Texas 2023 - 88th Regular

Texas Senate Bill SB729 Compare Versions

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1	1	S.B. No. 729
2	2
3	3
4	4	AN ACT
5	5	relating to the cash balance benefit under the Employees Retirement
6	6	System of Texas.
7	7	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	8	SECTION 1. Section 804.003, Government Code, is amended by
9	9	amending Subsections (j) and (k) and adding Subsection (k-1) to
10	10	read as follows:
11	11	(j) Except as provided by Subsection (k-1), if [If] a
12	12	domestic relations order is determined to be a qualified domestic
13	13	relations order, then the public retirement system (or applicable
14	14	carrier, if under the optional retirement program) shall pay the
15	15	segregated amounts without interest to the person or persons
16	16	entitled thereto and shall thereafter pay benefits pursuant to the
17	17	order.
18	18	(k) Except as provided by Subsection (k-1), if [If] a
19	19	domestic relations order is determined not to be a qualified
20	20	domestic relations order or if within 18 months of the date a
21	21	domestic relations order is received by the public retirement
22	22	system (or applicable carrier, if under the optional retirement
23	23	program) the issue as to whether such order is a qualified domestic
24	24	relations order is not resolved, then the public retirement system
25	25	(or applicable carrier, if under the optional retirement program)
26	26	shall pay the segregated amounts without interest and shall
27	27	thereafter pay benefits to the person or persons who would have been
28	28	entitled to such amounts if there had been no order. This
29	29	subsection shall not be construed to limit or otherwise affect any
30	30	liability, responsibility, or duty of a party with respect to any
31	31	other party to the action out of which the order arose.
32	32	(k-1) Payment of segregated amounts by a public retirement
33	33	system, or applicable carrier if under the optional retirement
34	34	program, under Subsections (j) and (k) related to a benefit payable
35	35	with respect to a member or retiree subject to Chapter 820 must
36	36	include annual interest provided by Section 820.102 and gain
37	37	sharing interest provided by Section 820.103.
38	38	SECTION 2. Section 813.0015, Government Code, is amended to
39	39	read as follows:
40	40	Sec. 813.0015. PROVISIONS APPLICABLE TO CASH BALANCE GROUP
41	41	MEMBERS. The following provisions of this chapter do not apply to a
42	42	cash balance group member:
43	43	(1) Sections 813.102, 813.104, 813.106, 813.202,
44	44	813.402, 813.403, 813.404, 813.502, 813.504, 813.505, [813.506,]
45	45	813.509, 813.511, 813.513, and 813.514; and
46	46	(2) Subchapter D.
47	47	SECTION 3. Section 814.008(a), Government Code, is amended
48	48	to read as follows:
49	49	(a) A retiree receiving an optional service or disability
50	50	retirement annuity approved by the board of trustees or described
51	51	by Section 814.108(c)(1), (c)(2), or (c)(5) or receiving an
52	52	optional cash balance annuity described by Section 820.0535(c)(1),
53	53	(c)(2), or (c)(5) may change the designated beneficiary as provided
54	54	by this section for the benefits payable after the retiree's death.
55	55	SECTION 4. Chapter 820, Government Code, is amended by
56	56	adding Subchapter A-1 to read as follows:
57	57	SUBCHAPTER A-1. MILITARY SERVICE CREDIT
58	58	Sec. 820.021. CREDITABLE MILITARY SERVICE. The board of
59	59	trustees shall adopt rules to comply with the Uniformed Services
60	60	Employment and Reemployment Rights Act of 1994 (38 U.S.C. Section
61	61	4301 et seq.), including rules governing how a member subject to
62	62	this chapter may establish military service credit under this
63	63	subchapter.
64	64	Sec. 820.022. STATE CONTRIBUTIONS FOR MILITARY SERVICE.
65	65	(a) The state shall contribute for military service established
66	66	under this subchapter an amount in the same ratio to the member's
67	67	contribution for the service as the state's contribution bears to
68	68	the contribution for current service required of a member of the
69	69	employee class who is subject to this chapter at the time the
70	70	service is established under this subchapter.
