By: Huffman S.B. No. 1245
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to contributions to, benefits from, and the administration
  of the Judicial Retirement System of Texas Plan Two.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 803.202, Government Code, is amended by
  adding Subsection (d) to read as follows:
         (d)  A member of the Judicial Retirement System of Texas Plan
  Two who is subject to Chapter 840A is eligible to participate in the
  program provided by this chapter.
         SECTION 2.  Section 804.003, Government Code, is amended by
  amending Subsections (j) and (k) and adding Subsection (k-2) to
  read as follows:
         (j)  Except as provided by Subsection (k-2), if [If] a
  domestic relations order is determined to be a qualified domestic
  relations order, then the public retirement system (or applicable
  carrier, if under the optional retirement program) shall pay the
  segregated amounts without interest to the person or persons
  entitled thereto and shall thereafter pay benefits pursuant to the
  order.
         (k)  Except as provided by Subsection (k-2), if [If] a
  domestic relations order is determined not to be a qualified
  domestic relations order or if within 18 months of the date a
  domestic relations order is received by the public retirement
  system (or applicable carrier, if under the optional retirement
  program) the issue as to whether such order is a qualified domestic
  relations order is not resolved, then the public retirement system
  (or applicable carrier, if under the optional retirement program)
  shall pay the segregated amounts without interest and shall
  thereafter pay benefits to the person or persons who would have been
  entitled to such amounts if there had been no order.  This
  subsection shall not be construed to limit or otherwise affect any
  liability, responsibility, or duty of a party with respect to any
  other party to the action out of which the order arose.
         (k-2)  Payment of segregated amounts by a public retirement
  system, or applicable carrier if under the optional retirement
  program, under Subsections (j) and (k) related to a benefit payable
  with respect to a member or retiree subject to Chapter 840A must
  include annual interest provided by Section 840A.103 and gain
  sharing interest provided by Section 840A.104.
         SECTION 3.  Section 836.001, Government Code, is amended by
  adding Subdivision (3-a) and amending Subdivision (9) to read as
  follows:
               (3-a)  "Cash balance group member" means a member
  subject to Chapter 840A.
               (9)  "Service credit" means the amount of membership
  and, if applicable, military[,] and equivalent membership service
  ascribed by the retirement system to a person and for which the
  person has made required contributions.
         SECTION 4.  Section 837.102(a), Government Code, is amended
  to read as follows:
         (a)  A retiree who resumes service as a judicial officer
  other than by [appointment or] assignment described in Section
  837.101 may not rejoin or receive credit in the retirement system
  for the resumed service, unless an election is made as provided by
  Section 837.103.
         SECTION 5.  Subchapter B, Chapter 837, Government Code, is
  amended by adding Section 837.103 to read as follows:
         Sec. 837.103.  RESUMPTION OF FULL-TIME JUDICIAL SERVICE BY
  CERTAIN RETIREES; OPTIONAL ELECTION TO REJOIN SYSTEM. (a) This
  section does not apply to a retiree receiving a cash balance annuity
  under Chapter 840A.
         (b)  Notwithstanding Sections 837.001(c) and 837.002(2), a
  retiree described by Section 837.102(a) may elect to rejoin the
  retirement system as a member and receive service credit in the
  system for resuming service as a judicial officer if, before taking
  the oath of office, the retiree has been separated from judicial
  service for at least 12 full consecutive months. The retiree shall
  provide notice of the election to the system in the manner
  prescribed by the system.
         (c)  For a person who makes an election under this section,
  on the resumption of annuity payments that have been suspended
  under Section 837.102, the retirement system shall recompute the
  annuity selected at the time of the person's original retirement to
  include the person's additional service credit established during
  membership under this section. If, at the time of the person's
  original retirement, the person selected an optional retirement
  annuity payable under Section 839.103(a)(3) or (4), the retirement
  system shall reduce the number of months of payments by the number
  of months for which the annuity was paid before the person resumed
  service.
         (d)  The retirement system shall implement this section only
  if the system is considered actuarially sound. For purposes of this
  subsection, the system is considered actuarially sound if, based on
  an actuarial valuation of the system prepared under Section
  840.204(d) on or after September 1, 2023, the amount of
  contributions to the system are sufficient to cover the normal cost
  of the system and to amortize the unfunded actuarial accrued
  liability of the system within 30 years. Not later than the 30th
  day after the date an actuarial valuation is prepared showing the
  system is actuarially sound, the system shall implement this
  section. On September 1, 2025:
               (1)  if this section is implemented, this subsection
  expires; or
               (2)  if this section is not implemented, this section
  expires.
