HB 112 — Retirement benefits

90R22 JCG-D By: Guillen H.B. No. 112 relating to retirement benefits for certain law enforcement officers who are members of the Teacher Retirement System of Texas, including the creation of a supplemental retirement program.

SECTION 1. Section 821.001, Government Code, is amended by adding Subdivisions (17-a), (17-b), and (17-c) to read as follows: (17-a) "Supplemental program member" means a member of the retirement system who has, is earning, or is eligible to earn credit for supplemental program service under Subchapter G, Chapter 823. (17-b) "Supplemental program service" means membership service that qualifies as supplemental program service under Section 823.551. (17-c) "Supplemental program service credit" means the amount of supplemental program service credited to a member under Subchapter G, Chapter 823.

SECTION 2. Section 822.005, Government Code, is amended by adding Subsection (e) to read as follows: (e) For a supplemental program member, the withdrawal of accumulated contributions under Subsection (a) includes all of the member's contributions made under Section 825.403.

SECTION 3. Chapter 823, Government Code, is amended by adding Subchapter G to read as follows: SUBCHAPTER G. SUPPLEMENTAL PROGRAM SERVICE CREDIT Sec. 823.551. SUPPLEMENTAL PROGRAM SERVICE: QUALIFICATIONS. Membership service qualifies as supplemental program service if: (1) the membership service was provided in a position with an employer that required the member to hold an officer license issued by the Texas Commission on Law Enforcement under Chapter 1701, Occupations Code; and (2) the primary duty of the position was the enforcement of the criminal or juvenile laws of this state. Sec. 823.552. SUPPLEMENTAL PROGRAM SERVICE: BASIS OF CREDIT. Supplemental program service credit is creditable as provided by rule of the board of trustees.

SECTION 4. Section 824.203(a), Government Code, is amended to read as follows: (a) Except as provided by Subsections (c) and (d) and Section 824.2035 , the standard service retirement annuity is an amount computed on the basis of the member's average annual compensation for the five years of service, whether or not consecutive, in which the member received the highest annual compensation, times 2.3 percent for each year of service credit in the retirement system.

SECTION 5. Subchapter C, Chapter 824, Government Code, is amended by adding Section 824.2035 to read as follows: Sec. 824.2035. ENHANCED SERVICE RETIREMENT ANNUITY FOR SUPPLEMENTAL PROGRAM MEMBERS; ELIGIBILITY. (a) Subject to Subsections (c) and (d) and notwithstanding Section 824.203, the standard service retirement annuity of a supplemental program member under this section is an amount computed on the basis of the member's average annual compensation for the five years of supplemental program service, whether or not consecutive, in which the member received the highest annual compensation, times 2.8 percent for each year of supplemental program service credit in the retirement system. With respect to any year of the five years of supplemental program service that is not supplemental service, the annuity must be computed by applying the percentage factor required under Section 824.203 instead of 2.8 percent for that year. (b) Notwithstanding Section 824.202 and subject to Subsections (c) and (d), a supplemental program member is eligible to retire and receive the annuity described by Subsection (a) if the member has at least 25 years of supplemental program service credit, regardless of age. (c) The annuity described by Subsection (a) of a supplemental program member who retires before attaining the age of 57 under the eligibility criteria established by Subsection (b) is actuarially reduced by five percent for each year of difference between the member's age at retirement and 57. The actuarial reduction described by this subsection is in addition to any other actuarial reduction required by Subsection (d) or other law, and a member is not entitled to have the annuity recalculated at age 57. (d) A supplemental program member who retires under Subsection (b) before attaining the age of 50 is entitled only to an annuity that is actuarially reduced from the annuity available at the age of 50 to the supplemental program member whose service credit annuity amount is based on the sum of the member's age and amount of supplemental program service credit and other service credit, and is not entitled to have the annuity recalculated at age 57. (e) A provision of law that applies to a member eligible to retire under Section 824.202 or receiving a service retirement annuity under Section 824.203 applies to the same extent and in the same manner to a member eligible for or receiving a service retirement annuity under this section, except to the extent the provision conflicts with this section. Optional retirement annuities provided by Section 824.204 are available to a member eligible to receive a service retirement annuity under this section. (f) Notwithstanding any other provision of this subchapter, a supplemental program member who is eligible to retire under this section or Section 824.202 is entitled to whichever computation of a service retirement annuity under this subchapter provides the higher annuity.

