PART 4. EMPLOYEES RETIREMENT SYSTEM OF TEXAS
CHAPTER 71. CREDITABLE SERVICE
The Employees Retirement System of Texas (ERS) proposes amendments to 34 TAC §71.29 and §71.31 concerning creditable service towards retirement.
An experience study conducted by the ERS actuary for pension matters resulted in recommended changes to assumptions that were approved by the ERS Board of Trustees (Board) at the May 13, 2008 meeting. Actuarial tables and reduction factors were prepared using the new assumptions, and these tables and factors were approved by the Board at the February 24, 2009 meeting. These sections of the ERS rules are amended to update the rules for the various changes to actuarial tables and reduction factors relating to the experience study, that have been approved by the Board.
Section 71.29 and §71.31, concerning the purchase of additional service credit and credit purchase option for certain waiting period service, are being amended to reflect new assumptions based on the recent actuarial experience study, new actuarial tables and reduction factors calculated on these assumptions.
Ms. Paula A. Jones, General Counsel and Chief Compliance Officer, 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.
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 simplified administration for the ERS defined benefit plans, to improve the accuracy of calculations and computations related to retirement benefits, and to make the rules conform to the Board's approved reduction factors and actuarial tables for retirement. There are no known anticipated costs to persons who are required to comply with the rules as proposed and, to her knowledge, small businesses should not be affected.
Comments on the proposed rule amendments may be submitted to Paula A. Jones, General Counsel and Chief Compliance Officer, 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 Monday, May 18, 2009, at 10:00 a.m.
The amendments are proposed under the Texas Government Code §815.102 and §815.105 which provide authorization for the ERS Board of Trustees to adopt mortality, service and other tables necessary for the retirement system and to adopt rules for the retirement system.
No other statutes are affected by the proposed amendments.
§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 (relating to Payments To Establish or Reestablish Service Credit) 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. The additional service credit tables apply to service
purchase calculations performed on or after September 1, 2009, and
are those tables adopted by the board on February 24, 2009, based
on assumptions adopted by the board on May 13, 2008. For service purchase
calculations performed prior to September 1, 2009, the previously
adopted tables apply. Copies of these tables are [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 title (relating to Payments To Establish
or Reestablish Service Credit) [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, Texas Government Code; 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
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
service credit established under this section. The tables recommended
by the 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. The waiting period service credit tables apply to
service purchase calculations performed on or after September 1, 2009,
and are those tables adopted by the board on February 24, 2009, based
on assumptions adopted by the board on May 13, 2008. For service purchase
calculations performed prior to September 1, 2009, the previously
adopted tables 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.
[:]
[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 April 6, 2009.
TRD-200901343
Paula A. Jones
General Counsel and Chief Compliance Officer
Employees Retirement System of Texas
Earliest possible date of adoption: May 17, 2009
For further information, please call: (512) 867-7416
The Employees Retirement System of Texas (ERS) proposes amendments to 34 TAC §73.11 and §73.21, concerning Benefits at Death or Retirement.
An experience study conducted by the ERS actuary for pension matters resulted in recommended changes to assumptions that were approved by the ERS Board of Trustees (Board) at the May 13, 2008 meeting. Actuarial tables and reduction factors were prepared using the new assumptions, and these tables and factors were approved by the Board at the February 24, 2009 meeting. These sections of the ERS rules are amended to update the rules for the various changes to actuarial tables and reduction factors relating to the experience study and that have been approved by the Board.
Section 73.11 and §73.21, concerning the Supplemental Retirement Program and the Reduction Factors for Age and Retirement Option, are being amended to reflect new assumptions based on the recent actuarial experience study and new actuarial tables and reduction factors calculated on those assumptions.
Ms. Paula A. Jones, General Counsel and Chief Compliance Officer, 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.
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 simplified administration for the ERS defined benefit plans, to improve the accuracy of calculations and computations related to retirement benefits, and to make the rules conform to the Board's approved reduction factors and actuarial tables for retirement. There are no known anticipated costs to persons who are required to comply with the rules as proposed, and, to her knowledge, small businesses should not be affected.
Comments on the proposed rule amendments may be submitted to Paula A. Jones, General Counsel and Chief Compliance Officer, 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 Monday, May 18, 2009, at 10:00 a.m.
The amendments are proposed under the Texas Government Code §815.102 and §815.105 which provide authorization for the ERS Board of Trustees to adopt mortality, service and other tables necessary for the retirement system and to adopt rules for the retirement system.
No other statutes are affected by the proposed amendments.
§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 and [&] Brazos Streets; P.O.
