate equal
to the most recent five fiscal years' smoothed return, as determined by the
pension system actuary, minus 500 basis points.
(c-2) The percentage rate
prescribed by Subsections (c) and (c-1) of this section may not be less
than zero percent or more than four percent, irrespective of the return
rate of the pension system's investment portfolio.
(d) A retired member who
receives a service pension under this article is eligible [entitled]
to receive an additional amount each month equal to $150, beginning on the
later of the date the retired member's pension begins or the date the first
monthly payment becomes due after June 18, 2001, and continuing until the
end of the month in which the retired member dies. This amount is intended
to defray the retired member's group medical insurance costs and will be
paid directly by the fund to the retired member for the retired member's
lifetime.
(e) At the end of each
calendar year beginning after 1998, and subject to the conditions provided
by this subsection, the pension system shall make a 13th benefit payment to
each member or survivor who is hired
or rehired before October 9, 2004, including a member hired or rehired
before October 9, 2004, who was reinstated under arbitration, civil
service, or a court ruling after that date, and [person]
who is receiving a service
pension. The amount of the 13th payment shall be the same as the last
monthly payment received by the retiree or survivor before issuance of the
payment, except the payment received by any person who has been in pay
status for less than 12 months shall be for a prorated amount determined by
dividing the amount of the last payment received by 12 and multiplying this
amount by the number of months the person has been in pay status. The 13th payment may be made only for those
calendar years in which the pension system's funded ratio is 120 percent
or greater[:
[(1) the assets held by
the fund will equal or exceed its liabilities after the 13th payment is
made;
[(2) the rate of return
on the fund's assets exceeded 9.25 percent for the last fiscal year ending
before the payment; and
[(3) the payment will not
cause an increase in the contribution the city would have been required to
make if the 13th payment had not been made].
(h) Final average [Average
total direct] pay for a member who retires after participating in a
phase-down program in which the member receives a periodic payment that is
generated from the member's accumulated sick time, vacation time, and
overtime balances shall be based on the final average pay the member received
on the earlier of the date:
(1) immediately preceding
the date the member began phase-down participation; or
(2) if the member began
DROP participation on or after the year 2017 effective date, the member
began participation in DROP [highest pay period, excluding any pay
for overtime work, in the periods during which the member worked full-time
before participating in the phase-down program].
(i) The computation of final
average [total direct] pay shall be made in accordance with
procedures and policies adopted by the board.
(j) A member
participating in the phase-down program, defined in the 2011 labor
agreement between the city and the police officers' union, who has
separated from service is eligible to receive a monthly service pension as
if the member had attained normal retirement age. Notwithstanding any
other law, a member participating in option A or B of the phase-down
program whose effective date of entry into DROP is on or before the year
2017 effective date is, on exiting the phase-down program and separating
from service, eligible to receive a monthly service pension equal to the
amount credited to the member's DROP account under Section 14(d) of this
article immediately before the member separated from service.
(k) If a member is hired
on or after October 9, 2004, the member may elect to receive a partial
lump-sum optional payment equal to not more than 20 percent of the
actuarial value of the member's accrued pension at retirement. The
lump-sum payment under this subsection shall be actuarially neutral.
Notwithstanding any other law, if a member elects to receive a lump-sum
payment under this subsection, the value of the member's monthly service
pension shall be reduced actuarially to reflect the lump-sum payment.
(l) A member who is
receiving workers' compensation payments or who has received workers'
compensation and subsequently retires or begins participation in DROP will
have the member's pension or DROP benefit, as applicable, calculated on the
pay that the member would have received had the member not been receiving
workers' compensation benefits.
(m) For a member who is
promoted or appointed to a position above the rank of captain on or after
the year 2017 effective date, the member's monthly service pension and
member contributions shall be based on, as determined by the board:
(1) the member's pay for
the position the member held immediately before being promoted or
appointed; or
(2) the pay of the
highest civil rank for classified police officers for those members who have
no prior service with the city, which pay must be calculated based on the
three-year average prior to retirement.
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SECTION 2.04. Section 14,
Article 6243g-4, Revised Statutes, is amended by adding Subsection (n) to
read as follows:
(n) The board may adopt
rules, policies, or procedures that the board determines are necessary or
desirable to implement or administer this section, including rules that
limit the amount of a member's earnings under the DROP or that limit the
length of time a member may elect to participate in the DROP.
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No
equivalent provision.
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|
No
equivalent provision.
|
SECTION 2.16. Section 14,
Article 6243g-4, Revised Statutes, is amended by amending Subsections (b),
(c), (d), (e), (f-1), (h), (i), (k), and (l) and adding Subsections (c-1)
and (c-2) to read as follows:
(b) An active member who was
hired before October 9, 2004, including a member hired before October 9,
2004, who has been reinstated under arbitration, civil service, or a court
ruling after that date, and has at least 20 years of service with the
police department may file with the pension system an election to
participate in DROP and receive a DROP benefit instead of the standard form
of pension provided by this article as of the date the active member attained
20 years of service. The election may be made, under procedures
established by the board, by an eligible active member who has
attained the required years of service. A DROP election that is made and
accepted by the board may not be revoked [before the member's separation
from service].
(c) The monthly service
pension or [and] death benefits of an active member who is
a DROP participant that were accrued under this article as it existed
immediately before the year 2017 effective date remain accrued.
(c-1) The monthly service
pension or death benefits of an active member who becomes a DROP
participant on or after the year 2017 effective date will be
determined as if the [active] member had separated from service and
begun receiving a pension on the effective date of the member's DROP
election and the[. The active] member does not retire but
does not accrue additional service credit beginning on the effective date
of the member's entry into DROP.
(c-2) For a member who
exits DROP on or after the year 2017 effective date:
(1) any [the
election, and] increases in the member's pay that occur on or
after the effective date of the member's entry into DROP [that
date] may not be used in computing the [active] member's monthly
service pension; and
(2) any[, except
as provided by Subsection (l) of this section, but] cost-of-living
adjustments that occur on or after the effective date of the member's
entry into DROP [that date] and that otherwise would be
applicable to the pension will not be made during the time the
member participates in DROP.
(d) The member's DROP
benefit is determined as provided by this subsection and Subsection (e) of
this section. Each month an amount equal to the monthly service pension
the active member would have been eligible [entitled] to
receive if the active member had separated from service on the effective
date of entry into DROP, less any amount that is intended to help defray
the active member's group medical insurance costs as described by Section
12(d) of this article, shall be credited to a notional DROP account for the
active member[, and each month an amount equal to the monthly
contributions the active member makes to the fund on and after the
effective date of entry into DROP also shall be credited to the same notional
DROP account]. In any year in which a 13th payment is made to retired
members under Section 12(e) of this article, an amount equal to the amount
of the 13th payment that would have been made to the DROP participant if
the DROP participant had retired on the date of DROP entry will be credited
to the DROP account.
(e) As of the end of each
month an amount is credited to each active member's notional DROP account
at the rate of one-twelfth of a hypothetical earnings rate on amounts in
the account. The hypothetical earnings rate is determined for each
calendar year based on the compounded average of the aggregate
annual rate of return on investments of the pension system for the five
consecutive fiscal years ending June 30 preceding the calendar year to which
the earnings rate applies, multiplied by 65 percent. The hypothetical
earnings rate may not be less than 2.5 percent [zero].
(f-1) If a DROP participant
separates from service due to death, [and] the participant's
surviving spouse is eligible [person entitled] to receive
benefits under Sections 16 and 16A of this article and the surviving
spouse may elect to receive [does not revoke the DROP election,]
the DROP benefit [may be received] in the form of an additional
annuity over the life expectancy of the surviving spouse.
(h) Instead of beginning to
receive a service pension on separation from service in accordance with
Section 12 of this article, a retired member who is a DROP participant may
elect to have part or all of the amount that would otherwise be paid as a
monthly service pension, less any amount required to pay the retired
member's share of group medical insurance costs, credited to a DROP
account, in which case the additional amounts will become eligible to be
credited with hypothetical earnings in the same manner as the amounts
described by Subsection (g) of this section. On and after the year 2017
effective date, additional amounts may not be credited to a DROP account
under this subsection. Any amounts credited under this subsection before
the year 2017 effective date shall remain accrued in a retired member's
DROP account.
(i) A retired member who has
not attained age 70-1/2, whether or not a DROP participant before
retirement, may elect to have part or all of an amount equal to the monthly
service pension the retired member would otherwise be entitled to receive,
less any amount required to pay the retired member's share of group medical
insurance costs, credited to a DROP account, in which case the amounts will
become eligible to be credited with hypothetical earnings in the same
manner as the amounts described by Subsection (g) of this section. On
and after the year 2017 effective date, additional amounts may not be
credited to a DROP account under this subsection. Any amounts credited
under this subsection before the year 2017 effective date shall remain
accrued in a retired member's DROP account [A retired member who has
elected to have monthly service pension benefits credited to a DROP account
under this subsection or Subsection (h) of this section may direct that the
credits stop and the monthly service pension resume at any time. However,
a retired member who stops the credits at any time after September 1, 1999,
may not later resume the credits].
(k) If a retired member who is
[or was] a DROP participant is rehired as an employee of the police
department, any pension or DROP distribution that was being paid shall be
suspended and the monthly amount described by Subsection (d) of this
section will again begin to be credited to the DROP account while the
member continues to be an employee. If the member's DROP account has been
completely distributed, a new notional account may not [will]
be created and the monthly amount described by Subsection (d) of this
section may not be credited to a DROP account on behalf of the member [to
receive the member's monthly credits. If a retired member who was never a
DROP participant is rehired as an employee of the police department, that
member shall be eligible to elect participation in DROP on the same basis
as any other member].
(l) The maximum number of
years an active member may participate in DROP is 20 years. Except as
provided by this subsection, after the DROP participant has reached the
maximum number of years of DROP participation prescribed by this
subsection, including DROP participants with 20 years or more in DROP on or
before the year 2017 effective date, the DROP participant may not receive
the monthly service pension that was credited to a notional DROP account
but may receive the hypothetical earnings rate stated in Subsection (e) of
this section. Notwithstanding the preceding, a member's DROP account
balance before the year 2017 effective date may not be reduced under the
preceding provisions of this subsection [The DROP account of each
DROP participant who was an active member on May 1, 2001, shall be
recomputed and adjusted, effective on that date, to reflect the amount that
would have been credited to the account if the member's pension had been
computed based on 2.75 percent of the member's average total direct pay, or
base pay if applicable, for each of the member's first 20 years of
service. The DROP account adjustment shall also include the assumed
earnings that would have been credited to the account if the 2.75 percent
multiplier for the first 20 years of service had been in effect from the
time the member became a DROP participant].
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|
No
equivalent provision.
|
SECTION 2.17. Section 15,
Article 6243g-4, Revised Statutes, is amended by amending Subsections (a), (b),
(c), (d), (e), and (i) and adding Subsections (a-1), (c-1), (l), (m), and
(n) to read as follows:
(a) An active member who
becomes totally and permanently incapacitated for the performance of the
member's duties as a result of a bodily injury received in, or illness
caused by, the performance of those duties shall, on presentation to the
board of proof of total and permanent incapacity, be retired and shall
receive an immediate duty-connected disability pension equal to:
(1) for members hired or
rehired before October 9, 2004, the greater of 55 percent of the
member's final average [total direct] pay at the time of
retirement or the member's accrued service pension; or
(2) for members hired or
rehired on or after October 9, 2004, the greater of 45 percent of the
member's:
(A) final average pay at
the time of retirement; or
(B) accrued service
pension.
(a-1) If the injury
or illness described by Subsection (a) of this section involves a
traumatic event that directly causes an immediate cardiovascular condition
resulting in a total disability, the member is eligible for a
duty-connected disability pension. A disability pension granted by the
board shall be paid to the member for the remainder of the member's life,
[or for] as long as the incapacity remains, subject to Subsection
(e) of this section. If a member is a DROP participant at the
commencement of the member's disability, the member shall have the option
of receiving the DROP balance in any manner that is approved by the board
and that satisfies the requirements of Section 401(a)(9) of the code and
Treasury Regulation Section 1.104-1(b) (26 C.F.R. Section 1.104-1) and is
otherwise available to any other member under this article.
(b) A member [with 10
years or more of credited service] who becomes totally and permanently
incapacitated for the performance of the member's duties and is not
eligible for either an immediate service pension or a duty-connected
disability pension is eligible for an immediate monthly pension computed in
the same manner as a service retirement pension but based on final
average [total direct] pay and service accrued to the date of the
disability. The pension under this subsection may not be less than:
(1) for members hired
before October 9, 2004, including a member who involuntarily separated from
service but has been retroactively reinstated under arbitration, civil
service, or a court ruling, 27.5 percent of the member's final
average [total direct] pay; or
(2) except as provided by
Subdivision (1) of this subsection, for members hired or rehired on or
after October 9, 2004, 22.5 percent of the member's final average pay.
(c) A member hired or
rehired before October 9, 2004, who becomes eligible [entitled]
to receive a disability pension after November 23, 1998, is eligible
[entitled] to receive:
(1) subject to Subsection
(c-1) of this section, a one-time lump-sum payment of $5,000 at the
same time the first monthly disability pension payment is made, but only if
the member has not previously received a $5,000 payment under this section
or Section 12 of this article; and
(2) [. The
retired member shall also receive] an additional amount each month
equal to $150, beginning on the later of the date the pension begins or the
date the first monthly payment becomes due after June 18, 2001, and
continuing as long as the disability pension continues, to help defray the
cost of group medical insurance.
(c-1) For any year in
which a 13th payment is made to retired members under Section 12(e) of this
article, a 13th payment, computed in the same manner and subject to the
same conditions, shall also be paid to members who have retired under
this section.
(d) A person may not receive
a disability pension unless the person files with the board an application
for a disability pension not later than 180 days after the date of
separation from service, at which time the board shall have the person
examined, not later than the 90th day after the date the member files
the application, by a physician or physicians chosen and
compensated by the board. The physician shall make a report and
recommendations to the board regarding the extent of any disability and
whether any disability that is diagnosed is a duty-connected disability.
Except as provided by Subsection (j) of this section, a person may not
receive a disability pension for an injury received or illness incurred
after separation from service. In accordance with Section 6(g) of this
article, the board may, through its presiding officer, issue process,
administer oaths, examine witnesses, and compel witnesses to testify as to
any matter affecting retirement, disability, or death benefits under any
pension plan within the pension system.
(e) A retired member who has
been retired for disability is subject at all times to reexamination by a
physician chosen and compensated by the board and shall submit to further
examination as the board may require. If a retired member refuses to
submit to an examination, the board shall [may] order the
payments stopped. If a retired member who has been receiving a disability
pension under this section recovers so that in the opinion of the board the
retired member is able to perform the usual and customary duties formerly
performed for the police department, and the retired member is reinstated
or offered reinstatement to the position, or hired by another law
enforcement agency to a comparable position [reasonably
comparable in rank and responsibility to the position, held at the time of
separation from service], the board shall order the member's disability
pension stopped. A member may apply for a normal pension benefit, if
eligible, if the member's disability benefit payments are stopped by the
board under this subsection.
(i) Effective for payments
that become due after April 30, 2000, and instead of the disability benefit
provided by Subsection (a) or[,] (b)[, or (h)] of this
section, a member who suffers a catastrophic injury shall receive a monthly
benefit equal to 100 percent of the member's final average [total
direct] pay determined as of the date of retirement, and the
member's DROP balance, if any.
(l) A disability pension
may not be paid to a member for any disability if:
(1) the disability
resulted from an intentionally self-inflicted injury or a chronic illness
resulting from:
(A) an addiction by the
member through a protracted course of non-coerced ingestion of alcohol,
narcotics, or prescription drugs not prescribed to the member; or
(B) other substance
abuse; or
(2) except as provided by
Subsection (m) of this section, the disability was a result of the member's
commission of a felony.
(m) The board may waive
Subsection (l)(2) of this section if the board determines that facts exist
that mitigate denying the member's application for a disability pension.
(n) A person who
fraudulently applies for or receives a disability pension may be subject to
criminal and civil prosecution.
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No
equivalent provision.
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SECTION 2.18. Section 16,
Article 6243g-4, Revised Statutes, is amended to read as follows:
Sec. 16. RIGHTS OF
SURVIVORS. (a) For purposes of this article, a marriage is considered to
exist only if the couple is lawfully married under the laws of a state,
the District of Columbia, a United States territory, or a foreign
jurisdiction and the marriage would be recognized as a marriage under the
laws of at least one state, possession, or territory of the United States,
regardless of domicile [marriage is recorded in the records of the
recorder's office in the county in which the marriage ceremony was
performed]. In the case of a common-law marriage, a marriage
declaration must be signed by the member and the member's common-law spouse
before a notary public or similar official and recorded in the
records of the applicable jurisdiction [county clerk's office in
the county] in which the couple resides at the commencement of the
marriage. In addition, a marriage that is evidenced by a declaration of
common-law marriage signed before a notary public or similar official
after December 31, 1999, may not be treated as effective earlier than the
date on which it was signed before the notary public or similar official.
(b) If a retired member dies
after becoming eligible for [entitled to] a service or
disability pension, the board shall pay an immediate monthly benefit as
follows:
(1) to the surviving spouse for
life, if there is a surviving spouse, a sum equal to the pension that
was being received by the retired member at the time of death;
(2) to the guardian of any
dependent child under 18 years of age or a child with a disability as
long as the dependent child complies with the definition of dependent child
under Section 2(7) of this article [children], on behalf of the
dependent child [children], or directly to a dependent
child described by Section 2(7)(B) of this article, and if there is no
spouse eligible for [entitled to] an allowance, the sum a
surviving spouse would have received, to be divided equally among all
[the] dependent children if there is more than one dependent child;
or
(3) to any dependent parents
for life if no spouse or dependent child is eligible for [entitled
to] an allowance, the sum the spouse would have received, to be divided
equally between the two parents if there are two dependent parents.
(c) If an active [a]
member of the pension system who has not completed 20 [10]
years of service in the police department is killed or dies from any cause
growing out of or in consequence of any act clearly not in the actual
performance of the member's official duty, the member's surviving spouse,
dependent child or children, or dependent parent or parents are eligible
[entitled] to receive an immediate benefit. The benefit is computed
in the same manner as a service retirement pension but is based on the deceased
member's service and final average [total direct] pay at the
time of death. The monthly benefit may not be less than:
(1) 27.5 percent of
the member's final average [total direct] pay for members
hired before October 9, 2004, including a member who involuntarily
separated from service but has been retroactively reinstated under
arbitration, civil service, or a court ruling; or
(2) 22.5 percent of the
member's final average pay for members hired or rehired on or after October
9, 2004.
(e) If any active member is
killed or dies from any cause growing out of or in consequence of the
performance of the member's duty, the member's surviving spouse, dependent
child or children, or dependent parent or parents are eligible [entitled]
to receive immediate benefits computed in accordance with Subsection (b) of
this section, except that the benefit [payable to the spouse, or to the
guardian of the dependent child or children if there is no surviving
spouse, or the dependent parent or parents if there is no surviving spouse
or dependent child,] is equal to 100 percent of the member's final
average [total direct] pay, computed as of the date of death.
(f) A surviving spouse who
receives a survivor's benefit under this article is eligible [entitled]
to receive an additional amount each month equal to $150, beginning with
the later of the date the first payment of the survivor's benefit is due or
the date the first monthly payment becomes due after June 18, 2001, and
continuing until the end of the month in which the surviving spouse dies.
(g) A surviving spouse or
dependent who becomes eligible to receive benefits with respect to an
active member who was hired or rehired before October 9, 2004, who
dies in active service after November 23, 1998, is eligible [entitled]
to receive a one-time lump-sum payment of $5,000 at the time the first
monthly pension benefit is paid, if the member has not already received a
$5,000 lump-sum payment under Section 12 or 15(c) of this article. If more
than one dependent is eligible to receive a payment under this subsection,
the $5,000 shall be divided equally among the eligible dependents. This
payment has no effect on the amount of the surviving spouse's or
dependents' monthly pension and may not be paid more than once.
(h) The monthly benefits of
surviving spouses or dependents provided under this section, except the
$150 monthly payments described by Subsection (f) of this section, shall be
increased annually at the same time and by the same percentage as the
pensions of retired members are increased in accordance with Section 12(c) or
12(c-1) of this article. Also, for any year in which a 13th payment is
made pursuant to Section 12(e) of this article, a 13th payment, computed in
the same manner and subject to the same conditions, shall also be
made to the survivor [survivors] who is eligible [are
entitled] to receive death benefits at that time if the member would
have been entitled to a 13th payment, if living.
(i) If a member or
individual receiving a survivor's pension dies before monthly payments have
been made for at least five years, leaving no person otherwise eligible
[entitled] to receive further monthly payments with respect to the
member, the monthly payments shall continue to be made [to the
designated beneficiary of the member or survivor, or to the estate of the
member or survivor if a beneficiary was not designated,] in the same
amount as the last monthly payment made to the member or[,]
survivor[, or estate,] until payments have been made for five years
with respect to the member. The payments shall be made to the spouse of
the member, if living, and if no spouse is living, to the natural or
adopted children of the member, to be divided equally among the children if
the member has more than one child. If the member has no spouse or
children who are living, the benefit may not be paid. If the member
dies after becoming eligible to receive benefits [vested] but
before payments begin, leaving no survivors eligible for benefits, the
amount of each monthly payment over the five-year period shall be the same
as the monthly payment the member would have received if the member had
taken disability retirement on the date of the member's death and
shall be paid to the member's spouse or children in the manner provided by
this subsection. If the member has no spouse or children who are
living, then the benefit may not be paid [A member may designate a
beneficiary in lieu of the member's estate to receive the remaining
payments in the event the member and all survivors die before payments have
been received for five years]. The member's estate or a beneficiary
who is not a survivor or dependent is not eligible [entitled]
to receive the payment described by Subsection (g) of this section.
