Bill Text: TX HB3636 | 2023-2024 | 88th Legislature | Introduced
Bill Title: Relating to a cost-of-living adjustment applicable to certain benefits paid by the Teacher Retirement System of Texas and a study on the feasibility of providing annual adjustments and an optional cash balance benefit under the system.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2023-03-16 - Referred to Pensions, Investments & Financial Services [HB3636 Detail]
Download: Texas-2023-HB3636-Introduced.html
88R10191 BDP-D | ||
By: Goodwin | H.B. No. 3636 |
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relating to a cost-of-living adjustment applicable to certain | ||
benefits paid by the Teacher Retirement System of Texas and a study | ||
on the feasibility of providing annual adjustments and an optional | ||
cash balance benefit under the system. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subchapter H, Chapter 824, Government Code, is | ||
amended by adding Section 824.703 to read as follows: | ||
Sec. 824.703. ADDITIONAL COST-OF-LIVING ADJUSTMENT. | ||
(a) Notwithstanding Section 824.702 and subject to Section | ||
821.006, the retirement system shall make a one-time cost-of-living | ||
adjustment payable to annuitants receiving a monthly death or | ||
retirement benefit annuity, as provided by this section. | ||
(b) Subject to Subsections (c) and (d), to be eligible for | ||
the adjustment, a person must be, on the effective date of the | ||
adjustment and disregarding any forfeiture of benefits under | ||
Section 824.601, an annuitant eligible to receive: | ||
(1) a standard service or disability retirement | ||
annuity payment; | ||
(2) an optional service or disability retirement | ||
annuity payment as either a retiree or beneficiary; | ||
(3) an annuity payment under Section 824.402(a)(3) or | ||
(4); | ||
(4) an annuity payment under Section 824.502; or | ||
(5) an alternate payee annuity payment under Section | ||
804.005. | ||
(c) If the annuitant: | ||
(1) is a retiree or is a beneficiary under an optional | ||
retirement payment plan, to be eligible for the adjustment under | ||
this section: | ||
(A) the annuitant must be living on the effective | ||
date of the adjustment; and | ||
(B) the effective date of the retirement of the | ||
member of the retirement system must have been on or before August | ||
31, 2020; | ||
(2) is a beneficiary under Section 824.402(a)(3) or | ||
(4) or 824.502, to be eligible for the adjustment: | ||
(A) the annuitant must be living on the effective | ||
date of the adjustment; and | ||
(B) the date of death of the member of the | ||
retirement system must have been on or before August 31, 2020; or | ||
(3) is an alternate payee under Section 804.005, the | ||
annuitant is eligible for the adjustment only if the effective date | ||
of the election to receive the annuity payment was on or before | ||
August 31, 2020. | ||
(d) An adjustment made under this section does not apply to | ||
payments under: | ||
(1) Section 824.203(d), relating to retirees who | ||
receive a standard service retirement annuity in an amount fixed by | ||
statute; | ||
(2) Section 824.304(a), relating to disability | ||
retirees with less than 10 years of service credit; | ||
(3) Section 824.304(b)(2), relating to disability | ||
retirees who receive a disability annuity in an amount fixed by | ||
statute; | ||
(4) Section 824.404(a), relating to active member | ||
survivor beneficiaries who receive a survivor annuity in an amount | ||
fixed by statute; | ||
(5) Section 824.501(a), relating to retiree survivor | ||
beneficiaries who receive a survivor annuity in an amount fixed by | ||
statute; or | ||
(6) Section 824.804(b), relating to participants in | ||
the deferred retirement option plan with regard to payments from | ||
their deferred retirement option plan accounts. | ||
(e) An adjustment under this section: | ||
(1) must be made beginning with an annuity payable for | ||
the month of September 2023; and | ||
(2) is limited to an amount equal to six percent of the | ||
monthly benefit subject to the increase. | ||
(f) The board of trustees shall determine the eligibility | ||
for and the amount of any adjustment in monthly annuities in | ||
accordance with this section. | ||
SECTION 2. (a) In this section, "retirement system" means | ||
Teacher Retirement System of Texas. | ||
(b) The State Pension Review Board shall conduct a study on | ||
the feasibility of the retirement system: | ||
(1) providing an annual cost-of-living adjustment to | ||
annuitants receiving a monthly death or retirement benefit annuity | ||
under Chapter 824, Government Code; and | ||
(2) offering members of the retirement system a choice | ||
of continuing to receive benefits under the existing defined | ||
benefit plan under an analysis that assumes a rate of return of six | ||
percent or a cash balance benefit plan under an analysis that | ||
assumes adoption of a cash balance benefit plan that is similar in | ||
design and cost structure to the cash balance benefit plan | ||
established under Chapter 820, Government Code, except that the | ||
State Pension Review Board should evaluate the difference between | ||
offering a cash balance benefit plan that provides a retirement | ||
eligibility age of 62 and a plan that provides a retirement | ||
eligibility age of 67. | ||
(c) In conducting the study, the State Pension Review Board | ||
shall: | ||
(1) assume the annual state contribution rate will | ||
increase over specific periods of time, including periods of 4 | ||
years, 8 years, 12 years, and 16 years, in an amount sufficient to | ||
pre-fund the amount necessary to provide the annual cost-of-living | ||
adjustments; | ||
(2) assume the annual cost-of-living adjustment will | ||
be the lesser of: | ||
(A) a percentage rate equal to the percentage | ||
increase, if any, during the preceding state fiscal year in the | ||
Consumer Price Index that is used by the comptroller of public | ||
accounts; or | ||
(B) three percent; | ||
(3) determine the additional state and employee | ||
contribution rates necessary to provide: | ||
(A) an annual cost-of-living adjustment for | ||
retirees, including retirees who have resumed employment with a | ||
Texas public educational institution, as described by Section | ||
824.601(c), Government Code; | ||
(B) an opt-in cost-of-living adjustment for | ||
retirees, including retirees who have resumed employment with a | ||
Texas public educational institution, as described by Section | ||
824.601(c), Government Code; | ||
(C) a transitional system developed by the | ||
retirement system under which: | ||
(i) current and future annuitants of the | ||
retirement system automatically receive cost-of-living adjustments | ||
that have been pre-funded by the state; and | ||
(ii) current members or annuitants of the | ||
retirement system can opt in to or opt out of the transitional | ||
system with the understanding that opting out allows the member or | ||
annuitant to remain under the current system with no guaranteed | ||
cost-of-living adjustments; and | ||
(D) any other alternative benefit adjustment | ||
that the retirement system determines is feasible to provide the | ||
best retirement benefits to annuitants; | ||
(4) when calculating the state contribution rates | ||
under this subsection, show what the cost would be over the periods | ||
of time specified in Subdivision (1) using varying assumed rates of | ||
return, including 5.5, 6, 6.5, and 7 percent; | ||
(5) when calculating contribution rate increases, | ||
show how much the employer and member contributions would need to | ||
increase if the state contribution rate is limited to 10 percent; | ||
(6) explore various cost-sharing options, including | ||
at least one option that does not require members of the retirement | ||
system to contribute any additional contributions necessary to | ||
pre-fund amounts needed to provide annual cost-of-living | ||
adjustments; and | ||
(7) solicit input and feedback from the public and | ||
other interested persons. | ||
(d) Not later than December 31, 2024, the State Pension | ||
Review Board shall submit to the legislature a written report on the | ||
results of the study and any recommendations for legislative | ||
action. | ||
(e) This section expires January 1, 2025. | ||
SECTION 3. 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. |