Bill Text: TX HB1438 | 2021-2022 | 87th Legislature | Introduced
Bill Title: Relating to requiring the Employees Retirement System of Texas to establish a cash balance retirement plan to provide retirement benefits to certain employees.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2021-03-05 - Referred to Pensions, Investments & Financial Services [HB1438 Detail]
Download: Texas-2021-HB1438-Introduced.html
87R3519 KFF-F | ||
By: Gates | H.B. No. 1438 |
|
||
|
||
relating to requiring the Employees Retirement System of Texas to | ||
establish a cash balance retirement plan to provide retirement | ||
benefits to certain employees. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 802.002, Government Code, is amended by | ||
adding Subsection (e) to read as follows: | ||
(e) Notwithstanding any other law, including Subsection | ||
(a), a cash balance retirement plan established under Chapter 820 | ||
is exempt from Sections 802.101, 802.1012, 802.1014, 802.103, | ||
802.104, and 802.202(d). This subsection may not be construed to | ||
exempt any plan from Section 802.105 or 802.106(h). | ||
SECTION 2. Subtitle B, Title 8, Government Code, is amended | ||
by adding Chapter 820 to read as follows: | ||
CHAPTER 820. CASH BALANCE RETIREMENT PLAN | ||
SUBCHAPTER A. GENERAL PROVISIONS | ||
Sec. 820.001. DEFINITIONS. In this chapter: | ||
(1) "Cash balance retirement plan" means a cash | ||
balance retirement plan established under this chapter. | ||
(2) "Defined benefit plan" means, as appropriate, the | ||
plan that provides benefits to members of the employee class of the | ||
retirement system under Chapters 811 through 815. | ||
(3) "Employee" means an employee or appointed officer | ||
described by Section 812.003(a). | ||
(4) "Interest" means the interest credited to a | ||
participant's notional account, which may not: | ||
(A) exceed a percentage rate equal to the cash | ||
balance retirement plan's most recent five fiscal years' smoothed | ||
rate of return; or | ||
(B) be less than zero percent. | ||
(5) "Participant" means a member, retiree, or other | ||
beneficiary of the retirement system who participates in the cash | ||
balance retirement plan. | ||
(6) "Qualified plan" means an employee benefit plan | ||
qualified under Section 401(a), Internal Revenue Code of 1986 (26 | ||
U.S.C. Section 401). | ||
Sec. 820.002. 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. 820.003. CERTAIN REFERENCES IN LAW TO RETIREMENT | ||
SYSTEM MEMBERS. A reference in law outside this subtitle to a | ||
member of or membership in the retirement system includes a | ||
participant of or participation in, as appropriate, a cash balance | ||
retirement plan unless the reference is expressly defined | ||
otherwise. | ||
SUBCHAPTER B. CREATION OF CASH BALANCE RETIREMENT PLAN | ||
Sec. 820.051. DUTY TO CREATE PLAN. Notwithstanding any | ||
other law and subject to the requirements of Subchapter C, the board | ||
of trustees shall by rule establish and administer a cash balance | ||
retirement plan to provide benefits to newly hired employees under | ||
that plan instead of under a defined benefit plan. | ||
SUBCHAPTER C. PLAN MINIMUM REQUIREMENTS | ||
Sec. 820.101. MINIMUM REQUIREMENTS. In establishing a cash | ||
balance retirement plan, the board of trustees shall ensure the | ||
plan meets the requirements of this subchapter. | ||
Sec. 820.102. ATTRIBUTES OF PLAN. (a) A cash balance | ||
retirement plan must: | ||
(1) provide for a closed amortization period not to | ||
exceed 20 years from the date an actuarial gain or loss is realized; | ||
(2) provide for the crediting of participant, state, | ||
and employer contributions to each participant's notional account; | ||
(3) provide for the crediting of interest to each | ||
participant's notional account; | ||
(4) include a vesting schedule; | ||
(5) include benefit options, including options for | ||
participants who separate from service prior to retirement; | ||
(6) provide for death and disability benefits; | ||
(7) allow a participant who is eligible to retire | ||
under the plan to elect to: | ||
(A) receive a monthly annuity payable for the | ||
life of the participant in an amount actuarially determined on the | ||
date of the participant's retirement based on the participant's | ||