71	71	(b) The state's contribution under Subsection (a) shall be
72	72	paid from the fund from which the member receives compensation at
73	73	the time the service is established or, if the member does not hold
74	74	a position at the time the service is established, from the fund
75	75	from which the member received compensation when the member most
76	76	recently held a position.
77	77	SECTION 5. Chapter 820, Government Code, is amended by
78	78	adding Subchapter A-2 to read as follows:
79	79	SUBCHAPTER A-2. REESTABLISHING PREVIOUSLY CANCELED SERVICE CREDIT
80	80	Sec. 820.031. REESTABLISHING PREVIOUSLY CANCELED SERVICE
81	81	CREDIT WITHOUT PURCHASE. (a) A cash balance group member who has
82	82	withdrawn contributions and canceled service credit in a class of
83	83	membership may reestablish the canceled service credit in the
84	84	retirement system for the purposes described by Subsection (c) by
85	85	submitting a request to the system in a form and manner prescribed
86	86	by the system.
87	87	(b) The retirement system shall grant the canceled service
88	88	credit of a member who submits a request as provided by Subsection
89	89	(a) after the system verifies that the member is a cash balance
90	90	group member.
91	91	(c) Service credit established under this section may be
92	92	used only to determine whether the cash balance group member is
93	93	eligible to retire and receive a cash balance annuity under this
94	94	chapter. The service credit does not affect eligibility for any
95	95	other purpose, including for purposes of determining eligibility to
96	96	participate in the group benefits program established under Chapter
97	97	1551, Insurance Code.
98	98	Sec. 820.032. PURCHASE OF PREVIOUSLY CANCELED SERVICE
99	99	CREDIT. (a) A cash balance group member who has withdrawn
100	100	contributions and canceled service credit in a class of membership
101	101	may purchase the canceled service credit in the retirement system
102	102	for the purposes described by Subsection (c) by:
103	103	(1) submitting a request to the system in a form and
104	104	manner prescribed by the system; and
105	105	(2) depositing with the retirement system in a lump
106	106	sum the total amount of money withdrawn from a membership class not
107	107	later than the first day of the 24th month after the month in which
108	108	the person is reemployed or again holds office.
109	109	(b) On receipt of the cash balance group member's deposit,
110	110	the retirement system shall credit the member's individual account
111	111	in the employees saving account with that amount and apply annual
112	112	and gain sharing interest beginning the first day of the month
113	113	following the date of the deposit, as provided by Sections 820.102
114	114	and 820.103.
115	115	(c) Service credit purchased under this section may be used
116	116	only:
117	117	(1) to determine whether the cash balance group member
118	118	is eligible to retire and receive a cash balance annuity; and
119	119	(2) for purposes of determining eligibility to
120	120	participate in the group benefits program established under Chapter
121	121	1551, Insurance Code.
122	122	(d) The retirement system may charge a reasonable
123	123	administrative fee to purchase service credit under this section.
124	124	SECTION 6. Section 820.052, Government Code, is amended to
125	125	read as follows:
126	126	Sec. 820.052. ELIGIBILITY FOR CASH BALANCE BENEFIT. A
127	127	member:
128	128	(1) who has service credit in the employee class of
129	129	membership is eligible to retire and receive a cash balance annuity
130	130	if the member:
131	131	(A) is at least 65 years old and has five years of
132	132	service credit in that class; or
133	133	(B) has at least five years of service credit in
134	134	that class and the sum of the member's age and amount of service
135	135	credit in that class, including months of age and credit, equals or
136	136	exceeds the number 80;
137	137	(2) who:
138	138	(A) has at least 20 years of service credit as a
139	139	law enforcement or custodial officer is eligible to retire
140	140	regardless of age and receive a cash balance annuity in an amount
141	141	computed and funded as provided by this subchapter [Section
142	142	820.053]; or
143	143	(B) is at least 55 years old and has at least 10
144	144	years of service credit as a law enforcement or custodial officer is
145	145	eligible to retire and receive a cash balance annuity in an amount
146	146	computed and funded as provided by this subchapter [Section
147	147	820.053], provided that the member is only entitled to the enhanced
148	148	benefit described by Section 820.053(a)(2)(B) if the member has at
149	149	least 20 years of service as a law enforcement or custodial officer;
150	150	or
151	151	(3) who has service credit in the elected class of
152	152	membership is eligible to retire and receive a cash balance annuity
153	153	if the member:
154	154	(A) is at least 60 years old and has eight years
155	155	of service credit in that class; or
156	156	(B) is at least 50 years old and has 12 years of
157	157	service credit in that class.