         SECTION 6.  Section 838.001, Government Code, is amended to
  read as follows:
         Sec. 838.001.  TYPES OF CREDITABLE SERVICE. The types of
  service creditable in the retirement system are[:
               [(1)]  membership service and, as applicable:[;]
               (1) [(2)]  military service; and
               (2) [(3)]  equivalent membership service.
         SECTION 7.  Subchapter A, Chapter 838, Government Code, is
  amended by adding Section 838.002 to read as follows:
         Sec. 838.002.  PROVISIONS INAPPLICABLE TO CASH BALANCE GROUP
  MEMBERS. Sections 838.102, 838.103, 838.1035, 838.105, 838.106,
  838.107, and 838.108 of this chapter do not apply to a cash balance
  group member.
         SECTION 8.  Subchapter A, Chapter 839, Government Code, is
  amended by adding Section 839.005 to read as follows:
         Sec. 839.005.  PROVISIONS INAPPLICABLE TO CASH BALANCE GROUP
  MEMBERS. The following provisions of this chapter do not apply to a
  cash balance group member:
               (1)  Section 839.002; and
               (2)  Subchapters B and E.
         SECTION 9.  Section 839.201(a), Government Code, is amended
  to read as follows:
         (a)  A member, other than a member who is eligible to receive
  a service retirement annuity under Section 839.101 or a cash
  balance annuity under Section 840A.052, is eligible, regardless of
  age, to retire from regular active service for disability and
  receive a disability retirement annuity if the member has at least
  seven years of service credit in the retirement system.
         SECTION 10.  Subchapter A, Chapter 840, Government Code, is
  amended by adding Section 840.009 to read as follows:
         Sec. 840.009.  PROVISIONS INAPPLICABLE TO CASH BALANCE GROUP
  MEMBERS. Sections 840.102(g) and (h), 840.1025, and 840.1027 of
  this chapter do not apply to a cash balance group member.
         SECTION 11.  The heading to Section 840.102, Government
  Code, is amended to read as follows:
         Sec. 840.102.  COLLECTION OF CERTAIN MEMBER CONTRIBUTIONS.
         SECTION 12.  Section 840.102(a), Government Code, is amended
  to read as follows:
         (a)  Except as provided by Subsections (g) and (h), each
  payroll period, a judicial officer who is a member of the retirement
  system other than a cash balance group member is required to
  contribute 9.5 percent of the officer's state compensation for
  service rendered after September 1, 2019.
         SECTION 13.  Sections 840.105(a) and (c), Government Code,
  are amended to read as follows:
         (a)  For all state compensation earned [after December 31,
  1989,] by judicial officers who are members of the retirement
  system, the state shall pick up the member contributions required
  by Section 840.102 or 840A.101, as applicable.  The state shall pay
  the picked-up contributions to the retirement system from the same
  source that is used in paying state compensation to the judicial
  officer members.  These payments are in lieu of contributions by the
  members.  The state shall pick up these contributions by a
  corresponding reduction in the cash salaries of the members, by an
  offset against a future salary increase, or by a combination of a
  salary reduction and offset against a future salary increase.  
  Members do not have the option of choosing to receive the
  contributed amounts directly instead of having them paid by the
  state to the retirement system.
         (c)  Member contributions picked up as provided by
  Subsection (a) shall be transmitted to the retirement system in the
  manner required by Section 840.102.  Member contributions picked up
  by the state shall be credited to the members' individual accounts
  and treated for all other purposes as if the amounts were a part of
  the members' compensation and had been deducted as provided by
  Section 840.102 or 840A.101, as applicable.
         SECTION 14.  Section 840.306(a), Government Code, is amended
  to read as follows:
         (a)  Except as provided by Section 840A.103 or 840A.104,
  interest [Interest] on money in a member's individual account in
  the retirement system is earned monthly and is computed at the rate
  of five percent a year on the mean balance of the member's account
  for the fiscal year.
