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
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  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.
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