(j) A benefit payment
made in accordance with this section on behalf of a minor or other person
under a legal disability fully discharges the pension system's obligation
to that person.
(k) A retired member or
surviving spouse may designate a beneficiary on a form prescribed by the
pension system to receive the final monthly payment owed but not received
before the member's or surviving spouse's death.
(l) The board may at any
time require a person receiving death benefits as a disabled child under
this article to undergo a medical examination by a physician appointed or
selected by the board for that purpose.
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|
No
equivalent provision.
|
SECTION 2.19. Section 16A,
Article 6243g-4, Revised Statutes, is amended to read as follows:
Sec. 16A. BENEFICIARY
DESIGNATION FOR DROP. (a) Except for the marriage requirement
described by Section 16(a) of this article, the [The] provisions
of Section 16 of this article pertaining to rights of survivors do not
apply to an amount held in a member's DROP account. A member who
participates in DROP may designate a beneficiary in the form and manner
prescribed by or on behalf of the board to receive the balance of the
member's DROP account in the event of the member's death, as permitted by
Section 401(a)(9) of the code and the board's policies. A member who is
married is considered to have designated the member's spouse as the
member's beneficiary unless the spouse consents, in a notarized writing
delivered to the board, to the designation of another person as
beneficiary. If no designated beneficiary survives the member, the board shall
[may] pay the balance of the member's DROP account to the member's
beneficiaries in the following order:
(1) to the member's spouse;
(2) if the member does not
have a spouse, to each natural or adopted child of the member, or
to the guardian of the child if the child is a minor or has a disability,
in equal shares;
(3) if the member does not
have a spouse or any children, to each surviving parent of the member in
equal shares; or
(4) if the member has no
beneficiaries described by Subdivisions (1), (2), and (3) of this
subsection, to the estate of the member.
(b) If a member names a
spouse as a beneficiary and is subsequently divorced from that spouse, the
divorce voids the designation of the divorced spouse as the member's
beneficiary. A designation of a divorced spouse will cause the board to
pay any balance remaining in the member's DROP account in the order
prescribed by Subsection (a) of this section.
(c) The surviving spouse
may designate a beneficiary on a form prescribed by the pension system to
receive the balance of the DROP account owed but not received before the
surviving spouse's death.
(d) Payment of the
balance of the member's DROP account made in accordance with this section
on behalf of a minor or other person under a legal disability fully
discharges the pension system's obligation to that person.
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|
No
equivalent provision.
|
SECTION 2.20. Section 17,
Article 6243g-4, Revised Statutes, is amended by amending Subsections (b),
(d), and (e) and adding Subsection (i) to read as follows:
(b) A member of the pension
system who has not completed 20 years of service at the time of separation
from service with the police department is eligible for [entitled
to] a refund of the total of the contributions the member made to the
pension system, plus any amount that was contributed for the member by the
city and not applied in accordance with this section to provide the member
with 10 years of service. The refund does not include interest, and
neither the city nor the member is eligible for [entitled to]
a refund of the contributions the city made on the member's behalf, except
as expressly provided by this subsection. By receiving the refund, the
member forfeits any service earned before separation from service, even if
it is otherwise nonforfeitable.
(d) A member must apply to
the board for a refund within one year after the date of separation from
service. Failure to apply for the refund within the one-year period
results in a forfeiture of the right to the refund except for an inactive
member who is eligible for a pension [whose right to a pension is
nonforfeitable]. However, the board may reinstate any amount forfeited
and allow the refund on application by the former member.
(e) Heirs, executors,
administrators, personal representatives, or assignees are not eligible
[entitled] to apply for and receive the refund authorized by this
section [except as provided by Section 16(c) of this article].
(i) Former members
reemployed on or after October 9, 2004, or current members who left service
after October 9, 2004, if reemployed by the city, may purchase prior
service credit at a rate of interest equal to 2.25 percent per year.
Active members hired before October 9, 2004, who have not yet purchased
prior service credit or members hired before October 9, 2004, who
involuntarily separated from service but have been retroactively reinstated
under arbitration, civil service, or a court ruling may purchase prior service
credit at a rate of interest equal to 2.75 percent per year. The board may
adopt rules necessary to implement this section.
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|
No
equivalent provision.
|
SECTION 2.21. Section 18(a),
Article 6243g-4, Revised Statutes, is amended to read as follows:
(a) Except as provided by
this section:
(1) credit may not be
allowed to any person for service with any department in the city other
than the police department; [and]
(2) a person's service will
be computed from the date of entry into the service of the police
department as a classified police officer until the date of
separation from service with the police department; and
(3) a member who received
service credit for service with any department in the city other than the
police department and who is receiving a monthly pension benefit or who
began participation in DROP before the year 2017 effective date shall
continue to have the service credit apply.
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|
No
equivalent provision.
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SECTION 2.22. Sections 19(b)
and (d), Article 6243g-4, Revised Statutes, are amended to read as follows:
(b) A person who rejoins the
pension system under this section is eligible [entitled] to
receive service credit for each day of service and work performed by the
person in a classified position in the police department, except for any
period during which the person is a DROP participant. The board shall add
service earned after the transfer to the prior service the active member
accrued in a classified position in the police department. However, the
active member may not receive service credit under this article, except to
the extent provided by Section 18, for service performed for the city other
than in a classified position in the police department.
(d) When a member who has
transferred as described by this section subsequently retires, the retired
member is eligible for [entitled to] a pension computed on
the basis of the combined service described by Subsection (b) of this
section, after deducting any period in which the member was suspended from
duty without pay, on leave of absence without pay, separated from service,
or employed by the city in a capacity other than in a classified position
in the police department.
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|
No
equivalent provision.
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SECTION 2.23. Section 21,
Article 6243g-4, Revised Statutes, is amended to read as follows:
Sec. 21. DETERMINATION OF
BENEFITS; PROVISION OF INFORMATION. (a) The board may require any
member, survivor, or other person or entity to furnish information the
board requires for the determination of benefits under this article. If a
person or entity does not cooperate in the furnishing or obtaining of
information required as provided by this section, the board may withhold
payment of the pension or other benefits dependent on the information.
(b) The city, not later
than the 14th day after the date the city receives a request by or on
behalf of the board, shall, unless otherwise prohibited by law, supply the
pension system with personnel, payroll, and financial records in the city's
possession that the pension system determines necessary to provide pension
administrative and fiduciary services under this section, to establish
beneficiaries' eligibility for any benefit, or to determine a member's
credited service or the amount of any benefits, including disability
benefits, and such other information the pension system may need,
including:
(1) information needed to
verify service, including the following information:
(A) the date a person is
sworn in to a position;
(B) the days a person is
under suspension;
(C) the days a person is absent
without pay, including the days a person is on maternity leave;
(D) the date of a
person's termination from employment; and
(E) the date of a
person's reemployment with the city;
(2) medical records;
(3) workers' compensation
records and pay information;
(4) payroll information;
(5) information needed to
verify whether a member is on military leave; and
(6) information regarding
phase-down participants, including information related to entry date and
phase-down plan.
(c) The city shall provide
any information that may be reasonably necessary to enable the pension
system to comply with administrative services the pension system performs
for the city as reasonably necessary to obtain any ruling or determination
letter from the Internal Revenue Service.
(d) The information
provided by the city shall be transmitted to the pension system
electronically in a format specified by the pension system, to the extent
available to the city, or in writing if so requested on behalf of the
pension system.
(e) The pension system
shall determine each member's credited service and pension benefits on the
basis of the personnel and financial records of the city and the records of
the pension system.
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|
No
equivalent provision.
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SECTION 2.24. Section 23,
Article 6243g-4, Revised Statutes, is amended to read as follows:
Sec. 23. MEMBERS IN MILITARY
SERVICE. (a) A member of the pension system engaged in active service in
a uniformed service may not be required to make the monthly payments into
the fund and may not lose any previous years' service with the city because
of the uniformed service. The uniformed service shall count as continuous
service in the police department if the member returns to the city police
department after discharge from the uniformed service as an employee within
the period required by the Uniformed Services Employment and Reemployment
Rights Act of 1994 (38 U.S.C. Section 4301 et seq.), as amended, and the
uniformed service does not exceed the period for which a person is eligible
[entitled] to have service counted pursuant to that Act.
Notwithstanding any other provision of this article, contributions and
benefits shall be paid and qualified service for military service shall be
determined in compliance with Section 414(u) of the code.
(b) The city is required to
make its payments into the fund on behalf of each member while the member
is engaged in a uniformed service. If a member who has less than 10 years
of service in the pension system dies directly or indirectly as a result of
the uniformed service, and without returning to active service, the spouse,
dependent children, dependent parent, or estate of the member is eligible
[entitled] to receive a benefit in the same manner as described by
Section 16(c) of this article.
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|
No
equivalent provision.
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SECTION 2.25. Section 24(b),
Article 6243g-4, Revised Statutes, is amended to read as follows:
(b) Payments due on behalf
of a dependent child shall be paid to the dependent child's guardian, if
any, or if none to the person with whom the dependent child is living,
except that the board may make payments directly to a dependent child in an
appropriate case and withhold payments otherwise due on behalf of any
person if the board has reason to believe the payments are not being
applied on behalf of the person eligible [entitled] to
receive them. The board may request a court of competent jurisdiction to
appoint a person to receive and administer the payments due to any
dependent child or person under a disability.
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|
No
equivalent provision.
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SECTION 2.26. Section 25,
Article 6243g-4, Revised Statutes, is amended by amending Subsections (b),
(c), (d), (g), and (h) and adding Subsections (c-1) and (h-1) through
(h-13) to read as follows:
(b) A member or survivor of
a member of the pension system may not accrue a retirement pension,
disability retirement allowance, death benefit allowance, DROP benefit, or
any other benefit under this article in excess of the benefit limits
applicable to the fund under Section 415 of the code. The board shall
reduce the amount of any benefit that exceeds those limits by the amount of
the excess. If total benefits under this fund and the benefits and
contributions to which any member is eligible [entitled]
under any other qualified plans maintained by the city that employs the
member would otherwise exceed the applicable limits under Section 415 of
the code, the benefits the member would otherwise receive from the fund
shall be reduced to the extent necessary to enable the benefits to comply
with Section 415.
(c) Subject to Subsection
(c-1) of this section, any [Any] distributee [member
or survivor] who receives [any distribution that is] an eligible
rollover distribution [as defined by Section 402(c)(4) of the code]
is eligible [entitled] to have that distribution transferred
directly to another eligible retirement plan of the distributee's [member's
or survivor's] choice on providing direction to the pension system
regarding that transfer in accordance with procedures established by the
board.
(c-1) For purposes of
Subsection (c) of this section:
(1) "Direct
rollover" means a payment by the plan to the eligible retirement plan
specified by the distributee.
(2)
"Distributee" means a member or a member's surviving spouse or
non-spouse designated beneficiary or a member's spouse or former spouse who
is the alternate payee under a qualified domestic relations order with regard
to the interest of the spouse or former spouse.
(3) "Eligible
retirement plan" means:
(A) an individual
retirement account as defined by Section 408(a) of the code;
(B) an individual
retirement annuity as defined by Section 408(b) of the code;
(C) an annuity plan as
described by Section 403(a) of the code;
(D) an eligible deferred
compensation plan as defined by Section 457(b) of the code that is
maintained by an eligible employer as described by Section 457(e)(1)(A) of
the code;
(E) an annuity contract
as described by Section 403(b) of the code;
(F) a qualified trust as
described by Section 401(a) of the code that accepts the distributee's
eligible rollover distribution; and
(G) in the case of an
eligible rollover distribution, for a designated beneficiary that is not
the surviving spouse, a spouse, or a former spouse who is an alternate
payee under a qualified domestic relations order, an eligible retirement
plan means only an individual retirement account or individual retirement
annuity that is established for the purpose of receiving the distribution
on behalf of the beneficiary.
(4) "Eligible
rollover distribution" means 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 for life or life expectancy of the
distributee or the joint lives or joint life expectancies of the
distributee and the distributee's designated beneficiary or for a specified
period of 10 years or more;
(B) any distribution to
the extent the distribution is required under Section 401(a)(9) of the
code; or
(C) any distribution that
is made on hardship of the employee.
(d) The annual
compensation for each member [total salary] taken into account
for any purpose under this article [for any member of the pension
system] may not exceed $200,000 for any year for an eligible
participant, or for years beginning after 2001 for an ineligible
participant, or $150,000 a year before 2001 for an ineligible participant.
These dollar limits shall be adjusted from time to time in accordance with
guidelines provided by the United States secretary of the treasury and
must comply with Section 401(a)(17) of the code. For purposes of this
subsection, an eligible participant is a person who first became an active
member before 1996, and an ineligible participant is a member who is not an
eligible participant.
(g) Distribution of benefits
must begin not later than April 1 of the year following the calendar year
during which the member eligible for [entitled to] the
benefits becomes 70-1/2 years of age or terminates employment with the
employer, whichever is later, and must otherwise conform to Section
401(a)(9) of the code.
(h) For purposes of
adjusting any benefit due to the limitations prescribed by Section 415 of
the code, the following provisions shall apply:
(1) the 415(b) limitation
with respect to any member who at any time has been a member in any other
defined benefit plan as defined in Section 414(j) of the code maintained by
the city shall apply as if the total benefits payable under all the defined
benefit plans in which the member has been a member were payable from one
plan; and
(2) the 415(c) limitation
with respect to any member who at any time has been a member in any other
defined contribution plan as defined in Section 414(i) of the code
maintained by the city shall apply as if the total annual additions under
all such defined contribution plans in which the member has been a member
were payable from one plan.
(h-1) For purposes of
adjusting any benefit due to the limitations prescribed by Section 415(b)
of the code, the following provisions shall apply:
(1) before January 1,
1995, a member may not receive an annual benefit that exceeds the limits
specified in Section 415(b) of the code, subject to the applicable
adjustments in that section;
(2) on and after January
1, 1995, a member may not receive an annual benefit that exceeds the dollar
amount specified in Section 415(b)(1)(A) of the code, subject to the
applicable adjustments in Section 415(b) of the code and subject to any
additional limits that may be specified in the pension system;
(3) in no event may a
member's annual benefit payable under the pension system, including any
DROP benefits, in any limitation year be greater than the limit applicable
at the annuity starting date, as increased in subsequent years pursuant to
Section 415(d) of the code, including regulations adopted under that
section; and
(4) the "annual
benefit" means a benefit payable annually in the form of a straight
life annuity, with no ancillary benefits, without regard to the benefit
attributable to any after-tax employee contributions, unless attributable
under Section 415(n) of the code, and to rollover contributions as defined
in Section 415(b)(2)(A) of the code. For purposes of this subdivision, the
"benefit attributable" shall be determined in accordance with applicable
federal regulations.
(h-2) For purposes of
adjustments to the basic limitation under Section 415(b) of the code in the
form of benefits, the following provisions apply:
(1) if the benefit under
the pension system is other than the form specified in Subsections
(h-1)(1)-(3) of this section, including DROP benefits, the benefit shall be
adjusted so that it is the equivalent of the annual benefit, using factors
prescribed in applicable federal regulations; and
(2) if the form of
benefit without regard to the automatic benefit increase feature is not a
straight life annuity or a qualified joint and survivor annuity,
Subdivision (1) of this subsection is applied by either reducing the limit
under Section 415(b) of the code applicable at the annuity starting date or
adjusting the form of benefit to an actuarially equivalent amount
determined by using the assumptions specified in Treasury Regulation
Section 1.415(b)-1(c)(2)(ii) that takes into account the additional
benefits under the form of benefit as follows:
(A) for a benefit paid in
a form to which Section 417(e)(3) of the code does not apply, the
actuarially equivalent straight life annuity benefit that is the greater
of:
(i) the annual amount of
the straight life annuity, if any, payable to the member under the pension
system commencing at the same annuity starting date as the form of benefit
to the member or the annual amount of the straight life annuity commencing
at the same annuity starting date that has the same actuarial present value
as the form of benefit payable to the member, computed using a five percent
interest assumption or the applicable statutory interest assumption; and
(ii) for years prior to
January 1, 2009, the applicable mortality tables described in Treasury
Regulation Section 1.417(e)-1(d)(2), and for years after December 31, 2008,
the applicable mortality tables described in Section 417(e)(3)(B) of the
code; or
(B) for a benefit paid in
a form to which Section 417(e)(3) of the code applies, the actuarially
equivalent straight life annuity benefit that is the greatest of:
(i) the annual amount of
the straight life annuity commencing at the annuity starting date that has
the same actuarial present value as the particular form of benefit payable,
computed using the interest rate and mortality table, or tabular factor,
specified in the plan for actuarial experience;
(ii) the annual amount of
the straight life annuity commencing at the annuity starting date that has
the same actuarial present value as the particular form of benefit payable,
computed using a 5.5 percent interest assumption or the applicable
statutory interest assumption, and for years prior to January 1, 2009, the
applicable mortality tables for the distribution under Treasury Regulation
Section 1.417(e)-1(d)(2), and for years after December 31, 2008, the
applicable mortality tables described in Section 417(e)(3)(B) of the code;
or
(iii) the annual amount
of the straight life annuity commencing at the annuity starting date that
has the same actuarial present value as the particular form of benefit
payable computed using the applicable interest rate for the distribution
under Treasury Regulation Section 1.417(e)-1(d)(3) using the rate in effect
for the month prior to retirement before January 1, 2017, and using the rate
in effect for the first day of the plan year with a one-year stabilization
period on and after January 1, 2017, and for years prior to January 1,
2009, the applicable mortality tables for the distribution under Treasury
Regulation Section 1.417(e)-1(d)(2), and for years after December 31, 2008,
the applicable mortality tables described in Section 417(e)(3)(B) of the
code, divided by 1.05.
(h-3) The pension system
actuary may adjust the limitation under Section 415(b) of the code at the
annuity starting date in accordance with Subsections (h-1) and (h-2) of
this section.
(h-4) The following are
benefits for which no adjustment of the limitation in Section 415(b) of the
code is required:
(1) any ancillary benefit
that is not directly related to retirement income benefits;
(2) the portion of any
joint and survivor annuity that constitutes a qualified joint and survivor
annuity; and
(3) any other benefit not
required under Section 415(b)(2) of the code and regulations adopted under
that section to be taken into account for purposes of the limitation of
Section 415(b)(1) of the code.
(h-5) The following
provisions apply to other adjustments of the limitation under Section
415(b) of the code:
(1) in the event the
member's pension benefits become payable before the member attains 62 years
of age, the limit prescribed by this section shall be reduced in accordance
with federal regulations adopted under Section 415(b) of the code, so that
that limit, as reduced, equals an annual straight life annuity benefit when
the retirement income benefit begins, that is equivalent to a $160,000, as
adjusted, annual benefit beginning at 62 years of age;
(2) in the event the
member's benefit is based on at least 15 years of service as a full-time
employee of any police or fire department or on 15 years of military
service, in accordance with Sections 415(b)(2)(G) and (H) of the code, the
adjustments provided for in Subdivision (1) of this section may not apply;
and
(3) in accordance with
Section 415(b)(2)(I) of the code, the reductions provided for in
Subdivision (1) of this section may not be applicable to preretirement
disability benefits or preretirement death benefits.
(h-6) The following
provisions of this subsection govern adjustment of the defined benefit
dollar limitation for benefits commenced after 65 years of age:
(1) if the annuity
starting date for the member's benefit is after 65 years of age and the
pension system does not have an immediately commencing straight life
annuity payable at both 65 years of age and the age of benefit
commencement, the defined benefit dollar limitation at the member's annuity
starting date is the annual amount of a benefit payable in the form of a
straight life annuity commencing at the member's annuity starting date that
is the actuarial equivalent of the defined benefit dollar limitation, with
actuarial equivalence computed using a five percent interest rate
assumption and the applicable mortality table for that annuity starting
date as defined in Section 417(e)(3)(B) of the code, expressing the
member's age based on completed calendar months as of the annuity starting
date;
(2) if the annuity
starting date for the member's benefit is after age 65, and the pension
system has an immediately commencing straight life annuity payable at both
65 years of age and the age of benefit commencement, the defined benefit
dollar limitation at the member's annuity starting date is the lesser of
the limitation determined under Subdivision (1) of this section and the
defined benefit dollar limitation multiplied by the ratio of the annual
amount of the adjusted immediately commencing straight life annuity under
the pension system at the member's annuity starting date to the annual
amount of the adjusted immediately commencing straight life annuity under
the pension system at 65 years of age, both determined without applying the
limitations of this subsection; and
(3) notwithstanding the
other requirements of this section:
(A) no adjustment shall
be made to reflect the probability of a member's death between the annuity
starting date and 62 years of age, or between 65 years of age and the
annuity starting date, as applicable, if benefits are not forfeited on the
death of the member prior to the annuity starting date; and
(B) to the extent
benefits are forfeited on death before the annuity starting date, the
adjustment shall be made, and for this purpose no forfeiture shall be
treated as occurring on the member's death if the pension system does not
charge members for providing a qualified preretirement survivor annuity, as
defined in Section 417(c) of the code, on the member's death.
(h-7) For the purpose of
Subsection (h-6)(2) of this section, the adjusted immediately commencing
straight life annuity under the pension system at the member's annuity
starting date is the annual amount of such annuity payable to the member,
computed disregarding the member's accruals after 65 years of age but
including actuarial adjustments even if those actuarial adjustments are
used to offset accruals, and the adjusted immediately commencing straight
life annuity under the pension system at 65 years of age is the annual
amount of the annuity that would be payable under the pension system to a
hypothetical member who is 65 years of age and has the same accrued benefit
as the member.