SECTION 6. Sections 824.304(a) and (b), Government Code, are amended to read as follows: (a) Subject to Sections 824.3045 and [ Section ] 824.310, if a member has a total of less than 10 years of service credit in the retirement system on the date of disability retirement, the retirement system shall pay the person a disability retirement annuity of $150 a month for the shortest of the following periods: (1) the duration of the disability; (2) the number of months of creditable service the person has at retirement; or (3) the duration of the person's life. (b) Subject to Sections 824.3045 and [ Section ] 824.310, if a member has a total of at least 10 years of service credit in the retirement system on the date of disability retirement, the retirement system shall pay the person for the duration of the disability a disability retirement annuity in an amount equal to the greater of: (1) a standard service retirement annuity computed under Section 824.203; or (2) $150 a month.

SECTION 7. Subchapter D, Chapter 824, Government Code, is amended by adding Sections 824.3045 and 824.3046 to read as follows: Sec. 824.3045. OCCUPATIONAL DISABILITY RETIREMENT BENEFITS FOR SUPPLEMENTAL PROGRAM MEMBERS. (a) Except as provided by Subsection (b), an annuity payable under Section 824.304 for a disability resulting from a risk to which supplemental program members are exposed because of the nature of the members' duties is an amount computed on the basis of the supplemental program member's average annual compensation, times 2.8 percent. (b) A disability retirement annuity described by Subsection (a) is not reducible because of age and may not be less than 50 percent of the supplemental program member's average annual compensation regardless of the amount of service credited to the member. (c) If a retiring member or retiree under this section presents evidence satisfactory to the retirement system that the person's disability makes the person incapable of substantial gainful activity solely because of the disability and is considered a total disability under federal social security law, the retirement system shall increase the person's disability retirement annuity to 100 percent of the member's average annual compensation. (d) An annuity increase under Subsection (c) is not payable before the first month following the month in which the satisfactory evidence is received by the retirement system under that subsection. (e) For purposes of this section, "average annual compensation" means: (1) a member's average annual compensation for the three highest years of compensation attributable to supplemental program service; or (2) a member's average annual compensation attributable to supplemental program service if a member retires with less than three years of service. Sec. 824.3046. INFORMATION ABOUT OCCUPATIONAL DISABILITY OF SUPPLEMENTAL PROGRAM MEMBER. (a) A supplemental program member who applies for retirement for a disability under Section 824.3045 shall furnish to the retirement system all information and other data requested by the retirement system and relating to the disability. (b) The retirement system may require information and other data relating to a disability retirement application to be furnished by any officer or employee of the employer with which the applicant holds a position. (c) After receiving information and other data the retirement system considers necessary, the executive director shall determine, subject to review by the board of trustees, whether or not the disability resulted from a risk described by Section 824.3045(a).

SECTION 8. Subchapter E, Chapter 824, Government Code, is amended by adding Section 824.4025 to read as follows: Sec. 824.4025. ANNUITY FOR SURVIVOR OF SUPPLEMENTAL PROGRAM MEMBER. If a supplemental program member who has at least 25 years of supplemental program service credit dies, the amount of the death benefit annuity payable for the member's supplemental program service is the amount of the annuity computed as provided by Section 824.2035, including any applicable reduction factors.

SECTION 9. Section 825.102, Government Code, is amended to read as follows: Sec. 825.102. RULEMAKING. Subject to the limitations of this subtitle, the board of trustees may adopt rules for: (1) eligibility for membership; (2) the administration of the funds of the retirement system; [ and ] (3) the transaction of business of the board ; and (4) the administration of supplemental benefits for supplemental program members .

SECTION 10. Section 825.403, Government Code, is amended by adding Subsection (a-1) to read as follows: (a-1) In addition to the contribution under Subsection (a), each employer of a supplemental program member shall deduct an additional 0.5 percent contribution from that member's compensation, provided that the member's contribution rate for a fiscal year is reduced by 0.1 percent for each 0.1 percent that the state contribution rate established for that fiscal year under Section 824.404(a)(2) is less than 0.5 percent.

