HBA-TBM H.B. 1043 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1043 By: Kuempel Pensions & Investments 3/6/2001 Introduced BACKGROUND AND PURPOSE The Texas Municipal Retirement System (TMRS) is a voluntary statewide retirement system that administers retirement, disability, and death benefits to employees of Texas cities. Each participating city is separately funded, with both employers and employees making contributions to TMRS. Employees contribute a portion of their compensation at a percentage selected by the municipality, and employers contribute as necessary to support the level of benefits the city has selected to offer. House Bill 1043 sets forth changes to TMRS to improve benefit options, extend death benefits, and decrease the vesting period to five years. 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 officer, department, agency or institution. ANALYSIS House Bill 1043 amends the Government Code to modify provisions relating to participation and credit in, contributions to, and benefits and administration of the Texas Municipal Retirement System (TMRS). The bill authorizes particular municipalities to permit a member to qualify and that a member is eligible for retirement if the member is 60 years old and has at least five years of credit service (Secs. 854.102 and 854.202). A member may terminate covered employment and remain eligible to retire and receive a service retirement annuity after the member attains 60 years of age if the member has at least five years of credited service (Sec. 854.205). The bill provides that a person may earn prorated interest on a prior or updated service credit (Secs. 853.105 and 853.402). The bill modifies the procedures required by a municipal ordinance authorizing TMRS to provide prior service credit for service performed by a member of TMRS during a probationary employment period (Sec. 853.304). The bill increases the maximum computed amount of a lump-sum payment on retirement from $5,000 to $10,000 (Sec. 854.002). The bill authorizes the surviving spouse of a member to leave the member's accumulated contributions or deposit with TMRS until the date a member would have attained retirement eligibility rather than accepting an annuity for the member's accumulated contributions (Sec. 854.003). The bill requires TMRS to reduce the amount of a benefit payment that would exceed the limitations on payment of benefits provided by the federal Internal Revenue Code of 1986 (Sec. 854.007). The bill sets forth provisions regarding a partial lump-sum distribution payment to the alternative payee in a qualified domestic relations order (Sec. 854.008). The bill modifies and adds provisions regarding the payment of an optional service retirement annuity and authorizes certain retirees to modify their annuities to include a pop-up provision which automatically increases a retiree's monthly benefit if the beneficiary dies before the retiree (Sec. 854.104). The bill adds provisions relating to beneficiaries and the selection of an optional service retirement annuity (Sec. 854.105). The bill authorizes certain retirees who marry after the date of the person's retirement to replace a selected annuity with an optional retirement annuity under certain conditions (Secs. 854.107 and 854.108). The bill modifies provisions regarding a member's designation of a beneficiary of supplemental death benefits (Sec. 854.605). The bill authorizes the board of trustees of TMRS (board) to engage in security lending and sets forth the requirements for a person to be eligible to lend securities (Sec. 855.3011). The bill sets forth provisions regarding the creation of a full benefit arrangement fund under the federal Internal Revenue Code of 1986 to provide benefits to certain retirement system participants. The bill authorizes the board to adopt rules for the efficient administration of a separate fund for the payment of benefits (Sec. 855.608). The bill repeals the optional benefit for the designated beneficiary of a vested employee (Sec. 854.204). EFFECTIVE DATE January 1, 2002. The five-year vesting period takes effect September 1, 2001.