Texas 2009 - 81st Regular

Texas House Bill HB360 Compare Versions

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1	1	H.B. No. 360
2	2
3	3
4	4	AN ACT
5	5	relating to the crediting and charging of investment gains and
6	6	losses on the assets held in trust by the Texas Municipal Retirement
7	7	System and providing a guaranteed minimum credit to employee
8	8	accounts.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 855.110, Government Code, is amended by
11	11	amending Subsection (a) and adding Subsection (d) to read as
12	12	follows:
13	13	(a) The board of trustees shall adopt rates and tables that
14	14	the board considers necessary for the retirement system after
15	15	considering the results of the actuary's investigation of the
16	16	mortality and service experience of the system's members and
17	17	annuitants. In adopting rates and tables, the board of trustees
18	18	shall adopt a discount rate that is not less than five percent in
19	19	developing an annuity purchase rate.
20	20	(d) In this section:
21	21	(1) "Annuity purchase rate" means the present value
22	22	factor used to convert reserves to a monthly annuity based on the
23	23	post-retirement discount rate assumption and the life expectancy of
24	24	the retiree or beneficiary or both the retiree and the beneficiary
25	25	at retirement under the selected form of payment.
26	26	(2) "Discount rate" means the interest rate used in
27	27	determining the present value of future cash flows.
28	28	SECTION 2. Section 855.111(a), Government Code, is amended
29	29	to read as follows:
30	30	(a) The board of trustees shall certify all current service
31	31	contribution rates and [,] all prior service contribution rates[,
32	32	and the current interest rate computed in accordance with Section
33	33	855.316(c) and approved in writing by the actuary].
34	34	SECTION 3. Section 855.205(d), Government Code, is amended
35	35	to read as follows:
36	36	(d) On the basis of rates and tables adopted by the board,
37	37	the actuary shall:
38	38	(1) annually compute the normal contribution rate for
39	39	each participating municipality;
40	40	(2) annually compute the prior service contribution
41	41	rate for each participating municipality;
42	42	(3) [compute the current interest rate in accordance
43	43	with Section 855.316(b);
44	44	[(4)] compute the supplemental death benefits rate and
45	45	the supplemental disability benefits rate for each participating
46	46	municipality; and
47	47	(4) [(5)] make an annual valuation of the assets and
48	48	liabilities of the funds of the retirement system.
49	49	SECTION 4. Section 855.307(a), Government Code, is amended
50	50	to read as follows:
51	51	(a) The retirement system shall credit or charge to [deposit
52	52	in] the account of a participating municipality in the municipality
53	53	accumulation fund:
54	54	(1) all current service contributions made by the
55	55	municipality to the retirement system;
56	56	(2) net investment income or loss allocated to the
57	57	fund under Section 855.317 [interest allowed as provided by this
58	58	subtitle on money in the fund]; and
59	59	(3) the withdrawal charge for reinstatement of
60	60	credited service as provided by Section 853.003.
61	61	SECTION 5. Section 855.308(a), Government Code, is amended
62	62	to read as follows:
63	63	(a) In addition to amounts credited or charged [deposited]
64	64	as provided by Section 855.307, the retirement system shall credit
65	65	to [deposit in] the account of a participating municipality in the
66	66	municipality accumulation fund all prior service contributions
67	67	made by the municipality to the retirement system.
68	68	SECTION 6. Section 855.310, Government Code, is amended to
69	69	read as follows:
70	70	Sec. 855.310. INTEREST FUND. (a) The amount in the
71	71	interest fund must accurately reflect the determination and
72	72	allocation of net investment income or loss [The retirement system
73	73	shall deposit in the interest fund all income, interest, and
74	74	dividends from deposits and investments authorized by this chapter.
75	75	The system shall credit the amount of an adjustment made in
76	76	accordance with Section 855.320 to the interest fund].
77	77	(b) The retirement system shall determine net investment
78	78	income or loss annually as of December 31 in accordance with
79	79	generally accepted accounting principles and shall allocate that
80	80	amount each year [On December 31 of each year, the retirement system
81	81	shall transfer money from the interest fund] in accordance with
82	82	Section 855.317.
