Bill Text: TX SB729 | 2023-2024 | 88th Legislature | Enrolled
Bill Title: Relating to the cash balance benefit under the Employees Retirement System of Texas.
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Passed) 2023-05-19 - Effective immediately [SB729 Detail]
Download: Texas-2023-SB729-Enrolled.html
S.B. No. 729 |
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relating to the cash balance benefit under the Employees Retirement | ||
System of Texas. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 804.003, Government Code, is amended by | ||
amending Subsections (j) and (k) and adding Subsection (k-1) to | ||
read as follows: | ||
(j) Except as provided by Subsection (k-1), if [ |
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domestic relations order is determined to be a qualified domestic | ||
relations order, then the public retirement system (or applicable | ||
carrier, if under the optional retirement program) shall pay the | ||
segregated amounts without interest to the person or persons | ||
entitled thereto and shall thereafter pay benefits pursuant to the | ||
order. | ||
(k) Except as provided by Subsection (k-1), if [ |
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domestic relations order is determined not to be a qualified | ||
domestic relations order or if within 18 months of the date a | ||
domestic relations order is received by the public retirement | ||
system (or applicable carrier, if under the optional retirement | ||
program) the issue as to whether such order is a qualified domestic | ||
relations order is not resolved, then the public retirement system | ||
(or applicable carrier, if under the optional retirement program) | ||
shall pay the segregated amounts without interest and shall | ||
thereafter pay benefits to the person or persons who would have been | ||
entitled to such amounts if there had been no order. This | ||
subsection shall not be construed to limit or otherwise affect any | ||
liability, responsibility, or duty of a party with respect to any | ||
other party to the action out of which the order arose. | ||
(k-1) Payment of segregated amounts by a public retirement | ||
system, or applicable carrier if under the optional retirement | ||
program, under Subsections (j) and (k) related to a benefit payable | ||
with respect to a member or retiree subject to Chapter 820 must | ||
include annual interest provided by Section 820.102 and gain | ||
sharing interest provided by Section 820.103. | ||
SECTION 2. Section 813.0015, Government Code, is amended to | ||
read as follows: | ||
Sec. 813.0015. PROVISIONS APPLICABLE TO CASH BALANCE GROUP | ||
MEMBERS. The following provisions of this chapter do not apply to a | ||
cash balance group member: | ||
(1) Sections 813.102, 813.104, 813.106, 813.202, | ||
813.402, 813.403, 813.404, 813.502, 813.504, 813.505, [ |
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813.509, 813.511, 813.513, and 813.514; and | ||
(2) Subchapter D. | ||
SECTION 3. Section 814.008(a), Government Code, is amended | ||
to read as follows: | ||
(a) A retiree receiving an optional service or disability | ||
retirement annuity approved by the board of trustees or described | ||
by Section 814.108(c)(1), (c)(2), or (c)(5) or receiving an | ||
optional cash balance annuity described by Section 820.0535(c)(1), | ||
(c)(2), or (c)(5) may change the designated beneficiary as provided | ||
by this section for the benefits payable after the retiree's death. | ||
SECTION 4. Chapter 820, Government Code, is amended by | ||
adding Subchapter A-1 to read as follows: | ||
SUBCHAPTER A-1. MILITARY SERVICE CREDIT | ||
Sec. 820.021. CREDITABLE MILITARY SERVICE. The board of | ||
trustees shall adopt rules to comply with the Uniformed Services | ||
Employment and Reemployment Rights Act of 1994 (38 U.S.C. Section | ||
4301 et seq.), including rules governing how a member subject to | ||
this chapter may establish military service credit under this | ||
subchapter. | ||
Sec. 820.022. STATE CONTRIBUTIONS FOR MILITARY SERVICE. | ||
(a) The state shall contribute for military service established | ||
under this subchapter an amount in the same ratio to the member's | ||
contribution for the service as the state's contribution bears to | ||
the contribution for current service required of a member of the | ||
employee class who is subject to this chapter at the time the | ||
service is established under this subchapter. | ||
(b) The state's contribution under Subsection (a) shall be | ||
paid from the fund from which the member receives compensation at | ||
the time the service is established or, if the member does not hold | ||
a position at the time the service is established, from the fund | ||
from which the member received compensation when the member most | ||
recently held a position. | ||
SECTION 5. Chapter 820, Government Code, is amended by | ||
adding Subchapter A-2 to read as follows: | ||
SUBCHAPTER A-2. REESTABLISHING PREVIOUSLY CANCELED SERVICE CREDIT | ||
Sec. 820.031. REESTABLISHING PREVIOUSLY CANCELED SERVICE | ||
CREDIT WITHOUT PURCHASE. (a) A cash balance group member who has | ||
withdrawn contributions and canceled service credit in a class of | ||