SECTION 11. Sections 825.404(a) and (a-2), Government Code, are amended to read as follows: (a) Except as provided by Subsection (a-1) and subject to Subsection (a-2), during each fiscal year, the state shall contribute to the retirement system : (1) 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 ; and (2) an additional amount equal to 1.5 percent of the aggregate annual compensation of all supplemental program members for that fiscal year . (a-2) The state contribution required by Subsection (a)(1) [ Subsection (a) ] is: (1) for the fiscal years beginning on September 1, 2019, and September 1, 2020, 7.5 percent of the aggregate annual compensation of all members of the retirement system during the applicable fiscal year; (2) for the fiscal year beginning on September 1, 2021, 7.75 percent of the aggregate annual compensation of all members of the retirement system during that fiscal year; (3) for the fiscal year beginning on September 1, 2022, eight percent of the aggregate annual compensation of all members of the retirement system during that fiscal year; and (4) for the fiscal year beginning on September 1, 2023, and each subsequent fiscal year, 8.25 percent of the aggregate annual compensation of all members of the retirement system during that fiscal year.

SECTION 12. Section 825.4092, Government Code, is amended by adding Subsection (f) to read as follows: (f) If a retiree is employed in a position for which member service would qualify as supplemental program service, the current contribution amount that a reporting employer is required to contribute under Subsection (b) must include contributions that would be required to be contributed by an active supplemental program member under Section 825.403(a-1) and by the state under Section 825.404(a)(2).

SECTION 13. Subchapter F, Chapter 825, Government Code, is amended by adding Section 825.5155 to read as follows: Sec. 825.5155. CERTIFICATION OF NAMES OF SUPPLEMENTAL PROGRAM MEMBERS. Not later than the sixth day of the month following the month in which a person begins or ceases employment in a position described by Section 823.551, the employer shall certify to the retirement system, in the manner prescribed by the system, the name of the employee and any other information the system determines necessary for the crediting of service and financing of benefits under this subtitle.

SECTION 14. Section 1551.102, Insurance Code, is amended by adding Subsection (c-3) to read as follows: (c-3) An individual is eligible to participate in the group benefits program as provided by Subsection (a) if the individual: (1) retires under the jurisdiction of the Teacher Retirement System of Texas with at least 10 years of eligible service credit; (2) retires under Section 824.2035, Government Code; and (3) was employed, as the last state employment before retirement, including employment by a public junior college, by a state agency whose employees are authorized to participate in the group benefits program.

SECTION 15. Section 1575.004(a), Insurance Code, is amended to read as follows: (a) In this chapter, "retiree" means: (1) an individual not eligible for coverage under a plan provided under Chapter 1551 or 1601 who: (A) has taken a service retirement under the Teacher Retirement System of Texas after September 1, 2005, with at least 10 years of service credit in the system, which may include up to five years of military service credit, but which may not include any other service credit purchased for equivalent or special service credit, and who meets any of the following criteria [ either ]: (i) the sum of the retiree's age and years of service credit in the retirement system equals or exceeds 80 at the time of retirement, regardless of whether the retiree had a reduction in the retirement annuity for early age; [ or ] (ii) the retiree has 30 or more years of service credit in the retirement system at the time of retirement; or (iii) the retiree's service retirement was taken under Section 824.2035, Government Code; (B) has taken a service retirement under the Teacher Retirement System of Texas after September 1, 2004, but on or before August 31, 2005, and on September 1, 2005, either: (i) meets the requirements for eligibility for the group program for coverage as a retiree as those requirements existed on August 31, 2004; (ii) meets the requirements of Paragraph (A); or (iii) is enrolled in the group program and was enrolled in the group program on August 31, 2005; or (C) has taken a service retirement under the Teacher Retirement System of Texas on or before August 31, 2004, and who is enrolled in the group program on August 31, 2005; (2) an individual who: (A) has taken a disability retirement under the Teacher Retirement System of Texas; and (B) is entitled to receive monthly benefits from the Teacher Retirement System of Texas; or (3) an individual who: (A) has taken a disability retirement under the Teacher Retirement System of Texas; (B) has at least 10 years of service credit in the Teacher Retirement System of Texas on the date of disability retirement, as determined under Section 824.304, Government Code; and (C) is not entitled to receive monthly benefits from the Teacher Retirement System of Texas because those benefits have been suspended in accordance with Section 824.310, Government Code.

SECTION 16. Section 1601.102, Insurance Code, is amended by amending Subsection (f) and adding Subsection (j) to read as follows: (f) Notwithstanding Subsections (b)-(d), and except as provided by Subsection (j), an individual is eligible to participate in the uniform program only if the individual: (1) has at least 10 years of service credit and the sum of the person's age and amount of service credit, including months of age and credit, equals or exceeds the number 80; or (2) is at least 65 years old and has at least 10 years of service credit. (j) An individual is eligible to participate in the uniform program as provided by Subsection (a) if the individual: (1) meets the minimum requirements of Subsection (b); (2) is at least 50 years old; and (3) retires under Section 824.2035, Government Code, with at least 10 years of service credit.

