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  By: Duncan, et al. S.B. No. 1458
 
  (Callegari, et al.)
 
   
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to contributions to, benefits from, and the administration
  of systems and programs administered by the Teacher Retirement
  System of Texas.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 824.202, Government Code, is amended by
  amending Subsections (a), (a-1), (b), (b-1), (d), and (d-1) and
  adding Subsections (a-2), (b-2), and (d-2) to read as follows:
         (a)  Except as provided by Subsections [Subsection] (a-1)
  and (a-2), a member is eligible to retire and receive a standard
  service retirement annuity if:
               (1)  the member is at least 65 years old and has at
  least five years of service credit in the retirement system;
               (2)  the member is at least 60 years old and has at
  least 20 years of service credit in the retirement system;
               (3)  the member is at least 50 years old and has at
  least 30 years of service credit in the retirement system; or
               (4)  the member has at least five years of service
  credit in the retirement system and the sum of the member's age and
  amount of service credit in the retirement system equals the number
  80.
         (a-1)  This subsection applies only to a person who becomes a
  member of the retirement system on or after September 1, 2007, and
  who is not subject to Subsection (a-2). A member subject to this
  subsection is eligible to retire and receive a standard service
  retirement annuity if:
               (1)  the member is at least 65 years old and has at
  least five years of service credit in the retirement system; or
               (2)  the member is at least 60 years old and has at
  least five years of service credit in the retirement system and the
  sum of the member's age and amount of service credit in the
  retirement system equals the number 80.
         (a-2)  This subsection applies only to a person who does not
  have at least five years of service credit in the retirement system
  on or before August 31, 2014, or who becomes a member of the
  retirement system on or after September 1, 2014. A member subject
  to this subsection is eligible to retire and receive a standard
  service retirement annuity if:
               (1)  the member is at least 65 years old and has at
  least five years of service credit in the retirement system; or
               (2)  the member is at least 62 years old and has at
  least five years of service credit in the retirement system and the
  sum of the member's age and amount of service credit in the
  retirement system equals the number 80.
         (b)  This subsection applies only to a person who is not
  subject to Subsection (b-1), (b-2), [or] (d), (d-1), or (d-2). If a
  member subject to this subsection is at least 55 years old and has
  at least five years of service credit in the retirement system, the
  member is eligible to retire and receive a service retirement
  annuity reduced from the standard service retirement annuity
  available under Subsection (a)(1), to a percentage derived from the
  following table:
 
Age at date of retirement 55 56 57 58 59 60 61 62 63 64 65
 
Age at date of retirement 55 56 57 58 59 60 61 62 63 64 65
 
Percentage of standard annuity receivable 47% 51% 55% 59% 63% 67% 73% 80% 87% 93% 100%
 
Percentage of standard annuity receivable 47% 51% 55% 59% 63% 67% 73% 80% 87% 93% 100%
 
Percentage of standard annuity receivable 47% 51% 55% 59% 63% 67% 73% 80% 87% 93% 100%
         (b-1)  This subsection applies only to a person who becomes a
  member of the retirement system on or after September 1, 2007, and
  who is not subject to Subsection (b-2). If a member subject to this
  subsection is at least 55 years old and has at least five years of
  service credit in the retirement system, but does not meet the
  requirements under Subsection (d-1), the member is eligible to
  retire and receive a service retirement annuity reduced from the
  standard service retirement annuity available under Subsection
  (a-1)(1), to a percentage derived from the following table:
 
Age at date of retirement 55 56 57 58 59 60 61 62 63 64 65
 
Age at date of retirement 55 56 57 58 59 60 61 62 63 64 65
 
Percentage of standard annuity receivable 47% 51% 55% 59% 63% 67% 73% 80% 87% 93% 100%
 
Percentage of standard annuity receivable 47% 51% 55% 59% 63% 67% 73% 80% 87% 93% 100%
 
Percentage of standard annuity receivable 47% 51% 55% 59% 63% 67% 73% 80% 87% 93% 100%
         (b-2)  This subsection applies only to a person who does not
  have at least five years of service credit in the retirement system
  on or before August 31, 2014, or who becomes a member of the
  retirement system on or after September 1, 2014. If a member
  subject to this subsection is at least 55 years old and has at least
  five years of service credit in the retirement system, but does not
  meet the requirements under Subsection (d-2), the member is
  eligible to retire and receive a service retirement annuity reduced
  from the standard service retirement annuity available under
  Subsection (a-2)(1), to a percentage derived from the following
  table:
 
