87R20704 KFF-F
 
  By: Gates, Capriglione, Parker, Stephenson H.B. No. 4534
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to a study by the Employees Retirement System of Texas of
  certain state retirement system reforms.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  INTERIM STUDY. (a) The Employees Retirement
  System of Texas shall conduct a study to evaluate potential reforms
  designed to improve the financial health of the retirement system,
  including the feasibility and anticipated financial impact of
  implementing the following reforms:
               (1)  transitioning from providing retirement benefits
  to members of the system under a defined benefit plan to providing
  those benefits under:
                     (A)  a defined contribution plan;
                     (B)  a hybrid pension plan that combines elements
  of a defined contribution plan and a defined benefit plan;
                     (C)  a cash balance pension plan that provides
  individual accounts for plan members; and
                     (D)  another retirement plan commonly used by
  other states;
               (2)  adopting changes to the existing defined benefit
  plan that are designed to reduce the unfunded actuarial accrued
  liabilities of the system and achieve actuarial soundness,
  including:
                     (A)  increasing the state contribution rate;
                     (B)  changing the minimum age at which members are
  eligible to retire;
                     (C)  changing the formula used to calculate
  annuities provided under the plan; and
                     (D)  reducing the amount of benefits provided
  under the plan, including the potential of offering members the
  option to receive partial lump sum payments in lieu of a portion of
  the member's annuity in a manner that ensures the amount of the lump
  sum payment is less than the actuarial present value of the portion
  of the annuity forfeited by the member; and
               (3)  implementing a pension revenue enhancement plan
  under which a life insurance policy or other financial product or
  benefit is purchased under the plan for members and annuitants of
  the Employees Retirement System of Texas who are eligible for and
  elect to enroll in the plan.
         (b)  In conducting the study required by this section, the
  Employees Retirement System of Texas shall review and evaluate the
  retirement plans and systems established in other states for best
  practices and financial outcomes, taking into consideration:
               (1)  the overall performance of other states' plans
  based on the unfunded liability balances, if any, of those plans;
  and
               (2)  the strengths and weaknesses of other states' 
  plans in attracting and maintaining a competitive workforce.
         (c)  The Employees Retirement System of Texas may consult
  with anyone the system determines appropriate to conduct the study
  and prepare the report required by this section, including outside
  experts and other state agencies, including the State Pension
  Review Board, the Legislative Budget Board, and the Texas
  Department of Insurance.
         SECTION 2.  FINDINGS AND RECOMMENDATIONS. Not later than
  September 1, 2022, the Employees Retirement System of Texas shall
  report the system's findings and recommendations to the governor,
  the lieutenant governor, the speaker of the house of
  representatives, and each member of the legislature. The system
  shall include in its recommendations specific statutory and
  regulatory changes that the system determines necessary or
  appropriate to implement its recommendations.
         SECTION 3.  EXPIRATION OF ACT. This Act expires September
  15, 2022.
         SECTION 4.  EFFECTIVE DATE. This Act takes effect
  immediately 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
  immediate effect, this Act takes effect September 1, 2021.