86R2654 KFF-D
By: Bettencourt S.B. No. 2428
A BILL TO BE ENTITLED
AN ACT
relating to authorizing the Employees Retirement System of Texas
and the Teacher Retirement System of Texas to establish defined
contribution plans or hybrid retirement plans to provide retirement
benefits to certain employees.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 802.002, Government Code, is amended by
adding Subsection (e) to read as follows:
(e) Notwithstanding any other law, including Subsection
(a), an alternative retirement plan established under Chapter 806
is exempt from Sections 802.101, 802.1012, 802.1014, 802.103,
802.104, and 802.202(d). This subsection may not be construed to
exempt any plan from Section 802.105 or 802.106(h).
SECTION 2. Subtitle A, Title 8, Government Code, is amended
by adding Chapter 806 to read as follows:
CHAPTER 806. AUTHORITY TO ESTABLISH ALTERNATIVE RETIREMENT PLANS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 806.001. DEFINITIONS. In this chapter:
(1) "Alternative retirement plan" means a defined
contribution plan or a hybrid retirement plan.
(2) "Board of trustees" means the board of trustees of
a retirement system.
(3) "Defined benefit plan" means, as appropriate, the
plan that provides benefits to:
(A) members of the employee class of the
Employees Retirement System of Texas under Subtitle B; or
(B) members of the Teacher Retirement System of
Texas under Subtitle C.
(4) "Defined contribution plan" has the meaning
assigned by Section 802.001.
(5) "Employee" means:
(A) for purposes of the Employees Retirement
System of Texas, a person who, but for creation of an alternative
retirement system under this chapter, would be eligible for
membership in the employee class of that system under Subchapter A,
Chapter 812; or
(B) for purposes of the Teacher Retirement System
of Texas, a person who, but for creation of an alternative
retirement system under this chapter, would be eligible for
membership in that system under Subchapter A, Chapter 822.
(6) "Hybrid retirement plan" means a retirement plan
that combines elements of a defined benefit plan, a defined
contribution plan, or an individual retirement savings account.
(7) "Qualified plan" means an employee benefit plan
qualified under Section 401(a), Internal Revenue Code of 1986 (26
U.S.C. Section 401).
(8) "Retirement system" means the Employees
Retirement System of Texas or the Teacher Retirement System of
Texas, as appropriate.
Sec. 806.002. APPLICABILITY. This chapter applies only to:
(1) the Employees Retirement System of Texas; and
(2) the Teacher Retirement System of Texas.
Sec. 806.003. CONFLICT OF LAW. To the extent of a conflict
between this chapter, including a rule adopted by a retirement
system under authority of this chapter, and any other law, this
chapter prevails.
SUBCHAPTER B. AUTHORITY TO CREATE ALTERNATIVE PLANS
Sec. 806.051. CREATION OF ALTERNATIVE PLAN.
Notwithstanding any other law, including Subtitles B and C, and
subject to the requirements of Subchapter C, the board of trustees
of a retirement system may by rule establish and administer an
alternative retirement plan to provide benefits to newly hired
employees under that plan instead of under a defined benefit plan.
Sec. 806.052. CERTAIN REFERENCES IN LAW TO RETIREMENT
SYSTEM MEMBERS. If a retirement system establishes an alternative
retirement plan under this chapter, a reference in law to a member
of or membership in the retirement system includes a participant of
or participation in, as appropriate, the alternative retirement
plan unless the reference is expressly defined otherwise.
SUBCHAPTER C. ALTERNATIVE PLAN MINIMUM REQUIREMENTS
Sec. 806.101. MINIMUM REQUIREMENTS. In establishing an
alternative retirement plan under this chapter, a retirement system
shall ensure the plan meets the requirements of this subchapter.
Sec. 806.102. QUALIFIED PLAN. An alternative retirement
plan created under this section must be a qualified plan.
Sec. 806.103. PARTICIPATION IN ALTERNATIVE PLAN;
RESUMPTION OF SERVICE. (a) In adopting rules to establish an
alternative retirement plan under this chapter, the board of
trustees shall designate the date by which all newly hired
employees shall begin participation in the plan.