         SECTION 15.  Subtitle E, Title 8, Government Code, is
  amended by adding Chapter 840A to read as follows:
  CHAPTER 840A.  CASH BALANCE BENEFIT
  SUBCHAPTER A.  GENERAL PROVISIONS
         Sec. 840A.001.  DEFINITION. In this chapter, "accumulated
  account balance" means the total of amounts in a member's
  individual account in the retirement system, including:
               (1)  amounts deducted from the compensation of the
  member;
               (2)  other member deposits required to be placed in the
  member's individual account; and
               (3)  interest credited to amounts in the member's
  individual account, including interest and gain sharing interest
  credited in accordance with Sections 840A.103 and 840A.104,
  respectively.
         Sec. 840A.002.  APPLICABILITY. This chapter applies only to
  a member who:
               (1)  took office on or after September 1, 2024; and
               (2)  was not a member on the date the member took
  office.
         Sec. 840A.003.  CONFLICT OF LAW. To the extent of a conflict
  between this chapter, including a rule adopted by the retirement
  system under authority of this chapter, and any other law, this
  chapter prevails.
         Sec. 840A.004.  RULES. The board of trustees may adopt rules
  necessary to implement this chapter.
  SUBCHAPTER B.  CASH BALANCE BENEFITS
         Sec. 840A.051.  APPLICATION FOR CASH BALANCE BENEFIT.
  (a)  A member may apply for a cash balance annuity by filing an
  application for retirement with the board of trustees.
         (b)  An application for a cash balance annuity may not be
  made:
               (1)  after the date the member wishes to retire; or
               (2)  more than 90 days before the date the member wishes
  to retire.
         Sec. 840A.052.  ELIGIBILITY FOR CASH BALANCE BENEFIT. A
  member is eligible to retire and receive a cash balance annuity if
  the member:
               (1)  is at least 60 years old and has at least eight
  years of service credited in the retirement system; or
               (2)  is at least 50 years old and has at least 12 years
  of service credited in the retirement system.
         Sec. 840A.053.  STANDARD CASH BALANCE BENEFITS FOR MEMBERS.
  (a)  The state match for the cash balance benefit is an amount
  computed by multiplying the member's accumulated account balance by
  150 percent.
         (b)  The retirement system shall compute a member's standard
  cash balance annuity under this section by taking the sum of the
  member's accumulated account balance and the state match computed
  under Subsection (a) and annuitizing that amount over the life
  expectancy of the member as of the effective date of the member's
  retirement using mortality and other tables adopted by the board of
  trustees for that purpose under Section 840.005.
         Sec. 840A.054.  OPTIONAL CASH BALANCE BENEFITS. (a)  
  Instead of the standard cash balance annuity payable under Section
  840A.053, a retiring member may elect to receive an optional cash
  balance annuity under this section.
         (b)  A person who selects an optional lifetime cash balance
  annuity must designate, before the selection becomes effective, one
  beneficiary to receive the annuity on the death of the person making
  the selection.  A person who selects an optional cash balance
  annuity payable for a guaranteed period may designate, before or
  after retirement, one or more beneficiaries to receive the annuity
  on the death of the person making the selection.
         (c)  A person eligible to select an optional cash balance
  annuity under this section may select an option which provides
  that:
               (1)  after the retiree's death, the reduced annuity is
  payable in the same amount throughout the life of the beneficiary
  designated by the retiree before retirement;
               (2)  after the retiree's death, one-half of the reduced
  annuity is payable throughout the life of the beneficiary
  designated by the retiree before retirement;
               (3)  if the retiree dies before 60 monthly annuity
  payments have been made, the remainder of the 60 payments are
  payable to one or more beneficiaries or, if one does not exist, to
  the retiree's estate;
               (4)  if the retiree dies before 120 monthly annuity
  payments have been made, the remainder of the 120 payments are
  payable to one or more beneficiaries or, if one does not exist, to
  the retiree's estate; or
               (5)  after the retiree's death, three-fourths of the
  reduced annuity is payable throughout the life of the beneficiary
  designated by the retiree before retirement.
         (d)  If a beneficiary designated by a retiree under
  Subsection (b) predeceases the retiree and the retiree has elected
  an optional lifetime annuity, the reduced annuity shall be
  increased to the standard cash balance annuity that the retiree
  would have been entitled to receive if the retiree had not selected
  the optional annuity.  The standard cash balance annuity shall be
  adjusted as appropriate for post-retirement increases in
  retirement benefits authorized by law since the date of retirement.
