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A BILL TO BE ENTITLED
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AN ACT
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relating to requiring the Employees Retirement System of Texas to |
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establish a hybrid retirement plan to provide retirement benefits |
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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), a hybrid retirement plan established under Chapter 820 is |
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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 B, Title 8, Government Code, is amended |
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by adding Chapter 820 to read as follows: |
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CHAPTER 820. HYBRID RETIREMENT PLAN |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 820.001. DEFINITIONS. In this chapter: |
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(1) "Defined benefit plan" means, as appropriate, the |
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plan that provides benefits to members of the employee class of the |
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retirement system under Chapters 811 through 815. |
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(2) "Defined contribution plan" has the meaning |
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assigned by Section 802.001. |
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(3) "Employee" means an employee or appointed officer |
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described by Section 812.003(a). |
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(4) "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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established under this chapter. |
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(5) "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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Sec. 820.002. CONFLICT OF LAW. To the extent of a conflict |
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between this chapter, including a rule adopted by the 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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Sec. 820.003. CERTAIN REFERENCES IN LAW TO RETIREMENT |
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SYSTEM MEMBERS. A reference in law outside this subtitle to a |
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member of or membership in the retirement system includes a |
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participant of or participation in, as appropriate, a hybrid |
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retirement plan unless the reference is expressly defined |
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otherwise. |
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SUBCHAPTER B. CREATION OF HYBRID RETIREMENT PLAN |
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Sec. 820.051. DUTY TO CREATE PLAN. Notwithstanding any |
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other law and subject to the requirements of Subchapter C, the board |
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of trustees shall by rule establish and administer a hybrid |
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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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SUBCHAPTER C. PLAN MINIMUM REQUIREMENTS |
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Sec. 820.101. MINIMUM REQUIREMENTS. In establishing a |
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hybrid retirement plan, the board of trustees of the retirement |
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system shall ensure the plan meets the requirements of this |
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subchapter. |
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Sec. 820.102. QUALIFIED PLAN. A hybrid retirement plan |
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created under this chapter must be a qualified plan. |
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Sec. 820.103. PARTICIPATION IN PLAN; RESUMPTION OF SERVICE. |
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(a) In adopting rules to establish a hybrid retirement plan, the |
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board of trustees shall designate the date by which all newly hired |
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employees shall begin participation in the plan, provided that date |
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is not later than January 1, 2023. |
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(b) A person who resumes employment with an employer on or |
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after the date designated by the board of trustees under Subsection |
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(a) and who 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 |
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newly hired employee for purposes of this section. |
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(c) Notwithstanding any other law, including Section |
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812.003, an employee who participates in a hybrid retirement plan |
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established under this chapter is not eligible for membership in |
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the retirement system and may not participate in the defined |
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benefit plan administered by the retirement system. |
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Sec. 820.104. EFFECT OF EMPLOYMENT CHANGES. A person |
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participating in a hybrid retirement plan continues to participate |
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in the plan when the person changes employment to another position |
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included in the coverage of the retirement system. |
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Sec. 820.105. VESTING OF BENEFITS; TERMINATION OF |
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PARTICIPATION. (a) Benefits in a hybrid retirement plan vest in a |
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participant not later than the fifth anniversary of the date the |
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person begins to participate in the plan. |
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(b) A person terminates participation in a hybrid |
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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 a hybrid |
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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 sum of the member's age and years of service in |
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a position covered by the plan is equal to 80. |
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Sec. 820.106. 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 a hybrid retirement plan. |
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Sec. 820.107. CONTRIBUTIONS. (a) A participant in a hybrid |
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retirement plan shall make contributions to the plan at the same |
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rate that a member of the retirement system participating in a |
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defined benefit plan is required to make for current service, and |
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the state and employers otherwise required to make contributions to |
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a defined benefit plan shall make contributions to the hybrid |
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retirement plan for each participant at the same rate as the state |
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and employers are required to contribute for contributing members |
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of the defined benefit plan. Contributions required under this |
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subsection shall be credited to the benefit of the participant. |
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(b) A participant in a hybrid 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 820.105. |
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(c) Participant, state, and employer contributions, as |
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applicable, shall be made in the manner provided by Subchapter E, |
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Chapter 815. |
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SECTION 3. This Act takes effect September 1, 2021. |