(h-8) The maximum pension
benefits payable to any member who has completed less than 10 years of
participation shall be the amount determined under Subsection (h-1) of this
section, as adjusted under Subsection (h-2) or (h-5) of this section,
multiplied by a fraction, the numerator of which is the number of the
member's years of participation and the denominator of which is 10. The
limit under Subsection (h-9) of this section concerning the $10,000 limit
shall be similarly reduced for any member who has accrued less than 10
years of service, except the fraction shall be determined with respect to
years of service instead of years of participation. The reduction provided
by this subsection cannot reduce the maximum benefit below 10 percent of
the limit determined without regard to this subsection. The reduction
provided for in this subsection may not be applicable to preretirement
disability benefits or preretirement death benefits.
(h-9) Notwithstanding
Subsection (h-8) of this section, the pension benefit payable with respect
to a member shall be deemed not to exceed the limit provided by Section 415
of the code if the benefits payable, with respect to such member under this
pension system and under all other qualified defined benefit pension plans
to which the city contributes, do not exceed $10,000 for the applicable
limitation year and for any prior limitation year and the city has not at
any time maintained a qualified defined contribution plan in which the
member participated.
(h-10) On and after
January 1, 1995, for purposes of applying the limits under Section 415(b)
of the code to a member's benefit paid in a form to which Section 417(e)(3)
of the code does not apply, the following provisions apply:
(1) a member's applicable
limit shall be applied to the member's annual benefit in the member's first
limitation year without regard to any cost-of-living adjustments under
Section 12 of this article;
(2) to the extent that
the member's annual benefit equals or exceeds the limit, the member shall
no longer be eligible for cost-of-living increases until such time as the
benefit plus the accumulated increases are less than the limit; and
(3) after the time
prescribed by Subdivision (2) of this subsection, in any subsequent
limitation year, a member's annual benefit, including any cost-of-living
increases under Section 12 of this article, shall be tested under the
applicable benefit limit, including any adjustment under Section 415(d) of
the code to the dollar limit under Section 415(b)(1)(A) of the code, and
the regulations under those sections.
(h-11) Any repayment of
contributions, including interest on contributions, to the plan with
respect to an amount previously refunded on a forfeiture of service credit
under the plan or another governmental plan maintained by the pension
system may not be taken into account for purposes of Section 415 of the
code, in accordance with applicable federal regulations.
(h-12) Reduction of
benefits or contributions to all plans, where required, shall be accomplished
by:
(1) first, reducing the
member's benefit under any defined benefit plans in which the member
participated, with the reduction to be made first with respect to the plan
in which the member most recently accrued benefits and then in the priority
determined by the pension system and the plan administrator of such other
plans; and
(2) next, reducing or
allocating excess forfeitures for defined contribution plans in which the
member participated, with the reduction to be made first with respect to
the plan in which the member most recently accrued benefits and then in the
priority determined by the pension system and the plan administrator for
such other plans.
(h-13) Notwithstanding
Subsection (h-12) of this section, reductions may be made in a different
manner and priority pursuant to the agreement of the pension system and the
plan administrator of all other plans covering such member. [If the
amount of any benefit is to be determined on the basis of actuarial
assumptions that are not otherwise specifically set forth for that purpose
in this article, the actuarial assumptions to be used are those earnings
and mortality assumptions being used on the date of the determination by
the pension system's actuary and approved by the board. The actuarial
assumptions being used at any particular time shall be attached as an
addendum to a copy of this article and treated for all purposes as a part
of this article. The actuarial assumptions may be changed by the pension
system's actuary at any time if approved by the board, but a change in
actuarial assumptions may not result in any decrease in benefits accrued as
of the effective date of the change.]
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No
equivalent provision.
|
SECTION 2.27. Section
26(b)(3), Article 6243g-4, Revised Statutes, is amended to read as follows:
(3) "Maximum
benefit" means the retirement benefit a retired member and the spouse,
dependent child, or dependent parent of a retired member or deceased member
or retiree are eligible [entitled] to receive from all
qualified plans in any month after giving effect to Section 25(b) of this
article and any similar provisions of any other qualified plans designed to
conform to Section 415 of the code.
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No
equivalent provision.
|
SECTION 2.28. Sections
26(c), (d), and (e), Article 6243g-4, Revised Statutes, are amended to read
as follows:
(c) An excess benefit
participant who is receiving benefits from the pension system is eligible
for [entitled to] a monthly benefit under this excess benefit
plan in an amount equal to the lesser of:
(1) the member's
unrestricted benefit less the maximum benefit; or
(2) the amount by which the
member's monthly benefit from the fund has been reduced because of the
limitations of Section 415 of the code.
(d) If a spouse, dependent
child, or dependent parent is eligible for [entitled to]
preretirement or postretirement death benefits under a qualified plan after
the death of an excess benefit participant, the surviving spouse, dependent
child, or dependent parent is eligible for [entitled to] a
monthly benefit under the excess benefit plan equal to the benefit
determined in accordance with this article without regard to the
limitations under Section 25(b) of this article or Section 415 of the code,
less the maximum benefit.
(e) Any benefit to which a person
is eligible [entitled] under this section shall be paid at
the same time and in the same manner as the benefit would have been paid
from the pension system if payment of the benefit from the pension system
had not been precluded by Section 25(b) of this article. An excess benefit
participant or any beneficiary may not, under any circumstances, elect to
defer the receipt of all or any part of a payment due under this section.
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|
No
equivalent provision.
|
SECTION 2.29. The heading to
Section 27, Article 6243g-4, Revised Statutes, is amended to read as
follows:
Sec. 27. CERTAIN WRITTEN
AGREEMENTS BETWEEN PENSION SYSTEM AND CITY AUTHORIZED [AGREEMENT TO
CHANGE BENEFITS].
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|
No
equivalent provision.
|
SECTION 2.30. Section 27,
Article 6243g-4, Revised Statutes, is amended by amending Subsection (b)
and adding Subsection (c) to read as follows:
(b) A pension benefit or
allowance provided by this article may be increased if the increase:
(1) is first approved by a
qualified actuary selected by the board;
(2) is approved by the board
and the city in a written agreement as authorized by this section; and
(3) does not deprive a
member, without the member's written consent, of a right to receive
benefits when [that have become fully vested and matured in] the
member is fully eligible.
(c) In a written
agreement entered into between the city and the board under this section,
the parties may not fundamentally:
(1) alter Sections 9
through 9E of this article;
(2) increase the assumed
rate of return to more than seven percent per year;
(3) extend the
amortization period of a liability layer to more than 30 years from the
first day of the fiscal year beginning 12 months after the date of the risk
sharing valuation study in which the liability layer is first recognized;
or
(4) allow a city
contribution rate in any year that is less than or greater than the city
contribution rate required under Section 9D or 9E of this article, as
applicable.
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No
equivalent provision.
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SECTION 2.31. Section 29,
Article 6243g-4, Revised Statutes, is amended by adding Subsections (c),
(d), (e), (f), and (g) to read as follows:
(c) To carry out the
provisions of Sections 9 through 9E of this article, the board and the
pension system shall provide the city actuary under a confidentiality
agreement the actuarial data used by the pension system actuary for the
pension system's actuarial valuations or valuation studies and other data
as agreed to between the city and the pension system that the city actuary
determines is reasonably necessary for the city actuary to perform the
studies required by Sections 9A through 9E of this article. Actuarial data
described by this subsection does not include information described by
Subsection (a) of this section.
(d) A risk sharing
valuation study prepared by either the city actuary or the pension system
actuary under Sections 9A through 9E of this article may not:
(1) include information
described by Subsection (a) of this section; or
(2) provide confidential
or private information regarding specific individuals or be grouped in a
manner that allows confidential or private information regarding a specific
individual to be discerned.
(e) The information,
data, and document exchanges under Sections 9 through 9E of this article
have all the protections afforded by applicable law and are expressly
exempt from the disclosure requirements under Chapter 552, Government Code,
except as may be agreed to by the city and pension system in a written
agreement under Section 27 of this article.
(f) Subsection (e) of
this section does not apply to final risk sharing valuation studies
prepared under Section 9A or 9B of this article.
(g) Before a union
contract is approved by the city, the mayor of the city must cause the city
actuaries to deliver to the mayor a report estimating the impact of the
proposed union contract on fund costs.
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No
equivalent provision.
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SECTION 2.32. Article
6243g-4, Revised Statutes, is amended by adding Section 30 to read as
follows:
Sec. 30. FORFEITURE OF
BENEFITS. (a) Notwithstanding any other law, a member who is convicted,
after exhausting all appeals, of an offense punishable as a felony of the
first degree in relation to, arising out of, or in connection with the
member's service as a classified police officer may not receive any
benefits under this article.
(b) After the member
described by Subsection (a) of this section is finally convicted, the
member's spouse may apply for benefits if the member, but for application
of Subsection (a) of this section, would have been eligible for a pension
benefit or a delayed payment of benefits. If the member would not have
been eligible for a pension benefit or a delayed payment of benefits, the
member's spouse may apply for a refund of the member's contributions. A
refund under this subsection does not include interest and does not include
contributions the city made on the member's behalf. The city may not
receive a refund of any contributions the city made on the member's behalf.
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No
equivalent provision.
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SECTION 2.33. Repeals Sections
2(19) and (23), 8(b), 12(f), 14(f) and (m), 15(h) and (j), and 18(b) and
(c), Article 6243g-4, Revised Statutes.
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No
equivalent provision.
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SECTION 2.34. A city and
board that have entered into one or more agreements under Section 27,
Article 6243g-4, Revised Statutes, shall agree in writing that any
provisions in the agreements that specifically conflict with this Act are
no longer in effect, as of the year 2017 effective date, and any
nonconflicting provisions of the agreements remain in full force and
effect.
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No
equivalent provision.
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SECTION 2.35.
Notwithstanding any other Act of the 85th Legislature, Regular Session,
2017, the issuance of pension obligation bonds under Chapter 107, Local
Government Code, in an amount sufficient to deliver pension obligation bond
proceeds to the pension system established under Article 6243g-4, Revised
Statutes, as amended by this Act, in the amount and manner prescribed by
Section 9B(j), Article 6243g-4, Revised Statutes, as added by this Act, may
not require the approval of the qualified voters of a city voting at an
election held for that purpose.
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No
equivalent provision.
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SECTION 2.36. The pension
system established under Article 6243g-4, Revised Statutes, shall require
the pension system actuary to prepare the first actuarial experience study
required under Section 9C, Article 6243g-4, Revised Statutes, as added by
this Act, not later than September 30, 2022.
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ARTICLE 3. MUNICIPAL
EMPLOYEES PENSION SYSTEM
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Same as introduced version.
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SECTION 3.01. Chapter 88
(H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
6243h, Vernon's Texas Civil Statutes), is amended by adding Section 3A to
read as follows:
Sec. 3A. ACTION
INCREASING AMORTIZATION PERIOD. (a) Notwithstanding any other provision
of this Act, a rate of a member's or a city's contributions to or a rate of
interest or the amount of a fee required for the establishment of credit in
the pension system may not be reduced or eliminated, a type of service may
not be made creditable in the pension system, a limit on the maximum
permissible amount of a type of creditable service may not be removed or
raised, a new monetary benefit payable by the pension system may not be
established, and the determination of the amount of a monetary benefit from
the pension system may not be increased, if, as a result of the particular
action, the time, as determined by an actuarial valuation, required to
amortize the unfunded actuarial liabilities of the pension fund would be
increased to a period that exceeds 30 years.
(b) If the amortization
period for the unfunded actuarial liabilities of the pension system exceeds
30 years at the time an action described by Subsection (a) of this section
is proposed, the proposal may not be adopted if, as a result of the
adoption, the amortization period would be increased, as determined by an
actuarial valuation.
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No
equivalent provision.
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No
equivalent provision.
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SECTION 3.01. Section 1,
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended by amending
Subdivisions (1), (4), (5), (7), (14), (18), and (26) and adding
Subdivisions (1-a), (1-b), (1-c), (1-d), (1-e), (1-f), (4-a), (4-b), (4-c),
(4-d), (4-e), (4-f), (11-a), (11-b), (11-c), (11-d), (11-e), (11-f),
(11-g), (11-h), (11-i), (11-j), (11-k), (12-a), (12-b), (14-a), (14-b),
(17-a), (18-a), (18-b), (20-a), (21-a), (26-a), (26-b), (28), (29), (30),
and (31) to read as follows:
(1) "Actuarial
data" includes:
(A) the census data, assumption
tables, disclosure of methods, and financial information that are routinely
used by the pension system actuary for the pension system's studies or an
actuarial experience study under Section 8D of this Act; and
(B) other data that is
reasonably necessary to implement Sections 8A through 8F of this Act, as
agreed to by the city and pension board.
(1-a) "Actuarial
experience study" has the meaning assigned by Section 802.1014,
Government Code.
(1-b) "Adjustment
factor" means the assumed rate of return less two percentage points.
(1-c) "Amortization
period" means the time period necessary to fully pay a liability
layer.
(1-d) "Amortization
rate" means the sum of the scheduled amortization payments less the
city contribution amount for a given fiscal year for the liability layers
divided by the projected pensionable payroll for the same fiscal year.
(1-e) "Assumed rate
of return" means the assumed market rate of return on pension system
assets, which is seven percent per annum unless adjusted as provided by
this Act.
(1-f)
"Authorized absence" means:
(A) each day an employee is
absent due to an approved holiday, vacation, accident, or sickness, if the
employee is continued on the employment rolls of the city or the pension
system, receives the employee's regular salary from the city or the pension
system for each day of absence, and remains eligible to work on recovery or
return; or
(B) any period that a person
is on military leave of absence under Section 18(a) of this Act, provided
the person complies with the requirements of that section.
(4) "City" means a
municipality having a population of more than two [1.5]
million.
(4-a) "City
contribution amount" means, for each fiscal year, a predetermined
payment amount expressed in dollars in accordance with a payment schedule
amortizing the legacy liability, using the level percent of payroll method
and the amortization period and payoff year, that is included in the
initial risk sharing valuation study under Section 8C(a)(3) of this Act, as
may be restated from time to time in:
(A) a subsequent risk
sharing valuation study to reflect adjustments to the amortization schedule
authorized by Section 8E or 8F of this Act; or
(B) a restated initial
risk sharing valuation study or a subsequent risk sharing valuation study
to reflect adjustments authorized by Section 8C(i) or (j) of this Act.
(4-b) "City
contribution rate" means a percent of pensionable payroll that is the
sum of the employer normal cost rate and the amortization rate for
liability layers, excluding the legacy liability, except as determined
otherwise under the express provisions of Sections 8E and 8F of this Act.
(4-c)
"Corridor" means the range of city contribution rates that are:
(A) equal to or greater
than the minimum contribution rate; and
(B) equal to or less than
the maximum contribution rate.
(4-d) "Corridor
margin" means five percentage points.
(4-e) "Corridor
midpoint" means the projected city contribution rate specified for
each fiscal year for 31 years in the initial risk sharing valuation study
under Section 8C of this Act, and as may be adjusted under Section 8E or 8F
of this Act, and in each case rounded to the nearest hundredths decimal
place.
(4-f)
"Cost-of-living adjustment percentage" means a percentage that:
(A) except as provided by
Paragraph (B), is equal to the pension system's five-year investment
return, based on a rolling five-year basis and net of investment expenses,
minus the adjustment factor, and multiplied by 50 percent; and
(B) may not be less than
zero or more than two percent.
(5) "Credited
service" means each day of service and prior service of a member for
which:
(A) the city [has]
and[, for service in group A,] the member have [has]
made required contributions to the pension fund that were not subsequently
withdrawn;
(B) the member has purchased
service credit or converted service credit from group B to group A by
paying into the pension fund required amounts that were not subsequently
withdrawn;
(C) the member has
reinstated service under Section 7(g) of this Act; and
(D) the member has
previously made payments to the pension fund that, under then existing
provisions of law, make the member eligible for credit for the service and
that were not subsequently withdrawn.
(7) "Dependent
child" means an unmarried natural or legally adopted child of a
member, deferred participant, or retiree who:
(A) was supported by the
member, deferred participant, or retiree before the termination of
employment of the member, deferred participant, or retiree; and
(B) is under 21 years of age
or is totally and permanently disabled from performing any full-time
employment because of an injury, illness, serious mental illness,
intellectual disability, or pervasive development disorder [or
retardation] that began before the child became 18 years of age and
before the termination of employment [death] of the member,
deferred participant, or retiree.
(11-a) "Employer
normal cost rate" means the normal cost rate minus the applicable
member contribution rate for newly hired employees, initially set as three
percent for group D members on the year 2017 effective date. The present
value of additional member contributions different from the group D rate
taken into account for purposes of determining the employer normal cost
rate must be applied toward the actuarial accrued liability.
(11-b) "Estimated
city contribution amount" means the city contribution amount estimated
in a final risk sharing valuation study under Section 8B or 8C of this Act,
as applicable, as required by Section 8B(a)(5) of this Act.
(11-c) "Estimated
city contribution rate" means the city contribution rate estimated in
a final risk sharing valuation study under Section 8B or 8C of this Act, as
applicable, as required by Section 8B(a)(5) of this Act.
(11-d) "Estimated
total city contribution" means the total city contribution estimated
by the pension system actuary or the city actuary, as applicable, by using
the estimated city contribution rates and the estimated city contribution
amounts recommended by each actuary for purposes of preparing the initial
risk sharing valuation study under Section 8C of this Act.
(11-e) "Fiscal
year," except as provided by Section 1B of this Act, means a fiscal
year beginning on July 1 and ending on June 30.
(11-f) "Funded
ratio" means the ratio of the pension system's actuarial value of
assets divided by the pension system's actuarial accrued liability.
(11-g) "Legacy
liability" means the unfunded actuarial accrued liability:
(A) for the fiscal year
ending June 30, 2016, reduced to reflect:
(i) changes to benefits
and contributions under this Act that took effect on the year 2017
effective date;
(ii) the deposit of
pension obligation bond proceeds on December 31, 2017; and
(iii) payments by the
city and earnings at the assumed rate of return allocated to the legacy
liability from July 1, 2016, to July 1, 2017, excluding July 1, 2017; and
(B) for each subsequent
fiscal year:
(i) reduced by the city
contribution amount for that year allocated to the amortization of the
legacy liability; and
(ii) adjusted by the
assumed rate of return.
(11-h) "Level
percent of payroll method" means the amortization method that defines
the amount of the liability layer recognized each fiscal year as a level
percent of pensionable payroll until the amount of the liability layer
remaining is reduced to zero.
(11-i) "Liability
gain layer" means a liability layer that decreases the unfunded
actuarial accrued liability.
(11-j) "Liability
layer" means the legacy liability established in the initial risk
sharing valuation study under Section 8C of this Act and the unanticipated
change as established in each subsequent risk sharing valuation study
prepared under Section 8B of this Act.
(11-k) "Liability
loss layer" means a liability layer that increases the unfunded
actuarial accrued liability. For purposes of this Act, the legacy
liability is a liability loss layer.
(12-a) "Maximum
contribution rate" means the rate equal to the corridor midpoint plus
the corridor margin.
(12-b) "Minimum
contribution rate" means the rate equal to the corridor midpoint minus
the corridor margin.
(14) "Military
service" means active service in the armed forces of the United States
or wartime service in the armed forces of the United States or in the allied
forces, if credit for military service has not been granted under any
federal or other state system or used in any other retirement system,
except as expressly required under federal law.
(14-a) "Normal cost
rate" means the salary weighted average of the individual normal cost
rates determined for the current active population, plus the assumed
administrative expenses determined in the most recent actuarial experience
study conducted under Section 8D of this Act, expressed as a rate, provided
the assumed administrative expenses may not exceed 1.25 percent of
pensionable payroll for the current fiscal year unless agreed to by the
city.
(14-b) "Payoff
year" means the year a liability layer is fully amortized under the
amortization period. A payoff year may not be extended or accelerated for
a period that is less than one month.
(17-a) "Pension
obligation bond" means a bond issued in accordance with Chapter 107,
Local Government Code.
(18) "Pension system,"
unless the context otherwise requires, means the retirement,
disability, and survivor benefit plans for municipal employees of a city
under this Act and employees under Section 3(d) of this Act.
(18-a) "Pension
system actuary" means the actuary engaged by the pension system under
Section 2B of this Act.
(18-b) "Pensionable
payroll" means the combined salaries paid to all members in a fiscal
year.
(20-a) "Price
inflation assumption" means:
(A) the most recent
headline consumer price index 10-year forecast published in the Federal
Reserve Bank of Philadelphia Survey of Professional Forecasters; or
(B) if the forecast
described by Paragraph (A) of this subdivision is not available, another
standard as determined by mutual agreement between the city and the pension
board entered into under Section 3(n) of this Act.
(21-a) "Projected
pensionable payroll" means the estimated pensionable payroll for the
fiscal year beginning 12 months after the date of the risk sharing
valuation study prepared under Section 8B of this Act, at the time of
calculation by:
(A) projecting the prior
fiscal year's pensionable payroll forward two years using the current
payroll growth rate assumptions; and
(B) adjusting, if
necessary, for changes in population or other known factors, provided those
factors would have a material impact on the calculation, as determined by
the pension board.
(26) "Surviving
spouse" means a spouse by marriage of [person who was
married to] a member, deferred participant, or retiree at the time of
death of the member, deferred participant, or retiree and as of the date
of [before] separation from service by the member, deferred
participant, or retiree.
(26-a) "Third
quarter line rate" means the corridor midpoint plus 2.5 percentage
points.
(26-b) "Total city
contribution" means, for a fiscal year, an amount equal to the sum of:
(A) the city contribution
rate multiplied by the pensionable payroll for the fiscal year; and
(B) the city contribution
amount for the fiscal year.