158	158	SECTION 7. Subchapter B, Chapter 820, Government Code, is
159	159	amended by adding Sections 820.0535, 820.0536, and 820.0537 to read
160	160	as follows:
161	161	Sec. 820.0535. OPTIONAL CASH BALANCE BENEFITS. (a)
162	162	Instead of the standard cash balance annuity payable under Section
163	163	820.053, a retiring member may elect to receive an optional cash
164	164	balance annuity under this section.
165	165	(b) A person who selects an optional lifetime cash balance
166	166	annuity must designate, before the selection becomes effective, one
167	167	beneficiary to receive the annuity on the death of the person making
168	168	the selection. A person who selects an optional cash balance
169	169	annuity payable for a guaranteed period may designate, before or
170	170	after retirement, one or more beneficiaries to receive the annuity
171	171	on the death of the person making the selection.
172	172	(c) A person eligible to select an optional cash balance
173	173	annuity under this section may select an option that provides that:
174	174	(1) after the retiree's death, the reduced annuity is
175	175	payable in the same amount throughout the life of the beneficiary
176	176	designated by the retiree before retirement;
177	177	(2) after the retiree's death, one-half of the reduced
178	178	annuity is payable throughout the life of the beneficiary
179	179	designated by the retiree before retirement;
180	180	(3) if the retiree dies before 60 monthly annuity
181	181	payments have been made, the remainder of the 60 payments are
182	182	payable to one or more beneficiaries or, if one does not exist, to
183	183	the retiree's estate;
184	184	(4) if the retiree dies before 120 monthly annuity
185	185	payments have been made, the remainder of the 120 payments are
186	186	payable to one or more beneficiaries or, if one does not exist, to
187	187	the retiree's estate; or
188	188	(5) after the retiree's death, three-fourths of the
189	189	reduced annuity is payable throughout the life of the beneficiary
190	190	designated by the retiree before retirement.
191	191	(d) If a beneficiary designated by a retiree under
192	192	Subsection (b) predeceases the retiree and the retiree has elected
193	193	an optional lifetime annuity, the reduced annuity shall be
194	194	increased to the standard cash balance annuity that the retiree
195	195	would have been entitled to receive if the retiree had not selected
196	196	the optional annuity. The standard cash balance annuity shall be
197	197	adjusted as appropriate for post-retirement increases in
198	198	retirement benefits authorized by law since the date of retirement.
199	199	(e) Any increase in an annuity under Subsection (d) begins
200	200	with the payment for the month following the month in which the
201	201	designated beneficiary dies, and the increased annuity is payable
202	202	to the retiree for the remainder of the retiree's life.
203	203	(f) The computation of an optional cash balance annuity must
204	204	be made without regard to the gender of the annuitant or designated
205	205	beneficiary.
206	206	(g) Except as provided by Section 814.008 or 820.0536, a
207	207	person who selected an optional cash balance annuity described by
208	208	Subsection (c)(1), (c)(2), or (c)(5) of this section may not change
209	209	or revoke a beneficiary designation after the person's effective
210	210	date of retirement.