83	83	SECTION 7. Sections 855.311(c) and (e), Government Code,
84	84	are amended to read as follows:
85	85	(c) The retirement system shall credit or charge to the
86	86	interest reserve account, general reserves account, and
87	87	distributive benefits account amounts allocated [interest] in
88	88	accordance with Section 855.317.
89	89	(e) If the board of trustees determines that the amount
90	90	credited to the distributive benefits account on December 31 of any
91	91	year is sufficient to do so, the board by resolution may:
92	92	(1) authorize the distribution and payment of all or
93	93	part of the money credited to the account to persons who were
94	94	annuitants on that day in the ratio of the rate of the monthly
95	95	benefit of each annuitant to the total of all annuity payments made
96	96	by the system for the final month of the year; or
97	97	(2) authorize the distribution of all or part of the
98	98	amount credited to the account to[:
99	99	[(A)] each member's individual account in the
100	100	employees saving fund as supplemental interest in the ratio of the
101	101	amount of [current] interest paid on the individual's account to
102	102	the [current] interest paid to all individual accounts for the
103	103	year[; and
104	104	[(B) each participating municipality's account
105	105	in the municipality accumulation fund as supplemental interest in
106	106	the ratio of the current interest allowed on the account of the
107	107	municipality to the total current interest paid to all
108	108	municipalities' accounts for the year].
109	109	SECTION 8. Section 855.312(b), Government Code, is amended
110	110	to read as follows:
111	111	(b) The board of trustees by resolution recorded in its
112	112	minutes shall transfer from the interest reserve account of the
113	113	endowment fund to the expense fund the amount that exceeds the
114	114	amount needed to provide adequate reserves as provided by Section
115	115	855.317 [against insufficient earnings on investments and against
116	116	special and contingency requirements of other funds of the system]
117	117	and that is needed to pay the system's estimated expenses for the
118	118	fiscal year.
119	119	SECTION 9. Section 855.316, Government Code, is amended to
120	120	read as follows:
121	121	Sec. 855.316. INTEREST RATES. [(a)] Unless this subtitle
122	122	expressly specifies [states that interest is computed using the
123	123	current interest rate or] another [specified] rate of interest, for
124	124	periods after December 31, 2008, the rate of interest is five
125	125	percent compounded annually, plus any other amounts the board of
126	126	trustees is expressly authorized to provide. Notwithstanding any
127	127	other provision in this chapter, the interest credited to the
128	128	employees saving fund in a calendar year may not be less than five
129	129	percent as allocated under Section 855.317(a) [computed using the
130	130	rate of:
131	131	[(1) 2-1/2 percent a year compounded annually for
132	132	periods before January 1, 1970;
133	133	[(2) 3 percent a year compounded annually for periods
134	134	after December 31, 1969, and before January 1, 1977;
135	135	[(3) 4 percent a year compounded annually for periods
136	136	after December 31, 1976, and before January 1, 1982; and
137	137	[(4) 5 percent a year compounded annually for periods
138	138	after December 31, 1981].
139	139	[(b) The current interest rate is the lesser of:
140	140	[(1) the interest rate prescribed by Subsection (a);
141	141	or
142	142	[(2) the interest rate computed by:
143	143	[(A) adding to the amount in the municipality
144	144	accumulation fund on January 1 of the year for which the computation
145	145	is made the sum of the accumulated contributions in the employees
146	146	saving fund on January 1 of the year of all persons who are members
147	147	on December 31 of the year, before any transfers for retirements
148	148	effective December 31 of the year are made, and the amount in the
149	149	endowment fund, after transfer of money to the expense fund, on
150	150	January 1 of the year; and
151	151	[(B) dividing the amount in the interest fund on
152	152	December 31 of that year after the transfer of interest to the
153	153	current service annuity reserve fund, municipality accumulation
154	154	fund, supplemental disability benefits fund, and supplemental
155	155	death benefits fund, by the amount computed under Paragraph (A).]
