By: Callegari H.B. No. 3356
A BILL TO BE ENTITLED
AN ACT
relating to contributions to, benefits from, and the administration
of certain public retirement systems.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 802.001, Government Code, is amended by
adding Subdivision (1-a) to read as follows:
(1-a) "Defined contribution plan" means a plan
provided by the governing body of a public retirement system in
which contributions are made to the individual account of an
officer or employee during the officer's or employee's service or
employment, and any benefit on death, disability, or retirement
consists solely of contributions and investment income, if any,
including interest, dividends, and capital gains. A defined
contribution plan is not actuarially funded and does not guarantee
a specific monthly benefit. The term includes a plan described by
Section 401(a), 401(k), 403(b), or 457, Internal Revenue Code of
1986.
SECTION 2. Section 802.002, Government Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) Except as provided by Subsection (b), the Employees
Retirement System of Texas, the Teacher Retirement System of Texas,
the Texas County and District Retirement System, the Texas
Municipal Retirement System, and the Judicial Retirement System of
Texas Plan Two are exempt from Sections 802.101(a), 802.101(b),
802.101(d), 802.102, 802.103(a), 802.103(b), 802.202, 802.203,
802.204, 802.205, 802.206, and 802.207, and from all of Subchapter
E. The Judicial Retirement System of Texas Plan One is exempt from
all of Subchapters B and C except Sections 802.104 and 802.105.
The optional retirement program governed by Chapter 830 is exempt
from all of Subchapters B and C except Section 802.106.
(c) Notwithstanding any other law, a defined contribution
plan, or a retirement system that is organized under the Texas Local
Fire Fighters Retirement Act (Article 6243e, Vernon's Texas Civil
Statutes), for a fire department consisting exclusively of
volunteers, as defined by that Act, is exempt from Subchapter E.
SECTION 3. Section 802.1012(e), Government Code, is amended
to read as follows:
(e) Before beginning an audit under this section, the
independent actuary must meet with the manager of the pension fund
for the public retirement system to discuss the appropriate
assumptions to use in conducting the audit, and the governing body
of the public retirement system must expressly approve, in writing,
the assumptions to be considered. At a minimum, the independent
actuary and the manager shall consider, and the governing body
shall review, assumptions relating to long-term returns on
investments, salary growth, inflation, mortality tables, age of
eligibility, and any anticipated changes in the covered population
of members.
SECTION 4. Chapter 802, Government Code, is amended by
adding Subchapter E to read as follows:
SUBCHAPTER E. ADDITIONAL PROVISIONS APPLICABLE TO CERTAIN
ACTUARIALLY FUNDED PUBLIC RETIREMENT SYSTEMS
Sec. 802.401. FUNDING POLICY. (a) The public retirement
system shall achieve and maintain a minimum funded ratio of 100
percent no later than the public retirement system's fiscal year
beginning in 2045. Any unfunded liability generated after fiscal
year 2045 must be amortized over a closed period no greater than 15
years.
Sec. 802.402. CONTRIBUTIONS. (a) In any year or other
applicable funding cycle in which contributions to a public
retirement system fall below normal cost, the governing body of the
public retirement system shall promptly prepare a report containing
an analysis of the effect the underfunding is reasonably projected
to have on the system and shall distribute the report to all plan
members and beneficiaries, the plan sponsoring entity, and the
board.
(b) The allocation of the normal cost portion of
contributions under this section must be level or declining as a
percentage of payroll over all generations of employees of the
sponsoring entity, calculated according to applicable actuarial
standards.
Sec. 802.403. ADDITIONAL STUDIES AND REPORTS.
(a) Except as provided by Subsection (b), this section
applies only to a public retirement system with total assets the
book value of which, as of the last day of the preceding fiscal
year, is at least $100 million.
(b) This section does not apply to the Employees Retirement
System of Texas, the Teacher Retirement System of Texas, the Texas
County and District Retirement System, the Texas Municipal
Retirement System, or the Judicial Retirement System of Texas Plan
Two.
(c) In addition to the requirements of Subchapter B, the
governing body of a public retirement system to which this
subchapter applies shall, at reasonable intervals, conduct or
arrange to have conducted:
(1) an actuarial experience study in which actuarial
assumptions are reviewed in light of relevant experience factors,
important trends, and economic projections with the purpose of
determining whether actuarial assumptions require adjustment; and
(2) a study of the public retirement system's assets
and liabilities for use in reviewing asset allocations.
Sec. 802.406. ETHICAL STANDARDS. The governing body of a
public retirement system shall adopt ethical standards and
conflict-of-interest policies. Policies adopted under this
section must be consistent with and not less restrictive than
Section 802.203 or any applicable law governing the fiduciary
duties of the governing body.
SECTION 5. The governing body of a public retirement system
to which Subchapter E, Chapter 802, Government Code, as added by
this Act, applies shall adopt rules or procedures necessary to
implement that subchapter as soon as practicable after the
effective date of this Act, but not later than January 1, 2014.
SECTION 6. This Act takes effect September 1, 2013.