211	211	(h) A beneficiary designation that names a former spouse as
212	212	a beneficiary for a guaranteed optional cash balance annuity
213	213	described by Subsection (c)(3) or (c)(4) is invalid unless the
214	214	designation is made after the date of the divorce.
215	215	(i) An optional retirement annuity provided by this section
216	216	is available to a member eligible to receive an enhanced service
217	217	retirement annuity described by Section 820.053(a)(2)(B), but the
218	218	same optional plan and beneficiary must be selected for the portion
219	219	of the annuity payable from the law enforcement and custodial
220	220	officer supplemental retirement fund and the portion payable from
221	221	the member's individual account in the employees saving account.
222	222	Sec. 820.0536. CHANGE IN OPTIONAL CASH BALANCE ANNUITY
223	223	SELECTION. (a) A person who retired and selected an optional cash
224	224	balance annuity described by Section 820.0535(c)(1), (c)(2), or
225	225	(c)(5) may change the optional annuity to a standard cash balance
226	226	annuity only if:
227	227	(1) pursuant to a divorce decree, a court orders the
228	228	change in the annuity to a standard cash balance annuity; or
229	229	(2) the retiree files with the retirement system a
230	230	request to change the annuity and, in connection with a divorce
231	231	between the retiree and the beneficiary designated by the retiree
232	232	under Section 820.0535(b), the beneficiary has executed a written,
233	233	notarized instrument that:
234	234	(A) releases the system from any claim to the
235	235	annuity by the beneficiary; and
236	236	(B) transfers all of the beneficiary's interest
237	237	in the annuity to the retiree.
238	238	(b) If a retiree files a request as provided by Subsection
239	239	(a), the retirement system shall recompute the annuity as a
240	240	standard cash balance annuity. The increase in the annuity under
241	241	this section begins with the monthly payment made to the retiree for
242	242	the month following the month in which a request is filed as
243	243	provided by Subsection (a).
244	244	Sec. 820.0537. PARTIAL LUMP-SUM CASH BALANCE OPTION. (a) A
245	245	member who is eligible for a cash balance annuity may select a
246	246	standard cash balance annuity under Section 820.053 or an optional
247	247	cash balance annuity under Section 820.0535, together with a
248	248	partial lump-sum distribution.
249	249	(b) The amount of the lump-sum distribution under this
250	250	section may not exceed the sum of 36 months of a standard cash
251	251	balance annuity computed without regard to this section.
252	252	(c) The cash balance annuity selected by the member shall be
253	253	actuarially reduced to reflect the lump-sum option selected by the
254	254	member and shall be actuarially equivalent to a standard or
255	255	optional cash balance annuity, as applicable, without the partial
256	256	lump-sum distribution. The annuity and lump sum shall be computed
257	257	to result in no actuarial loss to the retirement system.
258	258	(d) The lump-sum distribution shall be made as a single
259	259	payment payable at the time that the first monthly annuity payment
260	260	is paid.
261	261	(e) The amount of the lump-sum distribution shall be
262	262	deducted from any amount otherwise payable under this chapter.
263	263	(f) The partial lump-sum option under this section may be
264	264	elected only once by a member and may not be elected by a retiree. A
265	265	member retiring under the proportionate retirement program under
266	266	Chapter 803 is not eligible for the partial lump-sum option.
267	267	(g) Before a retiring member selects a partial lump-sum
268	268	distribution under this section:
269	269	(1) the retirement system shall provide written notice
270	270	to the member of the amount by which the member's annuity will be
271	271	reduced because of the selection; and
272	272	(2) the member must acknowledge receipt of the notice
273	273	in writing.
274	274	(h) The board of trustees may adopt rules for the
275	275	implementation of this section and may authorize the option to be
276	276	used for a death benefit annuity. This section does not apply to a
277	277	disability retirement annuity.