(28) "Ultimate entry
age normal" means an actuarial cost method under which a calculation
is made to determine the average uniform and constant percentage rate of
contributions that, if applied to the compensation of each member during
the entire period of the member's anticipated covered service, would be
required to meet the cost of all benefits payable on the member's behalf
based on the benefits provisions for newly hired employees. For purposes
of this definition, the actuarial accrued liability for each member is the
difference between the member's present value of future benefits based on
the tier of benefits that apply to the member and the member's present
value of future normal costs determined using the normal cost rate.
(29) "Unfunded
actuarial accrued liability" means the difference between the
actuarial accrued liability and the actuarial value of assets. For
purposes of this definition:
(A) "actuarial
accrued liability" means the portion of the actuarial present value of
projected benefits attributed to past periods of member service based on
the cost method used in the risk sharing valuation study prepared under
Section 8B or 8C of this Act, as applicable; and
(B) "actuarial value
of assets" means the value of pension plan investments as calculated
using the asset smoothing method used in the risk sharing valuation study
prepared under Section 8B or 8C of this Act, as applicable.
(30) "Unanticipated
change" means, with respect to the unfunded actuarial accrued
liability in each subsequent risk sharing valuation study prepared under
Section 8B of this Act, the difference between:
(A) the remaining balance
of all then-existing liability layers as of the date of the risk sharing
valuation study; and
(B) the actual unfunded
actuarial accrued liability as of the date of the risk sharing valuation
study.
(31) "Year 2017
effective date" means the date on which H.B. No. 43, Acts of the 85th
Legislature, Regular Session, 2017, took effect.
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No
equivalent provision.
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SECTION 3.02. Chapter 88
(H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h,
Vernon's Texas Civil Statutes), is amended by adding Sections 1A, 1B, and
1C to read as follows:
Sec. 1A. INTERPRETATION
OF ACT. This Act does not and may not be interpreted to:
(1) relieve the city, the
pension board, or the pension system of their respective obligations under
Sections 8A through 8F of this Act;
(2) reduce or modify the
rights of the city, the pension system, or the pension board, including any
officer or employee of the city, pension system, or pension board, to
enforce obligations described by Subdivision (1) of this subsection;
(3) relieve the city,
including any official or employee of the city, from:
(A) paying or directing
to pay required contributions to the pension system or fund under Section 8
or 8A of this Act or carrying out the provisions of Sections 8A through 8F
of this Act; or
(B) reducing or modifying
the rights of the pension board and any officer or employee of the pension
board or pension system to enforce obligations described by Subdivision (1)
of this section;
(4) relieve the pension
board or pension system, including any officer or employee of the pension
board or pension system, from any obligation to implement a benefit change
or carry out the provisions of Sections 8A through 8F of this Act; or
(5) reduce or modify the
rights of the city and any officer or employee of the city to enforce an
obligation described by Subdivision (4) of this section.
Sec. 1B. FISCAL YEAR. If
either the pension system or the city changes its respective fiscal year,
the pension system and the city shall enter into a written agreement under
Section 3(n) of this Act to adjust the provisions of Sections 8A through 8F
of this Act to reflect that change for purposes of this Act.
Sec. 1C. CONFLICT OF
LAW. To the extent of a conflict between this Act and any other law, this
Act prevails.
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No
equivalent provision.
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SECTION 3.03. Section 2,
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended by amending
Subsections (c), (d), (g), (j), (l), and (n) and adding Subsections (c-1),
(c-2), (c-3), (c-4), (j-1), (j-2), (ee), (ff), (gg), (hh), (ii), and (jj)
to read as follows:
(c) The pension board
consists of 11 [nine] trustees as follows:
(1) one person appointed
by the mayor of the city [, or the director of the civil service
commission as the mayor's representative];
(2) one person appointed
by the controller of the city [treasurer or a person
performing the duties of treasurer];
(3) four municipal employees
of the city who are members of the pension system;
(4) two retirees, each of
whom:
(A) has at least five years
of credited service in the pension system;
(B) receives a retirement
pension from the pension system; and
(C) is not an officer or
employee of the city; [and]
(5) one person appointed
by the elected trustees who [:
[(A)] has been a
resident of this state for the three years preceding the date of initial
appointment; and
(6) two persons appointed
by the governing body of the city [(B) is not a city officer or
employee].
(c-1) To serve as a
trustee under Subsection (c)(1), (2), or (6) of this section, a person may
not be a participant in or beneficiary of the pension system.
(c-2) A trustee appointed
under Subsection (c)(1), (2), (5), or (6) of this section must have
expertise in at least one of the following areas: accounting, finance,
pensions, investments, or actuarial science. Of the trustees appointed
under Subsections (c)(1), (2), and (6) of this section, not more than two
trustees may have expertise in the same area.
(c-3) A trustee appointed
under Subsection (c)(1) of this section shall serve a three-year term
expiring in July of the applicable year. The appointed trustee may be
removed at any time by the mayor. The mayor shall fill a vacancy caused by
the trustee's death, resignation, or removal and the person appointed to
fill the vacancy shall serve the remainder of the unexpired term of the
replaced trustee and may not serve beyond the expiration of the unexpired
term unless appointed by the mayor.
(c-4) A trustee appointed
under Subsection (c)(2) of this section shall serve a three-year term
expiring in July of the applicable year. The appointed trustee may be
removed at any time by the controller. The controller shall fill a vacancy
caused by the trustee's death, resignation, or removal and the person
appointed to fill the vacancy shall serve the remainder of the unexpired
term of the replaced trustee and may not serve beyond the expiration of the
unexpired term unless appointed by the controller.
(d) To serve as a trustee
under Subsection (c)(3) of this section, a person must be a member with at
least five years of credited service and be elected by the active members
of the pension system voting at an election called by the pension
board. No more than two of the employee trustees may be employees of the
same department.
(g) To serve as a trustee
under Subsection (c)(4) of this section, a person must be elected by a
majority of the retirees voting [retired members of the
pension system] at an election called by the pension board.
(j) To serve as a trustee
under Subsection (c)(5) of this section, the person must be appointed by a
vote of a majority of the elected trustees of the pension board. The
trustee appointed under Subsection (c)(5) of this section shall serve
[serves] a three-year [two-year] term. The
appointment or reappointment of the appointed trustee shall take place in July
[January] of the [each even-numbered] year in which
the term ends. The appointed trustee may be removed at any time by a
vote of a majority of the elected trustees of the pension board. A vacancy
caused by the appointed trustee's death, resignation, or removal shall be
filled by the elected trustees of the pension board. The appointee serves
for the remainder of the unexpired term of the replaced trustee. An
appointed trustee may not serve beyond the expiration of the three-year
[two-year] term unless a majority of [other than by
appointment for a new term by] the elected trustees of the pension
board reappoint the trustee for a new term.
(j-1) To serve as a
trustee under Subsection (c)(6) of this section, a person must be appointed
by a vote of a majority of the members of the governing body of the city.
Each trustee appointed under Subsection (c)(6) of this section shall serve
three-year terms expiring in July of the applicable year. A trustee
appointed under Subsection (c)(6) of this section may be removed at any
time by a vote of a majority of the members of the governing body of the
city. A vacancy caused by the appointed trustee's death, resignation, or
removal shall be filled by a vote of a majority of the members of the
governing body of the city. A person appointed to fill the vacancy shall
serve the remainder of the unexpired term of the replaced trustee, and may
not serve beyond the expiration of the unexpired term unless appointed by
the governing body of the city.
(j-2) If a majority of
the pension board determines that a trustee appointed under Subsection
(c)(1), (2), or (6) of this section has acted or is acting in a manner that
conflicts with the interests of the pension system or is in violation of
this Act or any agreement between the pension board and the city entered
into under Section 3(n) of this Act, the pension board may recommend to the
mayor, controller, or governing body, as appropriate, that the appointed
trustee be removed from the pension board. If the appointed trustee was
appointed by the governing body of the city, an action item concerning the
pension board's recommendation shall be placed on the governing body's
agenda for consideration and action. The governing body shall make a
determination on the recommendation and communicate the determination to
the pension system not later than the 45th day after the date of the
recommendation.
(l) To serve on the
pension board, each [Each] trustee shall, on or before [at]
the first pension board meeting following the trustee's most recent
election or appointment, take an oath of office that the trustee:
(1) will diligently and
honestly administer the pension system; and
(2) will not knowingly
violate this Act or willingly allow a violation of this Act to occur.
(n) The person serving as a
trustee under Subsection (c)(2) of this section serves as the treasurer of
the pension fund [under penalty of that person's official bond and oath
of office]. The treasurer shall file an [That person's]
official bond payable to the [city shall cover the person's
position as treasurer of the] pension system. The treasurer is
[fund, and that person's sureties are] liable on [for]
the treasurer's official bond for the faithful performance of the
treasurer's duties under this Act in connection with [actions
pertaining to] the pension fund [to the same extent as the sureties
are liable under the terms of the bond for other actions and conduct of the
treasurer].
(ee) A trustee appointed
under Subsection (c)(1), (2), (5), or (6) of this section who fails to
attend at least 50 percent of all regular pension board meetings, as
determined annually each July 1, may be removed from the pension board by
the appointing entity. A trustee removed under this subsection may not be
appointed as a trustee for one year following removal.
(ff) All trustees
appointed under Subsection (c) of this section shall complete minimum
educational training requirements established by the State Pension Review
Board. The appointing entity may remove an appointed trustee who does not
complete minimum educational training requirements during the period
prescribed by the State Pension Review Board.
(gg) The pension board
shall adopt an ethics policy governing, among other matters, conflicts of
interest that each trustee must comply with during the trustee's term on
the pension board.
(hh) During a trustee's
term on the pension board and for one year after leaving the pension board,
a trustee may not represent any other person or organization in any formal
or informal appearance before the pension board or pension system staff
concerning a matter for which the person has or had responsibility as a
trustee.
(ii) The pension board
may establish standing or temporary committees as necessary to assist the
board in carrying out its business, including committees responsible for
risk management or governance, investments, administration and
compensation, financial and actuarial matters, audits, disability
determinations, and agreements under Section 3(n) of this Act. The pension
board shall establish a committee responsible for agreements under Section
3(n) of this Act that must be composed of the elected trustees and the
trustee appointed by the elected trustees. Except for a committee
responsible for agreements under Section 3(n) of this Act and any committee
responsible for personnel issues:
(1) each committee must
include at least one elected trustee and one trustee appointed by the
mayor, controller, or governing body of the city;
(2) committee meetings
are open to all trustees; and
(3) a committee may not
make final decisions and may only make recommendations to the pension
board.
(jj) Subsections (x)(1)
through (4), (y), and (cc) of this section do not grant the pension board
authority to modify or terminate Sections 8A through 8F of this Act.
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No
equivalent provision.
|
SECTION 3.04. Chapter 88
(H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
6243h, Vernon's Texas Civil Statutes), is amended by adding Sections 2A,
2B, 2C, and 2D to read as follows:
Sec. 2A. CONFLICTS OF
INTEREST. (a) The existence or appearance of a conflict of interest on
the part of any trustee is detrimental to the proper functioning of the
pension system if not properly addressed. An appointed trustee may not
deliberate or vote on an action relating to the investment of pension
system assets if:
(1) the trustee or an
entity with which the trustee is affiliated:
(A) is a competitor or an
affiliate of the person or firm that is the subject of or otherwise under
consideration in the action; or
(B) likely would be
subject to a due diligence review by the person or firm that is under
consideration in the investment-related action; or
(2) the pension board
otherwise determines that the proposed action would create a direct or
indirect benefit for the appointed trustee or a firm with which the appointed
trustee is affiliated.
(b) The city attorney
shall:
(1) provide annual
training to trustees appointed by the city regarding conflicts of interest;
and
(2) to the extent
authorized by city ordinances, at the request of the external affairs committee
of the pension board, review and take appropriate action on a complaint
alleging a conflict of interest on the part of a city-appointed trustee.
Sec. 2B. PENSION SYSTEM
ACTUARY; ACTUARIAL VALUATIONS. (a) The pension board shall retain an
actuary or actuarial firm for purposes of this Act.
(b) At least annually,
the pension system actuary shall make a valuation of the assets and
liabilities of the pension fund. The valuation must include the risk
sharing valuation study conducted under Section 8B or 8C of this Act, as
applicable.
(c) The pension system
shall provide a report of the valuation to the city.
Sec. 2C. QUALIFICATIONS
OF CITY ACTUARY. (a) An actuary hired by the city for purposes of this
Act must be an actuary from a professional service firm who:
(1) is not already
engaged by the pension system or any other pension system or fund
authorized under Article 6243e.2(1) or 6243g-4, Revised Statutes, to
provide actuarial services to the pension system or fund, as applicable;
(2) has a minimum of 10
years of professional actuarial experience; and
(3) is a fellow of the
Society of Actuaries or a member of the American Academy of Actuaries and
who, in carrying out duties for the city, has met the applicable
requirements to issue statements of actuarial opinion.
(b) Notwithstanding
Subsection (a) of this section, the city actuary must at least meet the
qualifications required by the board for the pension system actuary. The
city actuary is not required to have greater qualifications than those of
the pension system actuary.
Sec. 2D. REPORT ON
INVESTMENTS BY INDEPENDENT INVESTMENT CONSULTANT. (a) At least once every
three years, the board shall hire an independent investment consultant,
including an independent investment consulting firm, to conduct a review of
pension system investments and submit a report to the board and the city
concerning the review or demonstrate in the pension system's annual
financial report that the review was conducted. The independent investment
consultant shall review and report on at least the following:
(1) the pension system's
compliance with its investment policy statement, ethics policies, including
policies concerning the acceptance of gifts, and policies concerning
insider trading;
(2) the pension system's
asset allocation, including a review and discussion of the various risks,
objectives, and expected future cash flows;
(3) the pension system's
portfolio structure, including the pension system's need for liquidity,
cash income, real return, and inflation protection and the active, passive,
or index approaches for different portions of the portfolio;
(4) investment manager
performance reviews and an evaluation of the processes used to retain and
evaluate managers;
(5) benchmarks used for
each asset class and individual manager;
(6) an evaluation of fees
and trading costs;
(7) an evaluation of any
leverage, foreign exchange, or other hedging transaction; and
(8) an evaluation of
investment-related disclosures in the pension system's annual reports.
(b) When the board
retains an independent investment consultant under this section, the
pension system may require the consultant to agree in writing to maintain
the confidentiality of:
(1) information provided
to the consultant that is reasonably necessary to conduct a review under
this section; and
(2) any nonpublic
information provided for the pension system for the review.
(c) The costs for the
investment report required by this section shall be paid from the pension
fund.
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No
equivalent provision.
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SECTION 3.05. Section 3,
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended by amending
Subsections (f) and (n) and adding Subsections (o), (p), (q), (r), and (s)
to read as follows:
(f) The pension board shall
compensate from the pension fund the persons performing services under
Subsections (d) and (e) of this section and may provide other employee
benefits that the pension board considers proper. Any person employed by
the pension board under Subsection (d) or (e) of this section who has
service credits with the pension system at the time of the person's
employment by the pension board retains the person's status in the pension
system. Any person employed by the pension system on or after January
1, 2008, who does not have service credits with the pension system at
the time of employment is a group D [A] member in
accordance with Section 5 of this Act. The pension board shall adopt a
detailed annual budget detailing its proposed administrative expenditures
under this subsection for the next fiscal year.
(n) Notwithstanding any
other law and except as specifically limited by Subsection (o) of this
section, the pension board may enter into a written agreement with the
city regarding pension issues and benefits. The agreement must be approved
by the pension board and the governing body of the city and signed
by the mayor and by the pension board or the pension board's designee. The
agreement is enforceable against and binding on the pension board,
the city, and the pension system, including the pension
system's members, retirees, deferred participants, beneficiaries, eligible
survivors, and alternate payees. Any reference in this Act to an
agreement between the city and the pension board or pension system is a
reference to an agreement entered under this subsection.
(o) In any written
agreement entered into between the city and the pension board under
Subsection (n) of this section, the parties may not:
(1) fundamentally alter
Sections 8A through 8F of this Act;
(2) increase the assumed
rate of return to more than seven percent per year;
(3) extend the
amortization period of a liability layer to more than 30 years from the
first day of the fiscal year beginning 12 months after the date of the risk
sharing valuation study in which the liability layer is first recognized;
or
(4) allow a total city
contribution in any fiscal year that is less than the total city
contribution required under Section 8E or 8F, as applicable, of this Act.
(p) Annually on or before
the end of the fiscal year, the pension board shall make a report to the
mayor and the governing body of the city, each of which shall provide a
reasonable opportunity for the pension board to prepare and present the
report.
(q) The pension board
shall provide quarterly investment reports to the mayor.
(r) At the mayor's
request, the pension board shall meet, discuss, and analyze with the mayor
or the mayor's representatives any city proposed policy changes and ordinances
that may have a financial effect on the pension system.
(s) The pension board
shall work to reduce administrative expenses, including by working with any
other pension fund to which the city contributes.
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No
equivalent provision.
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SECTION 3.06. Section 5,
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended by amending
Subsections (b), (e), (f), and (g) and adding Subsections (j) and (k) to
read as follows:
(b) Except as provided by
Subsection (c), (j), or (k) of this section and Sections 4 and 6 of
this Act, an employee is a group A member of the pension system as a
condition of employment if the employee:
(1) is hired or rehired as
an employee by the city, the predecessor system, or the pension system on
or after September 1, 1999, and before January 1, 2008;
(2) was a member of the
predecessor system before September 1, 1981, under the terms of Chapter
358, Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g,
Vernon's Texas Civil Statutes), and did not make an election before
December 1, 1981, under Section 22(a) of that Act to receive a refund of
contributions and become a group B member;
(3) was a group A member who
terminated employment included in the predecessor system before May 3,
1991, elected under Section 16, Chapter 358, Acts of the 48th Legislature,
Regular Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), to
leave the member's contributions in that pension fund, met the minimum
service requirements for retirement at an attained age, was reemployed in a
position included in the predecessor system before September 1, 1999, and
elected, not later than the 30th day after the date reemployment began, to
continue as a group A member;
(4) became a member of, or
resumed membership in, the predecessor system as an employee or elected
official of the city after January 1, 1996, and before September 1, 1999,
and elected by submission of a signed and notarized form in a manner
determined by the pension board to become a group A member and to
contribute a portion of the person's salary to the pension fund as required
by Chapter 358, Acts of the 48th Legislature, Regular Session, 1943
(Article 6243g, Vernon's Texas Civil Statutes); or
(5) met the requirements of
Section 3B, Chapter 358, Acts of the 48th Legislature, Regular Session,
1943 (Article 6243g, Vernon's Texas Civil Statutes), or Subsection (f) of
this section for membership in group A.
(e) Any member or former
member of the pension system elected to an office of the city on or after
September 1, 1999, and before January 1, 2008, is [becomes] a
group A member and is eligible to receive credit for all previous service
on the same conditions as reemployed group A members under Sections 7(c),
(d), (e), and (f) of this Act, except as otherwise provided by this Act. For
purposes of this subsection [Notwithstanding any other provision in
this Act or in Chapter 358, Acts of the 48th Legislature, Regular Session,
1943 (Article 6243g, Vernon's Texas Civil Statutes)], consecutive terms
of office of any elected member who is elected to an office of the city are
considered to be continuous employment for purposes of this Act.
(f) Each group B member of
the pension system may make an irrevocable election on a date and in a
manner determined by the pension board to change membership from group B to
group A:
(1) for future service only;
or
(2) for future service and
to convert all past group B service to group A service and comply with the
requirements of Subsection (h) of this section provided the service is
converted before December 31, 2005.
(g) Each group A member with
service in group B may make an irrevocable election not later than
December 31, 2005, [on a date] and in a manner determined by the
pension board to convert all group B service to group A service and to
comply with the requirements of Subsection (h) of this section.
(j) Except as provided by
Subsection (k) of this section or Section 4 of this Act, an employee is a
group D member of the pension system as a condition of employment if the
employee is hired as an employee by the city or the pension system on or
after January 1, 2008.
(k) Notwithstanding any
provision of this section, for purposes of Subsection (j) of this section:
(1) consecutive terms of
office of an elected member who is elected to an office of the city are
considered to be continuous employment; and
(2) a former employee who
is rehired as an employee by the city or the pension system on or after
January 1, 2008, is, as a condition of employment, a member of the group in
which that employee participated at the time of the employee's immediately
preceding separation from service.
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No
equivalent provision.
|
SECTION 3.07. Section 6,
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended by adding
Subsections (k) and (l) to read as follows:
(k) Notwithstanding any
other law, including Subsection (b)(3) of this section, Subsections (a)
through (j) of this section do not apply to any employee on or after
January 1, 2005. An employee who meets the definition of "executive
official" under Subsection (b)(3) of this section is a group A member
beginning January 1, 2005, for credited service earned on or after January
1, 2005, or a member of the applicable group under Section 5 of this Act.
This subsection does not affect:
(1) any credited service
or benefit percentage accrued in group C before January 1, 2005;
(2) any group C benefit
that a deferred participant or retiree is eligible to receive that was
earned before January 1, 2005; or
(3) the terms of any
obligation to purchase service credit or convert service credit to group C
that was entered into before January 1, 2005.
(l) A group C member who
terminates employment before January 1, 2005, is subject to the retirement
eligibility requirements in effect on the date of the member's termination
from employment. A group C member who becomes a group A member under
Subsection (k) of this section on January 1, 2005, is subject to the
retirement eligibility requirements under Section 10 of this Act.
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No
equivalent provision.
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SECTION 3.08. Section 7,
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended by amending
Subsections (a), (c), (e), (f), (g), and (h) and adding Subsections (g-1),
(g-2), (i), (j), (k), and (l) to read as follows:
(a) Notwithstanding any
other provision of this Act, duplication of service or credited service in
group A, B, [or] C, or D of the pension system or in the
pension system and any other defined benefit pension plan to which the city
contributes is prohibited.
