PART 4. EMPLOYEES RETIREMENT SYSTEM OF TEXAS

CHAPTER 71. CREDITABLE SERVICE

34 TAC §§71.3, 71.19, 71.29, 71.31

The Employees Retirement System of Texas (ERS) proposes amendments to 34 Texas Administrative Code (TAC) §§71.3, 71.19, 71.29, and 71.31 concerning Creditable Service.

A recent experience study conducted by the ERS actuary for pension matters resulted in recommended changes to assumptions that were approved by the board at its May 13, 2008, meeting. These sections are amended to update the rules for the various changes to actuarial tables and reduction factors relating to the experience study and these assumptions.

Section 71.3, concerning Service Credit for Members of the Elective Class, has changed for consistency and to reflect that the word that was capitalized is a defined term.

Section 71.19, concerning Transfer of Service between the Teacher Retirement System of Texas (TRS) and the Employees Retirement System of Texas (ERS), has changed in order to satisfy Internal Revenue Service requirements that a retirement is bona fide and results in a termination of employment.

Sections 71.29 and 71.31, concerning Purchase of Additional Service Credit and Credit Purchase Option For Certain Waiting Period Service, have changed to reflect new waiting period service credit tables and additional service credit tables based on the recent actuarial experience study and the assumptions adopted.

Ms. Paula A. Jones, General Counsel, Employees Retirement System of Texas, has determined that for the first five year period the rules are in effect, there will be no fiscal implications for state or local government as a result of enforcing or administering the rules, and, to her knowledge, small businesses should not be affected.

Ms. Jones also determined that for each year of the first five years the rules are in effect the public benefit anticipated as a result of enforcing the rules would be maintaining accuracy in the calculations of the cost of purchasing service credit, up-to-date information in the calculations of the cost of reduced annuities, and conformance of the rules to the board's approved procedures for retirement and applicable federal law and regulations. There are no known anticipated economic costs to persons who are required to comply with the rules as proposed.

Comments on the proposed rule amendments may be submitted to Paula A. Jones, General Counsel, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or you may email Ms. Jones at paula.jones@ers.state.tx.us. The deadline for receiving comments is August 11, 2008, at 10:00 a.m.

The amendments are proposed under the Texas Government Code, §§815.102, 815.105, 833.105, 834.103, 835.002, 840.002, 840.005, and 844.1021 which provide authorization for the ERS Board of Trustees to adopt rules necessary to carry out its statutory duties and responsibilities and to adopt mortality, service and other tables necessary for the system.

No other statutes are affected by the proposed amendments.

§71.3.Service Credit for Members of the Elective Class.

(a) Each elective state official who becomes a member of the System [system] shall be eligible to establish one month of service for each month or fraction thereof in which he holds office. No more than 24 months service shall be credited for a two-year term and no more than 48 months service shall be credited for a four-year term.

(b) A member of the elected class who on or after September 1, 1989, purchases and receives credit in the elected class for calendar year service and who during that same calendar year holds a position as an appointive officer or employee shall also receive credit in the employee class of membership.

§71.19.Transfer of Service between the Teacher Retirement System of Texas (TRS) and the Employees Retirement System of Texas (ERS).

(a) Purpose. These rules are intended to implement the provisions of the Government Code, Chapter 805, concerning the transfer of credit between the TRS and the ERS, and to provide a systematic method of funding the actuarial value of the annuity resulting from transferred service.

(b) Forms.

(1) Applications for transfer will be made using forms prescribed by the ERS.

(2) The ERS will cooperate with the TRS in an effort to make such application forms for the ERS comparable to those used by the TRS.

(c) Notice.

(1) A person who elects to transfer service credit pursuant to these rules must file the appropriate form to make such transfer not more than 90 days prior to the person's retirement effective date, but not later than said effective date.

(2) The ERS will notify the TRS of the pending transfer not later than 30 days following said effective date.

(d) Manner of transfer.

(1) Service credit and assets will be transferred through electronic and hard copy documentation pursuant to these rules, and the ERS will maintain records of such transfers permanently.

(2) Any transfer of service credit to the ERS must reflect years of credit, average salary, periods of service, method of calculation, and the manner used to calculate the time period involved, including any military credit purchased.

(3) Any transfer of service credit to the ERS must include specific data regarding the pre-tax and after-tax contributions by the person, penalty interest, earned interest, and any other dollar amount which will be part of the transfer.

(4) Assets to fund the portion of the annuity attributable to service with the TRS will be transferred to the ERS pursuant to agreement with the TRS.

(5) Service transferred from the TRS will be established in an employee class account for the benefit of the member.

