87R2145 JCG-D
 
  By: Stephenson H.B. No. 248
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to a pension revenue enhancement plan for the Teacher
  Retirement System of Texas.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle C, Title 8, Government Code, is amended
  by adding Chapter 826 to read as follows:
  CHAPTER 826. PENSION REVENUE ENHANCEMENT PLAN
         Sec. 826.0001.  DEFINITIONS. Notwithstanding any other
  provision of this subtitle, in this chapter:
               (1)  "Beneficiary" or "designated beneficiary" means a
  person or entity who is designated by a member or annuitant under
  authority of Section 826.0002(b) to receive the proceeds of a life
  insurance policy purchased under the plan.
               (2)  "Board of trustees," unless the context requires
  otherwise, means the board appointed under this chapter.
               (3)  "Pension revenue enhancement plan" or "plan" means
  the pension revenue enhancement plan established in accordance with
  this chapter.
               (4)  "Plan manager" means the plan manager the board of
  trustees enters into a contract with under Section 826.0009.
               (5)  "Trust fund" means the pension revenue enhancement
  plan trust fund established under this chapter.
               (6)  "Trustee" means the trustee the board of trustees
  enters into a contract with under Section 826.0008.
         Sec. 826.0002.  PENSION REVENUE ENHANCEMENT PLAN. (a) The
  pension revenue enhancement plan established in accordance with
  this chapter provides a life insurance benefit to certain members
  and annuitants of the retirement system while providing an
  additional revenue source for funding the retirement system. Under
  the plan, the trustee shall purchase a life insurance policy that
  provides for a cash value, the face value of which is $100,000, for
  each member enrolled in the plan. Except as provided by Subsection
  (b), the trust fund is the owner and beneficiary of each life
  insurance policy purchased under the plan.
         (b)  A member or annuitant enrolled in the plan may designate
  a beneficiary to receive $50,000 of the proceeds of the life
  insurance policy purchased under the plan.
         (c)  The trustee or plan manager may obtain a loan from a
  third-party lender to pay the premium of a life insurance policy
  purchased under the plan. On the death of a member or annuitant
  enrolled in the plan, the trustee or plan manager, as applicable,
  shall repay the third-party lender from the proceeds of the life
  insurance policy.
         (d)  When the cash value of a life insurance policy is
  sufficient, as determined by the trustee, the trustee may borrow
  against the policy to:
               (1)  repay the loan of a third-party lender; and
               (2)  use excess cash flow to purchase life insurance
  policies for other members enrolled in the plan or for another
  purpose authorized under the plan.
         Sec. 826.0003.  MEMBER ENROLLMENT IN PLAN. (a) A member or
  annuitant of the retirement system may elect to enroll in the plan
  if the member or annuitant, as applicable:
               (1)  is 62 years of age or younger; and
               (2)  meets the insurer's requirements for issuance of a
  life insurance policy.
         (b)  The board of trustees, in cooperation with the public
  school system, shall ensure that not later than the 30th day after
  the date a member is hired by a public school system, the member is
  given an opportunity to elect to enroll in the plan.
         (c)  A member or annuitant may not be required to enroll in
  the plan or to pay the premium or any other fee to enroll in the
  plan.
         Sec. 826.0004.  PENSION REVENUE ENHANCEMENT PLAN TRUST FUND.
  (a) In this section, "financial institution" has the meaning
  assigned by Section 201.101, Finance Code.
         (b)  The pension revenue enhancement plan trust fund is a
  trust fund outside the state treasury that is:
               (1)  held in a financial institution by the board of
  trustees on behalf of members and annuitants of the retirement
  system; and
               (2)  administered by the board of trustees through a
  contract with the trustee and plan manager.
         (c)  The trust fund consists of:
               (1)  proceeds of a life insurance policy issued to a
  member or annuitant enrolled in the plan;
               (2)  gifts, grants, and other donations received for
  the trust fund;
               (3)  proceeds of loans obtained for purposes of the
  trust fund; and
               (4)  interest earned on trust fund money.
         (d)  The plan manager shall allocate money deposited in the
  trust fund for the purposes specified under this chapter.
         (e)  The board of trustees and the trustee shall administer
  the trust fund in a manner that qualifies income earned in the trust
  fund for an exemption from federal income taxation under Section
  115, Internal Revenue Code of 1986.