(c) Except as provided by
Section 12 of this Act, a [group A] member may pay into the pension
fund and obtain credit for any service with the city or the pension system
for which credit is otherwise allowable [in group A] under this Act,
except that:
(1) no required
contributions were made by the member for the service; or
(2) refunded contributions
attributable to the service have not been subsequently repaid.
(e) To establish service
described by Subsection (c) of this section that occurred on or after
September 1, 1999, the member shall pay a sum computed by multiplying the
member's salary during the service by the rate established [by the
pension board] for member contributions under Section 8 of this Act,
and the city shall pay into the pension fund an amount equal to the rate
established for city contributions under Section 8A [8] of
this Act [multiplied by that member's salary for the same period].
(f) In addition to the
amounts to be paid by the member under Subsection (d) or (e) of this
section, the member shall also pay interest on those amounts at the current
assumed rate of return [six percent] per year, not
compounded, from the date the contributions would have been deducted, if
made, or from the date contributions were refunded to the date of repayment
of those contributions into the pension fund.
(g) Before the year 2017
effective date, if [If] a group B or group D member
separates from service before completing five years of credited service,
the member's service credit is canceled at the time of separation. If the
member is reemployed by the city in a position covered by the pension
system before the first anniversary of the date of separation, all
credit for previous service is restored. Any member whose service credit
is canceled under this subsection and who is reemployed by the city in a
position covered by the pension system after the first anniversary of
the date of separation receives one year of previous service credit in
group B or group D, as applicable, for each full year of subsequent
service up to the amount of the previous service that was canceled.
(g-1) On or after the
year 2017 effective date, if a group B or group D member who has made
required member contributions separates from service before completing five
years of credited service, the member's service credit is canceled at the
time of separation and the member is eligible to receive a refund of
required member contributions as provided by Section 17 of this Act. If
the member is reemployed before the first anniversary of the date of
separation:
(1) subject to
Subdivision (2) of this subsection, all credit for previous service for
which no member contributions were required is restored, along with credit
for previous service for which the member did not receive a refund of
contributions; and
(2) if the member's
service credit is canceled under this subsection, the member is eligible to
reinstate the canceled credited service by paying the pension system the
refund amount, if any, plus interest on those amounts at the current
assumed rate of return per year, not compounded, from the date
contributions were refunded to the date of repayment of those contributions
to the pension fund.
(g-2) For purposes of
Subsection (g-1)(2) of this section, for any canceled service for which
contributions were not required, the member receives one year of previous
service credit in group B or group D, as appropriate, for each full year of
subsequent service up to the amount of the previous service that was
canceled.
(h) A group B member who was
a group A member before September 1, 1981, and who was eligible to purchase
credit for previous service under Chapter 358, Acts of the 48th Legislature,
Regular Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), may
purchase the service credit in group B by paying into the pension fund an
amount equal to the assumed rate of return [six percent] per
year, not compounded, on any contributions previously withdrawn for the
period from the date of withdrawal to the date of purchase.
(i) Under rules and
procedures adopted by the pension board, a group D member may effectuate a
direct trustee-to-trustee transfer from a qualifying code Section 457(b)
plan to the pension system to purchase an increased or enhanced benefit in
accordance with the provisions of code Sections 415(n) and 457(e)(17) of
the Internal Revenue Code of 1986. The amount transferred under this
subsection shall be held by the pension system and the pension system may
not separately account for the amount. The pension board by rule shall
determine the additional benefit that a member is entitled to based on a
transfer under this subsection.
(j) For purposes of this
subsection and Subsection (k) of this section, "furlough time"
means the number of days a person has been furloughed. A person who has
been voluntarily or involuntarily furloughed shall receive credited service
for each day that the person has been furloughed, provided that:
(1) the pension system
receives all required city contributions and member contributions for the
credited service attributable to the furlough time for the pay period in
which the furlough occurs, based on the regular salary that each furloughed
member would have received if the member had worked during the furlough
time;
(2) the member may
receive not more than 10 days of credited service in a fiscal year for
furlough time; and
(3) credited service for
furlough time may not be used to meet the five-year requirement under
Section 10(b) of this Act for eligibility for a benefit.
(k) For purposes of
Subsection (j) of this section, the city shall establish a unique pay code
for furlough time to provide for timely payment of city contributions and
member contributions for furlough time and to allow the pension system to
identify furlough time for each furloughed employee.
(l) Notwithstanding any
provision of this section, the interest rate on any service purchase shall
be the then current assumed rate of return, not compounded.
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No
equivalent provision.
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SECTION 3.09. The heading to
Section 8, Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular
Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended to
read as follows:
Sec. 8. MEMBER
CONTRIBUTIONS.
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No
equivalent provision.
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SECTION 3.10. Sections 8(a),
(b), and (c), Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular
Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), are amended
to read as follows:
(a) Subject to
adjustments authorized under Section 8E or 8F of this Act, beginning on the
year 2017 effective date, each [Each group A] member of the
pension system shall make biweekly [monthly] contributions
during employment in an amount determined in accordance with this
section [by the pension board and expressed as a percentage of
salary]. The contributions shall be deducted by the employer from the
salary of each member and paid to the pension system for deposit in the
pension fund. Member contributions under this section shall be made as
follows:
(1) each group A member
shall contribute:
(A) seven percent of the
member's salary beginning with the member's first full biweekly pay period
that occurs on or after the year 2017 effective date; and
(B) a total of eight
percent of the member's salary beginning with the member's first full
biweekly pay period for the member that occurs on or after July 1, 2018;
(2) each group B member
shall contribute:
(A) two percent of the
member's salary beginning with the member's first full biweekly pay period
that occurs on or after the year 2017 effective date; and
(B) a total of four
percent of the member's salary beginning with the member's first full
biweekly pay period for the member that occurs on or after July 1, 2018;
and
(3) each group D member
shall contribute two percent of the member's salary beginning with the
member's first full biweekly pay period that occurs on or after the year
2017 effective date.
(b) This section does not
increase or decrease the contribution obligation of any member that arose
before the year 2017 effective date [September 1, 2001,] or
give rise to any claim for a refund for any contributions made before that
date.
(c) The employer shall pick
up the contributions required of [group A] members by Subsection (a)
of this section and contributions required of group D members under
Section 10A(a) of this Act as soon as reasonably practicable under
applicable rules for all salaries earned by members after the year
2017 effective date and by January 1, 2018, for contributions
required by Section 10A(a) of this Act. The city shall pay the pickup
contributions to the pension system from the same source of funds that is
used for paying salaries to the members. The pickup contributions are in
lieu of contributions by [group A] members. The city may pick up
those contributions by a deduction from each [group A] member's
salary equal to the amount of the member's contributions picked up by the
city. Members may not choose to receive the contributed amounts directly
instead of having the contributed amounts paid by the city to the pension
system. An accounting of member contributions picked up by the employer
shall be maintained, and the contributions shall be treated for all other
purposes as if the amount were a part of the member's salary and had been
deducted under this section. Contributions picked up under this subsection
shall be treated as employer contributions in determining tax treatment of
the amounts under the Internal Revenue Code of 1986, as amended.
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No
equivalent provision.
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SECTION 3.11. Chapter 88
(H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
6243h, Vernon's Texas Civil Statutes), is amended by adding Sections 8A,
8B, 8C, 8D, 8E, 8F, 8G, and 8H to read as follows:
Sec. 8A. CITY
CONTRIBUTIONS. (a) The city shall make contributions to the pension system
for deposit into the pension fund as provided by this section and Section
8B, 8C, 8E, or 8F of this Act, as applicable. The city shall contribute:
(1) beginning with the
year 2017 effective date and ending with the fiscal year ending June 30,
2018, an amount equal to the sum of:
(A) the city contribution
rate, as determined in the initial risk sharing valuation study conducted
under Section 8C of this Act, multiplied by the pensionable payroll for the
fiscal year; and
(B) the city contribution
amount for the fiscal year; and
(2) for each fiscal year
after the fiscal year ending June 30, 2018, an amount equal to the sum of:
(A) the city contribution
rate, as determined in a subsequent risk sharing valuation study conducted
under Section 8B of this Act and adjusted under Section 8E or 8F of this
Act, as applicable, multiplied by the pensionable payroll for the
applicable fiscal year; and
(B) except as provided by
Subsection (e) of this section, the city contribution amount for the
applicable fiscal year.
(b) Except by written
agreement between the city and the pension board under Section 3(n) of this
Act providing for an earlier contribution date, at least biweekly, the city
shall make the contributions required by Subsection (a) of this section by
depositing with the pension system an amount equal to the sum of:
(1) the city contribution
rate multiplied by the pensionable payroll for the biweekly period; and
(2) the city contribution
amount for the applicable fiscal year divided by 26.
(c) With respect to each
fiscal year:
(1) the first
contribution by the city under this section for the fiscal year shall be
made not later than the date payment is made to employees for their first
full biweekly pay period beginning on or after the first day of the fiscal
year; and
(2) the final
contribution by the city under this section for the fiscal year shall be
made not later than the date payment is made to employees for the final
biweekly pay period of the fiscal year.
(d) In addition to the
amounts required under this section, the city may at any time contribute
additional amounts to the pension system for deposit in the pension fund by
entering into a written agreement with the pension board in accordance with
Section 3(n) of this Act.
(e) If, in any given
fiscal year, the funded ratio is greater than or equal to 100 percent, the
city contribution under this section may no longer include the city
contribution amount.
(f) Contributions shall
be made under this section by the city to the pension system in order to be
credited against any amortization schedule of payments due to the pension
system under this Act.
(g) Subsection (f) of
this section does not affect the exclusion of contribution amounts under
Subsection (e) of this section or changes to an amortization schedule of a
liability layer under Section 8B(a)(7)(F), 8C(i)-(j), or 8E(c)(3)-(4) of
this Act.
Sec. 8B. RISK SHARING
VALUATION STUDIES. (a) The pension system and the city shall separately
cause their respective actuaries to prepare a risk sharing valuation study
in accordance with this section and actuarial standards of practice. A
risk sharing valuation study must:
(1) be dated as of the
first day of the fiscal year for which the study is required to be
prepared;
(2) be included in the
annual valuation study prepared under Section 2B of this Act;
(3) calculate the
unfunded actuarial accrued liability of the pension system;
(4) be based on actuarial
data provided by the pension system actuary or, if actuarial data is not
provided, on estimates of actuarial data;
(5) estimate the city
contribution rate and the city contribution amount, taking into account any
adjustments required under Section 8E or 8F of this Act for all applicable
prior fiscal years;
(6) detail the city
contribution rate and the city contribution amount, taking into account any
adjustments required under Section 8E or 8F of this Act for all applicable prior
fiscal years;
(7) subject to Subsection
(g) of this section, be based on the following assumptions and methods that
are consistent with actuarial standards of practice:
(A) an ultimate entry age
normal actuarial method;
(B) for purposes of
determining the actuarial value of assets:
(i) except as provided by
Subparagraph (ii) of this paragraph and Section 8E(c)(1) or 8F(c)(1) of
this Act, an asset smoothing method recognizing actuarial losses and gains
over a five-year period applied prospectively beginning on the year 2017
effective date; and
(ii) for the initial risk
sharing valuation study prepared under Section 8C of this Act, a
marked-to-market method applied as of June 30, 2016;
(C) closed layered
amortization of liability layers to ensure that the amortization period for
each layer begins 12 months after the date of the risk sharing valuation
study in which the liability layer is first recognized;
(D) each liability layer
is assigned an amortization period;
(E) each liability loss
layer amortized over a period of 30 years from the first day of the fiscal
year beginning 12 months after the date of the risk sharing valuation study
in which the liability loss layer is first recognized, except that the
legacy liability must be amortized from July 1, 2016, for a 30-year period
beginning July 1, 2017;
(F) the amortization
period for each liability gain layer being:
(i) equal to the
remaining amortization period on the largest remaining liability loss layer
and the two layers must be treated as one layer such that if the payoff
year of the liability loss layer is accelerated or extended, the payoff
year of the liability gain layer is also accelerated or extended; or
(ii) if there is no
liability loss layer, a period of 30 years from the first day of the fiscal
year beginning 12 months after the date of the risk sharing valuation study
in which the liability gain layer is first recognized;
(G) liability layers,
including the legacy liability, funded according to the level percent of
payroll method;
(H) the assumed rate of
return, subject to adjustment under Section 8E(c)(5) of this Act or, if
Section 8C(g) of this Act applies, adjustment in accordance with a written
agreement entered into under Section 3(n) of this Act, except that the
assumed rate of return may not exceed seven percent per annum;
(I) the price inflation
assumption as of the most recent actuarial experience study, which may be
reset by the pension board by plus or minus 50 basis points based on that
actuarial experience study;
(J) projected salary
increases and payroll growth rate set in consultation with the city's
finance director;
(K) payroll for purposes
of determining the corridor midpoint, city contribution rate, and city
contribution amount must be projected using the annual payroll growth rate
assumption; and
(L) the city contribution
rate calculated without inclusion of the legacy liability; and
(8) be revised and
restated, if appropriate, not later than:
(A) the date required by
a written agreement entered into between the city and the pension board; or
(B) the 30th day after
the date required action is taken by the pension board under Section 8E or
8F of this Act to reflect any changes required by either section.
(b) As soon as
practicable after the end of a fiscal year, the pension system actuary at
the direction of the pension system and the city actuary at the direction
of the city shall separately prepare a proposed risk sharing valuation
study based on the fiscal year that just ended.
(c) Not later than October
31 following the end of the fiscal year, the pension system shall provide
to the city actuary, under a confidentiality agreement with the pension
board in which the city actuary agrees to comply with the confidentiality
provisions of Section 8G of this Act, the actuarial data described by
Subsection (a)(4) of this section.
(d) Not later than the
150th day after the last day of the fiscal year:
(1) the pension system
actuary, at the direction of the pension system, shall provide the proposed
risk sharing valuation study prepared by the pension system actuary under
Subsection (b) of this section to the city actuary; and
(2) the city actuary, at
the direction of the city, shall provide the proposed risk sharing
valuation study prepared by the city actuary under Subsection (b) of this
section to the pension system actuary.
(e) Each actuary
described by Subsection (d) of this section may provide copies of the
proposed risk sharing valuation studies to the city or the pension system
as appropriate.
(f) If, after exchanging
proposed risk sharing valuation studies under Subsection (d) of this
section, it is found that the difference between the estimated city
contribution rate recommended in the proposed risk sharing valuation study
prepared by the pension system actuary and the estimated city contribution
rate recommended in the proposed risk sharing valuation study prepared by
the city actuary for the corresponding fiscal year is:
(1) less than or equal to
two percentage points, the estimated city contribution rate recommended by
the pension system actuary will be the estimated city contribution rate for
purposes of Subsection (a)(5) of this section, and the proposed risk
sharing valuation study prepared for the pension system is considered to be
the final risk sharing valuation study for the fiscal year for the purposes
of this Act; or
(2) greater than two
percentage points, the city actuary and the pension system actuary shall
have 20 business days to reconcile the difference, provided that without
the mutual agreement of both actuaries, the difference in the estimated
city contribution rate recommended by the city actuary and the estimated
city contribution rate recommended by the pension system actuary may not be
further increased and:
(A) if, as a result of
reconciliation efforts under this subdivision, the difference is reduced to
less than or equal to two percentage points:
(i) the estimated city
contribution rate proposed under the reconciliation by the pension system
actuary will be the estimated city contribution rate for purposes of
Subsection (a)(5) of this section; and
(ii) the pension system's
risk sharing valuation study is considered to be the final risk sharing
valuation study for the fiscal year for the purposes of this Act; or
(B) if, after 20 business
days, the pension system actuary and the city actuary are not able to reach
a reconciliation that reduces the difference to an amount less than or
equal to two percentage points:
(i) the city actuary at
the direction of the city and the pension system actuary at the direction
of the pension system each shall deliver to the finance director of the
city and the executive director of the pension system a final risk sharing
valuation study with any agreed-to changes, marked as the final risk
sharing valuation study for each actuary; and
(ii) not later than the
90th day before the first day of the next fiscal year, the finance director
and the executive director shall execute a joint addendum to the final risk
sharing valuation study received under Subparagraph (i) of this paragraph
that is a part of the final risk sharing valuation study for the fiscal
year for all purposes and reflects the arithmetic average of the estimated
city contribution rates for the fiscal year stated by the city actuary and
the pension system actuary in the final risk sharing valuation study for
purposes of Subsection (a)(5) of this section, and for reporting purposes
the pension system may treat the pension system actuary's risk sharing
valuation study with the addendum as the final risk sharing valuation
study.
(g) The assumptions and
methods used and the types of actuarial data and financial information used
to prepare the initial risk sharing valuation study under Section 8C of
this Act shall be used to prepare each subsequent risk sharing valuation
study under this section, unless changed based on the actuarial experience
study conducted under Section 8D of this Act.
(h) The actuarial data
provided under Subsection (a)(4) of this section may not include the identifying
information of individual members.
Sec. 8C. INITIAL RISK
SHARING VALUATION STUDIES; CORRIDOR MIDPOINT AND CITY CONTRIBUTION
AMOUNTS. (a) The pension system and the city shall separately cause their
respective actuaries to prepare an initial risk sharing valuation study
that is dated as of July 1, 2016, in accordance with this section. An
initial risk sharing valuation study must:
(1) except as otherwise
provided by this section, be prepared in accordance with Section 8B of this
Act, and for purposes of Section 8B(a)(4) of this Act, be based on
actuarial data as of June 30, 2016;
(2) project the corridor
midpoint for 31 fiscal years beginning with the fiscal year beginning July
1, 2017; and
(3) subject to
Subsections (i) and (j) of this section, include a schedule of city
contribution amounts for 30 fiscal years beginning with the fiscal year
beginning July 1, 2017.
(b) If the initial risk
sharing valuation study has not been prepared consistent with this section
before the year 2017 effective date, as soon as practicable after the year
2017 effective date:
(1) the pension system
shall provide to the city actuary under a confidentiality agreement the
necessary actuarial data used by the pension system actuary to prepare the
proposed initial risk sharing valuation study; and
(2) not later than the
30th day after the date the city's actuary receives the actuarial data:
(A) the city actuary, at
the direction of the city, shall provide a proposed initial risk sharing
valuation study to the pension system actuary; and
(B) the pension system
actuary, at the direction of the pension system, shall provide a proposed
initial risk sharing valuation study to the city actuary.
(c) If, after exchanging
proposed initial risk sharing valuation studies under Subsection (b)(2) of
this section, it is determined that the difference between the estimated
total city contribution divided by the pensionable payroll for any fiscal
year in the proposed initial risk sharing valuation study prepared by the
pension system actuary and in the proposed initial risk sharing valuation
study prepared by the city actuary is:
(1) less than or equal to
two percentage points, the estimated city contribution rate and the
estimated city contribution amount for that fiscal year recommended by the
pension system actuary will be the estimated city contribution rate and the
estimated city contribution amount, as applicable, for purposes of Section
8B(a)(5) of this Act; or
(2) greater than two
percentage points, the city actuary and the pension system actuary shall
have 20 business days to reconcile the difference and:
(A) if, as a result of
reconciliation efforts under this subdivision, the difference in any fiscal
year is reduced to less than or equal to two percentage points, the city contribution
rate and the city contribution amount recommended by the pension system
actuary for that fiscal year will be the estimated city contribution rate
and the estimated city contribution amount, as applicable, for purposes of
Section 8B(a)(5) of this Act; or
(B) if, after 20 business
days, the city actuary and the pension system actuary are not able to reach
a reconciliation that reduces the difference to an amount less than or
equal to two percentage points for any fiscal year:
(i) the city actuary at
the direction of the city and the pension system actuary at the direction
of the pension system each shall deliver to the finance director of the
city and the executive director of the pension system a final initial risk
sharing valuation study with any agreed-to changes, marked as the final
initial risk sharing valuation study for each actuary; and
(ii) the finance director
and the executive director shall execute a joint addendum to the final
initial risk sharing valuation study that is a part of each final initial
risk sharing valuation study for all purposes and that reflects the
arithmetic average of the estimated city contribution rate and the
estimated city contribution amount for each fiscal year in which the
difference was greater than two percentage points for purposes of Section
8B(a)(5) of this Act, and for reporting purposes the pension system may
treat the pension system actuary's initial risk sharing valuation study
with the addendum as the final initial risk sharing valuation study.
(d) In preparing the
initial risk sharing valuation study, the city actuary and pension system
actuary shall:
(1) adjust the actuarial
value of assets to be equal to the market value of assets as of July 1,
2016;
(2) assume the issuance
of planned pension obligation bonds by December 31, 2017; and
(3) assume benefit and
contribution changes under this Act as of the year 2017 effective date.
(e) If the city actuary
does not prepare an initial risk sharing valuation study for purposes of
this section, the pension system actuary's initial risk sharing valuation
study will be used as the final risk sharing valuation study for purposes
of this Act unless the city did not prepare a proposed initial risk sharing
valuation study because the pension system actuary did not provide the
necessary actuarial data in a timely manner. If the city did not prepare a
proposed initial risk sharing valuation study because the pension system
actuary did not provide the necessary actuarial data in a timely manner,
the city actuary shall have 60 days to prepare the proposed initial risk
sharing valuation study on receipt of the necessary information.
(f) If the pension system
actuary does not prepare a proposed initial risk sharing valuation study
for purposes of this section, the proposed initial risk sharing valuation
study prepared by the city actuary will be the final risk sharing valuation
study for purposes of this Act.
(g) The city and the
pension board may agree on a written transition plan for resetting the
corridor midpoint:
(1) if at any time the
funded ratio is equal to or greater than 100 percent; or
(2) for any fiscal year
after the payoff year of the legacy liability.
(h) If the city and the
pension board have not entered into an agreement described by Subsection (g)
of this section in a given fiscal year, the corridor midpoint will be the
corridor midpoint determined for the 31st fiscal year in the initial risk
sharing valuation study prepared in accordance with this section.