(e) Transfer of funds. The ERS and the TRS agree on the following method of transferring funds. Each system shall certify on a monthly basis the total dollar amount of annuities paid by the system which are attributable to service transferred pursuant to the Government Code, Chapter 805. The amount certified shall exclude any portion of annuities paid consisting of post-retirement increases. Each system shall remit to the other system the amount certified within 30 days of receipt of such certification. It is recognized that adjustments will be made from month-to-month as a result of such things as administrative errors, the death of the annuitant or a beneficiary, return-to-work, and recovery from disability by an annuitant. The systems will jointly agree on the administrative and accounting procedures to be established in order to ensure the transfer of funds pursuant to this section.

(f) Purchase of refunded service.

(1) A member of the TRS who canceled membership in the ERS by taking a refund of his individual account may repurchase his service credit for the purpose of making a transfer at any time prior to retirement. Such persons do not have to become a contributing member of the ERS in order to purchase such canceled service credit.

(2) A person who cancels membership in the ERS by taking a refund of his individual account must meet the general requirements for reinstatement or purchase of service credit in the ERS.

(g) Military credit. Any transferred military service which would result in a member receiving service credit in excess of that permitted under the ERS rules will not be accepted.

(h) Termination of membership. The transfer of ERS credit to the TRS will terminate membership in the ERS, and will cancel all rights to benefits from the ERS based on that service.

(i) Service in the month following retirement. A retirement shall be canceled and membership reinstated [reinstate] if a member, who transferred service and retired pursuant to this chapter, holds a position during the month following retirement with the retirement system on which benefits are based. A retirement shall be canceled and membership reinstated if a retiring member has a commitment from his present employer to be rehired. At the time of retirement, a retiring member must disclose to the retirement system any commitment from his present employer to be rehired.

§71.29.Purchase of Additional Service Credit.

(a) An eligible member may establish equivalent membership service credit authorized by §813.513, Texas Government Code, as provided in this section. The provisions of §71.14 of this title do not apply to credit established under this section.

(b) A member is eligible to establish credit under this section in the membership class in which the member holds a position if the member:

(1) has 120 months of service credit for one or more periods of time during which the member held a position in a membership class and the required contributions were made;

(2) is actively contributing to the system at the time credit is established; and

(3) is not eligible to establish other credit or service.

(c) An eligible member shall deposit with the system in a lump sum a contribution in the amount determined by the system to be the actuarial present value of the benefit attributable to the credit established under this section. The tables recommended by the actuaries and adopted by the board shall be used by the system to determine the actuarial present value. The additional service credit tables are adopted by reference and made a part of this rule for all purposes. For additional service credit purchased on or after January 1, 2009, the additional service credit tables shall be those tables adopted by the board based on assumptions adopted by the board on May 13, 2008. For additional service credit purchased prior to January 1, 2009, the previously adopted tables that were in effect at the time the additional service credit was purchased shall apply. Copies of these tables are available from the System's executive director, Employees Retirement System of Texas at 18th and Brazos Streets, P.O. Box 13207, Austin, Texas 78711-3207. [Such tables are incorporated herein by reference and shall be available from the System's executive director, Employees Retirement System of Texas at 18th and Brazos Streets, P.O. Box 13207, Austin, Texas 78711-3207.] The actuarial present value shall be based on:

(1) the member's age on the date of the deposit required by this subsection;

(2) the earliest date on which the member will become eligible to retire and receive a service retirement annuity after establishing credit under this section; and

(3) the future employment, compensation, investment and retirement benefit assumptions recommended by the actuaries and adopted by the board.

(d) Credit shall be established in increments of 12 months of credit, except that a member who may become eligible to retire by establishing fewer than 12 months of credit may establish the minimum number of months of credit necessary for the member to become eligible to retire.

(e) A member who establishes credit under this section shall certify that the member is not eligible to establish other credit or service and shall waive any and all right to establish such credit or service that the member had on the date of the deposit required by subsection (c) of this section. This subsection does not apply to service credit transferred as authorized by Chapter 805, Texas Government Code.

(f) Credit established under this section may not be used to compute the amount of a disability retirement annuity, or to determine average monthly compensation for the purpose of computing a service retirement annuity.

(g) A member who withdraws contributions and cancels credit established under this section may not reestablish such credit under §813.102, Texas Government Code, but may again establish credit as provided in this section.

(h) The provisions of §813.503, Texas Government Code, do not apply to credit established under this section.

§71.31.Credit Purchase Option For Certain Waiting Period Service.

(a) An eligible member may establish service credit for service performed during the waiting period as authorized by §813.514, Texas Government Code, and as provided in this section. The provisions of §71.14 of this chapter do not apply to service credit established under this section.

(b) A member is eligible to establish service credit under this section if the member:

(1) holds a position in the employee class;

(2) has completed the waiting period;

(3) has made a retirement contribution in accordance with §813.201; and

(4) makes application for the establishment of service credit and payment of the required contributions in accordance with procedures developed by ERS.