         Sec. 826.0005.  USES OF TRUST FUND MONEY. The trustee may
  use trust fund money only to:
               (1)  purchase life insurance policies for members and
  annuitants enrolled in the plan;
               (2)  distribute proceeds in accordance with Section
  826.0006(1);
               (3)  pay the interest, principal, and any fees
  associated with a loan obtained under the plan;
               (4)  pay costs associated with plan administration and
  operation, including the plan manager's fee in accordance with the
  contract between the board of trustees and the plan manager; and
               (5)  make a contribution to retirement system assets.
         Sec. 826.0006.  TRUST FUND DISTRIBUTIONS. On the death of a
  member or annuitant enrolled in the plan, the trustee shall:
               (1)  distribute $50,000 from the proceeds under the
  life insurance policy to the member's or annuitant's designated
  beneficiary, if any; and
               (2)  retain the remaining proceeds in the trust fund to
  use in accordance with Section 826.0005.
         Sec. 826.0007.  BOARD OF TRUSTEES. (a)  The governor shall
  appoint nine members of the board of trustees after consulting with
  the State Board of Education, the Texas Department of Insurance,
  the board of trustees of the retirement system, and any other agency
  or person the governor determines appropriate.
         (b)  All members of the board of trustees must have
  experience in the field of finance, insurance, pension
  administration, or an appropriate industry relevant to the purposes
  for which the trust fund is established.
         (c)  Members of the board of trustees serve staggered
  six-year terms.
         (d)  If a vacancy occurs, the governor shall appoint a person
  to serve for the remainder of the unexpired term.
         (e)  The governor shall designate the presiding officer of
  the board of trustees.
         (f)  A member of the board of trustees may not receive
  compensation for service as a member but is entitled to
  reimbursement for necessary expenses the member incurs in the
  discharge of the member's duties.
         (g)  The board of trustees shall meet at the call of the
  presiding officer.
         (h)  The retirement system shall provide the board of
  trustees with any administrative support necessary for the board to
  exercise its duties under this chapter, including providing office
  space, equipment, and any technical assistance the board may
  require.
         (i)  The board of trustees has all the authority necessary
  and proper to carry out the board's duties under this chapter,
  including the authority to adopt rules necessary to implement this
  chapter.
         Sec. 826.0008.  TRUSTEE. (a)  The board of trustees shall
  contract with a person to act as the trustee of the trust fund.  The
  trustee shall:
               (1)  hold and administer the assets of the trust fund;
               (2)  distribute life insurance policy proceeds as
  appropriate;
               (3)  annually or at the request of the board of
  trustees, provide status reports on the performance of the plan to
  the board;
               (4)  as appropriate, enter into a loan agreement with a
  third-party lender on behalf of the trust fund to finance the
  premiums of life insurance policies purchased under the plan;
               (5)  as appropriate, sign a collateral assignment for a
  life insurance policy on behalf of the trust fund;
               (6)  work with the plan manager to ensure loan and life
  insurance policy information is correct and complies with the plan;
               (7)  as appropriate, provide death benefit information
  to and request life insurance policy loans from the insurer; and
               (8)  on the death of a member or annuitant enrolled in
  the plan, distribute the proceeds under the life insurance policy
  to the designated beneficiary in accordance with Section
  826.0006(1).
         (b)  The trustee has all the authority necessary or proper to
  carry out the trustee's duties under this section.
         Sec. 826.0009.  PLAN MANAGER. The board of trustees shall
  contract with a person to act as plan manager. The plan manager
  shall:
               (1)  design, implement, and assist with overseeing the
  pension revenue enhancement plan required under this chapter and
  ensure compliance with all applicable legal and technical
  requirements;
               (2)  implement the plan and modify the plan as
  necessary to comply with Section 826.0004(e);
               (3)  design or select a life insurance policy
  appropriate for the plan;
               (4)  obtain the approval and support of an insurance
  company for the plan;
               (5)  negotiate with an insurance company to obtain
  beneficial life insurance policy enhancements for the plan,
  including low-commission products;
               (6)  negotiate with a third-party lender for the most
  advantageous loan terms;
               (7)  facilitate loan renewals as necessary;
               (8)  provide the trustee with information needed to
  complete annual status reports required under Section
  826.0008(a)(3);
               (9)  by working with the public school system,
  facilitate member enrollment in the plan;
               (10)  work with the public school system to ensure
  members or annuitants enrolled in the plan have access to the
  insurance company's claims department;
               (11)  oversee member and annuitant compliance with the
  insurance company's underwriting process to ensure proper
  enrollment in the plan;
               (12)  enroll new members in the plan as appropriate;
  and
               (13)  advise the board of trustees and the trustee on:
                     (A)  plan maintenance or changes;
                     (B)  appropriate repayment of loans; and
                     (C)  obtaining life insurance policy loans.