SECTION 17. (a) An employer participating in the Teacher Retirement System of Texas shall begin making deductions and collecting the contributions for the supplemental program as provided by Section 825.403(a-1), Government Code, as added by this Act, based on service that is performed on or after September 1, 2029. The employer shall also begin making the additional contributions under Section 825.4092(f), Government Code, as added by this Act, and provide the certification required by Section 825.5155, Government Code, as added by this Act, based on service that is performed on or after September 1, 2029. (b) The board of trustees of the Teacher Retirement System of Texas shall adopt rules as soon as possible after the effective date of this Act to implement the changes in law made by this Act, including rules governing the treatment of a member of the Teacher Retirement System of Texas whose employment in a position described by Section 823.551, Government Code, as added by this Act, began before September 1, 2029.

SECTION 18. (a) In this section, "supplemental program member" and "supplemental program service credit" have the meanings assigned by Section 821.001, Government Code, as amended by this Act. (b) Subject to the requirements of this section, the changes in law made by this Act apply only to a member of the Teacher Retirement System of Texas who, on or after the effective date of this Act, is a supplemental program member. (c) A member described by Subsection (b) of this section and the member's beneficiaries are not entitled to receive payment of a benefit under Section 824.2035, 824.3045, or 824.4025, Government Code, as added by this Act, until September 1, 2029. The Teacher Retirement System of Texas shall pay the benefit described by this subsection to a member or beneficiary who accrues entitlement to the benefit under this subsection between the effective date of this Act and September 1, 2029, as soon as practicable after September 1, 2029, but not later than September 1, 2030. Between the effective date of this Act and September 1, 2029, the retirement system may provide a service, disability, or death benefit, as appropriate, to a member or beneficiary who is otherwise eligible for that benefit under Chapter 824, Government Code, as that chapter existed immediately before the effective date of this Act. If the retirement system provides a benefit under prior law in accordance with this subsection, on September 1, 2029, the retirement system shall recompute that benefit under Section 824.2035, 824.3045, or 824.4025, Government Code, as added by this Act, as applicable, as of the date of the member's retirement or death, as applicable, and pay to the member or the member's beneficiaries, in a lump sum, the difference between: (1) the sum of the amount of the recomputed benefit accrued between the effective date of this Act and September 1, 2029; and (2) the sum of the amount of the benefit paid to the member or beneficiary under authority of this subsection between the effective date of this Act and September 1, 2029. (d) Except as provided by Subsection (f) of this section, service credit earned by a member described by Subsection (b) of this section before September 1, 2029, qualifies as supplemental program service credit only if: (1) the member verifies in accordance with Subsection (e) of this section that the service credit qualifies as supplemental program service credit under Section 823.551, Government Code, as added by this Act; and (2) subject to Subsection (e) of this section, the board of trustees of the Teacher Retirement System of Texas determines the prior supplemental program service credit can be established in the retirement system without increasing the period required to amortize the unfunded actuarial liabilities of the retirement system to a period that exceeds 30 years by one or more years. (e) As soon as practicable after the effective date of this Act, the board of trustees of the Teacher Retirement System of Texas shall determine whether the legislature appropriated sufficient money to the retirement system for the retirement system to provide prior supplemental program service credit in accordance with Subsection (d)(2) of this section. If the board determines that insufficient money was appropriated by the legislature to the retirement system to provide prior supplemental program service credit in accordance with Subsection (d)(2) of this section, the board shall adopt rules governing how a supplemental program member may establish supplemental program service credit for service performed before September 1, 2029, by verifying that service and depositing with the retirement system, for each year of supplemental program service credit, the actuarial present value, at the time of deposit, of the additional standard retirement annuity benefits that would be attributable to the purchase of service credit under this section, based on rates and tables recommended by the retirement system's actuary and adopted by the board. The rules must require that the verification of prior service as supplemental program service credit be completed not later than September 1, 2030. (f) If a member described by Subsection (b) of this section fails to establish prior supplemental program service credit in accordance with this section before September 1, 2029, the member is not entitled to establish the supplemental program service credit or receive the related benefits authorized by this Act.

SECTION 19. This Act takes effect September 1, 2027.