membership may reestablish the canceled service credit in the | ||
retirement system for the purposes described by Subsection (c) by | ||
submitting a request to the system in a form and manner prescribed | ||
by the system. | ||
(b) The retirement system shall grant the canceled service | ||
credit of a member who submits a request as provided by Subsection | ||
(a) after the system verifies that the member is a cash balance | ||
group member. | ||
(c) Service credit established under this section may be | ||
used only to determine whether the cash balance group member is | ||
eligible to retire and receive a cash balance annuity under this | ||
chapter. The service credit does not affect eligibility for any | ||
other purpose, including for purposes of determining eligibility to | ||
participate in the group benefits program established under Chapter | ||
1551, Insurance Code. | ||
Sec. 820.032. PURCHASE OF PREVIOUSLY CANCELED SERVICE | ||
CREDIT. (a) A cash balance group member who has withdrawn | ||
contributions and canceled service credit in a class of membership | ||
may purchase the canceled service credit in the retirement system | ||
for the purposes described by Subsection (c) by: | ||
(1) submitting a request to the system in a form and | ||
manner prescribed by the system; and | ||
(2) depositing with the retirement system in a lump | ||
sum the total amount of money withdrawn from a membership class not | ||
later than the first day of the 24th month after the month in which | ||
the person is reemployed or again holds office. | ||
(b) On receipt of the cash balance group member's deposit, | ||
the retirement system shall credit the member's individual account | ||
in the employees saving account with that amount and apply annual | ||
and gain sharing interest beginning the first day of the month | ||
following the date of the deposit, as provided by Sections 820.102 | ||
and 820.103. | ||
(c) Service credit purchased under this section may be used | ||
only: | ||
(1) to determine whether the cash balance group member | ||
is eligible to retire and receive a cash balance annuity; and | ||
(2) for purposes of determining eligibility to | ||
participate in the group benefits program established under Chapter | ||
1551, Insurance Code. | ||
(d) The retirement system may charge a reasonable | ||
administrative fee to purchase service credit under this section. | ||
SECTION 6. Section 820.052, Government Code, is amended to | ||
read as follows: | ||
Sec. 820.052. ELIGIBILITY FOR CASH BALANCE BENEFIT. A | ||
member: | ||
(1) who has service credit in the employee class of | ||
membership is eligible to retire and receive a cash balance annuity | ||
if the member: | ||
(A) is at least 65 years old and has five years of | ||
service credit in that class; or | ||
(B) has at least five years of service credit in | ||
that class and the sum of the member's age and amount of service | ||
credit in that class, including months of age and credit, equals or | ||
exceeds the number 80; | ||
(2) who: | ||
(A) has at least 20 years of service credit as a | ||
law enforcement or custodial officer is eligible to retire | ||
regardless of age and receive a cash balance annuity in an amount | ||
computed and funded as provided by this subchapter [ |
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(B) is at least 55 years old and has at least 10 | ||
years of service credit as a law enforcement or custodial officer is | ||
eligible to retire and receive a cash balance annuity in an amount | ||
computed and funded as provided by this subchapter [ |
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benefit described by Section 820.053(a)(2)(B) if the member has at | ||
least 20 years of service as a law enforcement or custodial officer; | ||
or | ||
(3) who has service credit in the elected class of | ||
membership is eligible to retire and receive a cash balance annuity | ||
if the member: | ||
(A) is at least 60 years old and has eight years | ||
of service credit in that class; or | ||
(B) is at least 50 years old and has 12 years of | ||
service credit in that class. | ||
SECTION 7. Subchapter B, Chapter 820, Government Code, is | ||
amended by adding Sections 820.0535, 820.0536, and 820.0537 to read | ||
as follows: | ||
Sec. 820.0535. OPTIONAL CASH BALANCE BENEFITS. (a) | ||
Instead of the standard cash balance annuity payable under Section | ||
820.053, a retiring member may elect to receive an optional cash | ||
balance annuity under this section. | ||
(b) A person who selects an optional lifetime cash balance | ||
annuity must designate, before the selection becomes effective, one | ||
beneficiary to receive the annuity on the death of the person making | ||
the selection. A person who selects an optional cash balance | ||
annuity payable for a guaranteed period may designate, before or | ||
after retirement, one or more beneficiaries to receive the annuity | ||
on the death of the person making the selection. | ||
(c) A person eligible to select an optional cash balance | ||
annuity under this section may select an option that provides that: | ||
(1) after the retiree's death, the reduced annuity is | ||
