81R15399 T
By: Truitt H.B. No. 3480
A BILL TO BE ENTITLED
AN ACT
relating to annuities and investments for certain public employees.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 6 of Article 6228a-5, Vernon's Texas
Civil Statutes, is amended to read as follows:
Sec. 6. (a) A company is eligible to certify to the
retirement system under Section 5 of this Act if the company
satisfies the following financial strength criteria:
(1) the company's actuarial opinions required under
Articles 1.11 and 3.28, Insurance Code, have not been adverse or
qualified in the five years preceding the date the application is
filed;
(2) the company is subject to the annual audit
requirements of Article 1.15A, Insurance Code, and its most recent
audit of financial strength conducted by an independent certified
public accountant is timely filed and does not indicate the
existence of any material adverse financial conditions in the
company for the five years preceding the filing deadline for the
audit;
(3) the company has not been the subject of an
administrative or regulatory action by the Texas Department of
Insurance under Article 1.32 or 21.28-A or Section 83.051,
Insurance Code, in the five years preceding the date the
application is filed;
(4) the company has maintained during the five years
preceding the date the application is filed an average of at least
400 percent of the authorized control level, as calculated in
accordance with the risk-based capital and surplus requirements
established in rules adopted by the Texas Department of Insurance;
(5) the company has not fallen below 300 percent of the
authorized control level, as calculated in accordance with the
risk-based capital and surplus established in rules adopted by the
Texas Department of Insurance, at any time in the five years
preceding the date the application is filed; and
(6) the company has at least five years' experience in
qualified investment products and has a specialized department
dedicated to the service of qualified investment products.
(b) For purposes of Subsection (a)(4) of this section, the
company must calculate the five-year average on the same date each
year.
(c) After consultation with the Texas Department of
Insurance and the State Securities Board, the retirement system may
adopt rules only to administer this section and Sections 5, 7, 8,
8A, 11, 12, and 13 of this Act.
(d) The retirement system shall refer all complaints about
qualified investment products or a certified company under Section
9A to the appropriate division of the Texas Department of Insurance
or the State Securities Board.
(e) Violations of this Act are subject to enforcement under
Title 2, Subtitle B, Insurance Code, and Title 19, Texas Civil
Statutes.
(f) The Texas Department of Insurance and the State
Securities Board shall cooperate with the retirement system in the
administration of this Act and shall provide a report to [notify]
the retirement system at the beginning of each quarter of the fiscal
year setting forth the status of any action or determination
regarding a product or a company that is alleged to have violated
[violates] Sections 5, [or] 8A, or 9A of this Act. The Texas
Department of Insurance and the State Securities Board shall
promptly notify the retirement system of any final order finding a
violation of this Act.
(g) [(f)] The retirement system shall revoke the
certification of a company if the retirement system receives notice
under Subsection (f) [(e)] of this section of a final order finding
a violation of this Act. The retirement system shall revoke the
certification of a company for a period of one year if the
retirement system receives notice of a final order that the company
has been found to have violated Section 9A of this Act. The
retirement system shall revoke the certification of a company if
the retirement system receives notice under [or] Section 5(c) of
this Act of a violation regarding the company or the company's
product. The company may recertify to the board of trustees after
the applicable period of revocation.
(h) [(g)] The retirement system shall prescribe the uniform
notice required by Section 11 of this Act.
(i) [(h)] A certification or recertification remains in
effect for five years unless denied, suspended, or revoked.
(j) [(i)] A company offering eligible qualified investments
that are subject to salary reduction agreements must provide
toll-free telephone transferring privileges each business day from
8 a.m. to 6 p.m. central standard time.
SECTION 2. Section 8(a) of Article 6228a-5, Vernon's Texas
Civil Statutes, is amended to read as follows:
Section 8: (a) A company that offers qualified investment
products other than annuity contracts, including a company that
offers a custodial account under Section 403(b)(7), Internal
Revenue Code of 1986, as amended, with only registered products of
other certified companies, may certify to the retirement system
based on rules adopted by the board of trustees. The rules shall be
based on reasonable factors, including:
(1) the financial strength of the companies offering
products; and
(2) the administrative cost to employees.
SECTION 3. Section 9(a) of Article 6228a-5, Vernon's Texas
Civil Statutes, is amended to read as follows:
Sec. 9. (a) An educational institution may not:
(1) except as provided by Subsection (b) of this
section, refuse to enter into a salary reduction agreement with an
employee if the qualified investment product that is the subject of
the salary reduction is an eligible qualified investment and is
registered with the system under Section 8A;
(2) require or coerce an employee's attendance at any
meeting at which qualified investment products are marketed;
(3) limit the ability of an employee to initiate,
change, or terminate a qualified investment product at any time the
employee chooses;
(4) grant exclusive access to an employee by
discriminating against or imposing barriers to any agent, broker,
or company that provides qualified investment products under this
Act;
(5) grant exclusive access to information about an
employee's financial information, including information about an
employee's qualified investment products, to a company or agent
offering qualified investment products unless the employee
consents in writing to the access;
(6) accept any benefit from a company or from an agent
or affiliate of a company that offers qualified investment
products; [or]
(7) use public funds to recommend a qualified
investment product offered by a company or an agent of a company
that offers a qualified investment product; or
(8) enter into a salary reduction agreement or
continue a salary reduction agreement for a product that is offered
by a company that has not certified to the retirement system,
including a company whose certification has been suspended or
revoked.
SECTION 4. Article 6228a-5, Vernon's Texas Civil Statutes,
is amended by adding Section 9A to read as follows:
Sec. 9A. A certified company, a company owned by or
affiliated by common ownership or control with a certified company,
or an agent of such companies may not enter into or renew a contract
with an educational institution for administration of the
institution's Section 403(b) retirement plan.
SECTION 5. This Act takes effect September 1, 2009.