Bill Text: TX SB1245 | 2023-2024 | 88th Legislature | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to contributions to, benefits from, and the administration of the Judicial Retirement System of Texas Plan Two.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2023-06-18 - Effective immediately [SB1245 Detail]
Download: Texas-2023-SB1245-Introduced.html
Bill Title: Relating to contributions to, benefits from, and the administration of the Judicial Retirement System of Texas Plan Two.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2023-06-18 - Effective immediately [SB1245 Detail]
Download: Texas-2023-SB1245-Introduced.html
88R4577 KFF-D | ||
By: Huffman | S.B. No. 1245 |
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relating to contributions to, benefits from, and the administration | ||
of the Judicial Retirement System of Texas Plan Two. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 803.202, Government Code, is amended by | ||
adding Subsection (d) to read as follows: | ||
(d) A member of the Judicial Retirement System of Texas Plan | ||
Two who is subject to Chapter 840A is eligible to participate in the | ||
program provided by this chapter. | ||
SECTION 2. Section 804.003, Government Code, is amended by | ||
amending Subsections (j) and (k) and adding Subsection (k-2) to | ||
read as follows: | ||
(j) Except as provided by Subsection (k-2), 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-2), 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-2) 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 840A must | ||
include annual interest provided by Section 840A.103 and gain | ||
sharing interest provided by Section 840A.104. | ||
SECTION 3. Section 836.001, Government Code, is amended by | ||
adding Subdivision (3-a) and amending Subdivision (9) to read as | ||
follows: | ||
(3-a) "Cash balance group member" means a member | ||
subject to Chapter 840A. | ||
(9) "Service credit" means the amount of membership | ||
and, if applicable, military[ |
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ascribed by the retirement system to a person and for which the | ||
person has made required contributions. | ||
SECTION 4. Section 838.001, Government Code, is amended to | ||
read as follows: | ||
Sec. 838.001. TYPES OF CREDITABLE SERVICE. The types of | ||
service creditable in the retirement system are[ |
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[ |
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(1) [ |
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(2) [ |
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SECTION 5. Subchapter A, Chapter 838, Government Code, is | ||
amended by adding Section 838.002 to read as follows: | ||
Sec. 838.002. PROVISIONS INAPPLICABLE TO CASH BALANCE GROUP | ||
MEMBERS. Sections 838.102, 838.103, 838.1035, 838.105, 838.106, | ||
838.107, and 838.108 of this chapter do not apply to a cash balance | ||
group member. | ||
SECTION 6. Subchapter A, Chapter 839, Government Code, is | ||
amended by adding Section 839.005 to read as follows: | ||
Sec. 839.005. PROVISIONS INAPPLICABLE TO CASH BALANCE GROUP | ||
MEMBERS. The following provisions of this chapter do not apply to a | ||
cash balance group member: | ||
(1) Section 839.002; and | ||
(2) Subchapters B and E. | ||
SECTION 7. Section 839.201(a), Government Code, is amended | ||
to read as follows: | ||
(a) A member, other than a member who is eligible to receive | ||
a service retirement annuity under Section 839.101 or a cash | ||
balance annuity under Section 840A.052, is eligible, regardless of | ||
age, to retire from regular active service for disability and | ||
receive a disability retirement annuity if the member has at least | ||
seven years of service credit in the retirement system. | ||
SECTION 8. Subchapter A, Chapter 840, Government Code, is | ||
amended by adding Section 840.009 to read as follows: | ||
Sec. 840.009. PROVISIONS INAPPLICABLE TO CASH BALANCE GROUP | ||
MEMBERS. Sections 840.102(g) and (h), 840.1025, and 840.1027 of | ||
this chapter do not apply to a cash balance group member. | ||
SECTION 9. The heading to Section 840.102, Government Code, | ||
is amended to read as follows: | ||
Sec. 840.102. COLLECTION OF CERTAIN MEMBER CONTRIBUTIONS. | ||
SECTION 10. Section 840.102(a), Government Code, is amended | ||
to read as follows: | ||
(a) Except as provided by Subsections (g) and (h), each | ||
payroll period, a judicial officer who is a member of the retirement | ||
system other than a cash balance group member is required to | ||
contribute 9.5 percent of the officer's state compensation for | ||
service rendered after September 1, 2019. | ||
SECTION 11. Sections 840.105(a) and (c), Government Code, | ||
are amended to read as follows: | ||
(a) For all state compensation earned [ |
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system, the state shall pick up the member contributions required | ||
by Section 840.102 or 840A.101, as applicable. The state shall pay | ||
the picked-up contributions to the retirement system from the same | ||
source that is used in paying state compensation to the judicial | ||
officer members. These payments are in lieu of contributions by the | ||