156	156	SECTION 10. The heading to Section 855.317, Government
157	157	Code, is amended to read as follows:
158	158	Sec. 855.317. ANNUAL ALLOCATION OF NET INVESTMENT INCOME OR
159	159	LOSS [TRANSFER OF ASSETS] FROM INTEREST FUND.
160	160	SECTION 11. Sections 855.317(a) and (b), Government Code,
161	161	are amended to read as follows:
162	162	(a) Effective as of [On] December 31 of each year, the board
163	163	of trustees shall make the following allocations from the interest
164	164	fund that in the aggregate equal the net investment income or loss
165	165	for the year [transfer from the interest fund the following
166	166	amounts]:
167	167	(1) to the current service annuity reserve fund,
168	168	interest on the mean amount in the current service annuity reserve
169	169	fund during that year;
170	170	(2) to the supplemental disability benefits fund,
171	171	interest on the mean amount in the supplemental disability benefits
172	172	fund during that year;
173	173	(3) to the supplemental death benefits fund, interest
174	174	on the mean amount in the supplemental death benefits fund during
175	175	that year;
176	176	(4) to the accounts in the municipality accumulation
177	177	fund, an amount derived by applying a positive or negative rate, as
178	178	determined by the board of trustees in its sole discretion to the
179	179	January 1 balances of that year for each of those accounts [current
180	180	interest on the amount in the municipality accumulation fund on
181	181	January 1 of that year];
182	182	(5) to the interest reserve account of the endowment
183	183	fund, a positive or negative amount as determined by the board of
184	184	trustees in its sole discretion [current interest on the amount in
185	185	the endowment fund on January 1 of that year]; and
186	186	(6) to the employees saving fund, [current] interest
187	187	on the sum of the accumulated contributions in the employees saving
188	188	fund credited on January 1 of that year to all persons who are
189	189	members on December 31 of that year before any transfers for
190	190	retirement effective December 31 of that year are made.
191	191	(b) In making allocations under this section, the board of
192	192	trustees shall, without regard to the amount of net investment
193	193	income or loss for the calendar year, first allocate interest as
194	194	specified in Section 855.316 to those funds or accounts referenced
195	195	in Subsections (a)(1), (2), (3), and (6). The board shall then
196	196	allocate the remaining net investment income or loss between the
197	197	funds or accounts referenced in Subsections (a)(4) and (5) in rates
198	198	or amounts determined by the board in its sole discretion. The
199	199	board of trustees shall accumulate the amount of assets in
200	200	[transfer to] the interest reserve account of the endowment fund
201	201	[the portion of the amount remaining in the interest fund after the
202	202	transfers required by Subsection (a) are made] that the board in its
203	203	sole discretion determines is necessary:
204	204	(1) to provide adequate reserves to:
205	205	(A) mitigate the effects of future investment
206	206	return volatility and [against] insufficient net investment
207	207	income; and
208	208	(B) provide reasonable rate stabilization for
209	209	participating municipalities [future earnings on investments to
210	210	allow interest on the retirement system's funds];
211	211	(2) to provide adequate reserves against special and
212	212	contingency requirements of other funds of the system; and
213	213	(3) to provide the amount required for the
214	214	administration expenses of the system for the following year.
215	215	SECTION 12. Section 855.320, Government Code, is repealed.
216	216	SECTION 13. This Act takes effect immediately if it
217	217	receives a vote of two-thirds of all the members elected to each
218	218	house, as provided by Section 39, Article III, Texas Constitution.
219	219	If this Act does not receive the vote necessary for immediate
220	220	effect, this Act takes effect September 1, 2009.
221	221	______________________________ ______________________________
222	222	President of the Senate Speaker of the House
223	223	I certify that H.B. No. 360 was passed by the House on April
224	224	22, 2009, by the following vote: Yeas 149, Nays 0, 1 present, not
225	225	voting.
226	226	______________________________
227	227	Chief Clerk of the House
228	228	I certify that H.B. No. 360 was passed by the Senate on May
229	229	14, 2009, by the following vote: Yeas 31, Nays 0.
230	230	______________________________
231	231	Secretary of the Senate
232	232	APPROVED: _____________________
233	233	Date
234	234	_____________________
235	235	Governor