payable in the same amount throughout the life of the beneficiary | ||
designated by the retiree before retirement; | ||
(2) after the retiree's death, one-half of the reduced | ||
annuity is payable throughout the life of the beneficiary | ||
designated by the retiree before retirement; | ||
(3) if the retiree dies before 60 monthly annuity | ||
payments have been made, the remainder of the 60 payments are | ||
payable to one or more beneficiaries or, if one does not exist, to | ||
the retiree's estate; | ||
(4) if the retiree dies before 120 monthly annuity | ||
payments have been made, the remainder of the 120 payments are | ||
payable to one or more beneficiaries or, if one does not exist, to | ||
the retiree's estate; or | ||
(5) after the retiree's death, three-fourths of the | ||
reduced annuity is payable throughout the life of the beneficiary | ||
designated by the retiree before retirement. | ||
(d) If a beneficiary designated by a retiree under | ||
Subsection (b) predeceases the retiree and the retiree has elected | ||
an optional lifetime annuity, the reduced annuity shall be | ||
increased to the standard cash balance annuity that the retiree | ||
would have been entitled to receive if the retiree had not selected | ||
the optional annuity. The standard cash balance annuity shall be | ||
adjusted as appropriate for post-retirement increases in | ||
retirement benefits authorized by law since the date of retirement. | ||
(e) Any increase in an annuity under Subsection (d) begins | ||
with the payment for the month following the month in which the | ||
designated beneficiary dies, and the increased annuity is payable | ||
to the retiree for the remainder of the retiree's life. | ||
(f) The computation of an optional cash balance annuity must | ||
be made without regard to the gender of the annuitant or designated | ||
beneficiary. | ||
(g) Except as provided by Section 814.008 or 820.0536, a | ||
person who selected an optional cash balance annuity described by | ||
Subsection (c)(1), (c)(2), or (c)(5) of this section may not change | ||
or revoke a beneficiary designation after the person's effective | ||
date of retirement. | ||
(h) A beneficiary designation that names a former spouse as | ||
a beneficiary for a guaranteed optional cash balance annuity | ||
described by Subsection (c)(3) or (c)(4) is invalid unless the | ||
designation is made after the date of the divorce. | ||
(i) An optional retirement annuity provided by this section | ||
is available to a member eligible to receive an enhanced service | ||
retirement annuity described by Section 820.053(a)(2)(B), but the | ||
same optional plan and beneficiary must be selected for the portion | ||
of the annuity payable from the law enforcement and custodial | ||
officer supplemental retirement fund and the portion payable from | ||
the member's individual account in the employees saving account. | ||
Sec. 820.0536. CHANGE IN OPTIONAL CASH BALANCE ANNUITY | ||
SELECTION. (a) A person who retired and selected an optional cash | ||
balance annuity described by Section 820.0535(c)(1), (c)(2), or | ||
(c)(5) may change the optional annuity to a standard cash balance | ||
annuity only if: | ||
(1) pursuant to a divorce decree, a court orders the | ||
change in the annuity to a standard cash balance annuity; or | ||
(2) the retiree files with the retirement system a | ||
request to change the annuity and, in connection with a divorce | ||
between the retiree and the beneficiary designated by the retiree | ||
under Section 820.0535(b), the beneficiary has executed a written, | ||
notarized instrument that: | ||
(A) releases the system from any claim to the | ||
annuity by the beneficiary; and | ||
(B) transfers all of the beneficiary's interest | ||
in the annuity to the retiree. | ||
(b) If a retiree files a request as provided by Subsection | ||
(a), the retirement system shall recompute the annuity as a | ||
standard cash balance annuity. The increase in the annuity under | ||
this section begins with the monthly payment made to the retiree for | ||
the month following the month in which a request is filed as | ||
provided by Subsection (a). | ||
Sec. 820.0537. PARTIAL LUMP-SUM CASH BALANCE OPTION. (a) A | ||
member who is eligible for a cash balance annuity may select a | ||
standard cash balance annuity under Section 820.053 or an optional | ||
cash balance annuity under Section 820.0535, together with a | ||
partial lump-sum distribution. | ||
(b) The amount of the lump-sum distribution under this | ||
section may not exceed the sum of 36 months of a standard cash | ||
balance annuity computed without regard to this section. | ||
(c) The cash balance annuity selected by the member shall be | ||
actuarially reduced to reflect the lump-sum option selected by the | ||
member and shall be actuarially equivalent to a standard or | ||
optional cash balance annuity, as applicable, without the partial | ||
lump-sum distribution. The annuity and lump sum shall be computed | ||
to result in no actuarial loss to the retirement system. | ||
(d) The lump-sum distribution shall be made as a single | ||
payment payable at the time that the first monthly annuity payment | ||
is paid. | ||
