TBM H.B. 1242 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1242 By: Kuempel Pensions & Investments 3/6/2001 Introduced BACKGROUND AND PURPOSE The Texas County and District Retirement System is a voluntary statewide retirement system that administers retirement, disability, and death benefits to officers and employees of counties and other political subdivisions, excluding cities and school districts. Each participating subdivision is separately funded, with both employers and employees making contributions to TCDRS. House Bill 1242 provides improved options to members and retirees of TCDRS, including increased death benefits, and improved options for disability retirees and retirees who have worked for more than one subdivision or who return to work. H.B. 1242 also makes administrative changes to streamline the system. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state office, department, agency, or institution. ANALYSIS House Bill 1242 amends the Government Code to modify provisions relating to participation and credit in, contributions to, and benefits and administration of the Texas County and District Retirement System (TCDRS). The bill modifies provisions regarding the applications by, and payments to, persons other than members, beneficiaries, and annuitants (Sec. 841.008). The bill authorizes the board to adopt rules relating to the selection, payment, and distribution of benefits to ensure compliance with federal statutes and regulations (Sec. 841.010). A person commits an offense if the person knowingly fails to return money received from the retirement system to which the person is not entitled (Sec. 841.101). The bill authorizes the board to adopt rules regarding the powers and duties of a participating subdivision to adopt orders and resolutions, make elections, and otherwise exercise decision-making authority concerning the rights and benefits of the members and annuitants under a plan adopted or assumed by the subdivision (Sec. 842.002). The bill modifies provisions regarding the service credit of a member of multiple retirement systems that may be used to determine eligibility for a benefit in TCDRS (Sec. 842.106). The bill removes certain provisions regarding exceptions to the general membership requirement in the retirement system and modifies provisions for the withdrawal of accumulated contributions (Secs. 842.107 and 842.108). The bill also modifies provisions regarding a person's length of membership and the termination of membership in TCDRS (Sec. 842.109). The bill modifies the provisions regarding the resumption of service by a retiree with the same employer or a different employer (Secs. 842.110 and 842.111). The bill expands the provisions regarding correction of errors to grant an employee service credit based on back pay or employment gained by the issuance of a judgment or order or the settlement of a suit (Sec. 842.112). The bill provides that the monthly amount of a standard retirement annuity is based on the sum of the member's service credit and accumulated contributions and is computed using the member's attained age and the actuarial equivalent of the benefit (Sec. 843.002). The bill sets forth provisions regarding the composition of service credit and the adjustment of credited service and current service credit (Secs. 843.004 and 843.005). The bill requires a member to claim prior service credit before the fifth anniversary of the date the member became eligible to claim the credit (Sec. 843.103). The bill removes limitations on allocated prior service credit (Sec. 843.105). The bill modifies provisions relating to the certification of service and average compensation for a member of an optimal class who claims credit for prior service (Sec. 843.304). The bill expands the types of benefits payable by the retirement system to include supplemental death benefits and refunds of accumulated contributions (Sec. 844.001). The bill provides that a separate retirement annuity is payable for each participating subdivision from which a person retires or is considered to have retired (Sec. 844.002). A person who has retired with a service retirement annuity is eligible, without regard to any age or credited service requirement, to apply for and receive a service retirement annuity based on service for another participating subdivision from which the person has terminated employment (Sec. 844.102). The bill modifies provisions regarding the effective date of a member's retirement. The bill authorizes credited service with a member's new employer to be used in determining eligibility for service retirement. The bill provides that a member eligible for service retirement using combined credit service for two or more subdivisions may apply simultaneously for a retirement annuity from one subdivision and a refund of accumulated contributions for service to another subdivision (Sec. 844.003). The bill specifies the last day a retiree is authorized to revoke or change an application for retirement and other circumstances under which annuity payments may be changed (Sec. 844.005). The bill provides that an optional service retirement annuity or an optional disability retirement annuity reverts to the standard service retirement annuity if the designated beneficiary predeceases the retiree (Secs. 844.104 and 844.305). The bill modifies provisions regarding payments under a qualified domestic relations order (Sec. 844.006). The bill modifies the partial lump-sum distribution service retirement provisions (Sec. 844.009). The bill provides that a member files an application for service or disability retirement annuity with the retirement system rather than the board of trustees (Secs. 844.101 and 844.301). This bill sets forth provisions regarding annuities that are not subject to discontinuance (Sec. 844.3051). The bill modifies the adjustments that may be made at the discontinuance of a disability retirement annuity when a person resumes membership in TCDRS, and authorizes the board to adopt rules regarding the computation of those adjustments (Sec. 844.309). The bill modifies provisions regarding return of accumulated contributions and return of excess contributions after the death of a member or former member (Secs. 844.401 and 844.402). The bill provides that the supplemental death benefit program constitutes group term life insurance purchased for employees as described by the federal Internal Revenue Code of 1986 (Sec. 844.501). The bill modifies the computations used to determine the amount of a member's supplemental death benefit annuity (Sec. 844.503). The bill increases from $2,500 to $5,000 the supplemental death benefit of a retiree of one subdivision (Sec. 844.504). The bill modifies the benefit options the governing body of a subdivision may adopt or authorize (Sec. 844.704). The retirement system is required to establish and maintain a separate member individual account for each subdivision with which a member has credited service (Sec. 845.306). The bill requires payments to be made by electronic funds transfer, and sets forth provisions for exceptions ( Sec. 845.313). The bill modifies provisions regarding penalties for late contributions by subdivisions (Sec. 845.407). The bill modifies provisions regarding unclaimed benefits (Sec. 845.505). The bill repeals laws relating to a member from a county with a local pension system, partial lump-sum distribution on service retirement, optional service retirement annuity, optional disability retirement annuity, excess contributions of disability retirees, and extended supplemental death benefits coverage (SECTION 54). EFFECTIVE DATE December 31, 2001. SECTIONS 12 and 51 of the Act take effect September 1, 2001.