         (e)  Any increase in an annuity under Subsection (d) begins
  with the payment for the month following the month in which the
  designated beneficiary dies, and the increased annuity is payable
  to the retiree for the remainder of the retiree's life.
         (f)  The computation of an optional cash balance annuity must
  be made without regard to the gender of the annuitant or designated
  beneficiary.
         (g)  Except as provided by Section 840A.055, a person who
  selected an optional cash balance annuity described by Subsection
  (c)(1), (2), or (5) may not change or revoke a beneficiary
  designation after the person's effective date of retirement.
         (h)  A beneficiary designation that names a former spouse as
  a beneficiary for a guaranteed optional cash balance annuity
  described by Subsection (c)(3) or (4) is invalid unless the
  designation is made after the date of the divorce.
         Sec. 840A.055.  CHANGE IN OPTIONAL CASH BALANCE ANNUITY
  SELECTION. (a) A person who retired and selected an optional cash
  balance annuity described by Section 840A.054(c)(1), (2), or (5)
  may change the optional annuity to a standard cash balance annuity
  only if:
               (1)  pursuant to a divorce decree, a court orders the
  change in the annuity to a standard cash balance annuity; or
               (2)  the retiree files with the retirement system a
  request to change the annuity and, in connection with a divorce
  between the retiree and the beneficiary designated by the retiree
  under Section 840A.054(b), the beneficiary has executed a written,
  notarized instrument that:
                     (A)  releases the system from any claim to the
  annuity by the beneficiary; and
                     (B)  transfers all of the beneficiary's interest
  in the annuity to the retiree.
         (b)  If a retiree files a request as provided by Subsection
  (a), the retirement system shall recompute the annuity as a
  standard cash balance annuity. The increase in the annuity under
  this section begins with the monthly payment made to the retiree for
  the month following the month in which a request is filed as
  provided by Subsection (a).
         Sec. 840A.056.  PARTIAL LUMP-SUM CASH BALANCE OPTION.  (a)  A
  member who is eligible for a cash balance annuity may select a
  standard cash balance annuity under Section 840A.053 or an optional
  cash balance annuity under Section 840A.054, together with a
  partial lump-sum distribution.
         (b)  The amount of the lump-sum distribution under this
  section may not exceed the sum of 36 months of a standard cash
  balance annuity computed without regard to this section.
         (c)  The cash balance annuity selected by the member shall be
  actuarially reduced to reflect the lump-sum option selected by the
  member and shall be actuarially equivalent to a standard or
  optional cash balance annuity, as applicable, without the partial
  lump-sum distribution.  The annuity and lump sum shall be computed
  to result in no actuarial loss to the retirement system.
         (d)  The lump-sum distribution shall be made as a single
  payment payable at the time that the first monthly annuity payment
  is paid.
         (e)  The amount of the lump-sum distribution shall be
  deducted from any amount otherwise payable under this chapter.
         (f)  The partial lump-sum option under this section may be
  elected only once by a member and may not be elected by a retiree.  A
  member retiring under the proportionate retirement program under
  Chapter 803 is not eligible for the partial lump-sum option.
         (g)  Before a retiring member selects a partial lump-sum
  distribution under this section:
               (1)  the retirement system shall provide written notice
  to the member of the amount by which the member's annuity will be
  reduced because of the selection; and
               (2)  the member must acknowledge receipt of the notice
  in writing.
         (h)  The board of trustees may adopt rules for the
  implementation of this section and may authorize the option to be
  used for a death benefit annuity.  This section does not apply to a
  disability retirement annuity.
         Sec. 840A.057.  DEATH AND DISABILITY BENEFITS.  (a)  
  Notwithstanding any other law, a member subject to this chapter, a
  retiree receiving a cash balance annuity under this chapter, or the
  beneficiary of a member or retiree described by this subsection,
  who qualifies for a death or survivor benefit annuity or a
  disability retirement annuity under Chapter 839 is entitled to a
  cash balance annuity under this subchapter instead of the annuity
  otherwise provided under Chapter 839.
         (b)  The board of trustees may enter into contracts to
  provide additional death and disability benefits under this
  chapter.
  SUBCHAPTER C.  CONTRIBUTIONS AND INTEREST
         Sec. 840A.101.  COLLECTION OF MEMBER CONTRIBUTIONS.  Each
  payroll period, each department or agency of the state shall cause
  to be deducted from the compensation of a member subject to this
  chapter a contribution of six percent of the compensation of the
  member.
