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A BILL TO BE ENTITLED
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AN ACT
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relating to authorizing the Employees Retirement System of Texas |
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and the Teacher Retirement System of Texas to establish defined |
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contribution plans or hybrid retirement plans to provide retirement |
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benefits to certain employees. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 802.002, Government Code, is amended by |
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adding Subsection (e) to read as follows: |
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(e) Notwithstanding any other law, including Subsection |
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(a), an alternative retirement plan established under Chapter 809 |
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is exempt from Sections 802.101, 802.1012, 802.1014, 802.103, |
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802.104, and 802.202(d). This subsection may not be construed to |
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exempt any plan from Section 802.105 or 802.106(h). |
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SECTION 2. Subtitle A, Title 8, Government Code, is amended |
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by adding Chapter 809 to read as follows: |
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CHAPTER 809. AUTHORITY TO ESTABLISH ALTERNATIVE RETIREMENT PLANS |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 809.001. DEFINITIONS. In this chapter: |
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(1) "Alternative retirement plan" means a defined |
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contribution plan or a hybrid retirement plan. |
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(2) "Board of trustees" means the board of trustees of |
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a retirement system. |
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(3) "Defined benefit plan" means, as appropriate, the |
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plan that provides benefits to: |
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(A) members of the employee class of the |
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Employees Retirement System of Texas under Subtitle B, Title 8; or |
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(B) members of the Teacher Retirement System of |
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Texas under Subtitle C, Title 8. |
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(4) "Defined contribution plan" has the meaning |
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assigned by Section 802.001. |
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(5) "Hybrid retirement plan" means a retirement plan |
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that combines elements of a defined benefit plan, a defined |
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contribution plan, or an individual retirement savings account. |
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(6) "Qualified plan" means an employee benefit plan |
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qualified under Section 401(a), Internal Revenue Code of 1986 (26 |
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U.S.C. Section 401). |
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(7) "Retirement system" means the Employees |
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Retirement System of Texas or the Teacher Retirement System of |
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Texas, as appropriate. |
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Sec. 809.002. APPLICABILITY. This chapter applies only to: |
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(1) the Employees Retirement System of Texas; and |
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(2) the Teacher Retirement System of Texas. |
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Sec. 809.003. CONFLICT OF LAW. To the extent of a conflict |
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between this chapter, including a rule adopted by a retirement |
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system under authority of this chapter, and any other law, this |
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chapter prevails. |
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SUBCHAPTER B. AUTHORITY TO CREATE ALTERNATIVE PLANS |
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Sec. 809.051. CREATION OF ALTERNATIVE PLAN. |
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Notwithstanding any other law, including Subtitles B and C, Title |
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8, and subject to the requirements of Subchapter C, the board of |
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trustees may by rule establish and administer an alternative |
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retirement plan to provide benefits to newly hired employees under |
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that plan instead of under a defined benefit plan. |
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Sec. 809.052. CERTAIN REFERENCES IN LAW TO RETIREMENT |
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SYSTEM MEMBERS. If a retirement system establishes an alternative |
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retirement plan under this chapter, a reference in law to a member |
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of the retirement system includes a participant in the alternative |
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retirement plan unless the reference is expressly defined |
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otherwise. |
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SUBCHAPTER C. ALTERNATIVE PLAN MINIMUM REQUIREMENTS |
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Sec. 809.101. MINIMUM REQUIREMENTS. In establishing an |
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alternative retirement plan under this chapter, a retirement system |
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shall ensure the plan meets the requirements of this subchapter. |
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Sec. 809.102. QUALIFIED PLAN. An alternative retirement |
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plan created under this section must be a qualified plan. |
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Sec. 809.103. PARTICIPATION IN ALTERNATIVE PLAN; |
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RESUMPTION OF SERVICE. (a) In adopting rules to establish an |
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alternative retirement plan under this chapter, the board of |
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trustees shall designate the date by which all newly hired |
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employees shall begin participation in the plan. |
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(b) A person who resumes employment with an employer and who |
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is already a member of the retirement system eligible to |
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participate in a defined benefit plan remains eligible to |
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participate in the defined benefit plan and is not considered a new |
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employee for purposes of required participation in an alternative |
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retirement plan established under this chapter. |
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(c) Notwithstanding any other law, an employee who |
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participates in an alternative retirement plan established under |
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this chapter is not eligible to, and may not participate in, the |
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defined benefit plan administered by the retirement system. |
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Sec. 809.104. EFFECT OF EMPLOYMENT CHANGES. A person |
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participating in an alternative retirement plan continues to |