(i) If the city makes a
contribution to the pension system of at least $5 million more than the
amount that would be required by Section 8A(a) of this Act, a liability
gain layer with the same remaining amortization period as the legacy
liability is created. In each subsequent risk sharing valuation study until
the end of that amortization period, the city contribution amount must be
decreased by the amortized amount in each fiscal year covered by the
liability gain layer.
(j) Notwithstanding any
other provision of this Act, including Section 8H of this Act:
(1) if the city fails to
deliver the proceeds of pension obligation bonds totaling $250 million on
or before January 2, 2018, the pension board shall have 30 days from
January 2, 2018, to rescind, prospectively, any or all benefit changes made
effective under H.B. No. 43, Acts of the 85th Legislature, Regular Session,
2017, as of the year 2017 effective date, or to reestablish the deadline
for the delivery of pension obligation bond proceeds, reserving the right
to rescind the benefit changes authorized by this subdivision if the bond
proceeds are not delivered by the reestablished deadline; and
(2) subject to Subsection
(k) of this section, if the pension board rescinds benefit changes under
Subdivision (1) of this subsection or pension obligation bond proceeds are
not delivered on or before the deadline or reestablished deadline
prescribed by Subdivision (1) of this subsection, the initial risk sharing
valuation study shall be prepared again and restated without assuming the
delivery of the pension obligation bond proceeds, the extended time for
delivery of pension obligation bond proceeds, or the rescinded benefit
changes, as applicable, including a reamortization of the city contribution
amount for the amortization period remaining for the legacy liability, and
the resulting city contribution rate and city contribution amount will
become effective in the fiscal year following the completion of the
restated initial risk sharing valuation study.
(k) The restated initial
risk sharing valuation study required under Subsection (j)(2) of this
section must be completed at least 30 days before the start of the fiscal
year:
(1) ending June 30, 2019,
if the pension board does not reestablish the deadline under Subsection
(j)(1) of this section; or
(2) immediately following
the reestablished deadline, if the pension board reestablishes the deadline
under Subsection (j)(1) of this section and the city fails to deliver the
pension obligation bond proceeds described by Subsection (j)(1) of this
section by the reestablished deadline.
Sec. 8D. ACTUARIAL
EXPERIENCE STUDIES. (a) At least once every four years, the pension
system actuary, at the direction of the pension system, shall conduct an
actuarial experience study in accordance with actuarial standards of
practice. The actuarial experience study required by this subsection must
be completed not later than September 30 of the year in which the study is
required to be conducted.
(b) Except as otherwise
expressly provided by Sections 8B(a)(7)(A)-(I) of this Act, actuarial
assumptions and methods used in the preparation of a risk sharing valuation
study, other than the initial risk sharing valuation study, shall be based
on the results of the most recent actuarial experience study.
(c) Not later than the
180th day before the date the pension board may consider adopting any
assumptions and methods for purposes of Section 8B of this Act, the pension
system shall provide the city actuary with a substantially final draft of
the pension system's actuarial experience study, including:
(1) all assumptions and
methods recommended by the pension system actuary; and
(2) summaries of the
reconciled actuarial data used in creation of the actuarial experience
study.
(d) Not later than the
60th day after the date the city receives the final draft of the pension
system's actuarial experience study under Subsection (c) of this section,
the city actuary and pension system actuary may communicate concerning the
assumptions and methods used in the actuarial experience study. During the
period prescribed by this subsection, the pension system actuary may modify
the recommended assumptions in the draft actuarial experience study to
reflect any changes to assumptions and methods to which the pension system
actuary and the city actuary agree.
(e) At the city actuary's
written request, the pension system shall provide additional actuarial data
used by the pension system actuary to prepare the draft actuarial
experience study, provided that confidential data may only be provided
subject to a confidentiality agreement entered into between the pension
system and the city actuary.
(f) The city actuary, at
the direction of the city, shall provide in writing to the pension system
actuary and the pension system:
(1) any assumptions and
methods recommended by the city actuary that differ from the assumptions
and methods recommended by the pension system actuary; and
(2) the city actuary's
rationale for each method or assumption the actuary recommends and
determines to be consistent with standards adopted by the Actuarial
Standards Board.
(g) Not later than the
30th day after the date the pension system actuary receives the city
actuary's written recommended assumptions and methods and rationale under
Subsection (f) of this section, the pension system shall provide a written
response to the city identifying any assumption or method recommended by
the city actuary that the pension system does not accept. If any
assumption or method is not accepted, the pension system shall recommend to
the city the names of three independent actuaries for purposes of this
section.
(h) An actuary may only
be recommended, selected, or engaged by the pension system as an
independent actuary under this section if the person:
(1) is not already
engaged by the city, the pension system, or any other pension system or
fund authorized under Article 6243e.2(1) or 6243g-4, Revised Statutes, to
provide actuarial services to the city, the pension system, or another
pension system or fund referenced in this subdivision;
(2) is a member of the
American Academy of Actuaries; and
(3) has at least five
years of experience as an actuary working with one or more public
retirement systems with assets in excess of $1 billion.
(i) Not later than the
20th day after the date the city receives the list of three independent
actuaries under Subsection (g) of this section, the city shall identify and
the pension system shall hire one of the listed independent actuaries on
terms acceptable to the city and the pension system to perform a scope of
work acceptable to the city and the pension system. The city and the
pension system each shall pay 50 percent of the cost of the independent
actuary engaged under this subsection. The city shall be provided the
opportunity to participate in any communications between the independent
actuary and the pension system concerning the engagement, engagement terms,
or performance of the terms of the engagement.
(j) The independent
actuary engaged under Subsection (i) of this section shall receive on
request from the city or the pension system:
(1) the pension system's
draft actuarial experience study, including all assumptions and methods
recommended by the pension system actuary;
(2) summaries of the
reconciled actuarial data used to prepare the draft actuarial experience
study;
(3) the city actuary's
specific recommended assumptions and methods together with the city
actuary's written rationale for each recommendation;
(4) the pension system
actuary's written rationale for its recommendations; and
(5) if requested by the
independent actuary and subject to a confidentiality agreement between the
pension system and the independent actuary, additional confidential
actuarial data.
(k) Not later than the
30th day after the date the independent actuary receives all the requested
information under Subsection (j) of this section, the independent actuary
shall advise the pension system and the city whether it agrees with the
assumption or method recommended by the city actuary or the corresponding
method or assumption recommended by the pension system actuary, together
with the independent actuary's rationale for making the determination.
During the period prescribed by this subsection, the independent actuary
may discuss recommendations in simultaneous consultation with the pension
system actuary and the city actuary.
(l) The pension system
and the city may not seek any information from any prospective independent
actuary about possible outcomes of the independent actuary's review.
(m) If an independent
actuary has questions or concerns regarding an engagement entered into
under this section, the independent actuary shall simultaneously consult
with both the city actuary and the pension system actuary regarding the
questions or concerns. This subsection does not limit the pension system's
authorization to take appropriate steps to complete the engagement of the
independent actuary on terms acceptable to both the pension system and the
city or to enter into a confidentiality agreement with the independent
actuary, if needed.
(n) If the pension board
does not adopt an assumption or method recommended by the city actuary or
pension system actuary, including an assumption or method to which the
independent actuary agrees, the city actuary is authorized to use that
recommended assumption or method in connection with preparation of a
subsequent risk sharing valuation study under Section 8B of this Act until
the risk sharing valuation study following the next actuarial experience
study is prepared.
Sec. 8E. CITY
CONTRIBUTION RATE WHEN ESTIMATED CITY CONTRIBUTION RATE LOWER THAN CORRIDOR
MIDPOINT; AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a) This section governs
the determination of the city contribution rate applicable in a fiscal year
if the estimated city contribution rate is lower than the corridor
midpoint.
(b) If the funded ratio
is:
(1) less than 90 percent,
the city contribution rate for the fiscal year equals the corridor
midpoint; or
(2) equal to or greater
than 90 percent and the city contribution rate is:
(A) equal to or greater
than the minimum contribution rate, the estimated city contribution rate is
the city contribution rate for the fiscal year; or
(B) except as provided by
Subsection (e) of this section, less than the minimum contribution rate for
the corresponding fiscal year, the city contribution rate for the fiscal
year equals the minimum contribution rate achieved in accordance with
Subsection (c) of this section.
(c) For purposes of
Subsection (b)(2)(B) of this section, the following adjustments shall be
applied sequentially to the extent required to increase the estimated city
contribution rate to equal the minimum contribution rate:
(1) first, adjust the
actuarial value of assets equal to the current market value of assets, if
making the adjustment causes the city contribution rate to increase;
(2) second, under a
written agreement between the city and the pension board under Section 3(n)
of this Act entered into not later than the 30th day before the first day
of the next fiscal year, prospectively restore all or part of any benefit
reductions or reduce increased employee contributions, in each case made
after the year 2017 effective date;
(3) third, accelerate the
payoff year of the legacy liability by offsetting the remaining legacy
liability by the amount of the new liability loss layer, provided that
during the accelerated period the city will continue to pay the city
contribution amount as scheduled in the initial risk sharing valuation
study, subject to Section 8C(i) or (j) of this Act;
(4) fourth, accelerate
the payoff year of existing liability loss layers, excluding the legacy
liability, by accelerating the oldest liability loss layers first, to an
amortization period of not less than 20 years from the first day of the
fiscal year beginning 12 months after the date of the risk sharing
valuation study in which the liability loss layer is first recognized; and
(5) fifth, under a
written agreement between the city and the pension board under Section 3(n)
of this Act entered into not later than the 30th day before the first day
of the next fiscal year, the city and the pension board may agree to reduce
the assumed rate of return.
(d) If the funded ratio
is:
(1) equal to or greater
than 100 percent:
(A) all existing liability
layers, including the legacy liability, are considered fully amortized and
paid;
(B) the city contribution
amount may no longer be included in the city contribution under Section 8A
of this Act; and
(C) the city and the
pension system may mutually agree to change assumptions in a written
agreement entered into between the city and the pension board under Section
3(n) of this Act; and
(2) greater than 100
percent in a written agreement between the city and the pension system
entered into under Section 3(n) of this Act, the pension system may reduce
member contributions or increase pension benefits if as a result of the
action:
(A) the funded ratio is
not less than 90 percent; and
(B) the city contribution
rate is not more than the minimum contribution rate.
(e) Except as provided by
Subsection (f) of this section, if an agreement under Subsection (d) of
this section is not reached on or before the 30th day before the first day
of the next fiscal year, before the first day of the next fiscal year, the
pension board shall reduce member contributions and implement or increase
cost-of-living adjustments, but only to the extent that the city
contribution rate is set at or below the minimum contribution rate and the
funded ratio is not less than 90 percent.
(f) If any member
contribution reduction or benefit increase under Subsection (e) of this
section has occurred within the previous three fiscal years, the pension
board may not make additional adjustments to benefits, and the city
contribution rate must be set to equal the minimum contribution rate.
Sec. 8F. CITY
CONTRIBUTION RATE WHEN ESTIMATED CITY CONTRIBUTION RATE EQUAL TO OR GREATER
THAN CORRIDOR MIDPOINT; AUTHORIZATION FOR CERTAIN ADJUSTMENTS. (a) This
section governs the determination of the city contribution rate in a fiscal
year when the estimated city contribution rate is equal to or greater than
the corridor midpoint.
(b) If the estimated city
contribution rate is:
(1) less than or equal to
the maximum contribution rate for the corresponding fiscal year, the
estimated city contribution rate is the city contribution rate; or
(2) except as provided by
Subsection (d) or (f) of this section, greater than the maximum
contribution rate for the corresponding fiscal year, the city contribution
rate equals the corridor midpoint achieved in accordance with Subsection
(c) of this section.
(c) For purposes of
Subsection (b)(2) of this section, the following adjustments shall be
applied sequentially to the extent required to decrease the estimated city
contribution rate to equal the corridor midpoint:
(1) first, adjust the
actuarial value of assets to the current market value of assets, if making
the adjustment causes the city contribution rate to decrease;
(2) second, if the payoff
year of the legacy liability was accelerated under Section 8E(c) of this
Act:
(A) extend the payoff
year of the legacy liability by increasing the legacy liability by the
amount of the new liability gain layer to a maximum amount; and
(B) during the extended
period provided by Paragraph (A) of this subdivision, the city shall
continue to pay the city contribution amount for the extended period in
accordance with the schedule included in the initial risk sharing valuation
study, subject to Section 8C(i) or (j) of this Act; and
(3) third, if the payoff
year of a liability loss layer other than the legacy liability was
previously accelerated under Section 8E(c) of this Act, extend the payoff
year of existing liability loss layers, excluding the legacy liability, by extending
the most recent loss layers first, to a payoff year not later than 30 years
from the first day of the fiscal year beginning 12 months after the date of
the risk sharing valuation study in which the liability loss layer is first
recognized.
(d) If the city
contribution rate after adjustment under Subsection (c) of this section is
greater than the third quarter line rate, the city contribution rate equals
the third quarter line rate. To the extent necessary to comply with this
subsection, the city and the pension board shall enter into a written
agreement under Section 3(n) of this Act to increase member contributions
and make other benefit or plan changes not otherwise prohibited by
applicable federal law or regulations.
(e) Gains resulting from adjustments
made as the result of a written agreement between the city and the pension
board under Subsection (d) of this section may not be used as a direct
offset against the city contribution amount in any fiscal year.
(f) If an agreement under
Subsection (d) of this section is not reached on or before the 30th day
before the first day of the next fiscal year, before the start of the next
fiscal year to which the city contribution rate would apply, the pension
board, to the extent necessary to set the city contribution rate equal to
the third quarter line rate, shall:
(1) increase member
contributions; and
(2) decrease
cost-of-living adjustments.
(g) If the city
contribution rate remains greater than the corridor midpoint in the third
fiscal year after adjustments are made in accordance with an agreement
under Subsection (d) of this section, in that fiscal year the city
contribution rate equals the corridor midpoint achieved in accordance with
Subsection (h) of this section.
(h) The city contribution
rate must be set at the corridor midpoint under Subsection (g) of this
section by:
(1) in the risk sharing
valuation study for the third fiscal year described by Subsection (g) of
this section, adjusting the actuarial value of assets to equal the current market
value of assets, if making the adjustment causes the city contribution rate
to decrease; and
(2) under a written
agreement entered into between the city and the pension board under Section
3(n) of this Act:
(A) increasing member
contributions; and
(B) making any other
benefit or plan changes not otherwise prohibited by applicable federal law
or regulations.
(i) If an agreement under
Subsection (h)(2) of this section is not reached on or before the 30th day
before the first day of the next fiscal year, before the start of the next
fiscal year, the pension board, to the extent necessary to set the city
contribution rate equal to the corridor midpoint, shall:
(1) increase member
contributions; and
(2) decrease
cost-of-living adjustments.
Sec. 8G. CONFIDENTIALITY.
(a) The information, data, and document exchanges under Sections 8A
through 8F of this Act have all the protections afforded by applicable law
and are expressly exempt from the disclosure requirements under Chapter
552, Government Code, except as may be agreed to by the city and pension
system in a written agreement under Section 3(n) of this Act.
(b) Subsection (a) of
this section does not apply to final risk sharing valuation studies
prepared under Sections 8B and 8C of this Act.
(c) A risk sharing
valuation study prepared by either the city actuary or the pension system
actuary under Sections 8A through 8F of this Act may not:
(1) include information
in a form that includes identifiable information relating to a specific
individual; or
(2) provide confidential
or private information regarding specific individuals or be grouped in a
manner that allows confidential or private information regarding a specific
individual to be discerned.
Sec. 8H. UNILATERAL
DECISIONS AND ACTIONS PROHIBITED. No unilateral decision or action by the
pension board is binding on the city and no unilateral decision or action
by the city is binding on the pension system with respect to the
application of Sections 8A through 8F of this Act unless expressly provided
by a provision of those sections. Nothing in this section is intended to
limit the powers or authority of the pension board.
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No
equivalent provision.
|
SECTION 3.12. Section 9(c),
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended to read as
follows:
(c) If a member dies and
there are no eligible survivors to receive the allowance provided for in
Section 14 of this Act, the member's spouse [beneficiary] or,
if there is no spouse [beneficiary], the member's estate
shall receive the refund amount.
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No
equivalent provision.
|
SECTION 3.14. Chapter 88
(H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001 (Article
6243h, Vernon's Texas Civil Statutes), is amended by adding Section 10A to
read as follows:
Sec. 10A. GROUP D MEMBER
HYBRID COMPONENT. (a) On and after January 1, 2018, in addition to the
group D member contributions under Section 8 of this Act, each group D
member shall contribute one percent of the member's salary for each
biweekly pay period beginning with the member's first full biweekly pay
period after the later of January 1, 2018, or the group D member's first
date of employment. The contribution required by this subsection:
(1) shall be picked up
and paid in the same manner and at the same time as group D member
contributions required under Section 8(a)(3) of this Act, subject to
applicable rules;
(2) is separate from and
in addition to the group D member contribution under Section 8(a)(3) of
this Act; and
(3) is not subject to
reduction or increase under Sections 8A through 8F of this Act or a refund
under Section 17 of this Act.
(b) For each biweekly pay
period of a group D member's service for which the group D member makes the
contribution required under Subsection (a) of this section, the following
amounts shall be credited to a notional account, known as a cash balance
account, for the group D member:
(1) the amount of the
contributions paid under Subsection (a) of this section for that biweekly
pay period; and
(2) interest on the
balance of the group D member's cash balance account determined by
multiplying:
(A) an annual rate that
is one-half the pension system's five-year investment return based on a
rolling five-fiscal-year basis and net of investment expenses, with a
minimum annual rate of 2.5 percent and a maximum annual rate of 7.5
percent, and divided by 26; and
(B) the amount credited
to the group D member's cash balance account as of the end of the biweekly
pay period.
(c) The pension system
may not pay interest on amounts credited to a cash balance account but not
received by the pension system under Subsection (b) of this section.
(d) On separation from
service, a group D member is eligible to receive only a distribution of the
contributions credited to that group D member's cash balance account,
without interest, if the group D member has attained less than one year of
service while contributing to the cash balance account. If a group D
member attains less than one year of service while contributing to the cash
balance account, the group D member is fully vested in the accrued benefit
represented by that group D member's cash balance account, including
interest.
(e) In a manner and form
prescribed by the pension board, a group D member who terminates employment
is eligible to elect to receive the group D member's cash balance account
benefit in a lump-sum payment, in substantially equal periodic payments, in
a partial lump-sum payment followed by substantially equal periodic
payments, or in partial payments from the group D member's cash balance
account.
(f) Contributions may not
be made to a group D member's cash balance account for a period that occurs
after the date the group D member terminates employment, except that
interest at a rate that is not greater than the rate under Subsection
(b)(2) of this section, as determined by the pension board, may be credited
based on the former group D member's undistributed cash balance account
after the date the group D member terminates employment.
(g) On the death of a
group D member or former group D member before the full distribution of the
member's cash balance account, the deceased member's cash balance account
shall be payable in a single lump-sum payment to:
(1) the deceased member's
surviving spouse;
(2) if there is no
surviving spouse, each designated beneficiary of the deceased member,
designated in the manner and on a form prescribed by the pension board; or
(3) if there is no
designated beneficiary, the deceased member's estate.
(h) The lump-sum payment
described by Subsection (g) of this section shall be made within a
reasonable time after the pension board has determined that the individual
or estate is eligible for the distribution.
(i) Subject to the other
provisions of this section, the pension board may adopt rules necessary to
implement this section, including rules regarding the payment of the cash
balance account and limitations on the timing and frequency of payments.
All distributions and changes in the form of distribution must be made in a
manner and at a time that complies with the Internal Revenue Code of 1986.
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No
equivalent provision.
|
SECTION 3.15. Section 11,
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended to read as
follows:
Sec. 11. OPTION-ELIGIBLE
PARTICIPANTS [GROUP B RETIREMENT OPTIONS]. (a) In this
section, "J&S Annuity" means payment of a normal retirement
pension or early retirement pension under one of the options provided by
Subsection (b) of this section.
(a-1) For purposes of
this section, an option-eligible participant is:
(1) a former group A or
group B member who terminates employment with the city or the pension
system on or after June 30, 2011, and who is eligible to receive a normal
retirement pension, provided the member was not married as of the date of
the member's termination of employment;
(2) a former group B
member who terminated employment with the city or the predecessor system
before September 1, 1997, and who is eligible to receive a normal
retirement pension; or
(3) a former group D
member who terminated employment with the city or the pension system and
who is eligible to receive a normal retirement pension or an early
retirement pension.
(a-2) The pension board,
in its sole discretion, shall make determinations regarding an individual's
status as an option-eligible participant.
(a-3) Before the date an
option-eligible participant commences receipt of a benefit, that
option-eligible participant [A group B member who terminated
employment with the city or the predecessor system before September 1,
1997,] must elect, in a manner and at a time determined by the
pension board, [before the member's effective retirement date]
whether to receive [have] the participant's [member's]
normal retirement pension or early retirement pension, as applicable, or
to have the option-eligible participant's normal retirement pension or
early retirement pension, as applicable, paid under one of the options
provided by Subsection (b) of this section. The election may be revoked,
in a manner and at a time established by the pension board, not later than
the 60th day before the date the participant commences receipt of a
benefit [member's effective retirement date].
(b) The normal retirement
pension or early retirement pension may be one of the following actuarially
equivalent amounts:
(1) option 1: a reduced
pension payable to the participant [member], then on the participant's
[member's] death one-half of the amount of that reduced pension is
payable to the participant's [member's] designated survivor,
for life;
(2) option 2: a reduced
pension payable to the participant [member], then on the participant's
[member's] death that same reduced pension is payable to the participant's
[member's] designated survivor, for life; and
(3) option 3: a reduced
pension payable to the participant [member], and if the participant
[member] dies within 10 years, the pension is paid to the participant's
[member's] designated survivor for the remainder of the 10-year
period beginning on the participant's benefit commencement [member's
effective retirement] date.
