Texas 2023 - 88th Regular

Texas House Bill HB3367 Compare Versions

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1	1	88R4577 KFF-D
2	2	By: Bonnen H.B. No. 3367
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to contributions to, benefits from, and the administration
8	8	of the Judicial Retirement System of Texas Plan Two.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Section 803.202, Government Code, is amended by
11	11	adding Subsection (d) to read as follows:
12	12	(d) A member of the Judicial Retirement System of Texas Plan
13	13	Two who is subject to Chapter 840A is eligible to participate in the
14	14	program provided by this chapter.
15	15	SECTION 2. Section 804.003, Government Code, is amended by
16	16	amending Subsections (j) and (k) and adding Subsection (k-2) to
17	17	read as follows:
18	18	(j) Except as provided by Subsection (k-2), if [If] a
19	19	domestic relations order is determined to be a qualified domestic
20	20	relations order, then the public retirement system (or applicable
21	21	carrier, if under the optional retirement program) shall pay the
22	22	segregated amounts without interest to the person or persons
23	23	entitled thereto and shall thereafter pay benefits pursuant to the
24	24	order.
25	25	(k) Except as provided by Subsection (k-2), if [If] a
26	26	domestic relations order is determined not to be a qualified
27	27	domestic relations order or if within 18 months of the date a
28	28	domestic relations order is received by the public retirement
29	29	system (or applicable carrier, if under the optional retirement
30	30	program) the issue as to whether such order is a qualified domestic
31	31	relations order is not resolved, then the public retirement system
32	32	(or applicable carrier, if under the optional retirement program)
33	33	shall pay the segregated amounts without interest and shall
34	34	thereafter pay benefits to the person or persons who would have been
35	35	entitled to such amounts if there had been no order. This
36	36	subsection shall not be construed to limit or otherwise affect any
37	37	liability, responsibility, or duty of a party with respect to any
38	38	other party to the action out of which the order arose.
39	39	(k-2) Payment of segregated amounts by a public retirement
40	40	system, or applicable carrier if under the optional retirement
41	41	program, under Subsections (j) and (k) related to a benefit payable
42	42	with respect to a member or retiree subject to Chapter 840A must
43	43	include annual interest provided by Section 840A.103 and gain
44	44	sharing interest provided by Section 840A.104.
45	45	SECTION 3. Section 836.001, Government Code, is amended by
46	46	adding Subdivision (3-a) and amending Subdivision (9) to read as
47	47	follows:
48	48	(3-a) "Cash balance group member" means a member
49	49	subject to Chapter 840A.
50	50	(9) "Service credit" means the amount of membership
51	51	and, if applicable, military[,] and equivalent membership service
52	52	ascribed by the retirement system to a person and for which the
53	53	person has made required contributions.
54	54	SECTION 4. Section 838.001, Government Code, is amended to
55	55	read as follows:
56	56	Sec. 838.001. TYPES OF CREDITABLE SERVICE. The types of
57	57	service creditable in the retirement system are[:
58	58	[(1)] membership service and, as applicable:[;]
59	59	(1) [(2)] military service; and
60	60	(2) [(3)] equivalent membership service.
61	61	SECTION 5. Subchapter A, Chapter 838, Government Code, is
62	62	amended by adding Section 838.002 to read as follows:
63	63	Sec. 838.002. PROVISIONS INAPPLICABLE TO CASH BALANCE GROUP
64	64	MEMBERS. Sections 838.102, 838.103, 838.1035, 838.105, 838.106,
65	65	838.107, and 838.108 of this chapter do not apply to a cash balance
66	66	group member.
67	67	SECTION 6. Subchapter A, Chapter 839, Government Code, is
68	68	amended by adding Section 839.005 to read as follows:
69	69	Sec. 839.005. PROVISIONS INAPPLICABLE TO CASH BALANCE GROUP
70	70	MEMBERS. The following provisions of this chapter do not apply to a
71	71	cash balance group member:
72	72	(1) Section 839.002; and
73	73	(2) Subchapters B and E.
74	74	SECTION 7. Section 839.201(a), Government Code, is amended
75	75	to read as follows:
76	76	(a) A member, other than a member who is eligible to receive
77	77	a service retirement annuity under Section 839.101 or a cash
78	78	balance annuity under Section 840A.052, is eligible, regardless of
79	79	age, to retire from regular active service for disability and
80	80	receive a disability retirement annuity if the member has at least
81	81	seven years of service credit in the retirement system.
