HBA-TBM H.B. 1487 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1487 By: Yarbrough Pensions & Investments 3/9/2001 Introduced BACKGROUND AND PURPOSE Currently, some municipal firefighters and police officers benefit from a deferred retirement option program (DROP). DROP plans allow the members of retirement systems who want to continue working despite being eligible to retire to invest in an alternative pension benefit option for up to five years. Affording such a benefit to law enforcement officers may enable the Department of Public Safety to retain experienced officers. House Bill 1487 provides a DROP plan for certain law enforcement and custodial officer members of the Employees Retirement System of Texas. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the board of trustees of the Employees Retirement System of Texas in SECTION 1 (Section 814.704, Government Code) of this bill. ANALYSIS House Bill 1487 amends the Government Code to authorize certain law enforcement and custodial officer (officer) members of the Employees Retirement System of Texas (ERS) to elect, if the officer remains in a position with the state, to participate in a deferred retirement option plan (DROP). The bill authorizes an officer who has at least 20 years of service credit and has attained the normal retirement age to participate in DROP by filing a prescribed election form with ERS. The bill sets forth provisions regarding the terms and irrevocability of the filing and the maximum period and effective date of participation. ERS is required to approve each election filed by an eligible member. An officer participating in DROP remains a member of ERS during the period of participation, provided the officer does not terminate membership, but the bill prohibits the officer during participation from accruing additional service credit in ERS. The bill sets forth provisions regarding the contributions, computations of service, and payment of benefits during the period of participation. On the effective date of a member's participation in DROP, ERS is required to transfer the accumulated contributions made by the member and the state to the retirement annuity reserve account ( reserve account). The bill requires ERS to transfer monthly, during participation, the amount the member would have received that month if the member had retired on the effective date of DROP participation from the reserve account to a DROP account created for the member. The bill sets forth provisions relating to the interest credited to a member's account. When a member retires, the member is entitled to the accumulated amount in the member's DROP account payable in a lump sum or in periodic installments at the option of the member. The bill requires the board of trustees of ERS to determine by rule the number and frequency of installment payments. The bill sets forth provisions relating to the disbursement of a decedent's DROP benefit. The bill sets forth provisions regarding the termination of participation in DROP and the benefits for service accumulated by a member after participation in DROP. EFFECTIVE DATE September 1, 2001.