Bill Text: TX SB1752 | 2017-2018 | 85th Legislature | Introduced
Bill Title: Relating to authorizing certain municipalities to establish defined contribution plans to provide retirement benefits to certain employees.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2017-04-24 - Left pending in committee [SB1752 Detail]
Download: Texas-2017-SB1752-Introduced.html
85R4770 KFF-D | ||
By: Bettencourt | S.B. No. 1752 |
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relating to authorizing certain municipalities to establish | ||
defined contribution plans to provide retirement benefits to | ||
certain employees. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subtitle A, Title 8, Government Code, is amended | ||
by adding Chapter 808 to read as follows: | ||
CHAPTER 808. AUTHORITY OF CERTAIN MUNICIPALITIES TO ESTABLISH | ||
DEFINED CONTRIBUTION PLANS | ||
SUBCHAPTER A. GENERAL PROVISIONS | ||
Sec. 808.001. DEFINITIONS. In this chapter: | ||
(1) "Defined benefit plan" means a plan provided by a | ||
public retirement system that provides participants specified | ||
benefit payments calculated in accordance with a formula that is | ||
based on factors such as a participant's earnings history, age, and | ||
years of service. | ||
(2) "Defined contribution plan" and "public | ||
retirement system" have the meanings assigned by Section 802.001. | ||
(3) "Qualified plan" means an employee benefit plan | ||
qualified under Section 401(a), Internal Revenue Code of 1986 (26 | ||
U.S.C. Section 401). | ||
Sec. 808.002. APPLICABILITY. This chapter applies only to: | ||
(1) a public retirement system that provides benefits | ||
to municipal employees under a defined benefit plan; and | ||
(2) a home-rule municipality that is the sponsoring | ||
authority of a public retirement system described by Subdivision | ||
(1). | ||
Sec. 808.003. CONFLICT OF LAW. To the extent of a conflict | ||
between this chapter, including an ordinance adopted by a | ||
municipality or a rule adopted by a public retirement system under | ||
authority of this chapter, and any other law, this chapter | ||
prevails. | ||
SUBCHAPTER B. AUTHORITY TO CREATE DEFINED CONTRIBUTION PLAN | ||
Sec. 808.051. ELECTION TO ESTABLISH DEFINED CONTRIBUTION | ||
PLAN. (a) On receipt of a petition requesting the election signed | ||
by a number of registered voters of the municipality equal to at | ||
least 10 percent of the number of voters who voted in the most | ||
recent election of the municipality, the governing body of a | ||
municipality shall order an election to authorize the creation of a | ||
defined contribution plan for newly hired municipal employees or a | ||
category of newly hired municipal employees in accordance with this | ||
section. | ||
(b) An election ordered under this section must be held as | ||
part of the next regularly scheduled general election for municipal | ||
officials that is held after the date the governing body of the | ||
municipality orders the election and that allows sufficient time to | ||
prepare the ballot in compliance with other requirements of law. | ||
(c) The ballot for an election ordered under this section | ||
shall be printed to permit voting for or against the proposition: | ||
"Authorizing (name of municipality) to establish by | ||
ordinance a defined contribution plan for (insert "employees" or | ||
the category of employees to receive benefits under the plan) | ||
initially hired by the municipality on or after (insert date) as | ||
provided by state law." | ||
(d) An election ordered under this section must be held and | ||
the returns prepared and canvassed in conformity with the Election | ||
Code. | ||
(e) If an election authorized under this section is held, | ||
the municipality may implement the other provisions of this chapter | ||
only if a majority of the votes cast at the election favor the | ||
proposition. | ||
Sec. 808.052. CREATION OF DEFINED CONTRIBUTION PLAN. | ||
Notwithstanding any other law, including Title 109, Revised | ||
Statutes, and subject to the requirements of Subchapter C, if | ||
authorized by an election under Section 808.051, the governing body | ||
of a municipality that is the sponsoring authority of a public | ||
retirement system shall establish by ordinance a defined | ||
contribution plan to be administered by the public retirement | ||