(e) The amount of the lump-sum distribution shall be | ||
deducted from any amount otherwise payable under this chapter. | ||
(f) The partial lump-sum option under this section may be | ||
elected only once by a member and may not be elected by a retiree. A | ||
member retiring under the proportionate retirement program under | ||
Chapter 803 is not eligible for the partial lump-sum option. | ||
(g) Before a retiring member selects a partial lump-sum | ||
distribution under this section: | ||
(1) the retirement system shall provide written notice | ||
to the member of the amount by which the member's annuity will be | ||
reduced because of the selection; and | ||
(2) the member must acknowledge receipt of the notice | ||
in writing. | ||
(h) The board of trustees may adopt rules for the | ||
implementation of this section and may authorize the option to be | ||
used for a death benefit annuity. This section does not apply to a | ||
disability retirement annuity. | ||
SECTION 8. Section 820.054(a), Government Code, is amended | ||
to read as follows: | ||
(a) Notwithstanding any other law, a member subject to this | ||
chapter, a retiree receiving a cash balance annuity under this | ||
chapter, or the beneficiary of a member or retiree described by this | ||
subsection, who qualifies for a death or survivor benefit annuity | ||
or a disability retirement annuity under Chapter 814 is entitled to | ||
a cash balance annuity under this subchapter [ |
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instead of the annuity otherwise provided under Chapter 814. | ||
SECTION 9. Sections 820.103(a), (b), and (d), Government | ||
Code, are amended to read as follows: | ||
(a) Each fiscal year and subject to Subsection (b), the | ||
retirement system shall compute the gain sharing interest rate | ||
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(1) determining the average return on the investment | ||
of the system's cash and securities during the preceding five | ||
fiscal years, expressed as a percentage rate; | ||
(2) subtracting four percentage points from the | ||
percentage rate determined under Subdivision (1); and | ||
(3) multiplying the resulting difference [ |
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(b) Subject to Subsection (c), [ |
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system shall: | ||
(1) in addition to the amount deposited under Section | ||
820.102, deposit into each member's individual account in the | ||
employees saving account an amount equal to the gain sharing | ||
interest rate determined under Subsection (a) for the fiscal year | ||
multiplied by the member's accumulated account balance as of the | ||
end of the preceding fiscal year; and | ||
(2) recalculate the annuity payment of a retiree or | ||
annuitant under this chapter by: | ||
(A) multiplying the annuity payment amount as of | ||
the end of the preceding fiscal year by [ |
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gain sharing interest rate determined under Subsection (a); or | ||
(B) if the retiree or annuitant was not entitled | ||
to an annuity payment as of the end of the preceding fiscal year, | ||
multiplying the retiree's or annuitant's first annuity payment | ||
amount by the gain sharing interest rate determined under | ||
Subsection (a). | ||
(d) Subsection (b) applies only to a retiree or annuitant | ||
who is receiving a cash balance annuity under Section 820.053 or | ||
820.0535, including an alternate payee under Section 804.005. | ||
SECTION 10. Section 804.003, Government Code, as amended by | ||
this Act, applies only to a domestic relations order entered on or | ||
after the effective date of this Act. A domestic relations order | ||
entered before the effective date of this Act is governed by the law | ||
in effect on the date the order was entered, and the former law is | ||
continued in effect for that purpose. | ||
SECTION 11. Notwithstanding Section 820.032, Government | ||
Code, as added by this Act, a person who is a cash balance group | ||
member on the effective date of this Act may purchase canceled | ||
service credit under that section not later than the first day of | ||
the 24th month after the month in which this Act takes effect. | ||
SECTION 12. This Act takes effect immediately if it | ||
receives a vote of two-thirds of all the members elected to each | ||
house, as provided by Section 39, Article III, Texas Constitution. | ||
If this Act does not receive the vote necessary for immediate | ||
effect, this Act takes effect September 1, 2023. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I hereby certify that S.B. No. 729 passed the Senate on | ||
April 3, 2023, by the following vote: Yeas 31, Nays 0; and that | ||
the Senate concurred in House amendment on May 9, 2023, by the | ||
following vote: Yeas 31, Nays 0. | ||
______________________________ | ||
Secretary of the Senate | ||
I hereby certify that S.B. No. 729 passed the House, with | ||
amendment, on May 2, 2023, by the following vote: Yeas 142, | ||
Nays 0, one present not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
Approved: | ||
______________________________ | ||
Date | ||
______________________________ | ||
Governor |