(b) A person who resumes employment with an employer on or
after the date designated by the board of trustees under Subsection
(a) and who is already a member of the retirement system eligible to
participate in a defined benefit plan remains eligible to
participate in the defined benefit plan and is not considered a
newly hired employee for purposes of this section.
(c) Notwithstanding any other law, an employee who
participates in an alternative retirement plan established under
this chapter is not eligible for membership in the retirement
system and may not participate in the defined benefit plan
administered by the retirement system.
Sec. 806.104. EFFECT OF EMPLOYMENT CHANGES. A person
participating in an alternative retirement plan continues to
participate in the plan when the person changes employment to
another position included in the coverage of the retirement system.
Sec. 806.105. VESTING OF BENEFITS; TERMINATION OF
PARTICIPATION. (a) Benefits in an alternative retirement plan
vest in a participant not later than the fifth anniversary of the
date the person begins to participate in the plan.
(b) A person terminates participation in an alternative
retirement plan, without losing any vested benefits, by:
(1) death;
(2) retirement; or
(3) termination of employment in all positions
included in the coverage of the retirement system.
(c) The benefits of a product purchased under an alternative
retirement plan become available under the terms of the annuity but
not before the earlier of the date:
(1) the member terminates participation as provided by
Subsection (b); or
(2) the sum of the member's age and years of service in
a position covered by the plan is equal to 80.
Sec. 806.106. CREDITABLE SERVICE. A person may not
establish in the defined benefit plan administered by the
retirement system credit for service performed during a period the
person was participating in an alternative retirement plan.
Sec. 806.107. CONTRIBUTIONS. (a) A participant in an
alternative retirement plan shall make contributions to the plan at
the same rate that a member of the retirement system participating
in a defined benefit plan is required to make for current service,
and the state and employers otherwise required to make
contributions to a defined benefit plan shall make contributions to
the alternative retirement plan for each participant at the same
rate as the state and employers are required to contribute for
contributing members of the defined benefit plan. Contributions
required under this subsection shall be credited to the benefit of
the participant.
(b) A participant in an alternative retirement plan and the
participant's employer shall execute an agreement under which the
salary of the participant is reduced by the amount of the
contribution required by this section. An agreement under this
subsection is irrevocable until the participant terminates
participation in the plan under Section 806.105.
(c) Participant, state, and employer contributions, as
applicable, shall be made in the manner provided by Subchapter E,
Chapter 815, or Subchapter E, Chapter 825, as applicable.
Sec. 806.108. HEALTH BENEFITS AND OTHER COVERAGES. A
person who participates or who is eligible to participate in an
alternative retirement plan established under this chapter is
eligible for health benefits and other coverages under Subtitle H,
Title 8, Insurance Code, and Subchapter D, Chapter 22, Education
Code, if applicable, to the same extent as a person who is a member
or who is eligible to be a member of the retirement system.
SECTION 3. Section 822.001(b), Government Code, is amended
to read as follows:
(b) Membership in the retirement system is a condition of
employment for employees of the public school system unless an
employee is excluded from membership under Section 806.103(c) or
822.002.
SECTION 4. Section 830.002(b), Government Code, is amended
to read as follows:
(b) Participation in the optional retirement program is an
alternative to active membership in the retirement system or
participation in an alternative retirement plan under Chapter 806,
as appropriate.
SECTION 5. Sections 830.102(a) and (d), Government Code,
are amended to read as follows:
(a) A person included in the coverage [member] of the
retirement system who is eligible [to participate in the optional
retirement program] may elect to [continue as a member of the
retirement system or to] participate in the optional retirement
program.
(d) An eligible person who does not elect to participate in
the optional retirement program is considered to have chosen to
continue participation [membership] in the retirement system.
SECTION 6. Section 830.106, Government Code, is amended to
read as follows:
Sec. 830.106. ELIGIBILITY FOR RESUMPTION OF MEMBERSHIP. A
participant in the optional retirement program is not eligible for
participation [membership] in the retirement system unless the
person:
(1) terminates employment covered by the optional
retirement program; and
(2) becomes employed in the public school system or
with a state agency in a position that is not eligible for
participation in the optional retirement program.
SECTION 7. This Act takes effect September 1, 2019.