members. The state shall pick up these contributions by a | ||
corresponding reduction in the cash salaries of the members, by an | ||
offset against a future salary increase, or by a combination of a | ||
salary reduction and offset against a future salary increase. | ||
Members do not have the option of choosing to receive the | ||
contributed amounts directly instead of having them paid by the | ||
state to the retirement system. | ||
(c) Member contributions picked up as provided by | ||
Subsection (a) shall be transmitted to the retirement system in the | ||
manner required by Section 840.102. Member contributions picked up | ||
by the state shall be credited to the members' individual accounts | ||
and treated for all other purposes as if the amounts were a part of | ||
the members' compensation and had been deducted as provided by | ||
Section 840.102 or 840A.101, as applicable. | ||
SECTION 12. Section 840.306(a), Government Code, is amended | ||
to read as follows: | ||
(a) Except as provided by Section 840A.103 or 840A.104, | ||
interest [ |
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the retirement system is earned monthly and is computed at the rate | ||
of five percent a year on the mean balance of the member's account | ||
for the fiscal year. | ||
SECTION 13. Subtitle E, Title 8, Government Code, is | ||
amended by adding Chapter 840A to read as follows: | ||
CHAPTER 840A. CASH BALANCE BENEFIT | ||
SUBCHAPTER A. GENERAL PROVISIONS | ||
Sec. 840A.001. DEFINITION. In this chapter, "accumulated | ||
account balance" means the total of amounts in a member's | ||
individual account in the retirement system, including: | ||
(1) amounts deducted from the compensation of the | ||
member; | ||
(2) other member deposits required to be placed in the | ||
member's individual account; and | ||
(3) interest credited to amounts in the member's | ||
individual account, including interest and gain sharing interest | ||
credited in accordance with Sections 840A.103 and 840A.104, | ||
respectively. | ||
Sec. 840A.002. APPLICABILITY. This chapter applies only to | ||
a member who: | ||
(1) took office on or after September 1, 2024; and | ||
(2) was not a member on the date the member took | ||
office. | ||
Sec. 840A.003. CONFLICT OF LAW. To the extent of a conflict | ||
between this chapter, including a rule adopted by the retirement | ||
system under authority of this chapter, and any other law, this | ||
chapter prevails. | ||
Sec. 840A.004. RULES. The board of trustees may adopt rules | ||
necessary to implement this chapter. | ||
SUBCHAPTER B. CASH BALANCE BENEFITS | ||
Sec. 840A.051. APPLICATION FOR CASH BALANCE BENEFIT. | ||
(a) A member may apply for a cash balance annuity by filing an | ||
application for retirement with the board of trustees. | ||
(b) An application for a cash balance annuity may not be | ||
made: | ||
(1) after the date the member wishes to retire; or | ||
(2) more than 90 days before the date the member wishes | ||
to retire. | ||
Sec. 840A.052. ELIGIBILITY FOR CASH BALANCE BENEFIT. A | ||
member is eligible to retire and receive a cash balance annuity if | ||
the member: | ||
(1) is at least 60 years old, currently holds a | ||
judicial office, and has at least 10 years of service credited in | ||
the retirement system; | ||
(2) is at least 60 years old and has at least 12 years | ||
of service credited in the retirement system, regardless of whether | ||
the member currently holds a judicial office; | ||
(3) has at least 20 years of service credited in the | ||
retirement system, regardless of whether the member currently holds | ||
a judicial office; or | ||
(4) has served at least 12 years on an appellate court | ||
and the sum of the member's age and amount of service credited in | ||
the retirement system equals or exceeds the number 70, regardless | ||
of whether the member currently holds a judicial office. | ||
Sec. 840A.053. CASH BALANCE BENEFITS FOR MEMBERS. (a) The | ||
state match for the cash balance benefit is an amount computed by | ||
multiplying the member's accumulated account balance by 150 | ||
percent. | ||
(b) The retirement system shall compute a member's cash | ||
balance annuity under this section by taking the sum of the member's | ||
accumulated account balance and the state match computed under | ||
Subsection (a) and annuitizing that amount over the life expectancy | ||
of the member as of the effective date of the member's retirement | ||
using mortality and other tables adopted by the board for that | ||
purpose under Section 840.005. | ||
Sec. 840A.054. OPTIONAL CASH BALANCE BENEFITS. (a) | ||
Instead of the standard cash balance annuity payable under Section | ||
840A.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 | ||
person 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 persons 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 which provides | ||
that: | ||
(1) after the retiree's death, the reduced annuity is | ||
payable in the same amount throughout the life of the person | ||
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 person 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 person | ||
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 840A.055, a person who | ||