(c) An eligible member shall deposit with the System [system ] in a lump sum a contribution in the amount determined by the System [system] to be the actuarial present value of the benefit attributable to the service credit established under this section. The tables recommended by the System's [ system's] actuary and adopted by the board shall be used to determine the actuarial present value.[:] The waiting period service credit tables are adopted by reference and made a part of this rule for all purposes. For waiting period service credit purchased on or after January 1, 2009, the waiting period service credit tables shall be those tables adopted by the board based on assumptions adopted by the board on May 13, 2008. For waiting period service credit purchased prior to January 1, 2009, the previously adopted tables that were in effect at the time the waiting period service was purchased shall apply. Copies of these tables are available from the executive director of the Employees Retirement System of Texas at 18th and Brazos, P.O. Box 13207, Austin, Texas 78711-3207.

[Figure: 34 TAC §71.31(c)]

(d) Actuarial present value shall be based on:

(1) the member's age on the date of the deposit required by this subsection;

(2) the earliest date on which the member will become eligible to retire and receive a service retirement annuity after establishing service credit under this section; and

(3) the future employment, compensation, investment and retirement benefit assumptions recommended by the system's actuary and adopted by the board.

(e) Waiting period service credit shall be established in increments of one month.

(f) This section does not apply to service credit transferred as authorized by Texas Government Code, Chapter 805.

(g) A member who withdraws contributions and cancels service credit established under this section may not reestablish such credit under §813.102, Texas Government Code, but may again establish credit only as provided by this section.

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 June 26, 2008.

TRD-200803347

Paula A. Jones

General Counsel

Employees Retirement System of Texas

Earliest possible date of adoption: August 10, 2008

For further information, please call: (512) 867-7288

34 TAC §§73.7, 73.11, 73.21, 73.26, 73.29

The Employees Retirement System of Texas (ERS) proposes amendments to 34 Texas Administrative Code (TAC) §§73.7, 73.11, 73.21, 73.26, and 73.29 concerning Benefits.

A recent experience study conducted by the ERS actuary for pension matters resulted in recommended changes to assumptions that were approved by the board at its May 13, 2008, meeting. These sections are amended to update the rules for the various changes to actuarial tables and reduction factors relating to the experience study.

Section 73.7, concerning Service in the Month Following Retirement, has changed in order to satisfy Internal Revenue Service requirements that a retirement is bona fide and results in a termination of employment.

Section 73.11, concerning Supplemental Retirement Program, has changed to reflect new age reduction factors based on the recent actuarial experience study and the assumptions adopted.

Section 73.21, concerning Reduction Factor for Age and Retirement Option, has changed to reflect new factors based on the recent actuarial experience study and assumptions adopted.

Sections 73.26 and 73.29, concerning Beneficiary Lineage for Guaranteed Periodic Payments and Spousal Consent Requirements, have changed for consistency and to reflect that the word that was capitalized is a defined term.

Ms. Paula A. Jones, General Counsel, Employees Retirement System of Texas, has determined that for the first five year period the rules are in effect, there will be no fiscal implications for state or local government as a result of enforcing or administering the rules, and, to her knowledge, small businesses should not be affected.

Ms. Jones also determined that for each year of the first five years the rules are in effect the public benefit anticipated as a result of enforcing the rules would be maintaining accuracy in the calculations using updated reduction factors, up-to-date information in the calculations of reduced annuities, and to make the rule conform to the board's approved procedures for retirement and applicable federal law and regulations. There are no known anticipated economic costs to persons who are required to comply with the rules as proposed.

Comments on the proposed rule amendments may be submitted to Paula A. Jones, General Counsel, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or you may email Ms. Jones at paula.jones@ers.state.tx.us. The deadline for receiving comments is August 11, 2008, at 10:00 a.m.

The amendments are proposed under the Texas Government Code, §§815.102, 815.105, 833.105, 834.103, 835.002, 840.002, 840.005, and 844.1021 which provide authorization for the ERS Board of Trustees to adopt rules necessary to carry out its statutory duties and responsibilities and to adopt mortality, service and other tables necessary for the system.

No other statutes are affected by the proposed amendments.

§73.7.Service in the Month Following Retirement.

(a) In order to satisfy Internal Revenue Service requirements that a retirement is bona fide and results in a termination of employment, a retirement shall be canceled and membership reinstated: [A retirement shall be cancelled and membership reinstated if the member holds a position in the class from which he retired during the calendar month following retirement.]

(1) If the member holds a position in the class from which he retired during the calendar month following retirement; or

(2) If a retiring member has a commitment from his present employer to be rehired. At the time of retirement, a retiring member must disclose to the retirement system any commitment from his present employer to be rehired.

(b) If the person attempting to retire establishes that the only service credited in the month after the proposed date of retirement was as the result of an oversight on the member's part or on the part of the employee's department, the member may petition the executive director for relief. The executive director may, for good cause, permit the retirement to be effective on the last day of the last month in which credit was established. The applicant must refund any annuity paid for a month prior to the new effective date of retirement.

§73.11.Supplemental Retirement Program.