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participate in the plan when the person changes employment to |
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another position included in the coverage of the retirement system. |
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Sec. 809.105. VESTING OF BENEFITS; TERMINATION OF |
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PARTICIPATION. (a) Benefits in an alternative retirement plan |
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vest in a participant not later than the fifth anniversary of the |
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date the person begins to participate in the plan. |
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(b) A person terminates participation in an alternative |
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retirement plan, without losing any vested benefits, by: |
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(1) death; |
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(2) retirement; or |
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(3) termination of employment in all positions |
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included in the coverage of the retirement system. |
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(c) The benefits of a product purchased under an alternative |
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retirement plan become available under the terms of the annuity but |
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not before the earlier of the date: |
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(1) the member terminates participation as provided by |
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Subsection (b); or |
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(2) the member's age and years of service in a position |
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covered by the plan equal 80. |
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Sec. 809.106. CREDITABLE SERVICE. A person may not |
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establish in the defined benefit plan administered by the |
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retirement system credit for service performed during a period the |
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person was participating in an alternative retirement plan. |
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Sec. 809.107. CONTRIBUTIONS. (a) A participant in an |
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alternative retirement plan shall make contributions to the plan at |
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the same rate that a member of the retirement system participating |
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in a defined benefit plan is required to make for current service, |
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and the state and employers otherwise required to make |
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contributions to a defined benefit plan shall make contributions to |
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the alternative retirement plan for each participant at the same |
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rate as the state and employers are required to contribute for |
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contributing members of the defined benefit plan. Contributions |
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required under this subsection shall be credited to the benefit of |
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the participant. |
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(b) A participant in an alternative retirement plan and the |
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participant's employer shall execute an agreement under which the |
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salary of the participant is reduced by the amount of the |
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contribution required by this section. An agreement under this |
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subsection is irrevocable until the participant terminates |
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participation in the plan under Section 809.105. |
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(c) Participant contributions shall be made in the manner |
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provided by Subchapter F, Chapter 815, or Subchapter E, Chapter |
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825, as applicable. |
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Sec. 809.108. HEALTH BENEFITS AND OTHER COVERAGES. A |
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person who participates or who is eligible to participate in an |
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alternative retirement plan established under this chapter is |
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eligible for health benefits and other coverages under Subtitle H, |
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Title 8, Insurance Code, and Subchapter D, Chapter 22, Education |
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Code, if applicable, to the same extent as a person who is a member |
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or who is eligible to be a member of the retirement system. |
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SECTION 3. Section 830.002(b), Government Code, is amended |
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to read as follows: |
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(b) Participation in the optional retirement program is an |
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alternative to active membership in the retirement system or |
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participation in an alternative retirement plan under Chapter 809, |
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as appropriate. |
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SECTION 4. Sections 830.102(a) and (d), Government Code, |
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are amended to read as follows: |
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(a) A person included in the coverage [member] of the |
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retirement system who is eligible [to participate in the optional
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retirement program] may elect to [continue as a member of the
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retirement system or to] participate in the optional retirement |
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program. |
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(d) An eligible person who does not elect to participate in |
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the optional retirement program is considered to have chosen to |
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continue membership in the retirement system or to participate in |
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an alternative retirement plan established under Chapter 809, as |
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applicable. |
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SECTION 5. Section 830.106, Government Code, is amended to |
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read as follows: |
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Sec. 830.106. ELIGIBILITY FOR RESUMPTION OF MEMBERSHIP. A |
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participant in the optional retirement program is not eligible for |
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participation [membership] in the retirement system unless the |
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person: |
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(1) terminates employment covered by the optional |
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retirement program; and |
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(2) becomes employed in the public school system or |
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with a state agency in a position that is not eligible for |
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participation in the optional retirement program. |
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SECTION 6. This Act takes effect September 1, 2017. |