Age at date of 55 56 57 58 59 60 61 62 63 64 65
 
retirement 55 56 57 58 59 60 61 62 63 64 65
 
Percentage of 47% 51% 55% 59% 63% 67% 73% 80% 87% 93% 100%
 
standard annuity 47% 51% 55% 59% 63% 67% 73% 80% 87% 93% 100%
 
receivable 47% 51% 55% 59% 63% 67% 73% 80% 87% 93% 100%
         (d)  This subsection applies only to a person who is not
  subject to Subsection (d-1) or (d-2). If a member subject to this
  subsection has at least 30 years of service credit in the retirement
  system, the member is eligible to retire regardless of age and
  receive a service retirement annuity consisting of the standard
  service retirement annuity available under Subsection (a)
  decreased by two percent for each year of age under 50 years.
         (d-1)  This subsection applies only to a person who becomes a
  member of the retirement system on or after September 1, 2007, and
  who is not subject to Subsection (d-2). If the sum of the member's
  age and amount of service credit in the retirement system equals the
  number 80, with at least five years of service credit, or if the
  member has at least 30 years of service credit in the retirement
  system, the member is eligible to retire regardless of age and
  receive a service retirement annuity consisting of[, reduced from]
  the standard service retirement annuity available under Subsection
  (a-1)(2) decreased by five percent for each year of age under 60
  years [(a)(2), to a percentage derived from the following table:
 