(c) If an option-eligible
participant [a former group B member] who has made the election
provided by Subsection (b) of this section dies after terminating
employment with at least five years of credited service but before
attaining the age required to begin receiving a normal or early retirement
pension, the person's designated survivor is eligible for the J&S Annuity
[benefits] provided by the option selected by the option-eligible
participant [former member] at the time of separation from
service. The benefits first become payable to an eligible designated
survivor on the date the option-eligible participant [former
member] would have become eligible to begin receiving a pension. If
the designated survivor elects for earlier payment, in a time and manner
determined by the pension board, the actuarial equivalent of that amount
shall be payable at that earlier date.
(d) A survivor benefit
under Subsection (c) of this section or a J&S Annuity is not payable
if:
(1) except as provided by
Subsection (e) of this section, an option-eligible participant [If a
former group B member under Subsection (a) of this section] does not
elect one of the J&S Annuity options under Subsection (b) of
this section and dies before retirement has commenced;
(2) an option-eligible
participant elects a normal retirement pension or early retirement pension
and dies before retirement has commenced; or
(3) an option-eligible
participant dies after retirement has commenced and that option-eligible
participant:
(A) elected a normal
retirement pension or early retirement pension;
(B) did not make a valid
election under Subsection (b) of this section; or
(C) made an election that
is void [, a survivor benefit is not payable].
(e) An option-eligible
participant described by Subsection (a-1)(3) of this section who did not
elect one of the J&S Annuity options under Subsection (b) of this
section is considered to have elected a J&S Annuity option under
Subsection (b)(1) of this section and to have designated the participant's
surviving spouse as the optional annuitant if the participant:
(1) was not in service
with the city or the pension system at the time of the participant's death;
(2) is survived by a
surviving spouse; and
(3) dies before the
participant's retirement has commenced.
(f) If the
option-eligible participant described by Subsection (e) of this section has
no surviving spouse, a survivor benefit or J&S Annuity is not payable.
If a J&S Annuity is paid under Subsection (e) of this section, a
survivor benefit is not payable under this subsection or under Section 14
of this Act.
(g) If Subsection (d) of
this section would otherwise apply to prohibit the payment of a survivor
benefit or J&S Annuity, but there is one or more dependent children of
the deceased option-eligible participant, the provisions of Section 14 of
this Act control the payment of survivor benefits to the dependent child or
children. The pension system may not pay both a J&S Annuity under this
section and a survivor benefit under Section 14 of this Act with respect to
any option-eligible participant. If a J&S Annuity is paid under
Subsection (e) of this section, a survivor benefit is not payable.
(h) If an option-eligible
participant has previously elected a J&S Annuity for a previous period
of service, no benefits have been paid under that previous election, and
the option-eligible participant terminates employment on or after January
1, 2012, the previous election is void and the option-eligible participant
shall make an election under Subsection (b) of this section to apply to all
periods of service.
(i) If a former group B
member with service before September 1, 1997, was rehired in a covered
position and converted the group B service covered by a J&S Annuity to
group A service, and that member terminates employment on or after January
1, 2012, and is not an option-eligible participant at the time of the
member's subsequent termination, the previous election is void and survivor
benefits for an eligible survivor, if any, are payable as provided by
Section 14 of this Act, provided benefits were not paid under the previous
election.
(j) If an option-eligible
participant who elects a J&S Annuity under this section designates the
participant's spouse as a designated survivor and the marriage is later
dissolved by divorce, annulment, or a declaration that the marriage is void
before the participant's retirement, the designation is void unless the
participant reaffirms the designation after the marriage was dissolved.
(k) A J&S Annuity
payable to a designated survivor of a retired option-eligible participant
is effective on the first day of the month following the month of the
option-eligible participant's death and ceases on the last day of the month
of the designated survivor's death or on the last day of the month in which
the survivor otherwise ceases to be eligible to receive a J&S Annuity.
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No
equivalent provision.
|
SECTION 3.16. Section
12(a)(5), Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular
Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), is amended to
read as follows:
(5) "DROP entry
date" means the date a member ceases to earn service credit and begins
earning credit for the member's DROP account, which is the later of the
date the member is eligible to participate in the DROP, the date requested
by the member, or October 1, 1997, as approved by the pension board. The
DROP entry date is the first day of a month and is determined by the normal
retirement eligibility requirements of this Act or of Chapter 358, Acts of
the 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas
Civil Statutes), as applicable, in effect on the requested DROP entry
date. A member who enters DROP on or after January 1, 2005, may not
have a DROP entry date that occurs before the date the pension system
receives the member's request to participate in DROP.
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No
equivalent provision.
|
SECTION 3.17. Section 12,
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended by adding
Subsections (b-1), (d-1), (o-1), (r), (s), and (t) and amending Subsections
(d), (f), (g), (h), (j), (k), (m), (o), and (p) to read as follows:
(b-1) Notwithstanding
Subsection (b) of this section, for DROP participation beginning on or
after January 1, 2005, a member must meet the normal retirement eligibility
requirements under Section 10(b) or (c) of this Act to be eligible to elect
to participate in DROP. This subsection does not apply to a member who:
(1) met the eligibility
requirements under Section 10(b) of this Act in effect before January 1,
2005; or
(2) before January 1,
2005, had at least five years of credited service and a combination of
years of age and years of credited service, including parts of years, the
sum of which equaled or was greater than 68.
(d) Credited service and
normal retirement benefits cease to accrue on the day preceding the
member's DROP entry date. The period of a member's DROP participation,
unless revoked as provided by Subsection (j) of this section, begins on the
DROP participant's DROP entry date and ends on the date of the DROP
participant's last day of active service with the city or the pension
system. On the first day of the month following the month in which the
pension board approves the member's DROP election, the DROP election
becomes effective and the pension board shall establish a DROP account for
the DROP participant. For each month during the period of DROP
participation before a DROP participant's termination of employment, the
following amounts shall be credited to the DROP participant's DROP account,
including prorated amounts for partial months of service:
(1) an amount equal to what
would have been the DROP participant's monthly normal retirement benefit if
the DROP participant had retired on the DROP participant's DROP entry date,
except that the monthly amount shall be computed based on the DROP
participant's credited service and average monthly salary as of the DROP
entry date and the benefit accrual rates and maximum allowable benefit
applicable on the DROP election date, with the cost-of-living adjustments payable
under Subsection (s) of this section, if any, that would apply if the
DROP participant had retired on the DROP participant's DROP entry date; and
(2) subject to Subsection
(d-1) of this section, [for a group A member, the member's
contributions to the pension fund required under Section 8 of this Act
during the member's participation in the DROP; and
[(3)] interest on the
DROP participant's DROP account balance computed at a rate determined by
the pension board and compounded at intervals designated by the pension
board, but at least once in each 13-month period.
(d-1) Beginning January
1, 2018, the pension board shall establish the interest rate applicable
under Subsection (d)(2) of this section as of January 1 of each year at a
rate:
(1) except as provided by
Subdivision (2) of this subsection, equal to half the pension system's
five-year investment return based on a rolling five-fiscal-year basis and
net of investment expenses; and
(2) that may not be less
than 2.5 percent or more than 7.5 percent.
(f) The period for credits
to a DROP participant's DROP account includes each month beginning with the
DROP participant's DROP entry date through the date the DROP participant
terminates employment with the city or the pension system. Credits may not
be made to a DROP participant's DROP account for a period that occurs after
the date the DROP participant terminates employment, except that interest
at a rate determined by the pension board may be paid on the person's
undistributed DROP account balance after the date the person terminates
employment. A DROP participant must pay required contributions to the
pension system for all time in DROP that would otherwise constitute service
in order to receive allowable credits to the DROP participant's DROP
account.
(g) A DROP participant who
terminates employment is eligible to elect to receive the DROP
participant's DROP benefit in a lump sum, in substantially equal periodic
payments, [or] in a partial lump sum followed by substantially equal
periodic payments, or in partial payments from the participant's DROP
account, in a manner and form determined by the pension board. The pension
board may establish procedures concerning partial payments under this
subsection, including limitations on the timing and frequency of those
payments. A participant who elects partial payments may elect to receive
the participant's entire remaining DROP account balance in a single
lump-sum payment. The pension board shall determine a reasonable time
for lump-sum and periodic payments of the DROP benefit. [An election
concerning single lump-sum or partial payments as provided by this
subsection must satisfy the requirements of Section 401(a)(9), Internal
Revenue Code of 1986, as amended.] All distributions and changes in
the form of distribution must be made in a manner and at a time that
complies with that provision of the Internal Revenue Code of 1986, as amended.
(h) If a DROP participant
dies before the full distribution of the DROP participant's DROP account
balance, the undistributed DROP account balance shall be distributed to the
DROP participant's surviving spouse, if any, in a lump-sum payment within a
reasonable time after the pension board has determined that the surviving
spouse is eligible for the distribution. If there is no surviving spouse, each
beneficiary of the DROP participant [participant's
beneficiary], as designated in the manner and on a form established by
the pension board, is eligible to receive the beneficiary's applicable
portion of the deceased DROP participant's undistributed DROP account
balance in a lump-sum payment within a reasonable time after the pension
board has determined that the beneficiary is eligible for the
distribution. If no beneficiary is designated, the undistributed DROP
account balance shall be distributed to the deceased participant's [member's]
estate.
(j) An election to
participate in the DROP is irrevocable, except that:
(1) if a DROP participant is
approved for a service disability pension, the DROP participant's DROP
election is automatically revoked; and
(2) if a DROP participant
dies, the surviving spouse, if any, or the beneficiary, if any, may elect
to revoke the DROP participant's DROP election, at a time and in a manner
determined by the pension board, only if the revocation occurs before a
distribution from the DROP participant's DROP account or the payment of a
survivor benefit under this Act or Chapter 358, Acts of the 48th
Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
Statutes)[; and
[(3) a DROP participant
approved by the pension board of the predecessor system before September 1,
1999, to participate in the DROP may make a one-time, irrevocable election
before termination of employment, on a date and in a manner determined by
the pension board, to revoke the DROP election and waive any and all rights
associated with the DROP election].
(k) On revocation of a DROP
election under Subsection (j) of this section, the DROP account balance
becomes zero, and a distribution of DROP benefits may not be made to the participant
[member], the participant's [member's] surviving
spouse, or the participant's [member's] beneficiaries. In
the event of revocation, the benefits based on the participant's [member's]
service are determined as if the participant's [member's]
DROP election had never occurred.
(m) If an unanticipated
actuarial cost occurs in administering the DROP, the pension board, on the
advice of the pension system [system's] actuary, may take
action necessary to mitigate the unanticipated cost, including refusal to
accept additional elections to participate in the DROP [plan].
The pension system shall continue to administer the DROP [plan]
for the DROP participants participating in the DROP [plan]
before the date of the mitigating action.
(o) Except as provided by
Subsection (o-1) of this section, on [On] termination of
employment, a DROP participant shall receive a normal retirement pension
under Section 10 of this Act or under Section 11, 22A, or 24 of Chapter
358, Acts of the 48th Legislature, Regular Session, 1943 (Article 6243g,
Vernon's Texas Civil Statutes), as those sections read on the day preceding
the participant's DROP entry date, as applicable, except that the credited
service under that section is the member's credited service as of the day
before the member's DROP entry date, the benefit accrual rate applicable to
the credited service shall be the benefit accrual rate in effect on the
member's DROP election date, the maximum allowable benefit shall be the
maximum allowable benefit in effect on the member's DROP election date, and
the member's average monthly salary is the average monthly salary determined
as of the later [date] of the member's DROP entry date or
January 1, 2005, as applicable [termination of employment]. The
DROP participant's normal retirement pension is increased by any
cost-of-living adjustments applied to the monthly credit to the member's
DROP account under Subsection (d)(1) of this section during the member's
participation in the DROP. Cost-of-living adjustments applicable to periods
after the date of the DROP participant's termination of employment are
based on the DROP participant's normal retirement pension computed under
this subsection or Subsection (o-1) of this section, as applicable,
excluding any cost-of-living adjustments.
(o-1) On termination of
employment, and before any benefit or DROP payment, a DROP participant who
is an option-eligible participant shall make the required election under
Section 11 of this Act. If the option-eligible participant elects a J&S
Annuity, the DROP account, including all DROP credits, shall be
recalculated from the DROP entry date to termination of employment as
provided by Subsection (o) of this section as if the J&S Annuity was
selected to be effective as of the DROP entry date.
(p) If a DROP election is
not revoked under Subsection (j) of this section, the survivor benefit
payable to an eligible survivor of a deceased DROP participant under
Section 14 of this Act is computed as a percentage of the monthly ordinary
disability pension that the member would have been eligible to receive had
the member suffered a disability the day before the member's DROP entry
date, except that the ordinary disability pension is computed based on the
DROP participant's credited service as of the day before the DROP
participant's DROP entry date, the benefit accrual rate applicable to the
credited service as of the DROP participant's DROP election date, and the
DROP participant's average monthly salary as of the later [date]
of the DROP participant's DROP entry date or January 1, 2005, as
applicable [death]. A surviving spouse, if any, of a DROP
participant who dies from a cause directly resulting from a specific
incident in the performance of the DROP participant's duties for the city
or the pension system is ineligible to receive enhanced survivor benefits
under Section 14(c) of this Act unless the DROP election is revoked under
Subsection (j)(2) of this section and the surviving spouse receives a
survivor benefit as otherwise provided by this subsection.
(r) Except as provided by
Subsection (s) of this section, the pension system may not credit a DROP
account with a cost-of-living adjustment percentage on or after February 1,
2018.
(s) On or after February
1, 2018, and for future credit only, the pension system shall credit a
cost-of-living adjustment percentage, not compounded, to the DROP account
of a DROP participant who was at least 62 years of age as of January 1 of
the year in which the increase is made.
(t) The pension board may
establish deadlines for the submission of any information, document, or
other record pertaining to DROP.
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|
No
equivalent provision.
|
SECTION 3.18. Sections
13(a), (b), and (c), Chapter 88 (H.B. 1573), Acts of the 77th Legislature,
Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), are
amended to read as follows:
(a) A member who has
completed five or more years of credited service and who becomes disabled
is eligible, regardless of age, for an ordinary disability retirement and
shall receive a monthly disability pension computed in accordance with
Section 10(d) of this Act [for group A members and Section 10(e)
for group B members].
(b) A member who is disabled
by reason of a personal injury sustained or a hazard undergone as a result
of, and while in the performance of, the member's employment duties at some
definite place and at some definite time on or after the date of becoming a
member, without serious and wilful misconduct on the member's part, is
eligible for a service disability retirement and shall receive a monthly
disability pension equal to the greater of:
(1) the monthly normal
retirement pension computed under Section 10(d) of this Act [for a group
A member or Section 10(e) for a group B member]; or
(2) 20 percent of the
member's monthly salary on the date the injury occurred or the hazard was
undergone.
(c) In addition to the
monthly disability pension under Subsection (b)(2) of this section, a group
A member shall receive one percent of the salary under Subsection (b)(2) of
this section for each year of credited service. The total disability
pension computed under Subsection (b)(2) of this section may not exceed the
greater of:
(1) 40 percent of that
monthly salary; or
(2) the monthly normal
retirement pension computed in accordance with Section 10(d) of this Act
[for a group A member or Section 10(e) for a group B member].
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No
equivalent provision.
|
SECTION 3.19. Section 14,
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended by amending
Subsections (a), (b), (c), (d), (e), and (h) and adding Subsection (b-1) to
read as follows:
(a) Except as provided by Section
11 or [Section] 12 of this Act, the pension board shall order
survivor benefits to be paid to an eligible survivor in the form of
a monthly allowance under this section if:
(1) a member or former
member of group A or group B dies from any cause after the
completion of five years of credited service with the city or the pension
system;
(2) while in the service of
the city or the pension system, a member dies from any cause directly
resulting from a specific incident in the performance of the member's duty;
[or]
(3) a member of group A
or group B dies after the date the member retires on a pension because
of length of service or a disability and the member leaves an eligible
survivor; or
(4) a member of group D
dies from any cause after the completion of five years of credited service
with the city or the pension system if the member on the date of the
member's death was still in service with the city or the pension system.
(b) A surviving spouse of a
member described by Subsection (a)(1) or (4) of this section [or
former member] who dies while still in [dies after having
completed five years of credited] service with the city or the pension
system [, but before beginning to receive retirement benefits,] is
eligible for a sum equal to the following applicable percentage [100
percent] of the retirement benefits to which the deceased member or
former member would have been eligible had the member been totally disabled
with an ordinary disability at the time of the member's last day of
credited service:
(1) 80 percent, if the
member's death occurs on or after the year 2017 effective date and the
spouse was married to the member for at least one continuous year as of the
member's date of death, except that the allowance payable to the
surviving spouse may not be less than $100 a month; or
(2) 50 percent, if the
member's death occurs on or after the year 2017 effective date and the
spouse was married to the member for less than one continuous year as of
the date of the member's death.
(b-1) A surviving spouse
of a former member described by Subsection (a)(1) of this section who dies
on or after the year 2017 effective date while not in the service of the
city or the pension system and before the member's retirement commenced, is
eligible for a sum equal to 50 percent of the deceased former member's
normal accrued pension at the time of the deceased former member's last day
of credited service. Benefits under this subsection first become payable
on the date the former member would have become eligible to begin receiving
a pension. If the surviving spouse elects for earlier payment, in a time
and manner determined by the pension board, the actuarial equivalent of
that amount shall be payable at that earlier date.
(c) A surviving spouse of a
member described by Subsection (a)(2) of this section who dies from
a cause directly resulting from a specific incident in the performance of
the member's duty with the city or the pension system, without serious or
wilful misconduct on the member's part, is eligible for a sum equal to 80
[100] percent of the deceased member's final average salary.
(d) A surviving spouse of a
retiree described by Subsection (a)(3) of this section who dies
after having received retirement benefits is eligible for a sum equal to the
following applicable percentage [100 percent] of the retirement
benefits being received at the time of the retiree's death, including
any applicable [. The] cost-of-living adjustment in the
survivor benefit under Section 10(h) of this Act [is] computed based
on the unadjusted normal retirement pension of the deceased retiree:
(1) 80 percent, if the
retiree's death occurs on or after the year 2017 effective date and the
retiree separated from service with the city or pension system before the
year 2017 effective date;
(2) 80 percent, if the
retiree's death occurs on or after the year 2017 effective date and the
retiree separated from service with the city or pension system on or after
the year 2017 effective date, provided the surviving spouse was married to
the retiree at the time of the retiree's death and for at least one
continuous year as of the date of the retiree's separation from service; or
(3) 50 percent, if both
the retiree's separation from service and death occur on or after the year
2017 effective date and the surviving spouse was married to the retiree at
the time of the retiree's death for less than one continuous year as of the
date of the retiree's separation from service.
(e) If there is a surviving
spouse, each dependent child shall receive a survivor benefit equal to 10
percent of the pension the member would have received if the member had
been disabled at the time of death up to a maximum of 20 percent for all
dependent children, except that if the total amount payable to the
surviving spouse and dependent children is greater than 80 [100]
percent of the benefit the member would have received, the percentage of
benefits payable to the surviving spouse shall be reduced so that the total
amount is not greater than 80 [100] percent of the benefit
the member would have received, and the reduction shall continue until the
total amount payable to the surviving spouse and dependent child, if any,
would not be greater than 80 [100] percent of the benefit the
member would have received.
(h) If a retiree dies and
there is no eligible survivor, the retiree's spouse, if any, or if there is
no spouse, the retiree's estate, is eligible to receive a lump-sum payment
of the unamortized balance of the retiree's accrued employee contributions,
if any, other than contributions after the DROP entry date, as determined
by an amortization schedule and method approved by the pension board. A
pension payable to a retiree ceases on the last day of the month [preceding
the month] of the retiree's death. A survivor benefit payable to an
eligible survivor is effective on the first day of the month following
the month of the retiree's death and ceases on the last day of [month
preceding] the month of the eligible survivor's death or on the last
day of the month in which the survivor otherwise ceases to be
eligible to receive a survivor's benefit.
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No
equivalent provision.
|
SECTION 3.20. Sections 16(a)
and (e), Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular
Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), are amended
to read as follows:
(a) Notwithstanding any
other provision of this Act, the pension board may pay to a member,
deferred participant, eligible survivor, alternate payee, or beneficiary in
a lump-sum payment the present value of any benefit payable to such a
person that is less than $20,000 [$10,000] instead of paying
any other benefit payable under this Act. If the lump-sum present value of
the benefit is at least $1,000 [$5,000] but less than $20,000
[$10,000], the pension board may make a lump-sum payment only on
written request by the member, deferred participant, eligible survivor,
alternate payee, or other beneficiary. The pension board shall make any
payment under this subsection as soon as practicable after eligibility
under this section has been determined by the pension board.
(e) A member who is
reemployed by the city or the pension system and who has at least two years
of continuous credited service after reemployment may reinstate service for
which the member received a lump-sum payment under this section by paying
into the pension fund the amount of the lump-sum payment, plus interest on
that amount at the applicable assumed rate of return [six
percent per year], not compounded, from the date the lump-sum payment
was made to the member until the date of repayment to the pension fund.