82	82	SECTION 8. Subchapter A, Chapter 840, Government Code, is
83	83	amended by adding Section 840.009 to read as follows:
84	84	Sec. 840.009. PROVISIONS INAPPLICABLE TO CASH BALANCE GROUP
85	85	MEMBERS. Sections 840.102(g) and (h), 840.1025, and 840.1027 of
86	86	this chapter do not apply to a cash balance group member.
87	87	SECTION 9. The heading to Section 840.102, Government Code,
88	88	is amended to read as follows:
89	89	Sec. 840.102. COLLECTION OF CERTAIN MEMBER CONTRIBUTIONS.
90	90	SECTION 10. Section 840.102(a), Government Code, is amended
91	91	to read as follows:
92	92	(a) Except as provided by Subsections (g) and (h), each
93	93	payroll period, a judicial officer who is a member of the retirement
94	94	system other than a cash balance group member is required to
95	95	contribute 9.5 percent of the officer's state compensation for
96	96	service rendered after September 1, 2019.
97	97	SECTION 11. Sections 840.105(a) and (c), Government Code,
98	98	are amended to read as follows:
99	99	(a) For all state compensation earned [after December 31,
100	100	1989,] by judicial officers who are members of the retirement
101	101	system, the state shall pick up the member contributions required
102	102	by Section 840.102 or 840A.101, as applicable. The state shall pay
103	103	the picked-up contributions to the retirement system from the same
104	104	source that is used in paying state compensation to the judicial
105	105	officer members. These payments are in lieu of contributions by the
106	106	members. The state shall pick up these contributions by a
107	107	corresponding reduction in the cash salaries of the members, by an
108	108	offset against a future salary increase, or by a combination of a
109	109	salary reduction and offset against a future salary increase.
110	110	Members do not have the option of choosing to receive the
111	111	contributed amounts directly instead of having them paid by the
112	112	state to the retirement system.
113	113	(c) Member contributions picked up as provided by
114	114	Subsection (a) shall be transmitted to the retirement system in the
115	115	manner required by Section 840.102. Member contributions picked up
116	116	by the state shall be credited to the members' individual accounts
117	117	and treated for all other purposes as if the amounts were a part of
118	118	the members' compensation and had been deducted as provided by
119	119	Section 840.102 or 840A.101, as applicable.
120	120	SECTION 12. Section 840.306(a), Government Code, is amended
121	121	to read as follows:
122	122	(a) Except as provided by Section 840A.103 or 840A.104,
123	123	interest [Interest] on money in a member's individual account in
124	124	the retirement system is earned monthly and is computed at the rate
125	125	of five percent a year on the mean balance of the member's account
126	126	for the fiscal year.
127	127	SECTION 13. Subtitle E, Title 8, Government Code, is
128	128	amended by adding Chapter 840A to read as follows:
129	129	CHAPTER 840A. CASH BALANCE BENEFIT
130	130	SUBCHAPTER A. GENERAL PROVISIONS
131	131	Sec. 840A.001. DEFINITION. In this chapter, "accumulated
132	132	account balance" means the total of amounts in a member's
133	133	individual account in the retirement system, including:
134	134	(1) amounts deducted from the compensation of the
135	135	member;
136	136	(2) other member deposits required to be placed in the
137	137	member's individual account; and
138	138	(3) interest credited to amounts in the member's
139	139	individual account, including interest and gain sharing interest
140	140	credited in accordance with Sections 840A.103 and 840A.104,
141	141	respectively.
142	142	Sec. 840A.002. APPLICABILITY. This chapter applies only to
143	143	a member who:
144	144	(1) took office on or after September 1, 2024; and
145	145	(2) was not a member on the date the member took
146	146	office.
147	147	Sec. 840A.003. CONFLICT OF LAW. To the extent of a conflict
148	148	between this chapter, including a rule adopted by the retirement
149	149	system under authority of this chapter, and any other law, this
150	150	chapter prevails.
151	151	Sec. 840A.004. RULES. The board of trustees may adopt rules
152	152	necessary to implement this chapter.
153	153	SUBCHAPTER B. CASH BALANCE BENEFITS
154	154	Sec. 840A.051. APPLICATION FOR CASH BALANCE BENEFIT.
155	155	(a) A member may apply for a cash balance annuity by filing an
156	156	application for retirement with the board of trustees.
157	157	(b) An application for a cash balance annuity may not be
158	158	made:
159	159	(1) after the date the member wishes to retire; or
160	160	(2) more than 90 days before the date the member wishes
161	161	to retire.