         Sec. 826.0010.  LIFE INSURANCE COMPANY. To be eligible to
  participate in the pension revenue enhancement plan created under
  this chapter, an insurance company must have a suitable credit
  rating.
         Sec. 826.0011.  PREMIUM FINANCE COMPANY. (a) To be eligible
  to participate in the pension revenue enhancement plan created
  under this chapter, a premium finance company must, as determined
  by the trustee:
               (1)  have at least 10 years of experience in the full
  recourse life insurance premium finance industry in the United
  States;
               (2)  have suitable support capability to service the
  plan;
               (3)  have at least two life insurance company and bank
  references;
               (4)  have deployed at least one financed insurance
  solution that complies with principles prescribed by the
  Governmental Accounting Standards Board; and
               (5)  demonstrate suitable testing of the company's
  designs to withstand an economic crisis.
         (b)  A premium finance company participating in the plan may:
               (1)  act as technical advisor to the trustee on
  securing premium financing for life insurance policies;
               (2)  assist with educating members and annuitants about
  the plan in partnership with the retirement system;
               (3)  participate in designing the plan;
               (4)  analyze the plan design to determine its ability
  to withstand an economic crisis;
               (5)  negotiate life insurance policy terms with an
  insurance company;
               (6)  help select an insurance company and life
  insurance policy;
               (7)  facilitate lending for the trustee;
               (8)  facilitate member enrollment;
               (9)  facilitate insurance underwriting;
               (10)  facilitate policy placement;
               (11)  engage in plan servicing and monitoring;
               (12)  technically advise on when to cease obtaining
  loans under the plan;
               (13)  assist with preparing annual status reports
  required under Section 826.0008(a)(3);
               (14)  assist with insurance claims processing; and
               (15)  act as a liaison to insurance companies and
  third-party lenders.
         Sec. 826.0012.  CONFIDENTIALITY OF RECORDS. (a) Except as
  provided by Subsection (b), all information relating to the plan is
  public and subject to disclosure under Chapter 552.
         (b)  Information relating to a prospective or current member
  or annuitant, including any personally identifiable information,
  is confidential except that the board may disclose that information
  to:
               (1)  the member regarding the member's life insurance
  policy; or
               (2)  an insurance company or a state or federal agency
  as necessary to administer the plan.
         Sec. 826.0013.  PLAN LIMITATIONS. (a) This chapter may not
  be construed to guarantee that proceeds under a life insurance
  policy will be sufficient to cover the expenses of a designated
  beneficiary.
         (b)  This chapter may not be construed to create any
  obligation of the state, any agency or instrumentality of the
  state, or the plan manager to guarantee for the benefit of a member
  or annuitant enrolled in the plan or a designated beneficiary:
               (1)  the return of any amount contributed to the trust
  fund on behalf of the enrolled member or annuitant;
               (2)  the rate of interest or other return on the life
  insurance policy; or
               (3)  the payment of interest or other return on the life
  insurance policy.
         SECTION 2.  (a) Not later than October 1, 2021, the governor
  shall appoint members to the board of trustees of the pension
  revenue enhancement plan as required by Section 826.0007,
  Government Code, as added by this Act.
         (b)  Not later than September 1, 2022, the board of trustees
  of the pension revenue enhancement plan shall ensure a pension
  revenue enhancement plan is established in accordance with Chapter
  826, Government Code, as added by this Act, and, notwithstanding
  Section 826.0003, Government Code, as added by this Act, shall
  ensure enrollment of members of the Teacher Retirement System of
  Texas in the plan is delayed until the plan has been implemented.
         SECTION 3.  This Act takes effect September 1, 2021.