Part 11. OFFICE OF THE FIRE FIGHTERS' PENSION COMMISSIONER
Chapter 306. CREDITABLE SERVICE FOR MEMBERS OF THE TEXAS EMERGENCY SERVICES RETIREMENT SYSTEM
The State Board of Trustees of the Texas Emergency Services Retirement System proposes amended rule 34 Texas Administrative Code §306.1, regarding credit for certain prior service of members of the Texas Emergency Services Retirement System (System).
The amended rule will authorize participating department to purchase pension credit for prior service of its members performed before the department joined the System. The System provides retirement, disability, and death benefits for volunteer fire fighters and EMS personnel in departments that participate in the System.
The proposed amended rule will simplify the administration of the pension system by limiting the options for and the time period in which a department may purchase prior service for participating members under this section. The proposal establishes 10 years as the maximum amount of qualified prior service credit in the System that a department may purchase for a member under this section. The proposal will allow a new department to purchase prior service credit within two years of joining the System.
If the proposed rule is adopted, it will eliminate the option for a participating department to purchase an accrued time benefit for prior service performed by a member prior to entry into the System. The proposed rule will eliminate the current prior service options known as ''Accrued Time'' or ''Accrued Time with Buyback'' to reduce the complexity of administration and to eliminate options that could provide inadequate benefits.
The Board was also concerned that the purchase of accrued time benefits by departments would result in fewer members vesting in the System and limit the ability of members to qualify for System pension benefits. Although the ''accrued time'' option allowed departments to provide equivalent benefits for prior service performed under the Texas Local Fire Fighters Retirement Act, the service purchased did not count toward System vesting or retirement benefits. All prior service purchased under the proposed rule will count as qualified service in the System and will allow participating members to vest sooner and receive higher benefits from the System.
Kevin Deiters, Program Director, has determined that for the first five years the proposed rule amendment is in effect it will reduce costs to those local municipal governments and emergency services districts purchasing prior service by reducing the minimum rate and by limiting the maximum period of prior service that a department may purchase for a member. The proposed rule will allow local municipal governments and emergency services districts to purchase prior service at any contribution rate or rates that equal or exceed the minimum contribution rate in effect for the period covered. The proposed rule will reduce costs to the State by simplifying the process and reducing the amount of staff time needed to prepare and present financial estimates to the interested parties. The simplified approach will also reduce the cost to the agency for computer programming and actuarial testing.
In 2006, the State Board adopted rules increasing the minimum contribution rate by $4 per year until the minimum rate reaches $36 per member per month in 2011. Departments purchasing prior service credit for service performed before September 1, 2005 could purchase that service at the $12 minimum contribution rate that was in effect before September 1, 2005. The proposed amendment will also limit the amount of qualified service that a department may purchase to 10 years instead of 15 years. This reduction in the maximum number of years of service that a participating department may purchase is needed to make the purchase of prior service more affordable.
Mr. Deiters has also determined that for the first five years that the amended rule is in effect that departments purchasing prior service credit will have more flexibility in setting the rate and ultimate cost to purchase qualified prior service credit in the System for their members.
Mr. Deiters has also determined that for the first five years that the amended rule is in effect the public benefit anticipated as a result of the adoption of the amendment will be to provide participating departments with improved benefits to recruit volunteer fire fighters and emergency services personnel to protect local communities. Small businesses and individuals will not be affected by the amendment.
This agency hereby certifies that the proposed rule amendments have been reviewed by the System's retained actuaries. It is their opinion that since the proposed rule amendments would not change a department's responsibility for the financing of the purchase of prior service credit, the proposed rule amendments are cost neutral and will have no actuarial effect on the System.
Comments on the amendment may be submitted in writing to Lisa Ivie Miller, Commissioner, Office of the Fire Fighter Pension Commissioner, P.O. Box 12577, Austin, Texas 78711-2577 no later than July 31, 2007. Comments may also be submitted electronically to rules@ffpc.state.tx.us or faxed to (512) 936-3480.
The amended rule is proposed under the statutory authority of Title 8, Government Code, Subtitle H, Texas Emergency Services Retirement System, Chapter 863, Creditable Service.
No other statutes, articles, or codes are affected by the proposed amendment.
§306.1.Prior Service Credit for Members of Participating Departments.
(a)
A department that elects to participate in the pension
system may, before the second anniversary of the date the department begins
participation, make a one-time election to purchase service credit for qualified
service performed for the department before the effective date of the department's
participation by the persons who became members of the pension system on the
effective date of the department's participation.
[
A department
that elects to participate in the pension system may, at the first meeting
of the local board, elect to purchase service credit for service performed
by the persons who became members on the effective date of departmental participation.
]
(b)
[
The maximum amount of prior service credit a member
may receive under this section is 10 years.
] The pension system shall
grant prior service credit under this section if the department agrees in
writing to finance the prior service credit by
an up-front
[
a
] lump-sum payment or within a period not to exceed 10 years from the
[
effective
] date
of the election to purchase the credit
.
(c) The cost to finance the purchase of prior service credit is based on the actuarially assumed rate of investment return on fund assets at the time payment for the credit begins. A department may purchase prior service credit at any contribution rate or rates at or above the minimum provided by statute or board rule for the period purchased.
(d)
The department must provide the commissioner with
the contribution rate or rates the department will pay and a record of prior
service showing the amount of service performed by each member of the department.
The record for each member must include the member's name, date of birth and
entry date in the department.
[
The commissioner shall furnish to
each participating department that agrees to purchase prior service credit
a record of member prior service to be completed and returned to the commissioner
showing the amount of prior service performed by each member of the department.
The record must be signed by the chair and secretary of the local board and
the administrative head of the department and be accompanied by a copy of
the minutes of the local board showing approval of the amounts of prior service
credit given the members.
]
(e) The maximum amount of prior service permitted to be purchased by this rule applies only to prior service credit purchased on or after July 1, 2007.
This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on May 21, 2007.
TRD-200701948
Kevin Deiters
Policy Director
Office of the Fire Fighters' Pension Commissioner
Earliest possible date of adoption: July 1, 2007
For further information, please call: (512) 936-3472