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|
No
equivalent provision.
|
SECTION 3.21. Section 17,
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended by amending
Subsections (a), (c), (d), (e), (f), (g), (h), (i), (j), (k), and (l) and adding
Subsections (c-1), (c-2), (q), (r), and (s) to read as follows:
(a) A member who terminates
employment with the city involuntarily due to a reduction in workforce, as
determined by the pension board, before the member becomes eligible for a
normal retirement pension or attains five years of credited service, is
eligible to [by written notice to the pension board, may make an
irrevocable election to] leave the person's contributions in the
pension fund until the first anniversary of the date of termination. If
during that period the person is reemployed by the city and has not
withdrawn the person's contributions, all rights and service credit as
a member shall be immediately restored without penalty. If reemployment
with the city does not occur before the first anniversary of the date of
termination, all payments made by the person into the pension fund by
salary deductions or other authorized contributions shall be refunded to
the person without interest. If the person is subsequently reemployed, the
person may have credit restored, subject to the provisions applicable at
the time of reemployment.
(c) A former member of
group A or group B whose employment is terminated for a reason other
than death or receipt of a retirement or disability pension after the
completion of five years of credited service may elect, in a manner
determined by the pension board, to receive a deferred retirement pension
that begins on the member's effective retirement date after the member
attains the eligibility requirements for normal retirement under Section
10 of this Act as it existed on the member's last day of credited service
[either 62 years of age or a combination of years of age and years of
credited service, including parts of years, the sum of which equals the
number 70]. The amount of monthly benefit shall be computed in the same
manner as for a normal retirement pension, but based on average monthly
salary and credited service as of the member's last day of credited service
and subject to the provisions of this Act or Chapter 358, Acts of 48th
Legislature, Regular Session, 1943 (Article 6243g, Vernon's Texas Civil
Statutes), in effect on the former member's last day of credited
service.
(c-1) A former member of
group D whose employment is terminated for a reason other than death or
receipt of a retirement or disability pension after the completion of five
years of credited service may elect, in a manner determined by the pension
board, to receive a deferred normal retirement pension that begins on the
former member's effective retirement date after the member attains 62 years
of age. The amount of a monthly benefit under this subsection shall be
computed in the same manner as a normal retirement pension, except the
benefit shall be based on the average monthly salary and credited service
of the former member as of the former member's last day of credited service
and subject to the provisions of this Act in effect on the former member's
last day of credited service.
(c-2) A former member of
group D whose employment is terminated for a reason other than death or
receipt of a retirement or disability pension and who has met the minimum
years of credited service to receive an early reduced retirement pension
under Section 10(e) of this Act on attaining the required age, may elect,
in a manner determined by the pension board, to receive a deferred early
retirement pension that begins on the former member's effective retirement
date after the member attains the required age under Section 10(e) of this
Act. The amount of monthly benefit shall be computed in the same manner as
for an early retirement pension under Section 10(e) of this Act, except
that the benefit shall be based on the average monthly salary and credited
service of the former member as of the former member's last day of credited
service and subject to the provisions of this Act in effect on the former
member's last day of credited service.
(d) If a member dies while
still employed by the city, whether eligible for a pension or not, and
Sections 12 and 14 of this Act do not apply, all of the member's rights in
the pension fund shall be satisfied by the refund to the member's spouse
[designated beneficiary], if any, or if there is no spouse [designated
beneficiary], to the member's estate, of all eligible payments, if any,
made by the member into the pension fund, without interest.
(e) [The provisions of
Section 14 of this Act concerning payments to eligible survivors apply in
the case of any former member who has made the election permitted by
Subsection (c) of this section and who dies before reaching the age at
which the former member would be eligible to receive a pension.] If
there is no eligible survivor of the former member, all of the former
member's rights in the pension fund shall be satisfied by the refund to the
former member's spouse [designated beneficiary], if any, or
if there is no spouse [designated beneficiary], to the former
member's estate, of all eligible payments made by the former member into
the pension fund by way of employee contributions, without interest.
(f) This Act does not change
the status of any former member of the predecessor system whose services
with the city or the pension system were terminated under Chapter 358, Acts
of the 48th Legislature, Regular Session, 1943 (Article 6243g, Vernon's
Texas Civil Statutes), except as otherwise expressly provided. Refunds of
contributions made under this section shall be paid to the departing
member, the member's spouse [beneficiary], or the member's
estate on written request and approval by the pension board in a lump sum,
except that if the pension board determines that funds are insufficient to
justify the lump-sum payment, the payment shall be refunded on a monthly
basis in amounts determined by the pension board.
(g) If a deferred
participant is reemployed by the city or the pension system before
receiving a deferred retirement pension or if a retiree is reemployed by
the city or the pension system, Subsections (h) and (j) of this section
apply to the computation of the member's pension following the member's
subsequent separation from service if the member was a member on or
after May 11, 2001, and is not otherwise subject to Subsection (q) of this
section.
(h) If a member described in
Subsection (g) of this section accrues not more than two years of
continuous credited service after reemployment:
(1) the portion of the
member's deferred or normal retirement pension attributable to the member's
period of credited service accrued before the date of the member's original
or previous separation from service is computed on the basis of the
applicable provisions of this Act or the predecessor system that were in
effect on the member's last day of credited service for the original or
previous period of credited service;
(2) the portion of the
member's deferred or normal retirement pension attributable to the member's
period of credited service accrued after the date of the member's
reemployment by the city or the pension system is computed on the basis of
the applicable provisions of this Act or the predecessor system in effect
on the member's last day of credited service for the subsequent period of
credited service; and
(3) the disability pension
or survivor benefit attributable to the member's period of credited service
accrued both before the date of the member's original or previous
separation from service and after the date of the member's reemployment by
the city or the pension system is computed on the basis of the applicable
provisions of this Act or the predecessor system that were in effect on the
member's last day of credited service for the original or previous
period of credited service.
(i) Subject to Subsection
(l) of this section, the disability pension or survivor benefit under
Subsection (h)(3) of this section is computed by adding the following
amounts:
(1) the amount of the
benefit derived from the member's credited service accrued after the date
of reemployment based on the benefit accrual rate in effect on the member's
last day of original or previous credited service in the group in
which the member participated on the member's last day of subsequent
credited service; and
(2) the amount of the
benefit the member, beneficiary, or eligible survivor was eligible to
receive based on the member's original or previous credited service
and the provisions in effect on the member's last day of original or
previous credited service.
(j) If a [the]
member described by Subsection (g) of this section accrues more than
two years of continuous credited service after reemployment, for purposes
of future payment only, a deferred retirement pension, normal retirement
pension, disability pension, or survivor benefit is computed on the basis
of the applicable provisions of this Act or the predecessor system in
effect on the member's last day of credited service for the subsequent
service.
(k) Notwithstanding any
other provision of this Act, if a retiree is reemployed by the city or the
pension system and becomes a member, the retiree's pension under this Act
ceases on the day before the date the retiree is reemployed. Payment of
the pension shall be suspended during the period of reemployment and may
not begin until the month following the month in which the reemployed
retiree subsequently terminates employment. On subsequent separation,
benefits payable are computed under Subsections (h) and (j) of this section,
as applicable. If the reemployed retiree receives any pension during
the period of reemployment, the retiree shall return all of the pension
received during that period to the pension system not later than the 30th
day after the date of receipt. If the reemployed retiree does not timely
return all of the pension, the pension board shall offset the amount not
returned against the payment of any future retirement pension, disability
pension, DROP balance, or survivor benefit payable on behalf of the
reemployed retiree, plus interest on the disallowed pension at the
applicable assumed rate of return, not compounded, from the date the
reemployed retiree received the disallowed pension to the date of the
offset on the disallowed pension.
(l) Except as provided by
Section 14 of this Act, if [If] a member is covered by
Subsection (h) of this section and has made an election or was eligible to
make an election under Section 11 of this Act or an optional annuity
election under Section 29, Chapter 358, Acts of the 48th Legislature,
Regular Session, 1943 (Article 6243g, Vernon's Texas Civil Statutes), or
has received a pension computed on the basis of an optional annuity
election, the optional annuity election, including any designation of an
eligible designated survivor, governs the payment of any pension or benefit
for the period of service covered by the optional annuity election,
and no other survivor benefit is payable for that period of service.
If a member meets the requirements of Subsection (j) of this section and
has made an optional annuity election or has received a pension computed on
the basis of an optional annuity election, the optional annuity election,
including any designation of an eligible designated survivor, shall control
the payment of any pension or benefit, and no other survivor benefit is
payable unless the member elects, not later than the 90th day after the
date of the separation of employment and before payment of a pension, to
revoke the optional annuity election for future payment of benefits. If
revocation occurs, any survivor benefit is paid under Subsection (j) of
this section.
(q) Subsections (g)
through (l) of this section do not apply to the calculation of any benefit
for or attributable to the period of service following:
(1) the employment or
reemployment of a member hired or rehired on or after January 1, 2005; or
(2) the reemployment of a
deferred retiree or retiree who is reemployed in a pension system covered
position before January 1, 2005, but for a period of two years or less of
continuous credited service.
(r) If a deferred retiree
or retiree subject to Subsection (q)(2) of this section is reemployed in a
pension system covered position, the retiree's pension due on the retiree's
subsequent retirement shall be computed as follows:
(1) the portion of the
retiree's pension attributable to the retiree's periods of credited service
that accrued before the retiree's reemployment shall be calculated on the
basis of the schedule of benefits for retiring members that was in effect
at the time of the member's previous termination or terminations of
employment; and
(2) the portion of the
member's pension attributable to the member's period of credited service
that accrued after the member's reemployment shall be calculated on the
basis of the schedule of benefits for retiring members that is in effect at
the time of the member's subsequent retirement.
(s) The computation under
Subsection (r) of this section may not result in a lower pension benefit amount
for the previous service of the retiree than the pension benefit amount the
retiree was eligible to receive for the retiree's previous service before
the date of reemployment.
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|
No
equivalent provision.
|
SECTION 3.22. Section 18(d),
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended to read as
follows:
(d) The military service
credited under Subsection (c) of this section:
(1) may not exceed a total
of 60 months; and
(2) may be claimed as
service solely in the group in which the member
participates [A only if the member is a group A member or group C
member] at the time the member claims the service [; and
[(3) may be claimed as
service in group B only if the member is a group B member at the time the
member claims the service].
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|
No
equivalent provision.
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SECTION 3.23. Sections 24(h)
and (i), Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular
Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), are amended
to read as follows:
(h) Contributions may not
accumulate under the excess benefit plan to pay future retirement
benefits. The executive director shall reduce each payment of employer
contributions that would otherwise be made to the pension fund under
Section 8A [8] of this Act by the amount determined to be
necessary to meet the requirements for retirement benefits under the plan,
including reasonable administrative expenses, until the next payment of
municipal contributions is expected to be made to the pension fund. The
employer shall pay to the plan, from the withheld contributions, not
earlier than the 30th day before the date each distribution of monthly
retirement benefits is required to be made from the plan, the amount
necessary to satisfy the obligation to pay monthly retirement benefits from
the plan. The executive director shall satisfy the obligation of the plan
to pay retirement benefits from the employer contributions transferred for
that month.
(i) Employer contributions
otherwise required to be made to the pension fund under Section 8A [8]
of this Act and to any other qualified plan shall be divided into those
contributions required to pay retirement benefits under this section and
those contributions paid into and accumulated to pay the maximum benefits
required under the qualified plan. Employer contributions made to provide
retirement benefits under this section may not be commingled with the money
of the pension fund or any other qualified plan.
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SECTION 3.02. Section 8(d),
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended to read as
follows:
(d) The city shall make [periodic]
payments into the pension fund each payroll period in an amount
equal to the product of the contribution rate certified by the pension
board and the aggregate [percentage contribution rate multiplied by
the combined] salaries of all group A and group B members of the
pension fund. The contribution rate, expressed as a percentage, shall be
based on the results of actuarial valuations made at least every three
years. The city's contribution rate shall consist of the normal cost plus
the level percentage of salary payments required to amortize the unfunded
actuarial liability over a period that does not exceed 30 [of 40]
years [from January 1, 1983, computed on the basis of an actuarial
reserve funding method approved by the pension board]. Notwithstanding
any other provision of this Act, the city's contribution rate, when added
to any contributions with respect to a qualified governmental excess
benefit arrangement maintained in accordance with Section 24 of this Act,
may not be an amount less than the greater of 10 percent of the combined
salaries of all members or two times the contribution rate of group A
members as provided in Subsection (a) of this section.
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SECTION 3.24. Repeals Section
8(d), Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular
Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes).
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SECTION 3.03. Section 10(h),
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended to read as
follows:
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
No
equivalent provision.
(h) Subject to Section 3A of this Act, for
[For] future payments only, pension
and survivor benefits for
all
retirees and eligible survivors
shall be increased
annually by
four
percent, not compounded,
for all persons receiving a
pension or survivor benefit as of January 1 of the year in which the
increase is made.
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SECTION 3.13. Section 10,
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended by amending
Subsections (b), (d), (e), (g), and (h) and adding Subsections (c-1),
(d-1), and (e-1) to read as follows:
(b) A group A or group B
member of the pension system who terminates employment is eligible for a
normal retirement pension beginning on the member's effective retirement
date after the date the member completes at least five years of credited
service and attains either:
(1) 62 years of age; or
(2) a combination of years
of age and years of credited service, including parts of years, the sum of
which equals or is greater than the number:
(A) 75, provided the
member is at least 50 years of age; or
(B) 70, provided
the member attained a combination of years of age and years of credited
service, including parts of years, the sum of which equals or is greater
than the number 68 before January 1, 2005.
(c-1) A group D member
who terminates employment is eligible for a normal retirement pension
beginning on the member's effective retirement date after the date the
member completes at least five years of credited service and attains 62
years of age.
(d) The amount of the
monthly normal retirement pension payable to an eligible:
(1) [retired]
group A or group B member who retires before January 1, 2005,
shall be determined under the law in effect on the member's last day of
credited service, subject to Section 17 of this Act;
(2) group A member who
retires on or after January 1, 2005, is equal to the sum of:
(A) the member's average
monthly salary multiplied by the percentage rate accrued under the law in
effect on December 31, 2004;
(B) the member's
average monthly salary multiplied by 2.5 [3-1/4] percent for
each year of the member's years of credited service in group A during the
member's first 20 [10] years of service that is earned on
or after January 1, 2005; [, 3-1/2 percent for each of the member's
years of credited service in group A during the member's next 10 years of
service,] and
(C) the member's average
monthly salary multiplied by 3.25 [4-1/4] percent for each year
of credited service of the member in group A during the member's years of
service in excess of the 20 years described under Paragraph (B)
of this subdivision that is earned on or after January 1, 2005;
(3) group B member who
retires on or after January 1, 2005, is equal to the sum of:
(A) the member's average
monthly salary multiplied by the percentage rate accrued under the law in
effect on December 31, 2004;
(B) the member's average
monthly salary multiplied by 1.75 percent for each year of the member's
years of credited service in group B during the member's first 10 years of
service that is earned on or after January 1, 2005;
(C) the member's average
monthly salary multiplied by two percent for each of the member's years of
credited service in group B in excess of the 10 years described under
Paragraph (B) of this subdivision that is earned on or after January 1,
2005; and
(D) the member's average
monthly salary multiplied by 2.5 percent for each year of credited service
of the member in group B during the member's years of service in excess of
20 years that is earned on or after January 1, 2005; or
(4) group D member who
retires on or after January 1, 2008, is equal to the sum of:
(A) the member's average
monthly salary multiplied by 1.8 percent for each year of the member's
years of credited service during the member's first 25 years of service;
and
(B) the member's average
monthly salary multiplied by 1 percent for each year of credited service of
the member in group D during the member's years of service in excess of 25
years.
(d-1) For purposes of
Subsection (d) of this section, service credit is rounded to the nearest
one-twelfth of a year [For purposes of this subsection, service
credit is rounded to the nearest one-twelfth of a year. The normal
retirement pension of a retired group A member may not exceed 90 percent of
the member's average monthly salary].
(e) A group D member who
terminates employment with the city or the pension system may elect to
receive an early retirement pension payable as a reduced benefit if the
member has attained:
(1) at least 10 years of
credited service and is at least 55 years of age; or
(2) five years of
credited service and a combination of years of age and years of credited
service, including parts of years, the sum of which equals or is greater
than the number 75.
(e-1) The amount of
the early retirement pension payable to a retired group D member under
Subsection (e) of this section shall be equal to the monthly normal
retirement pension reduced by 0.25 percent for each month the member is
less than 62 years of age at retirement [monthly normal retirement
pension payable to an eligible retired group B member equals the member's
average monthly salary multiplied by 1-3/4 percent for each year of the
member's years of credited service in group B during the member's first 10
years of service, 2 percent for each of the member's years of credited
service in group B during the member's next 10 years of service, and 2-3/4
percent for each year of credited service of the member in group B during
the member's years of service in excess of 20 years. For purposes of this
subsection, service credit is rounded to the nearest one-twelfth of a
year. The normal retirement pension of a retired group B member may not
exceed 90 percent of the member's average monthly salary].
(g) Notwithstanding any
other provision of this Act, the total normal retirement pension of a
retired member with credited service in group A, group B, [or] group
C, or group D may not exceed 90 percent of the member's average
monthly salary.
(h) On or after February 1, 2018, and for
[For] future payments only, pension benefits
for all group A retirees and group B retirees, and for all group D retirees
who terminated employment on or after the year 2017 effective date with at
least five years of credited service, and survivor benefits for [all retirees and] eligible
survivors of a former member of group
A or group B, or of a former member of group D who terminated employment on
or after the year 2017 effective date with at least five years of credited
service, shall be increased annually by the cost-of-living adjustment percentage [four percent], not compounded,
for all such eligible
persons receiving a pension or survivor benefit as of January 1 of the year
in which the increase is made.
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SECTION 3.04. Section 12(q),
Chapter 88 (H.B. 1573), Acts of the 77th Legislature, Regular Session, 2001
(Article 6243h, Vernon's Texas Civil Statutes), is amended to read as
follows:
(q) The pension board may
adopt rules for the implementation and operation of the DROP, including
rules:
(1) regarding the
payment of DROP benefits; and
(2) that limit the amount
of a member's earnings under the DROP or that limit the length of time a
member may elect to participate in the DROP.
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No
equivalent provision.
|
|
SECTION 3.05. Sections
15(a), (b), and (d), Chapter 88 (H.B. 1573), Acts of the 77th Legislature,
Regular Session, 2001 (Article 6243h, Vernon's Texas Civil Statutes), are
amended to read as follows:
(a) In addition to the
postretirement increases under Section 10(h) of this Act and subject to
Section 3A of this Act, the pension board may increase annuities
payable under this Act by an amount that does not exceed the annual
increase in the amount of premiums being paid under a group insurance
program provided for retirees of the city.
(b) The pension board may
distribute a supplemental payment to all retirees and eligible survivors
who are receiving annuities as of January 1 of the year in which the
supplemental payment is made. The supplemental payment shall be credited
to the DROP participants who are participating in the DROP as
of January 1 of the year in which the supplemental payment is made, if the
pension board's actuary determines that the payment complies with
Section 3A of this Act [as of the end of any fiscal year:
[(1) the value of the
pension system's assets exceeds the amount of the pension system's accrued
liability;
[(2) the pension system
has met the actuarial investment assumption for the previous fiscal year; and
[(3) the issuance of the
supplemental check will not cause the city's contribution rate to increase].
(d) A pension benefit or
allowance provided by this article may be increased if:
(1) a qualified actuary
selected by the pension board determines that the increase complies with
Section 3A of this article [cannot reasonably be considered to
jeopardize the pension system's ability to pay any existing benefit];
(2) the increase is approved
by the pension board and the city in a written agreement as provided by
Section 3(n) of this article; and
(3) the increase does not
deprive a member or retiree, without the written consent of the member or
retiree, from receiving the immediate or deferred retirement benefit that
the member or retiree was eligible to receive under this article before the
increase.
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No
equivalent provision.
|
|
No
equivalent provision.
|
SECTION 3.25. (a) The
change in law made by this Act to Section 2, Chapter 88 (H.B. 1573), Acts
of the 77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's
Texas Civil Statutes), applies only to the appointment or election of a
trustee of the board of trustees of the pension system established under
that law that occurs on or after the effective date of this Act.
(b) A person who is serving
as a trustee immediately before the effective date of this Act may continue
to serve for the remainder of the trustee's term, and that trustee's
qualifications for serving as a trustee for that term are governed by the
law in effect immediately before the effective date of this Act.
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No
equivalent provision.
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SECTION 3.26.
Notwithstanding any other Act of the 85th Legislature, Regular Session,
2017, the issuance of pension obligation bonds under Chapter 107, Local
Government Code, in an amount sufficient to deliver pension obligation bond
proceeds to the pension system established under Chapter 88 (H.B. 1573),
Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h,
Vernon's Texas Civil Statutes), as amended by this Act, in the amount and
manner prescribed by Section 8C(j), Chapter 88 (H.B. 1573), Acts of the
77th Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas
Civil Statutes), as added by this Act, may not require the approval of the
qualified voters of a city voting at an election held for that purpose.
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No
equivalent provision.
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SECTION 3.27. The pension
system established under Chapter 88 (H.B. 1573), Acts of the 77th
Legislature, Regular Session, 2001 (Article 6243h, Vernon's Texas Civil
Statutes), shall require the pension system actuary to prepare the first
actuarial experience study required under Section 8D, Chapter 88 (H.B.
1573), Acts of the 77th Legislature, Regular Session, 2001 (Article 6243h,
Vernon's Texas Civil Statutes), as added by this Act, not later than September
30, 2021.
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ARTICLE 4. EFFECTIVE DATE
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ARTICLE 4. CONFLICTING
LEGISLATION; EFFECTIVE DATE
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No
equivalent provision.
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SECTION 4.01. If this Act
conflicts with any other Act of the 85th Legislature, Regular Session,
2017, this Act controls unless the conflict is expressly resolved by the
legislature by reference to this Act.
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SECTION 4.01. This Act takes
effect September 1, 2017.
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SECTION 4.02. This Act takes effect July 1, 2017, 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 effect on that date, this Act
takes effect September 1, 2017.
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