162	162	Sec. 840A.052. ELIGIBILITY FOR CASH BALANCE BENEFIT. A
163	163	member is eligible to retire and receive a cash balance annuity if
164	164	the member:
165	165	(1) is at least 60 years old, currently holds a
166	166	judicial office, and has at least 10 years of service credited in
167	167	the retirement system;
168	168	(2) is at least 60 years old and has at least 12 years
169	169	of service credited in the retirement system, regardless of whether
170	170	the member currently holds a judicial office;
171	171	(3) has at least 20 years of service credited in the
172	172	retirement system, regardless of whether the member currently holds
173	173	a judicial office; or
174	174	(4) has served at least 12 years on an appellate court
175	175	and the sum of the member's age and amount of service credited in
176	176	the retirement system equals or exceeds the number 70, regardless
177	177	of whether the member currently holds a judicial office.
178	178	Sec. 840A.053. CASH BALANCE BENEFITS FOR MEMBERS. (a) The
179	179	state match for the cash balance benefit is an amount computed by
180	180	multiplying the member's accumulated account balance by 150
181	181	percent.
182	182	(b) The retirement system shall compute a member's cash
183	183	balance annuity under this section by taking the sum of the member's
184	184	accumulated account balance and the state match computed under
185	185	Subsection (a) and annuitizing that amount over the life expectancy
186	186	of the member as of the effective date of the member's retirement
187	187	using mortality and other tables adopted by the board for that
188	188	purpose under Section 840.005.
189	189	Sec. 840A.054. OPTIONAL CASH BALANCE BENEFITS. (a)
190	190	Instead of the standard cash balance annuity payable under Section
191	191	840A.053, a retiring member may elect to receive an optional cash
192	192	balance annuity under this section.
193	193	(b) A person who selects an optional lifetime cash balance
194	194	annuity must designate, before the selection becomes effective, one
195	195	person to receive the annuity on the death of the person making the
196	196	selection. A person who selects an optional cash balance annuity
197	197	payable for a guaranteed period may designate, before or after
198	198	retirement, one or more persons to receive the annuity on the death
199	199	of the person making the selection.
200	200	(c) A person eligible to select an optional cash balance
201	201	annuity under this section may select an option which provides
202	202	that:
203	203	(1) after the retiree's death, the reduced annuity is
204	204	payable in the same amount throughout the life of the person
205	205	designated by the retiree before retirement;
206	206	(2) after the retiree's death, one-half of the reduced
207	207	annuity is payable throughout the life of the person designated by
208	208	the retiree before retirement;
209	209	(3) if the retiree dies before 60 monthly annuity
210	210	payments have been made, the remainder of the 60 payments are
211	211	payable to one or more beneficiaries or, if one does not exist, to
212	212	the retiree's estate;
213	213	(4) if the retiree dies before 120 monthly annuity
214	214	payments have been made, the remainder of the 120 payments are
215	215	payable to one or more beneficiaries or, if one does not exist, to
216	216	the retiree's estate; or
217	217	(5) after the retiree's death, three-fourths of the
218	218	reduced annuity is payable throughout the life of the person
219	219	designated by the retiree before retirement.
220	220	(d) If a beneficiary designated by a retiree under
221	221	Subsection (b) predeceases the retiree and the retiree has elected
222	222	an optional lifetime annuity, the reduced annuity shall be
223	223	increased to the standard cash balance annuity that the retiree
224	224	would have been entitled to receive if the retiree had not selected
225	225	the optional annuity. The standard cash balance annuity shall be
226	226	adjusted as appropriate for post-retirement increases in
227	227	retirement benefits authorized by law since the date of retirement.
228	228	(e) Any increase in an annuity under Subsection (d) begins
229	229	with the payment for the month following the month in which the
230	230	designated beneficiary dies, and the increased annuity is payable
231	231	to the retiree for the remainder of the retiree's life.
232	232	(f) The computation of an optional cash balance annuity must
233	233	be made without regard to the gender of the annuitant or designated
234	234	beneficiary.
235	235	(g) Except as provided by Section 840A.055, a person who
236	236	selected an optional cash balance annuity described by Subsection
237	237	(c)(1), (2), or (5) of this section may not change or revoke a
238	238	beneficiary designation after the person's effective date of
239	239	retirement.
240	240	(h) A beneficiary designation that names a former spouse as
241	241	a beneficiary for a guaranteed optional cash balance annuity
242	242	described by Subsection (c)(3) or (4) is invalid unless the
243	243	designation is made after the date of the divorce.