selected an optional cash balance annuity described by Subsection | ||
(c)(1), (2), or (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 (4) is invalid unless the | ||
designation is made after the date of the divorce. | ||
Sec. 840A.055. CHANGE IN OPTIONAL CASH BALANCE ANNUITY | ||
SELECTION. (a) A person who retired and selected an optional cash | ||
balance annuity described by Section 840A.054(c)(1), (2), or (5) | ||
may change the optional annuity to a standard cash balance annuity | ||
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 selection, if the retiree designated | ||
a person as beneficiary who: | ||
(A) was not at the time of designation and is not | ||
currently the retiree's spouse or dependent child; or | ||
(B) is not currently the retiree's spouse or | ||
dependent child and has executed since the designation a written, | ||
notarized instrument that releases the retirement system from any | ||
claim to the annuity by the beneficiary and that 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. 840A.056. 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 840A.053 or an optional | ||
cash balance annuity under Section 840A.054, 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. | ||
Sec. 840A.057. DEATH AND DISABILITY BENEFITS. (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 839 is entitled to a | ||
cash balance annuity under this subchapter instead of the annuity | ||
otherwise provided under Chapter 839. | ||
(b) The board of trustees may enter into contracts to | ||
provide additional death and disability benefits under this | ||
chapter. | ||
SUBCHAPTER C. CONTRIBUTIONS AND INTEREST | ||
Sec. 840A.101. COLLECTION OF MEMBER CONTRIBUTIONS. Each | ||
payroll period, each department or agency of the state shall cause | ||
to be deducted from the compensation of a member subject to this | ||
chapter a contribution of six percent of the compensation of the | ||
member. | ||
Sec. 840A.102. STATE CONTRIBUTIONS FOR MILITARY SERVICE. | ||
(a) The state shall contribute for military service established | ||
under Section 838.1031 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 | ||
retirement system 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. | ||
Sec. 840A.103. ANNUAL INTEREST ADJUSTMENT. Each fiscal | ||
year, the retirement system shall deposit for a member subject to | ||
this chapter an amount equal to four percent of the member's | ||
accumulated account balance deposited into the member's individual | ||
account in the retirement system. | ||
Sec. 840A.104. GAIN SHARING INTEREST ADJUSTMENT. (a) Each | ||
fiscal year and subject to Subsection (b), the retirement system | ||
shall compute the gain sharing interest rate by: | ||
(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 under | ||
Subdivision (2) by 50 percent. | ||
(b) Subject to Subsection (c), each fiscal year, the | ||
retirement system shall: | ||
(1) in addition to the amount deposited under Section | ||
840A.103, deposit into each member's individual account in the | ||
retirement system 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 the 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). | ||
(c) The gain sharing interest rate applied under Subsection | ||
(b) may not be less than zero or more than three percent. | ||
(d) Subsection (b) applies only to a retiree or annuitant | ||
who is receiving a cash balance annuity under Section 840A.053 or | ||
840A.054, including an alternate payee under Section 804.005. | ||
SECTION 14. Section 1551.102(b), Insurance Code, is amended | ||
to read as follows: | ||
(b) An individual is eligible to participate in the group | ||
benefits program as provided by Subsection (a) if: | ||
(1) the individual retires under the jurisdiction of | ||
the Employees Retirement System of Texas; and | ||
(2) the individual: | ||
(A) receives or is eligible to receive an annuity | ||
under Section 814.104(a)(2), Government Code, and has at least 10 | ||
years of eligible service credit; | ||
(B) receives or is eligible to receive an annuity | ||
under Chapter 803 or Section 814.104(a)(1), Government Code, has at | ||
least 10 years of eligible service credit, and is at least 65 years | ||
of age; | ||
(C) receives or is eligible to receive an annuity | ||
that is based on eligibility under Section 814.002, 814.102, | ||
814.104(b), 814.107(a), 834.101, or 839.101, Government Code; or | ||
(D) receives or is eligible to receive an annuity | ||
under Subchapter B, Chapter 820, or Subchapter B, Chapter 840A, | ||
Government Code, and has at least 10 years of eligible service | ||
credit. | ||
SECTION 15. Section 1551.3196(c), Insurance Code, is | ||
amended to read as follows: | ||
(c) This section does not apply to an individual who: | ||
(1) receives or is eligible to receive an annuity that | ||
is based on eligibility under Section 814.002, 814.102, 834.101, | ||
[ |
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(2) is eligible to participate in the group benefits | ||
program under: | ||
(A) Section 1551.102(d) because of a disability; | ||
or | ||
(B) Section 1551.102(f). | ||
SECTION 16. 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. |