Age at date of 50 51 52 53 54 55 56 57 58 59 60
 
retirement 50 51 52 53 54 55 56 57 58 59 60
 
Minimum years of 30 29 28 27 26 25 24 23 22 21 20
 
service credit 30 29 28 27 26 25 24 23 22 21 20
 
required 30 29 28 27 26 25 24 23 22 21 20
 
Percentage of 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%
 
standard annuity 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%
 
receivable 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%
         [For each year of age under 50 years with 30 years of service
  credit, the standard service retirement annuity shall be five
  percent less than the percentage for age 50 with 30 years of service
  credit].
         (d-2)  This subsection applies only to a person who does not
  have at least five years of service credit in the retirement system
  on or before August 31, 2014, or who becomes a member of the
  retirement system on or after September 1, 2014. If the sum of the
  member's age and amount of service credit in the retirement system
  equals the number 80, with at least five years of service credit, or
  if the member has at least 30 years of service credit in the
  retirement system, the member is eligible to retire regardless of
  age and receive a service retirement annuity consisting of the
  standard service retirement annuity available under Subsection
  (a-2)(2) decreased by five percent for each year of age under 62
  years.
         SECTION 2.  Subchapter H, Chapter 824, Government Code, is
  amended by adding Section 824.702 to read as follows:
         Sec. 824.702.  COST-OF-LIVING ADJUSTMENT. (a)  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 Teacher Retirement System of Texas must have been on
  or before August 31, 1999;
               (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, 1999; 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, 1999.
         (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 2013; and
               (2)  is limited to the lesser of:
                     (A)  an amount equal to three percent of the
  monthly benefit subject to the increase; or
                     (B)  $100 a month.
         (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 3.  Section 824.807, Government Code, is amended to
  read as follows:
         Sec. 824.807.  INTEREST. Interest is creditable to a
  member's account in the deferred retirement option account at an
  annual, prorated rate equal to two [five] percent during the period
  of participation in the plan and until all benefits are
  distributed.
         SECTION 4.  Subsection (b), Section 825.307, Government
  Code, is amended to read as follows:
         (b)  Interest on a member's contribution is earned monthly
  and computed at the rate of two [five] percent a year. Except as
  provided by Subsection (c), interest is computed based on the mean
  balance in the member's account during that fiscal year and shall be
  credited on August 31 of each year.
         SECTION 5.  Section 825.402, Government Code, is amended to
  read as follows:
         Sec. 825.402.  RATE OF MEMBER CONTRIBUTIONS. [(a)]  The
  rate of contributions for each member of the retirement system is:
               (1)  five percent of the member's annual compensation
  or $180, whichever is less, for service rendered after August 31,
  1937, and before September 1, 1957;
               (2)  six percent of the first $8,400 of the member's
  annual compensation for service rendered after August 31, 1957, and
  before September 1, 1969;
               (3)  six percent of the member's annual compensation
  for service rendered after August 31, 1969, and before the first day
  of the 1977-78 school year;
               (4)  6.65 percent of the member's annual compensation
  for service rendered after the last day of the period described by
  Subdivision (3) and before September 1, 1985; [and]
               (5)  6.4 percent of the member's annual compensation
  for service rendered after August 31, 1985, and before September 1,
  2014;
               (6)  6.7 percent of the member's annual compensation
  for service rendered after August 31, 2014, and before September 1,
  2015;
               (7)  7.2 percent of the member's annual compensation
  for service rendered after August 31, 2015, and before September 1,
  2016;
               (8)  7.7 percent of the member's annual compensation
  for service rendered after August 31, 2016, and before September 1,
  2017; and
               (9)  for service rendered on or after September 1,
  2017, the lesser of:
                     (A)  7.7 percent of the member's annual
  compensation; or
                     (B)  a percentage of the member's annual
  compensation equal to 7.7 percent reduced by one-tenth of one
  percent for each one-tenth of one percent that the state
  contribution rate for the fiscal year to which the service relates
  is less than the state contribution rate established for the 2015
  fiscal year [subject to Subsection (b)].
         [(b)     Subject to Subsection (c), the board of trustees may by
  order require that the rate of contributions for each member of the
  retirement system under Subsection (a) is increased to not more
  than 6.58 percent of the member's annual compensation for service
  rendered after the date of the order if:
               [(1)     the legislature by law requires or authorizes the
  board of trustees to pay a supplemental payment to specified
  annuitants; and
               [(2)     the board of trustees finds, as of the time the
  payment is to be made, that after the payment is made the
  amortization period for the unfunded actuarial liabilities of the
  retirement system would exceed 30 years by one or more years.
         [(c)     Notwithstanding any other law, the board of trustees
  may not make a supplemental payment required or authorized by the
  legislature by law, and may not impose an increase in the rate of
  contributions under Subsection (b), if the board of trustees finds
  that after making the payment and imposing the increase the
  amortization period for the unfunded actuarial liabilities of the
  retirement system would exceed 30 years by one or more years.
         [(d)     Notwithstanding any other law, the board of trustees
  may delay making a supplemental payment required or authorized by
  the legislature by law as necessary to make the determinations
  required under Subsections (b) and (c).]
         SECTION 6.  Subsection (a), Section 825.403, Government
  Code, is amended to read as follows:
         (a)  Each payroll period, each employer shall deduct from the
  compensation of each member employed by the employer the [an]
  amount required by Section 825.402 [equal to 6.4 percent of the
  member's compensation for that period].
         SECTION 7.  Subchapter E, Chapter 825, Government Code, is
  amended by adding Section 825.4035 to read as follows:
         Sec. 825.4035.  EMPLOYER CONTRIBUTIONS FOR CERTAIN EMPLOYED
  MEMBERS FOR WHOM THE EMPLOYER IS NOT MAKING CONTRIBUTIONS TO THE
  FEDERAL OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE PROGRAM.
  (a)  This section:
               (1)  applies to an employer who reports to the
  retirement system under Section 825.403 the employment of a member
  for whom the employer is not making contributions to the federal
  Old-Age, Survivors, and Disability Insurance program; and
               (2)  does not apply to an employer that is an
  institution of higher education.
         (b)  Except as provided in Subsection (c), for each member
  the employer reports to the retirement system and for whom the
  employer is not making contributions to the federal Old-Age,
  Survivors, and Disability Insurance program, the employer shall
  contribute monthly to the retirement system for each such member:
               (1)  for the period beginning with the report month of
  September 2014 and ending with the report month of August 2015, an
  amount equal to 1.5 percent of the member's compensation; and
