| |
| |
|
|
A BILL TO BE ENTITLED
|
|
|
AN ACT
|
|
|
relating to authorizing the Employees Retirement System of Texas |
|
|
and the Teacher Retirement System of Texas to establish defined |
|
|
contribution plans or hybrid retirement plans to provide retirement |
|
|
benefits to certain employees. |
|
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
|
SECTION 1. Section 802.002, Government Code, is amended by |
|
|
adding Subsection (e) to read as follows: |
|
|
(e) Notwithstanding any other law, including Subsection |
|
|
(a), an alternative retirement plan established under Chapter 806 |
|
|
is exempt from Sections 802.101, 802.1012, 802.1014, 802.103, |
|
|
802.104, and 802.202(d). This subsection may not be construed to |
|
|
exempt any plan from Section 802.105 or 802.106(h). |
|
|
SECTION 2. Subtitle A, Title 8, Government Code, is amended |
|
|
by adding Chapter 806 to read as follows: |
|
|
CHAPTER 806. AUTHORITY TO ESTABLISH ALTERNATIVE RETIREMENT PLANS |
|
|
SUBCHAPTER A. GENERAL PROVISIONS |
|
|
Sec. 806.001. DEFINITIONS. In this chapter: |
|
|
(1) "Alternative retirement plan" means a defined |
|
|
contribution plan or a hybrid retirement plan. |
|
|
(2) "Board of trustees" means the board of trustees of |
|
|
a retirement system. |
|
|
(3) "Defined benefit plan" means, as appropriate, the |
|
|
plan that provides benefits to: |
|
|
(A) members of the employee class of the |
|
|
Employees Retirement System of Texas under Subtitle B; or |
|
|
(B) members of the Teacher Retirement System of |
|
|
Texas under Subtitle C. |
|
|
(4) "Defined contribution plan" has the meaning |
|
|
assigned by Section 802.001. |
|
|
(5) "Employee" means: |
|
|
(A) for purposes of the Employees Retirement |
|
|
System of Texas, a person who, but for creation of an alternative |
|
|
retirement system under this chapter, would be eligible for |
|
|
membership in the employee class of that system under Subchapter A, |
|
|
Chapter 812; or |
|
|
(B) for purposes of the Teacher Retirement System |
|
|
of Texas, a person who, but for creation of an alternative |
|
|
retirement system under this chapter, would be eligible for |
|
|
membership in that system under Subchapter A, Chapter 822. |
|
|
(6) "Hybrid retirement plan" means a retirement plan |
|
|
that combines elements of a defined benefit plan, a defined |
|
|
contribution plan, or an individual retirement savings account. |
|
|
(7) "Qualified plan" means an employee benefit plan |
|
|
qualified under Section 401(a), Internal Revenue Code of 1986 (26 |
|
|
U.S.C. Section 401). |
|
|
(8) "Retirement system" means the Employees |
|
|
Retirement System of Texas or the Teacher Retirement System of |
|
|
Texas, as appropriate. |
|
|
Sec. 806.002. APPLICABILITY. This chapter applies only to: |
|
|
(1) the Employees Retirement System of Texas; and |
|
|
(2) the Teacher Retirement System of Texas. |
|
|
Sec. 806.003. CONFLICT OF LAW. To the extent of a conflict |
|
|
between this chapter, including a rule adopted by a retirement |
|
|
system under authority of this chapter, and any other law, this |
|
|
chapter prevails. |
|
|
SUBCHAPTER B. AUTHORITY TO CREATE ALTERNATIVE PLANS |
|
|
Sec. 806.051. CREATION OF ALTERNATIVE PLAN. |
|
|
Notwithstanding any other law, including Subtitles B and C, and |
|
|
subject to the requirements of Subchapter C, the board of trustees |
|
|
of a retirement system may by rule establish and administer an |
|
|
alternative retirement plan to provide benefits to newly hired |
|
|
employees under that plan instead of under a defined benefit plan. |
|
|
Sec. 806.052. CERTAIN REFERENCES IN LAW TO RETIREMENT |
|
|
SYSTEM MEMBERS. If a retirement system establishes an alternative |
|
|
retirement plan under this chapter, a reference in law to a member |
|
|
of or membership in the retirement system includes a participant of |
|
|
or participation in, as appropriate, the alternative retirement |
|
|
plan unless the reference is expressly defined otherwise. |
|
|
SUBCHAPTER C. ALTERNATIVE PLAN MINIMUM REQUIREMENTS |
|
|
Sec. 806.101. MINIMUM REQUIREMENTS. In establishing an |
|
|
alternative retirement plan under this chapter, a retirement system |
|
|
shall ensure the plan meets the requirements of this subchapter. |
|
|
Sec. 806.102. QUALIFIED PLAN. An alternative retirement |
|
|
plan created under this section must be a qualified plan. |
|
|
Sec. 806.103. PARTICIPATION IN ALTERNATIVE PLAN; |
|
|
RESUMPTION OF SERVICE. (a) In adopting rules to establish an |
|
|
alternative retirement plan under this chapter, the board of |
|
|
trustees shall designate the date by which all newly hired |
|
|
employees shall begin participation in the plan. |
|
|
(b) A person who resumes employment with an employer on or |
|
|
after the date designated by the board of trustees under Subsection |
|
|
(a) and who is already a member of the retirement system eligible to |
|
|
participate in a defined benefit plan remains eligible to |
|
|
participate in the defined benefit plan and is not considered a |
|
|
newly hired employee for purposes of this section. |
|
|
(c) Notwithstanding any other law, an employee who |
|
|
participates in an alternative retirement plan established under |
|
|
