Texas 2021 - 87th Regular

Texas House Bill HB1438 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	87R3519 KFF-F
2	2	By: Gates H.B. No. 1438
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to requiring the Employees Retirement System of Texas to
8	8	establish a cash balance retirement plan to provide retirement
9	9	benefits to certain employees.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Section 802.002, Government Code, is amended by
12	12	adding Subsection (e) to read as follows:
13	13	(e) Notwithstanding any other law, including Subsection
14	14	(a), a cash balance retirement plan established under Chapter 820
15	15	is exempt from Sections 802.101, 802.1012, 802.1014, 802.103,
16	16	802.104, and 802.202(d). This subsection may not be construed to
17	17	exempt any plan from Section 802.105 or 802.106(h).
18	18	SECTION 2. Subtitle B, Title 8, Government Code, is amended
19	19	by adding Chapter 820 to read as follows:
20	20	CHAPTER 820. CASH BALANCE RETIREMENT PLAN
21	21	SUBCHAPTER A. GENERAL PROVISIONS
22	22	Sec. 820.001. DEFINITIONS. In this chapter:
23	23	(1) "Cash balance retirement plan" means a cash
24	24	balance retirement plan established under this chapter.
25	25	(2) "Defined benefit plan" means, as appropriate, the
26	26	plan that provides benefits to members of the employee class of the
27	27	retirement system under Chapters 811 through 815.
28	28	(3) "Employee" means an employee or appointed officer
29	29	described by Section 812.003(a).
30	30	(4) "Interest" means the interest credited to a
31	31	participant's notional account, which may not:
32	32	(A) exceed a percentage rate equal to the cash
33	33	balance retirement plan's most recent five fiscal years' smoothed
34	34	rate of return; or
35	35	(B) be less than zero percent.
36	36	(5) "Participant" means a member, retiree, or other
37	37	beneficiary of the retirement system who participates in the cash
38	38	balance retirement plan.
39	39	(6) "Qualified plan" means an employee benefit plan
40	40	qualified under Section 401(a), Internal Revenue Code of 1986 (26
41	41	U.S.C. Section 401).
42	42	Sec. 820.002. CONFLICT OF LAW. To the extent of a conflict
43	43	between this chapter, including a rule adopted by the retirement
44	44	system under authority of this chapter, and any other law, this
45	45	chapter prevails.
46	46	Sec. 820.003. CERTAIN REFERENCES IN LAW TO RETIREMENT
47	47	SYSTEM MEMBERS. A reference in law outside this subtitle to a
48	48	member of or membership in the retirement system includes a
49	49	participant of or participation in, as appropriate, a cash balance
50	50	retirement plan unless the reference is expressly defined
51	51	otherwise.
52	52	SUBCHAPTER B. CREATION OF CASH BALANCE RETIREMENT PLAN
53	53	Sec. 820.051. DUTY TO CREATE PLAN. Notwithstanding any
54	54	other law and subject to the requirements of Subchapter C, the board
55	55	of trustees shall by rule establish and administer a cash balance
56	56	retirement plan to provide benefits to newly hired employees under
57	57	that plan instead of under a defined benefit plan.
58	58	SUBCHAPTER C. PLAN MINIMUM REQUIREMENTS
59	59	Sec. 820.101. MINIMUM REQUIREMENTS. In establishing a cash
60	60	balance retirement plan, the board of trustees shall ensure the
61	61	plan meets the requirements of this subchapter.