278	278	SECTION 8. Section 820.054(a), Government Code, is amended
279	279	to read as follows:
280	280	(a) Notwithstanding any other law, a member subject to this
281	281	chapter, a retiree receiving a cash balance annuity under this
282	282	chapter, or the beneficiary of a member or retiree described by this
283	283	subsection, who qualifies for a death or survivor benefit annuity
284	284	or a disability retirement annuity under Chapter 814 is entitled to
285	285	a cash balance annuity under this subchapter [Section 820.053]
286	286	instead of the annuity otherwise provided under Chapter 814.
287	287	SECTION 9. Sections 820.103(a), (b), and (d), Government
288	288	Code, are amended to read as follows:
289	289	(a) Each fiscal year and subject to Subsection (b), the
290	290	retirement system shall compute the gain sharing interest rate
291	291	[applicable to the subsequent fiscal year] by:
292	292	(1) determining the average return on the investment
293	293	of the system's cash and securities during the preceding five
294	294	fiscal years, expressed as a percentage rate;
295	295	(2) subtracting four percentage points from the
296	296	percentage rate determined under Subdivision (1); and
297	297	(3) multiplying the resulting difference [sum
298	298	determined] under Subdivision (2) by 50 percent.
299	299	(b) Subject to Subsection (c), [in addition to the amount
300	300	deposited under Section 820.102,] each fiscal year, the retirement
301	301	system shall:
302	302	(1) in addition to the amount deposited under Section
303	303	820.102, deposit into each member's individual account in the
304	304	employees saving account an amount equal to the gain sharing
305	305	interest rate determined under Subsection (a) for the fiscal year
306	306	multiplied by the member's accumulated account balance as of the
307	307	end of the preceding fiscal year; and
308	308	(2) recalculate the annuity payment of a retiree or
309	309	annuitant under this chapter by:
310	310	(A) multiplying the annuity payment amount as of
311	311	the end of the preceding fiscal year by [an amount equal to] the
312	312	gain sharing interest rate determined under Subsection (a); or
313	313	(B) if the retiree or annuitant was not entitled
314	314	to an annuity payment as of the end of the preceding fiscal year,
315	315	multiplying the retiree's or annuitant's first annuity payment
316	316	amount by the gain sharing interest rate determined under
317	317	Subsection (a).
318	318	(d) Subsection (b) applies only to a retiree or annuitant
319	319	who is receiving a cash balance annuity under Section 820.053 or
320	320	820.0535, including an alternate payee under Section 804.005.
321	321	SECTION 10. Section 804.003, Government Code, as amended by
322	322	this Act, applies only to a domestic relations order entered on or
323	323	after the effective date of this Act. A domestic relations order
324	324	entered before the effective date of this Act is governed by the law
325	325	in effect on the date the order was entered, and the former law is
326	326	continued in effect for that purpose.
327	327	SECTION 11. Notwithstanding Section 820.032, Government
328	328	Code, as added by this Act, a person who is a cash balance group
329	329	member on the effective date of this Act may purchase canceled
330	330	service credit under that section not later than the first day of
331	331	the 24th month after the month in which this Act takes effect.
332	332	SECTION 12. This Act takes effect immediately if it
333	333	receives a vote of two-thirds of all the members elected to each
334	334	house, as provided by Section 39, Article III, Texas Constitution.
335	335	If this Act does not receive the vote necessary for immediate
336	336	effect, this Act takes effect September 1, 2023.
337	337	______________________________ ______________________________
338	338	President of the Senate Speaker of the House
339	339	I hereby certify that S.B. No. 729 passed the Senate on
340	340	April 3, 2023, by the following vote: Yeas 31, Nays 0; and that
341	341	the Senate concurred in House amendment on May 9, 2023, by the
342	342	following vote: Yeas 31, Nays 0.
343	343	______________________________
344	344	Secretary of the Senate
345	345	I hereby certify that S.B. No. 729 passed the House, with
346	346	amendment, on May 2, 2023, by the following vote: Yeas 142,
347	347	Nays 0, one present not voting.
348	348	______________________________
349	349	Chief Clerk of the House
350	350	Approved:
351	351	______________________________
352	352	Date
353	353	______________________________
354	354	Governor