244	244	Sec. 840A.055. CHANGE IN OPTIONAL CASH BALANCE ANNUITY
245	245	SELECTION. (a) A person who retired and selected an optional cash
246	246	balance annuity described by Section 840A.054(c)(1), (2), or (5)
247	247	may change the optional annuity to a standard cash balance annuity
248	248	if:
249	249	(1) pursuant to a divorce decree, a court orders the
250	250	change in the annuity to a standard cash balance annuity; or
251	251	(2) the retiree files with the retirement system a
252	252	request to change the annuity selection, if the retiree designated
253	253	a person as beneficiary who:
254	254	(A) was not at the time of designation and is not
255	255	currently the retiree's spouse or dependent child; or
256	256	(B) is not currently the retiree's spouse or
257	257	dependent child and has executed since the designation a written,
258	258	notarized instrument that releases the retirement system from any
259	259	claim to the annuity by the beneficiary and that transfers all of
260	260	the beneficiary's interest in the annuity to the retiree.
261	261	(b) If a retiree files a request as provided by Subsection
262	262	(a), the retirement system shall recompute the annuity as a
263	263	standard cash balance annuity. The increase in the annuity under
264	264	this section begins with the monthly payment made to the retiree for
265	265	the month following the month in which a request is filed as
266	266	provided by Subsection (a).
267	267	Sec. 840A.056. PARTIAL LUMP-SUM CASH BALANCE OPTION. (a) A
268	268	member who is eligible for a cash balance annuity may select a
269	269	standard cash balance annuity under Section 840A.053 or an optional
270	270	cash balance annuity under Section 840A.054, together with a
271	271	partial lump-sum distribution.
272	272	(b) The amount of the lump-sum distribution under this
273	273	section may not exceed the sum of 36 months of a standard cash
274	274	balance annuity computed without regard to this section.
275	275	(c) The cash balance annuity selected by the member shall be
276	276	actuarially reduced to reflect the lump-sum option selected by the
277	277	member and shall be actuarially equivalent to a standard or
278	278	optional cash balance annuity, as applicable, without the partial
279	279	lump-sum distribution. The annuity and lump sum shall be computed
280	280	to result in no actuarial loss to the retirement system.
281	281	(d) The lump-sum distribution shall be made as a single
282	282	payment payable at the time that the first monthly annuity payment
283	283	is paid.
284	284	(e) The amount of the lump-sum distribution shall be
285	285	deducted from any amount otherwise payable under this chapter.
286	286	(f) The partial lump-sum option under this section may be
287	287	elected only once by a member and may not be elected by a retiree. A
288	288	member retiring under the proportionate retirement program under
289	289	Chapter 803 is not eligible for the partial lump-sum option.
290	290	(g) Before a retiring member selects a partial lump-sum
291	291	distribution under this section:
292	292	(1) the retirement system shall provide written notice
293	293	to the member of the amount by which the member's annuity will be
294	294	reduced because of the selection; and
295	295	(2) the member must acknowledge receipt of the notice
296	296	in writing.
297	297	(h) The board of trustees may adopt rules for the
298	298	implementation of this section and may authorize the option to be
299	299	used for a death benefit annuity. This section does not apply to a
300	300	disability retirement annuity.
301	301	Sec. 840A.057. DEATH AND DISABILITY BENEFITS. (a)
302	302	Notwithstanding any other law, a member subject to this chapter, a
303	303	retiree receiving a cash balance annuity under this chapter, or the
304	304	beneficiary of a member or retiree described by this subsection,
305	305	who qualifies for a death or survivor benefit annuity or a
306	306	disability retirement annuity under Chapter 839 is entitled to a
307	307	cash balance annuity under this subchapter instead of the annuity
308	308	otherwise provided under Chapter 839.
309	309	(b) The board of trustees may enter into contracts to
310	310	provide additional death and disability benefits under this
311	311	chapter.
312	312	SUBCHAPTER C. CONTRIBUTIONS AND INTEREST
313	313	Sec. 840A.101. COLLECTION OF MEMBER CONTRIBUTIONS. Each
314	314	payroll period, each department or agency of the state shall cause
315	315	to be deducted from the compensation of a member subject to this
316	316	chapter a contribution of six percent of the compensation of the
317	317	member.
318	318	Sec. 840A.102. STATE CONTRIBUTIONS FOR MILITARY SERVICE.
319	319	(a) The state shall contribute for military service established
320	320	under Section 838.1031 an amount in the same ratio to the member's
321	321	contribution for the service as the state's contribution bears to
322	322	the contribution for current service required of a member of the
323	323	retirement system who is subject to this chapter at the time the
324	324	service is established under this subchapter.