system to provide benefits to newly hired municipal employees or a | ||
category of newly hired municipal employees, as applicable, under | ||
the plan instead of under a defined benefit plan. | ||
SUBCHAPTER C. MINIMUM REQUIREMENTS FOR DEFINED CONTRIBUTION PLAN | ||
Sec. 808.101. MINIMUM REQUIREMENTS. In establishing a | ||
defined contribution plan under this chapter, the governing body of | ||
a municipality shall ensure the plan meets the requirements of this | ||
subchapter. | ||
Sec. 808.102. QUALIFIED PLAN. A defined contribution plan | ||
created under this section must be a qualified plan. | ||
Sec. 808.103. PARTICIPATION IN DEFINED CONTRIBUTION PLAN; | ||
RESUMPTION OF SERVICE. (a) In the ordinance establishing a defined | ||
contribution plan under this chapter, the governing body of a | ||
municipality shall designate the date by which all newly hired | ||
municipal employees shall begin participation in the plan. | ||
(b) A person who resumes employment with a municipality and | ||
who is already eligible to participate in a defined benefit plan | ||
administered by a public retirement system because of the person's | ||
prior employment remains eligible to participate in the defined | ||
benefit plan and is not considered a new employee for purposes of | ||
required participation in a defined contribution plan established | ||
under this chapter. | ||
(c) Notwithstanding any other law, an employee who | ||
participates in a defined contribution plan established under this | ||
chapter is not eligible to, and may not participate in, the defined | ||
benefit plan administered by a public retirement system. | ||
Sec. 808.104. EFFECT OF EMPLOYMENT CHANGES. A person | ||
participating in a defined contribution plan continues to | ||
participate in the plan when the person changes employment to | ||
another position included in the coverage of the public retirement | ||
system. | ||
Sec. 808.105. VESTING OF BENEFITS; TERMINATION OF | ||
PARTICIPATION. (a) Benefits in a defined contribution plan vest in | ||
a participant not later than the fifth anniversary of the date the | ||
person begins to participate in the plan. | ||
(b) A person terminates participation in a defined | ||
contribution 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 public retirement system. | ||
(c) The benefits of a product purchased under a defined | ||
contribution plan become available under the terms of the annuity | ||
but not before the earlier of the date: | ||
(1) the member terminates participation as provided by | ||
Subsection (b); or | ||
(2) the member's age and years of service in a position | ||
covered by the plan equal 80. | ||
Sec. 808.106. CREDITABLE SERVICE. A person may not | ||
establish in the defined benefit plan administered by a public | ||
retirement system credit for service performed during a period the | ||
person was participating in a defined contribution plan. | ||
Sec. 808.107. CONTRIBUTIONS. (a) A participant in a | ||
defined contribution plan shall make contributions to the plan at | ||
the same rate that a participant in a defined benefit plan | ||
administered by the same public retirement system is required to | ||
make for current service, and the municipality shall make | ||
contributions to the defined contribution plan for each participant | ||
in the defined contribution plan at the same rate as the | ||
municipality is required to contribute for contributing | ||
participants in the defined benefit plan administered by the same | ||
public retirement system. Contributions required under this | ||
subsection shall be credited to the benefit of the participant in | ||
the defined contribution plan. | ||
(b) A participant in a defined contribution plan and the | ||
municipality 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 808.105. | ||
Sec. 808.108. HEALTH BENEFITS AND OTHER COVERAGES. | ||
Notwithstanding any other law, a person who participates or who is | ||
eligible to participate in a defined contribution plan established | ||
under this chapter is eligible for health benefits and other | ||
coverages to the same extent as a person who participates in a | ||
defined benefit plan administered by the same public retirement | ||
system. | ||
SECTION 2. This Act takes effect September 1, 2017. |