(a) For the purpose of this section:

(1) "supplemental program" is the program of retirement benefits for commissioned peace officers and custodial officers established by the Texas Government Code, §814.107;

(2) "regular program" is the retirement program available to members of the employee class generally.

(b) Age reduction factors for retirement from the supplemental program prior to age 50 are adopted by reference and are made a part of this rule for all purposes. Copies of the factors may be obtained from the executive director of the Employees Retirement System of Texas at 18th & Brazos Streets; P.O. Box 13207; Austin, Texas 78711-3207. For retirements occurring on or after January 1, 2009, the reduction factors for retirement from the supplemental program prior to age 50 shall be those factors adopted by the board based on assumptions adopted by the board on May 13, 2008. For retirements effective prior to January 1, 2009, the previously adopted factors that were in effect at the time of retirement shall apply.

(c) Option factors for annuities, based on a retirement involving the supplemental program, are those applicable to the age of the retiree and nominee at the time payments under each program are to begin.

(d) No payment shall be required to establish service credit in the supplemental program unless payment would be required to establish that credit in the regular program.

(e) Military service credit shall be creditable in the supplemental program only if, within 90 days of termination of covered employment, the member went into the military without intervening employment and the member resumed covered employment within 90 days of termination of military service.

(f) An occupational disability retirement annuity is subject to increase pursuant to the supplemental program as a result of the individual's submission of evidence satisfactory to the retirement system that the person's condition makes the person incapable of gainful occupation and is considered a total disability under the federal social security law.

(g) An annuity increase under Subsection (f) is not payable before the first month following the month in which the satisfactory evidence under Subsection (f) is received by the retirement system.

(h) An adjustment under the provisions of subsection (f) of this section shall include any reduction option factor applicable to a survivor benefit.

§73.21.Reduction Factor for Age and Retirement Option.

(a) Actuarial assumptions, mortality tables, and reduction factors used for calculation of benefits are those adopted by the board and apply to forms and effective dates of annuities specified by the board. Such assumptions, tables, and factors are incorporated in this rule by reference and are a part of this rule for all purposes. Copies of the tables are available from the executive director of the Employees Retirement System of Texas at 18th and Brazos Streets, P.O. Box 13207, Austin, Texas 78711-3207.

(b) The 2008 [1999] reduction factors for optional forms of retirement annuities apply to retirements effective on or after January 1, 2009. [September 30, 1999, and are those factors adopted by the board December 8, 1999, based on assumptions adopted by the board December 9, 1998.] For retirements effective on or after January 1, 2009, the reduction factors shall be those factors adopted by the board based on assumptions adopted by the board on May 13, 2008. The factors apply to annuities first payable January 1, 2009, [2000,] and thereafter. For retirements effective prior to January 1, 2009, the previously adopted factors that were in effect at the time of retirement shall apply.

(c) The actuaries have developed reduction factors for early retirement or death in accordance with the mortality tables adopted by the board. Such tables are incorporated in this rule by reference and are a part of this rule for all purposes. For early retirements or deaths occurring on or after January 1, 2009, the reduction factors for early retirement or death shall be those factors adopted by the board based on assumptions adopted by the board on May 13, 2008. For deaths and retirements effective prior to January 1, 2009, the previously adopted factors that were in effect at the time of such death or retirement shall apply.

(d) For retirements occurring on or after January 1, 2009, the reduction [Reduction] factors for the partial lump sum option [apply to retirements effective on or after January 1, 2000, and] are those factors adopted by the board [December 8, 1999,] based on assumptions adopted by the board on May 13, 2008. [December 9, 1998.] For retirements effective prior to January 1, 2009, the previously adopted factors for the partial lump sum option that were in effect at the time of retirement shall apply.

(e) Reduction factors for a standard nonoccupational disability retirement annuity apply to a disability retirement application received by the System on or after January 1, 2009. [September 1, 2005, and are those factors adopted by the board on August 24, 2005, based on assumptions adopted by the board on December 10, 2003.] For a retirement application received by the System on or after January 1, 2009, the reduction factors shall be those factors adopted by the board based on assumptions adopted by the board on May 13, 2008. For a disability retirement application received prior to January 1, 2009, the previously adopted factors that were in effect at the time such application was received shall apply.

[Figure: 34 TAC § 73.21(e)]

§73.26.Beneficiary Lineage for Guaranteed Periodic Payments.

(a) A member or retiree who selects an optional retirement annuity payable for a guaranteed period may, before or after retirement, designate one or more persons as primary beneficiaries to receive any remaining guaranteed periodic annuity payments if the member or retiree dies after retirement but before all guaranteed payments have been made. The member or retiree may also designate one or more alternate beneficiaries.

(b) A member who selects a death benefit plan for the payment of a death benefit plan annuity for a guaranteed period may designate one or more primary beneficiaries to receive the death benefit annuity upon the death of the member. The member may also designate one or more alternate beneficiaries.