325	325	(b) The state's contribution under Subsection (a) shall be
326	326	paid from the fund from which the member receives compensation at
327	327	the time the service is established or, if the member does not hold
328	328	a position at the time the service is established, from the fund
329	329	from which the member received compensation when the member most
330	330	recently held a position.
331	331	Sec. 840A.103. ANNUAL INTEREST ADJUSTMENT. Each fiscal
332	332	year, the retirement system shall deposit for a member subject to
333	333	this chapter an amount equal to four percent of the member's
334	334	accumulated account balance deposited into the member's individual
335	335	account in the retirement system.
336	336	Sec. 840A.104. GAIN SHARING INTEREST ADJUSTMENT. (a) Each
337	337	fiscal year and subject to Subsection (b), the retirement system
338	338	shall compute the gain sharing interest rate by:
339	339	(1) determining the average return on the investment
340	340	of the system's cash and securities during the preceding five
341	341	fiscal years, expressed as a percentage rate;
342	342	(2) subtracting four percentage points from the
343	343	percentage rate determined under Subdivision (1); and
344	344	(3) multiplying the resulting difference under
345	345	Subdivision (2) by 50 percent.
346	346	(b) Subject to Subsection (c), each fiscal year, the
347	347	retirement system shall:
348	348	(1) in addition to the amount deposited under Section
349	349	840A.103, deposit into each member's individual account in the
350	350	retirement system an amount equal to the gain sharing interest rate
351	351	determined under Subsection (a) for the fiscal year multiplied by
352	352	the member's accumulated account balance as of the end of the
353	353	preceding fiscal year; and
354	354	(2) recalculate the annuity payment of a retiree or
355	355	annuitant under this chapter by:
356	356	(A) multiplying the annuity payment amount as of
357	357	the end of the preceding fiscal year by the gain sharing interest
358	358	rate determined under Subsection (a); or
359	359	(B) if the retiree or annuitant was not entitled
360	360	to an annuity payment as of the end of the preceding fiscal year,
361	361	multiplying the retiree's or annuitant's first annuity payment
362	362	amount by the gain sharing interest rate determined under
363	363	Subsection (a).
364	364	(c) The gain sharing interest rate applied under Subsection
365	365	(b) may not be less than zero or more than three percent.
366	366	(d) Subsection (b) applies only to a retiree or annuitant
367	367	who is receiving a cash balance annuity under Section 840A.053 or
368	368	840A.054, including an alternate payee under Section 804.005.
369	369	SECTION 14. Section 1551.102(b), Insurance Code, is amended
370	370	to read as follows:
371	371	(b) An individual is eligible to participate in the group
372	372	benefits program as provided by Subsection (a) if:
373	373	(1) the individual retires under the jurisdiction of
374	374	the Employees Retirement System of Texas; and
375	375	(2) the individual:
376	376	(A) receives or is eligible to receive an annuity
377	377	under Section 814.104(a)(2), Government Code, and has at least 10
378	378	years of eligible service credit;
379	379	(B) receives or is eligible to receive an annuity
380	380	under Chapter 803 or Section 814.104(a)(1), Government Code, has at
381	381	least 10 years of eligible service credit, and is at least 65 years
382	382	of age;
383	383	(C) receives or is eligible to receive an annuity
384	384	that is based on eligibility under Section 814.002, 814.102,
385	385	814.104(b), 814.107(a), 834.101, or 839.101, Government Code; or
386	386	(D) receives or is eligible to receive an annuity
387	387	under Subchapter B, Chapter 820, or Subchapter B, Chapter 840A,
388	388	Government Code, and has at least 10 years of eligible service
389	389	credit.
390	390	SECTION 15. Section 1551.3196(c), Insurance Code, is
391	391	amended to read as follows:
392	392	(c) This section does not apply to an individual who:
393	393	(1) receives or is eligible to receive an annuity that
394	394	is based on eligibility under Section 814.002, 814.102, 834.101,
395	395	[or] 839.101, or 840A.052, Government Code; or
396	396	(2) is eligible to participate in the group benefits
397	397	program under:
398	398	(A) Section 1551.102(d) because of a disability;
399	399	or
400	400	(B) Section 1551.102(f).
401	401	SECTION 16. This Act takes effect immediately if it
402	402	receives a vote of two-thirds of all the members elected to each
403	403	house, as provided by Section 39, Article III, Texas Constitution.
404	404	If this Act does not receive the vote necessary for immediate
405	405	effect, this Act takes effect September 1, 2023.