62	62	Sec. 820.102. ATTRIBUTES OF PLAN. (a) A cash balance
63	63	retirement plan must:
64	64	(1) provide for a closed amortization period not to
65	65	exceed 20 years from the date an actuarial gain or loss is realized;
66	66	(2) provide for the crediting of participant, state,
67	67	and employer contributions to each participant's notional account;
68	68	(3) provide for the crediting of interest to each
69	69	participant's notional account;
70	70	(4) include a vesting schedule;
71	71	(5) include benefit options, including options for
72	72	participants who separate from service prior to retirement;
73	73	(6) provide for death and disability benefits;
74	74	(7) allow a participant who is eligible to retire
75	75	under the plan to elect to:
76	76	(A) receive a monthly annuity payable for the
77	77	life of the participant in an amount actuarially determined on the
78	78	date of the participant's retirement based on the participant's
79	79	accumulated notional account balance annuitized in accordance with
80	80	the actuarial assumptions and actuarial methods established in the
81	81	most recent actuarial experience study conducted by the system's
82	82	actuary under Section 815.206; or
83	83	(B) receive a single, partial lump-sum payment
84	84	from the participant's accumulated notional account balance and a
85	85	monthly annuity payable for life in an amount determined in
86	86	accordance with Paragraph (A) based on the participant's notional
87	87	account balance after receiving the partial lump-sum payment; and
88	88	(8) include any other provision determined necessary
89	89	by the board of trustees.
90	90	(b) At the time the cash balance retirement plan is
91	91	implemented, the employer normal cost rate of the cash balance
92	92	retirement plan may not exceed the employer normal cost rate for the
93	93	salary-based benefit plan.
94	94	Sec. 820.103. QUALIFIED PLAN. A cash balance retirement
95	95	plan must be a qualified plan.
96	96	Sec. 820.104. PARTICIPATION IN PLAN; RESUMPTION OF SERVICE.
97	97	(a) In adopting rules to establish a cash balance retirement plan,
98	98	the board of trustees shall designate the date by which all newly
99	99	hired employees shall begin participation in the plan.
100	100	(b) A person who resumes employment with an employer on or
101	101	after the date designated by the board of trustees under Subsection
102	102	(a) and who is already a member of the retirement system eligible to
103	103	participate in a defined benefit plan remains eligible to
104	104	participate in the defined benefit plan and is not considered a
105	105	newly hired employee for purposes of this section.
106	106	(c) Notwithstanding any other law, including Section
107	107	812.003, an employee who participates in a cash balance retirement
108	108	plan is not eligible for membership in the retirement system and may
109	109	not participate in the defined benefit plan administered by the
110	110	retirement system.
111	111	Sec. 820.105. EFFECT OF EMPLOYMENT CHANGES. A person
112	112	participating in a cash balance retirement plan continues to
113	113	participate in the plan when the person changes employment to
114	114	another position included in the coverage of the retirement system.
115	115	Sec. 820.106. VESTING OF BENEFITS. Benefits in a cash
116	116	balance retirement plan vest in a participant not later than the
117	117	fifth anniversary of the date the person begins to participate in
118	118	the plan.
119	119	Sec. 820.107. TERMINATION OF PARTICIPATION. A person
120	120	terminates participation in a cash balance retirement plan, without
121	121	losing any vested benefits, by:
122	122	(1) death;
123	123	(2) retirement; or
124	124	(3) termination of employment in all positions
125	125	included in the coverage of the retirement system.
126	126	Sec. 820.108. CREDITABLE SERVICE. A person may not
127	127	establish in the defined benefit plan administered by the
128	128	retirement system credit for service performed during a period the
129	129	person was participating in a cash balance retirement plan.
130	130	Sec. 820.109. CONTRIBUTIONS. (a) A participant in a cash
131	131	balance retirement plan shall make contributions to the plan at the
132	132	same rate that a member of the retirement system participating in a
133	133	defined benefit plan is required to make for current service, and
134	134	the state and employers otherwise required to make contributions to
135	135	a defined benefit plan shall make contributions to the cash balance
136	136	retirement plan for each participant at the same rate as the state
137	137	and employers are required to contribute for contributing members
138	138	of the defined benefit plan. Contributions required under this
139	139	subsection shall be credited to the benefit of the participant.
140	140	(b) A participant in a cash balance retirement plan and the
141	141	participant's employer shall execute an agreement under which the
142	142	salary of the participant is reduced by the amount of the
143	143	contribution required by this section. An agreement under this
144	144	subsection is irrevocable until the participant terminates
145	145	participation in the plan under Section 820.107.
146	146	(c) Participant, state, and employer contributions, as
147	147	applicable, shall be made in the manner provided by Subchapter E,
148	148	Chapter 815.
149	149	SECTION 3. This Act takes effect September 1, 2021.