(c) If any designated primary beneficiary is living at the time of the death of the retiree or of the member referred to in subsections (a) and (b) of this section, the primary beneficiary or beneficiaries will be entitled to receive the guaranteed periodic annuity payments or the death benefit plan annuity payments for the remainder of the guaranteed period.

(d) If no designated primary beneficiary is living at the time of the death of the retiree or of the member referred to in subsections (a) and (b) of this section, the designated alternate beneficiary or beneficiaries will be entitled to receive the guaranteed periodic annuity payments or the death benefit plan annuity payments, as applicable, in place of the designated primary beneficiaries. However, if a designated primary beneficiary is living at the time of the death of the retiree or member, then an alternate beneficiary shall have no further right, title, or interest in any annuity payments.

(e) If multiple primary beneficiaries are designated, upon the death of any one primary beneficiary, the remaining primary beneficiaries will share proportionately, based on the designated percentages, that portion of any remaining guaranteed annuity or death benefit plan annuity payments that was to have been paid to the beneficiary who died.

(f) If a designated primary beneficiary or alternate beneficiary becomes entitled to guaranteed annuity or death benefit plan payments as described in this section, but dies before all of the guaranteed periodic payments have been paid, and there are no other designated beneficiaries then living, any remaining guaranteed periodic payments shall be made to the estate of the beneficiary and not to the estate of the deceased retiree or member. At the sole election of the System [system], the System [ system] may pay the estate of a deceased beneficiary a lump sum amount that is the actuarial present value of the remaining guaranteed annuity payments.

(g) The simultaneous death provisions of Texas Government Code §814.006, and Texas Government Code §814.007, concerning a beneficiary who causes the death of a member or annuitant, apply to this section.

§73.29.Spousal Consent Requirements.

(a) The selection by a member of a service retirement annuity other than a joint and survivor annuity that pays benefits to the spouse of the member on the death of the member, is not effective unless the member's spouse consents to the selection or it is established to the satisfaction of the System [system] that:

(1) there is no spouse; or

(2) the spouse cannot be located.

(b) Should the spouse of the member be judicially declared incompetent, the consent required by this section shall be given by the spouse's legal guardian. The consent of a spouse who is incapable of giving his or her consent as required by this section may be given by a legal representative of the spouse only if the executive director or a person designated by the executive director determines:

(1) that the spouse is incapable of giving his or her consent; and

(2) the person or persons qualify as the legal representative of the spouse.

(c) The consent required by this section must be in writing on a form prescribed by the Employees Retirement System of Texas and acknowledged before a notary public.

(d) The provisions of this section apply only to service retirement annuities.

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 June 26, 2008.

TRD-200803348

Paula A. Jones

General Counsel

Employees Retirement System of Texas

Earliest possible date of adoption: August 10, 2008

For further information, please call: (512) 867-7288

34 TAC §§77.1, 77.11, 77.21

The Employees Retirement System of Texas (ERS) proposes amendments to 34 Texas Administrative Code (TAC) §§77.1, 77.11, and 77.21, concerning Judicial Retirement.

A recent experience study conducted by the ERS actuary for pension matters resulted in recommended changes to assumptions that were approved by the board at its May 13, 2008, meeting. These sections are amended to update the rules for the various changes to actuarial tables and reduction factors relating to the experience study.

Sections 77.1, 77.11, and 77.21, concerning Reduction Factors for Death before Age 65, Reduction Factors for Age and Retirement Options--Judicial Retirement System of Texas Plan One (JRS-I) and Judicial Retirement System of Texas Plan Two (JRS-II), and Purchase of Additional Service Credit, have changed to reflect new factors and tables based on the recent actuarial experience study and assumptions adopted.

Ms. Paula A. Jones, General Counsel, Employees Retirement System of Texas, has determined that for the first five year period the rules are in effect, there will be no fiscal implications for state or local government as a result of enforcing or administering the rules, and, to her knowledge, small businesses should not be affected.

Ms. Jones also determined that for each year of the first five years the rules are in effect the public benefit anticipated as a result of enforcing the rules would be maintaining accuracy in the calculations of the cost of purchasing service credit, up-to-date information in the calculations of reduced annuities, and conformance of the rules to the board's approved procedures for retirement and applicable federal law and regulations. There are no known anticipated economic costs to persons who are required to comply with the rules as proposed.

Comments on the proposed rule amendments may be submitted to Paula A. Jones, General Counsel, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or you may email Ms. Jones at paula.jones@ers.state.tx.us. The deadline for receiving comments is August 11, 2008, at 10:00 a.m.

The amendments are proposed under the Texas Government Code, §§815.102, 815.105, 833.105, 834.103, 835.002, 840.002, 840.005, and 844.1021 which provide authorization for the ERS Board of Trustees to adopt rules necessary to carry out its statutory duties and responsibilities and to adopt mortality, service and other tables necessary for the system.

No other statutes are affected by the proposed amendments.

§77.1.Reduction Factors for Death before Age 65.