this chapter is not eligible for membership in the retirement |
|
|
system and may not participate in the defined benefit plan |
|
|
administered by the retirement system. |
|
|
Sec. 806.104. EFFECT OF EMPLOYMENT CHANGES. A person |
|
|
participating in an alternative retirement plan continues to |
|
|
participate in the plan when the person changes employment to |
|
|
another position included in the coverage of the retirement system. |
|
|
Sec. 806.105. VESTING OF BENEFITS; TERMINATION OF |
|
|
PARTICIPATION. (a) Benefits in an alternative retirement plan |
|
|
vest in a participant not later than the fifth anniversary of the |
|
|
date the person begins to participate in the plan. |
|
|
(b) A person terminates participation in an alternative |
|
|
retirement plan, without losing any vested benefits, by: |
|
|
(1) death; |
|
|
(2) retirement; or |
|
|
(3) termination of employment in all positions |
|
|
included in the coverage of the retirement system. |
|
|
(c) The benefits of a product purchased under an alternative |
|
|
retirement plan become available under the terms of the annuity but |
|
|
not before the earlier of the date: |
|
|
(1) the member terminates participation as provided by |
|
|
Subsection (b); or |
|
|
(2) the sum of the member's age and years of service in |
|
|
a position covered by the plan is equal to 80. |
|
|
Sec. 806.106. CREDITABLE SERVICE. A person may not |
|
|
establish in the defined benefit plan administered by the |
|
|
retirement system credit for service performed during a period the |
|
|
person was participating in an alternative retirement plan. |
|
|
Sec. 806.107. CONTRIBUTIONS. (a) A participant in an |
|
|
alternative retirement plan shall make contributions to the plan at |
|
|
the same rate that a member of the retirement system participating |
|
|
in a defined benefit plan is required to make for current service, |
|
|
and the state and employers otherwise required to make |
|
|
contributions to a defined benefit plan shall make contributions to |
|
|
the alternative retirement plan for each participant at the same |
|
|
rate as the state and employers are required to contribute for |
|
|
contributing members of the defined benefit plan. Contributions |
|
|
required under this subsection shall be credited to the benefit of |
|
|
the participant. |
|
|
(b) A participant in an alternative retirement plan and the |
|
|
participant's employer shall execute an agreement under which the |
|
|
salary of the participant is reduced by the amount of the |
|
|
contribution required by this section. An agreement under this |
|
|
subsection is irrevocable until the participant terminates |
|
|
participation in the plan under Section 806.105. |
|
|
(c) Participant, state, and employer contributions, as |
|
|
applicable, shall be made in the manner provided by Subchapter E, |
|
|
Chapter 815, or Subchapter E, Chapter 825, as applicable. |
|
|
Sec. 806.108. HEALTH BENEFITS AND OTHER COVERAGES. A |
|
|
person who participates or who is eligible to participate in an |
|
|
alternative retirement plan established under this chapter is |
|
|
eligible for health benefits and other coverages under Subtitle H, |
|
|
Title 8, Insurance Code, and Subchapter D, Chapter 22, Education |
|
|
Code, if applicable, to the same extent as a person who is a member |
|
|
or who is eligible to be a member of the retirement system. |
|
|
SECTION 3. Section 822.001(b), Government Code, is amended |
|
|
to read as follows: |
|
|
(b) Membership in the retirement system is a condition of |
|
|
employment for employees of the public school system unless an |
|
|
employee is excluded from membership under Section 806.103(c) or |
|
|
822.002. |
|
|
SECTION 4. Section 830.002(b), Government Code, is amended |
|
|
to read as follows: |
|
|
(b) Participation in the optional retirement program is an |
|
|
alternative to active membership in the retirement system or |
|
|
participation in an alternative retirement plan under Chapter 806, |
|
|
as appropriate. |
|
|
SECTION 5. Sections 830.102(a) and (d), Government Code, |
|
|
are amended to read as follows: |
|
|
(a) A person included in the coverage [member] of the |
|
|
retirement system who is eligible [to participate in the optional
|
|
|
retirement program] may elect to [continue as a member of the
|
|
|
retirement system or to] participate in the optional retirement |
|
|
program. |
|
|
(d) An eligible person who does not elect to participate in |
|
|
the optional retirement program is considered to have chosen to |
|
|
continue participation [membership] in the retirement system. |
|
|
SECTION 6. Section 830.106, Government Code, is amended to |
|
|
read as follows: |
|
|
Sec. 830.106. ELIGIBILITY FOR RESUMPTION OF MEMBERSHIP. A |
|
|
participant in the optional retirement program is not eligible for |
|
|
participation [membership] in the retirement system unless the |
|
|
person: |
|
|
(1) terminates employment covered by the optional |
|
|
retirement program; and |
|
|
(2) becomes employed in the public school system or |
|
|
with a state agency in a position that is not eligible for |
|
|
participation in the optional retirement program. |
|
|
SECTION 7. This Act takes effect September 1, 2019. |