By: Callegari, et al. H.B. No. 3356
Substitute the following for H.B. No. 3356:
By: Callegari C.S.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 that
provides for an individual account for each participant and for
benefits based solely on the amount contributed to the
participant's account, and any income, expenses, gains and losses,
and forfeitures of accounts of other participants that may be
allocated to the participant's account.
SECTION 2. Section 802.002, Government Code, is amended by
amending Subsection (a) and adding Subsections (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. 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 governing body of a
public retirement system shall adopt a funding policy designed to
achieve and maintain a minimum funded ratio of 100 percent. The
policy must follow guidelines for actuarial soundness adopted by
the board. At a minimum, the funding policy must provide for
contributions that are sufficient to pay normal cost and to
amortize any unfunded actuarial accrued liabilities that exist over
a period not to exceed 25 years. If a public retirement system has
no unfunded actuarial accrued liabilities, contributions must be
sufficient to pay the full normal cost.
(b) A funding policy based on a total contribution amount
that can be shown to meet or exceed the minimum funding requirements
of Subsection (a) meets the requirements of this section.
(c) If the governing body of a public retirement system
receives an actuarial valuation conducted in accordance with
Section 802.101 indicating that system funding is insufficient to
meet the requirements of the funding policy adopted in accordance
with Subsection (a), the governing body shall notify the board and
the governing body of the plan sponsor of the determination in
writing not later than the 30th day after the date the valuation is
received.
(d) Following notice to the board and the plan sponsor, the
public retirement system is granted a period of six fiscal years to
regain compliance with Subsection (a) without further reporting
requirements. If by the expiration of the sixth fiscal year, the
system has not received a valuation indicating that the system is
compliant with the requirements of the funding policy adopted in
accordance with Subsection (a), the governing body of the public
retirement system shall prepare a written corrective action plan
detailing actions to be taken by the public retirement system and
plan sponsor to ensure that the amortization period of the public
retirement system does not exceed 25 years. The corrective action
plan must be signed by the governing body of the public retirement
system and by the governing body of the plan sponsor and must be
submitted to the board not later than the 180th day after the
expiration of the retirement system's six fiscal year period to
regain compliance.
(e) The corrective action plan must be updated and
resubmitted to the board every three years until the public
retirement system receives an actuarial valuation conducted in
accordance with Section 802.101 indicating that the system funding
meets the requirements of the funding policy adopted in accordance
with Subsection (a).
(f) The board shall publish on its Internet website a copy
of each corrective action plan received. The board may adopt rules
to implement the requirements of this section.
Sec. 802.402. ACTION INCREASING AMORTIZATION PERIOD. A new
monetary benefit payable by the retirement system may not be
established, and the determination of the amount of a monetary
benefit from the system may not be increased, if, as a result of the
action, the time required to amortize the unfunded actuarial
liabilities of the retirement system would be increased to a period
that exceeds 25 years by one or more years, as determined by an
actuarial valuation.
Sec. 802.403. CONTRIBUTIONS. (a) The plan sponsoring
entity contributions and employee contributions to a public
retirement system, as applicable, should be made at regular
intervals and should be sufficient to comply with the funding
policy established by Section 802.401.
(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. 802.404. ADDITIONAL STUDIES AND REPORTS. (a) Except
as otherwise provided by this chapter, 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 greater
than or equal to $100 million.
(b) 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 include a provision requiring trustees to report any
potential conflicts of interest and must be consistent with and not
less restrictive than Section 802.203.
SECTION 4. 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 5. This Act takes effect September 1, 2013.