If a member of the Judicial Retirement System of Texas Plan One who is eligible to select a death benefit plan dies prior to age 65, the annuity will be reduced by the factors developed by the actuaries. Those factors are adopted by reference and are made a part of this section for all purposes. Copies of the factors may be obtained from the executive director of the Employees Retirement System of Texas at 18th and Brazos Streets; P.O. Box 13207, Austin, Texas 78711-3207. For deaths occurring on or after January 1, 2009, the reduction factors shall be those factors adopted by the board based on assumptions adopted by the board on May 13, 2008. For deaths prior to January 1, 2009, the previously adopted factors that were in effect at the time of death shall apply.

§77.11.Reduction Factors for Age and Retirement Options--Judicial Retirement System of Texas Plan One (JRS-I) and Judicial Retirement System of Texas Plan Two (JRS-II).

(a) Tables for calculation of optional factors.

(1) The [1981] reduction factors for optional forms of retirement annuities are independent of the gender of the member and of the nominee. For retirements effective on or after January 1, 2009, the reduction factors shall be those adopted by the board based on assumptions adopted by the board on May 13, 2008. For retirements effective prior to January 1, 2009, the previously adopted factors that were in effect at the time of retirement shall apply. [ sex of the member and of the nominee and are based on the GA-51 male mortality table projected with Scale C to 1970 with an age set forward of one year for retiring members and an age set back of four years for nominees. The interest assumption is 5.0%.]

[(2) The 1992 reduction factors for optional forms of retirement annuities are independent of the gender of the member and the beneficiary and are based on the 1983 group annuity mortality table. The interest rate assumption is 8.5%.]

(2) [(3)] Copies of these tables are available from the executive director of the Employees Retirement System of Texas at 18th and Brazos Streets, P.O. Box 13207, Austin, Texas 78711-3207. The option tables, along with the adjustments described in this subsection are adopted by reference and made a part of this rule for all purposes.

(b) Option factors. For retirements and annuities effective on or after January 1, 2009, reduction factors for optional annuities for service retirement, disability retirement, and death benefit plans under the JRS-I and JRS-II plans shall be those factors adopted by the board based on assumptions adopted by the board on May 13, 2008. These factors apply to annuities first payable January 1, 2009, and thereafter. For retirements and annuities effective prior to January 1, 2009, the previously adopted reduction factors that were in effect at the time of retirement or first annuity payment shall apply. [All optional annuities for service retirement, disability retirement, and death benefit plans under the JRS-1 are calculated using the 1981 factors. Option factors for service retirement, disability retirement, and for death benefit plans for a member of the JRS-II are calculated using the 1992 factors.] All option factors have been developed by the actuaries and are adopted by reference subject to the limitations of this subsection. Option [ Both sets of option] factors are available from the executive director of the Employees Retirement System of Texas at 18th and Brazos Streets, P.O. Box 13207, Austin, Texas 78711-3207.

(c) Formula for JRS-II reduction factors for death before age 65.

(1) A death benefit annuity of the Judicial Retirement System of Texas Plan Two on behalf of a member dying before age 65 while not eligible for an unreduced service retirement benefit is reduced for each whole or partial calendar month that occurs during the period from the date of death to the 65th birthday, including the months that contain the dates of death and birthday. For the first 120 months (ages 55-64), the annuity is reduced by one-third of 1.0% per month. For the next 60 months (ages 50-54), the annuity is reduced by one-fourth of 1.0% per month. For the next 60 months (ages 45-49), the annuity is reduced by one-sixth of 1.0% per month. For the next 120 months (ages 35- 44), the annuity is reduced by one-twelfth of 1.0% per month.

(2) A death benefit annuity on behalf of a member dying before age 65 while eligible for an unreduced service retirement benefit shall not be reduced for age.

(3) JRS-II reduction factors for death before age 65 have been developed by the actuaries and are adopted by reference subject to the limitations of this subsection. For deaths on or after January 1, 2009, reduction factors for death before age 65 shall be those factors adopted by the board based on assumptions adopted by the board on May 13, 2008. For deaths prior to January 1, 2009, the previously adopted factors that were in effect at the time of death shall apply. The set of reduction factors is available from the executive director of the Employees Retirement System of Texas at 18th and Brazos Streets, P.O. Box 13207, Austin, Texas 78711-3207.

(d) Reserve factors. The reserve factors for JRS-II are adopted by reference and made a part of this rule for all purposes. For periods beginning on or after January 1, 2009, the reserve factors for death before age 65 shall be those factors adopted by the board based on assumptions adopted by the board on May 13, 2008. For periods prior to January 1, 2009, the previously adopted factors that were in effect during such period shall apply. Copies of these tables are available from the executive director of the Employees Retirement System of Texas at 18th and Brazos Streets, P.O. Box 13207, Austin, Texas 78711-3207.

(e) Dollar limitations for maximum annual benefit. Service retirement annuities shall conform to dollar limitations and applicable adjustments under the Internal Revenue Code of 1986, § 415 (26 United States Code §415) as determined by the federal commissioner of internal revenue.