accumulated notional account balance annuitized in accordance with | ||
the actuarial assumptions and actuarial methods established in the | ||
most recent actuarial experience study conducted by the system's | ||
actuary under Section 815.206; or | ||
(B) receive a single, partial lump-sum payment | ||
from the participant's accumulated notional account balance and a | ||
monthly annuity payable for life in an amount determined in | ||
accordance with Paragraph (A) based on the participant's notional | ||
account balance after receiving the partial lump-sum payment; and | ||
(8) include any other provision determined necessary | ||
by the board of trustees. | ||
(b) At the time the cash balance retirement plan is | ||
implemented, the employer normal cost rate of the cash balance | ||
retirement plan may not exceed the employer normal cost rate for the | ||
salary-based benefit plan. | ||
Sec. 820.103. QUALIFIED PLAN. A cash balance retirement | ||
plan must be a qualified plan. | ||
Sec. 820.104. PARTICIPATION IN PLAN; RESUMPTION OF SERVICE. | ||
(a) In adopting rules to establish a cash balance retirement plan, | ||
the board of trustees shall designate the date by which all newly | ||
hired employees shall begin participation in the plan. | ||
(b) A person who resumes employment with an employer on or | ||
after the date designated by the board of trustees under Subsection | ||
(a) and who is already a member of the retirement system eligible to | ||
participate in a defined benefit plan remains eligible to | ||
participate in the defined benefit plan and is not considered a | ||
newly hired employee for purposes of this section. | ||
(c) Notwithstanding any other law, including Section | ||
812.003, an employee who participates in a cash balance retirement | ||
plan is not eligible for membership in the retirement system and may | ||
not participate in the defined benefit plan administered by the | ||
retirement system. | ||
Sec. 820.105. EFFECT OF EMPLOYMENT CHANGES. A person | ||
participating in a cash balance retirement plan continues to | ||
participate in the plan when the person changes employment to | ||
another position included in the coverage of the retirement system. | ||
Sec. 820.106. VESTING OF BENEFITS. Benefits in a cash | ||
balance retirement plan vest in a participant not later than the | ||
fifth anniversary of the date the person begins to participate in | ||
the plan. | ||
Sec. 820.107. TERMINATION OF PARTICIPATION. A person | ||
terminates participation in a cash balance retirement plan, without | ||
losing any vested benefits, by: | ||
(1) death; | ||
(2) retirement; or | ||
(3) termination of employment in all positions | ||
included in the coverage of the retirement system. | ||
Sec. 820.108. CREDITABLE SERVICE. A person may not | ||
establish in the defined benefit plan administered by the | ||
retirement system credit for service performed during a period the | ||
person was participating in a cash balance retirement plan. | ||
Sec. 820.109. CONTRIBUTIONS. (a) A participant in a cash | ||
balance retirement plan shall make contributions to the plan at the | ||
same rate that a member of the retirement system participating in a | ||
defined benefit plan is required to make for current service, and | ||
the state and employers otherwise required to make contributions to | ||
a defined benefit plan shall make contributions to the cash balance | ||
retirement plan for each participant at the same rate as the state | ||
and employers are required to contribute for contributing members | ||
of the defined benefit plan. Contributions required under this | ||
subsection shall be credited to the benefit of the participant. | ||
(b) A participant in a cash balance retirement plan and the | ||
participant's employer shall execute an agreement under which the | ||
salary of the participant is reduced by the amount of the | ||
contribution required by this section. An agreement under this | ||
subsection is irrevocable until the participant terminates | ||
participation in the plan under Section 820.107. | ||
(c) Participant, state, and employer contributions, as | ||
applicable, shall be made in the manner provided by Subchapter E, | ||
Chapter 815. | ||
SECTION 3. This Act takes effect September 1, 2021. |