               (2)  beginning with the report month for September
  2015, an amount equal to the lesser of:
                     (A)  1.5 percent of the member's compensation; or
                     (B)  a percentage of the member's compensation
  equal to 1.5 percent reduced by one-tenth of one percent for each
  one-tenth of one percent that the state contribution rate for the
  fiscal year to which the report month relates is less than the state
  contribution rate established for the 2015 fiscal year.
         (c)  If a member is entitled to the minimum salary for
  certain school personnel under Section 21.402, Education Code, or
  if a member would have been entitled to the minimum salary for
  certain school personnel under former Section 16.056, Education
  Code, as that section existed on January 1, 1995, the employer
  shall, in addition to any contributions required under Section
  825.405, contribute monthly to the retirement system for each such
  member:
               (1)  for the period beginning with the report month of
  September 2014 and ending with the report month of August 2015, an
  amount equal to 1.5 percent of the statutory minimum salary
  determined under Section 825.405(b); and
               (2)  beginning with the report month for September
  2015, an amount equal to the lesser of:
                     (A)  1.5 percent of the statutory minimum salary
  determined under Section 825.405(b); or
                     (B)  a percentage of the statutory minimum salary
  determined under Section 825.405(b) equal to 1.5 percent reduced by
  one-tenth of one percent for each one-tenth of one percent that the
  state contribution rate for the fiscal year to which the report
  month relates is less than the state contribution rate established
  for the 2015 fiscal year.
         (d)  Contributions under this section:
               (1)  are subject to the requirements of Section
  825.408; and
               (2)  must be used to fund the normal cost of the
  retirement system.
         SECTION 8.  Subsection (a), Section 825.404, Government
  Code, is amended to read as follows:
         (a)  During each fiscal year, the state shall contribute to
  the retirement system an amount equal to at least six and not more
  than 10 percent of the aggregate annual compensation of all members
  of the retirement system during that fiscal year.  [The amount of
  the state contribution made under this section may not be less than
  the amount contributed by members during that fiscal year in
  accordance with Section 825.402.]
         SECTION 9.  Subsection (a), Section 1575.158, Insurance
  Code, is amended to read as follows:
         (a)  Subject to Section 1575.1581, the [The] trustee may, in
  addition to providing a basic plan, contract for and make available
  an optional group health benefit plan for retirees, dependents,
  surviving spouses, or surviving dependent children.
         SECTION 10.  Subchapter D, Chapter 1575, Insurance Code, is
  amended by adding Section 1575.1581 to read as follows:
         Sec. 1575.1581.  LIMITATION ON ENROLLMENT IN OPTIONAL GROUP
  HEALTH BENEFIT PLAN. (a)  A service retiree and any dependent of a
  service retiree are not eligible to participate in an optional
  group health benefit plan made available under Section 1575.158,
  unless the retiree:
               (1)  is at least 62 years of age or older; and
               (2)  meets the definition of retiree under Section
  1575.004(a)(1).
         (b)  A retiree subject to Subsection (a) may, on the date the
  retiree reaches 62 years of age, under rules adopted by the trustee:
               (1)  enroll in any coverage tier under the group
  program; and
               (2)  enroll, in the same coverage tier, the retiree's
  dependents who are enrolled in the group program as of the date the
  retiree reaches 62 years of age.
         SECTION 11.  Section 1579.103, Insurance Code, is repealed.
         SECTION 12.  For purposes of determining whether a member
  has at least five years of service on or before August 31, 2014,
  under Subsection (a-2), (b-2), or (d-2), Section 824.202,
  Government Code, as added by this Act, only service actually
  credited in the Teacher Retirement System of Texas, the Employees
  Retirement System of Texas, or a retirement system participating in
  the proportionate retirement program under Chapter 803, Government
  Code, on or before August 31, 2014, may be counted. Purchased
  service credit in the retirement system is:
               (1)  not considered actually credited in the retirement
  system if the service credit is established only after completion
  of an installment payment plan under which any installment payment
  is made after August 31, 2014; and
               (2)  considered actually credited in the retirement
  system if:
                     (A)  payment in full for the purchase of service
  credit is made by a direct rollover or otherwise on or before August
  31, 2014; or
                     (B)  payment in full by direct rollover or
  otherwise is made after August 31, 2014, if:
                           (i)  the member's request to purchase
  service credit occurred on or before August 31, 2014; and
                           (ii)  payment to purchase the service credit
  is made in accordance with uniform administrative requirements,
  including payment deadlines, established by the retirement system.
         SECTION 13.  Section 824.807 and Subsection (b), Section
  825.307, Government Code, as amended by this Act, apply only to
  interest accrued on or after the effective date of this Act.
  Interest accrued before the effective date of this Act is governed
  by the law in effect on the date the interest accrued, and that law
  is continued in effect for that purpose.
         SECTION 14.  (a)  The change in law made by this Act to
  Chapter 1575, Insurance Code, does not apply to, and the former law
  is continued in effect for, a person who takes a service retirement
  under the Teacher Retirement System of Texas on or after September
  1, 2014, and who meets one or more of the following requirements on
  or before August 31, 2014:
               (1)  the sum of the person's age and amount of service
  credit in the retirement system equals 70 or greater; or
               (2)  the person has at least 25 years of service credit
  in the retirement system.
         (b)  Only service actually credited in the Teacher
  Retirement System of Texas or the Employees Retirement System of
  Texas on or before August 31, 2014, may be used to determine
  eligibility under this section. Purchased service credit in the
  retirement system is:
               (1)  not considered actually credited in the retirement
  system for purposes of this section if the service credit is
  established only after completion of an installment payment plan
  under which any installment payment is required to be made after
  August 31, 2014; and
               (2)  considered actually credited in the retirement
  system for purposes of this section if:
                     (A)  payment in full for the purchase of service
  credit is made by a direct rollover or otherwise on or before August
  31, 2014; or
                     (B)  payment in full by direct rollover or
  otherwise is made after August 31, 2014, if:
                           (i)  the member's request to purchase
  service credit occurred on or before August 31, 2014; and
                           (ii)  payment to purchase the service credit
  is made in accordance with uniform administrative requirements,
  including payment deadlines, established by the retirement system.
         SECTION 15.  (a)  Except as provided by Subsection (b) of
  this section, this Act takes effect September 1, 2014.
         (b)  Section 825.402, Government Code, as amended by this
  Act, and the repeal by this Act of Section 1579.103, Insurance Code,
  take effect September 1, 2013.