§77.21.Purchase of Additional Service Credit.

(a) The provisions of this section apply only to the Judicial Retirement System of Texas Plan Two (JRS-II).

(b) An eligible member may establish equivalent membership service credit authorized by §838.108, Texas Government Code, as provided in this section. The provisions of §77.15 of this Chapter do not apply to service credit established under this section.

(c) A member is eligible to establish service credit under this section in the membership class in which the member holds a position if the member:

(1) has 120 months of service credit for one or more periods of time during which the member held a position as a judge and the required contributions were made;

(2) is a member of the system at the time credit is established; and

(3) is not eligible to establish other credit or service.

(d) An eligible member shall deposit with the system in a lump sum a contribution in the amount determined by the system to be the actuarial present value of the benefit attributable to the credit established under this section. The tables recommended by the system's actuary and adopted by the board shall be used by the system to determine the actuarial present value.[:] The additional service credit tables for JRS-II are adopted by reference and made a part of this rule for all purposes. For additional service credit purchased on or after January 1, 2009, the additional service credit tables shall be those tables adopted by the board based on assumptions adopted by the board on May 13, 2008. For additional service credit purchased prior to January 1, 2009, the previously adopted tables that were in effect at the time the additional service credit was purchased shall apply. Copies of these tables are available from the executive director of the Employees Retirement System of Texas at 18th and Brazos Streets, P.O. Box 13207, Austin, Texas 78711-3207.

[Figure: 34 TAC §77.21(d)]

(e) Actuarial present value shall be based on:

(1) the member's age on the date of the deposit required by this subsection;

(2) the earliest date on which the member will become eligible to retire and receive a service retirement annuity after establishing credit under this section; and

(3) the future employment, compensation, investment and retirement benefit assumptions recommended by the actuaries and adopted by the board.

(f) Credit shall be established in whole year increments of credit.

(g) A member who establishes credit under this section shall certify that the member is not eligible to establish other credit or service and shall waive any and all right to establish such credit or service that the member had on the date of the deposit required by subsection (d) of this section.

(h) Credit established under this section may not be used to compute the amount of a disability retirement annuity.

(i) A member who withdraws contributions and cancels credit established under this section may not reestablish such credit under §838.102, Texas Government Code, but may again establish credit as provided in this section.

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 June 26, 2008.

TRD-200803349

Paula A. Jones

General Counsel

Employees Retirement System of Texas

Earliest possible date of adoption: August 10, 2008

For further information, please call: (512) 867-7288

CHAPTER 302. GENERAL PROVISIONS RELATING TO THE TEXAS EMERGENCY SERVICES RETIREMENT SYSTEM

34 TAC §302.5, §302.6

The State Board of Trustees of the Texas Emergency Services Retirement System (System) proposes amendments to 34 TAC §302.5, regarding correction of errors in membership or qualified service in the System, and new 34 TAC §302.6, adopting by reference a form for such corrections.

The amendments to §302.5 would simplify the procedure for the correction of errors in enrolling members or granting service credit by eliminating the requirements of a formal letter and a copy of meeting minutes of a local board showing the change and substituting submission of a prescribed form. The commissioner would have the authority to require additional information on a case-by-case basis.

The new §302.6 would adopt by reference the required form.

Lisa Ivie Miller, Commissioner, has determined that the public benefit, for the first five years that the amended and new rules are in effect, will be to reduce administrative time and paperwork and therefore, costs for both participating departments and the System. Therefore the costs are reduced for both local and state governments.

Small businesses or individuals would not be affected by the adoption of the amended and new rules.

Comments on the proposed amendments and new rule may be submitted in writing to Lisa Ivie Miller, Commissioner, Office of the Fire Fighters' Pension Commissioner, P.O. Box 12577, Austin, Texas 78711-2577, no later than August 18, 2008. Comments may also be submitted electronically to rules@ffpc.state.tx.us or faxed to (512) 936-3480.

The amendments and new section are proposed under the statutory authority of Title 8, Texas Government Code, Subtitle H, Texas Emergency Services Retirement System.

No other statutes, articles, or codes are affected by the proposal.

§302.5.Correction of Errors.

(a) A local board may correct an error in enrollment in membership or computation of qualified service by completing and submitting to the Commissioner the prescribed form. The completed form must be: [a letter sent to the commissioner]

(1) signed by the chair and secretary of the local board and the administrative head of the department; and [,]

(2) accompanied by [a copy of the meeting minutes of the local board showing approval of the change and] any applicable past due contributions necessitated by the change.

(b) The Commissioner may require the local board to provide additional documentation.

§302.6.Correction Form.

The Board adopts by reference Correction Form No. 200 D, August 1, 2008, for corrections under §302.5 of this title (relating to Correction of Errors). Form 200 D, Letter for Correction of Errors, can be found on the Office of the Fire Fighters' Pension Commissioner's website, www.ffpc.state.tx.us or by going directly to http://www.ffpc.state.tx.us/tesrs/forms/Form%20200D%20Correction%20of%20Errors.pdf.