         Sec. 840A.102.  STATE CONTRIBUTIONS FOR MILITARY SERVICE.
  (a)  The state shall contribute for military service established
  under Section 838.1031 an amount in the same ratio to the member's
  contribution for the service as the state's contribution bears to
  the contribution for current service required of a member of the
  retirement system who is subject to this chapter at the time the
  service is established under this subchapter.
         (b)  The state's contribution under Subsection (a) shall be
  paid from the fund from which the member receives compensation at
  the time the service is established or, if the member does not hold
  a position at the time the service is established, from the fund
  from which the member received compensation when the member most
  recently held a position.
         Sec. 840A.103.  ANNUAL INTEREST ADJUSTMENT. Each fiscal
  year, the retirement system shall deposit for a member subject to
  this chapter an amount equal to four percent of the member's
  accumulated account balance deposited into the member's individual
  account in the retirement system.
         Sec. 840A.104.  GAIN SHARING INTEREST ADJUSTMENT. (a)  Each
  fiscal year and subject to Subsection (b), the retirement system
  shall compute the gain sharing interest rate by:
               (1)  determining the average return on the investment
  of the system's cash and securities during the preceding five
  fiscal years, expressed as a percentage rate;
               (2)  subtracting four percentage points from the
  percentage rate determined under Subdivision (1); and
               (3)  multiplying the resulting difference under
  Subdivision (2) by 50 percent.
         (b)  Subject to Subsection (c), each fiscal year, the
  retirement system shall:
               (1)  in addition to the amount deposited under Section
  840A.103, deposit into each member's individual account in the
  retirement system an amount equal to the gain sharing interest rate
  determined under Subsection (a) for the fiscal year multiplied by
  the member's accumulated account balance as of the end of the
  preceding fiscal year; and
               (2)  recalculate the annuity payment of a retiree or
  annuitant under this chapter by:
                     (A)  multiplying the annuity payment amount as of
  the end of the preceding fiscal year by the gain sharing interest
  rate determined under Subsection (a); or
                     (B)  if the retiree or annuitant was not entitled
  to an annuity payment as of the end of the preceding fiscal year,
  multiplying the retiree's or annuitant's first annuity payment
  amount by the gain sharing interest rate determined under
  Subsection (a).
         (c)  The gain sharing interest rate applied under Subsection
  (b) may not be less than zero or more than three percent.
         (d)  Subsection (b) applies only to a retiree or annuitant
  who is receiving a cash balance annuity under Section 840A.053 or
  840A.054, including an alternate payee under Section 804.005.
         SECTION 16.  Section 1551.102(b), Insurance Code, is amended
  to read as follows:
         (b)  An individual is eligible to participate in the group
  benefits program as provided by Subsection (a) if:
               (1)  the individual retires under the jurisdiction of
  the Employees Retirement System of Texas; and
               (2)  the individual:
                     (A)  receives or is eligible to receive an annuity
  under Section 814.104(a)(2), Government Code, and has at least 10
  years of eligible service credit;
                     (B)  receives or is eligible to receive an annuity
  under Chapter 803 or Section 814.104(a)(1), Government Code, has at
  least 10 years of eligible service credit, and is at least 65 years
  of age;
                     (C)  receives or is eligible to receive an annuity
  that is based on eligibility under Section 814.002, 814.102,
  814.104(b), 814.107(a), 834.101, or 839.101 or Subchapter B,
  Chapter 840A, Government Code; or
                     (D)  receives or is eligible to receive an annuity
  under Subchapter B, Chapter 820, Government Code, and has at least
  10 years of eligible service credit.
         SECTION 17.  Section 1551.3196(c), Insurance Code, is
  amended to read as follows:
         (c)  This section does not apply to an individual who:
               (1)  receives or is eligible to receive an annuity that
  is based on eligibility under Section 814.002, 814.102, 834.101,
  [or] 839.101, or 840A.052, Government Code; or
               (2)  is eligible to participate in the group benefits
  program under:
                     (A)  Section 1551.102(d) because of a disability;
  or
                     (B)  Section 1551.102(f).
         SECTION 18.  Section 837.103, Government Code, as added by
  this Act, if implemented, applies to a retiree of the Judicial
  Retirement System of Texas Plan Two who resumes service as a
  judicial officer before, on, or after the date that section is
  implemented.
         SECTION 19.  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, 2023.