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 June 24, 2008.

TRD-200803306

Craig Hudgins

General Counsel

Office of the Fire Fighters' Pension Commissioner

Earliest possible date of adoption: August 10, 2008

For further information, please call: (512) 936-3372

34 TAC §310.10

The State Board of Trustees of the Texas Emergency Services Retirement System (System) proposes amendments to 34 TAC §310.10, regarding voluntary payments by departments participating in the System to provide benefit enhancements for annuitants.

The purpose of the amendments are to specify five kinds of post-retirement increases that a department participating in the System could make to annuitants' benefits: an additional one-time payment, a cost-of-living adjustment based on an annual increase in the consumer price index, an annuity increase to a minimum monthly amount, an annuity increase of a specified amount for each year of service, or a percentage increase other than a cost-of-living adjustment. The amended rule would allow a department to apply an increase to only fully vested annuitants if it chose.

Lisa Ivie Miller, Commissioner, has determined that the public benefit for the first five years that the amended rule is in effect will be to inform departments, for their consideration, about common post-retirement benefit increases employed in other public retirement systems, while ensuring that proposed increases do not unconstitutionally discriminate among recipients and do not impose significant administrative costs on the System.

As in the current version of the rule, participating departments do not have to adopt any post-retirement benefit enhancements, but if they choose to do so, the System's actuary must first certify that the department's proposed payment schedule will be sufficient to fully finance the proposed increase. For this reason, the rule as amended would not impose a cost on a local government that it did not elect to accept.

Small businesses or individuals would not be affected by the adoption of the proposed amended rule.

Comments on the proposed amendments may be submitted in writing to Lisa Ivie Miller, Commissioner, Office of the Fire Fighters' Pension Commissioner, P.O. Box 12577, Austin, Texas 78711-2577, no later than August 18, 2008. Comments may also be submitted electronically to rules@ffpc.state.tx.us or faxed to (512) 936-3480.

This agency hereby certifies that the proposed amended rule has been reviewed by legal counsel and found to be within the agency's legal authority to adopt and further certifies that the proposed amended rule has been reviewed by the System's retained actuaries and found to be cost neutral.

The amendments are proposed under the statutory authority of Title 8, Texas Government Code, Subtitle H, Texas Emergency Services Retirement System, §864.0135.

No other statutes, articles, or codes are affected by the proposed amendments.

§310.10.Voluntary Payments by Departments.

(a) A participating department, as authorized by this section, may make one or more supplemental payments to retirees and other beneficiaries of the pension system, or may provide an increase in the amount of annuities paid to retirees and other beneficiaries of the system. A department may choose to apply a supplemental payment or increase in annuities to all beneficiaries or to only those whose benefits are derived from a person who was eligible to retire under §308.1(a) of this title (relating to Eligibility for Retirement Annuity). [, contingent upon the following conditions of this section.]

(b) An increase in benefits may consist of: [ A participating department must meet the following conditions before a supplemental payment or increase in annuity to retirees or beneficiaries is implemented:]

(1) an additional, one-time payment that does not exceed 100 percent of an annuitant's monthly scheduled payment; [ A participating department shall make payments to the system that are necessary to finance one or more supplemental payments to retirees or beneficiaries of the department.]

(2) a one-time permanent annuity increase based on the 12-month increase in the Consumer Price Index for All Urban Consumers as of December of the preceding year; [A participating department shall make payments to the system to finance an increase in annuities paid to annuitants of the department. The increase must apply to all annuitants in the same classification but may be based on persons who qualified for an annuity under a previously lower contribution rate.]

(3) a one-time permanent increase to allow each annuity to reach a minimum monthly amount; [Payments to the system may not be made under this section unless the system's actuary first determines that the payments to the system will be sufficient to finance the anticipated additional benefits.]

(4) a one-time permanent increase that adds to each annuity a specified amount for each whole year of credited service for the department; or [The department must enter into a contractual agreement as prescribed by the Office of the Firefighter's Pension Commissioner.]

(5) a one-time permanent percentage increase to each annuity.

(c) Before it may implement a supplemental payment or annuity increase under this section, a participating department shall:

(1) obtain from the Commissioner a determination from the system's actuary that the department's payments to the system will be sufficient to finance the anticipated additional benefits; and

(2) contract with the Commissioner to make quarterly payments to the system that are necessary to finance the increase in benefits.

(d) A supplemental payment or increase in benefits must apply to all annuitants in the same classification but may be based on persons who qualified for an annuity under a previously lower contribution rate.

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 June 24, 2008.

TRD-200803307

Craig Hudgins

General Counsel

Office of the Fire Fighters' Pension Commissioner

Earliest possible date of adoption: August 10, 2008

For further information, please call: (512) 936-3372