Box 13207; Austin, Texas 78711-3207. The reduction factors for
retirement from the supplemental program prior to age 50 apply to
retirements effective on or after September 30, 2009, and are those
factors adopted by the board on February 24, 2009, based on assumptions
adopted by the board on May 13, 2008. For retirements effective prior
to September 30, 2009, the previously adopted factors 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) of
this section [Subsection (f)] is not payable before
the first month following the month in which the satisfactory evidence
under subsection (f) of this section [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 1999 reduction factors for optional forms of retirement annuities apply to retirements effective on or after September 30, 1999 and prior to September 30, 2009, and are those factors adopted by the board December 8, 1999, based on assumptions adopted by the board December 9, 1998. The factors apply to annuities first payable January 1, 2000 through August 31, 2009. The 2009 reduction factors for optional forms of retirement annuities apply to retirements effective on or after September 30, 2009, and are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. The 2009 reduction factors apply to retirements first effective September 30, 2009, and thereafter. For retirements prior to September 30, 2009, the previously adopted factors 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. The reduction factors for early retirement or death apply to retirements effective on or after September 30, 2009, and apply to deaths first reported to ERS on or after September 1, 2009, and are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. For retirements prior to September 30, 2009 and deaths first reported to ERS prior to September 1, 2009, the previously adopted factors apply.
(d) The 2000 reduction [Reduction]
factors for the partial lump sum option apply to retirements effective
on or after January 1, 2000 through August 31, 2009, and
are those factors adopted by the board December 8, 1999, based on
assumptions adopted by the board December 9, 1998. The 2009 reduction
factors for the partial lump sum option apply to retirements effective
on or after September 30, 2009 and deaths first reported to ERS prior
to September 1, 2009, and are those factors adopted by the board on
February 24, 2009, based on assumptions adopted by the board on May
13, 2008. For retirements occurring prior to September 30, 2009 and
deaths first reported to ERS prior to September 1, 2009, the previously
adopted factors apply.
(e) The 2005 reduction [Reduction]
factors for a standard nonoccupational disability retirement annuity
apply to a disability retirement application received by the System
on or after 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. The 2009 reduction factors for a standard
nonoccupational disability retirement annuity apply to a disability
retirement based on the effective date of a retirement that is first
effective on or after September 30, 2009, and are those factors adopted
by the board on February 24, 2009, based on assumptions adopted by
the board on May 13, 2008. For disability retirements based on an
effective date of retirement that is first effective prior to September
30, 2009, the previously adopted factors apply.
[Figure: 34 TAC §73.21(e)]
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 April 6, 2009.
TRD-200901344
Paula A. Jones
General Counsel and Chief Compliance Officer
Employees Retirement System of Texas
Earliest possible date of adoption: May 17, 2009
For further information, please call: (512) 867-7416
The Employees Retirement System of Texas (ERS) proposes amendments to 34 TAC §§77.1, 77.11 and 77.21, concerning Judicial Retirement.
An experience study conducted by the ERS actuary for pension matters resulted in recommended changes to assumptions that were approved by the ERS Board of Trustees (Board) at the May 13, 2008 meeting. Actuarial tables and reduction factors were prepared using the new assumptions, and these tables and factors were approved by the Board at the February 24, 2009 meeting. These sections of the ERS rules are amended to update the rules for the various changes to actuarial tables and reduction factors relating to the experience study and that have been approved by the Board.
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, are being amended to reflect new assumptions based on the recent actuarial experience study and new actuarial tables and reduction factors calculated on those assumptions.
Ms. Paula A. Jones, General Counsel and Chief Compliance Officer, 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.
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 simplified administration for the ERS defined benefit plans, to improve the accuracy of calculations and computations related to retirement benefits, and to make the rules conform to the Board's approved reduction factors, reserve factors, and actuarial tables for retirement. There are no known anticipated costs to persons who are required to comply with the rules as proposed, and, to her knowledge, small businesses should not be affected.
Comments on the proposed rule amendments may be submitted to Paula A. Jones, General Counsel and Chief Compliance Officer, 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 Monday, May 18, 2009, at 10:00 a.m.
The amendments are proposed under the Texas Government Code §§835.002, 840.002, and 840.005 which provide authorization for the ERS Board of Trustees to adopt mortality, service and other tables and factors necessary for the retirement system and to adopt rules for the retirement 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. The reduction factors that apply to deaths of members prior to age 65 and that occur on or after September 1, 2009, are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. For deaths occurring prior to September 1, 2009, the previously adopted factors 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 [sex]
of the member and of the beneficiary [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 beneficiaries [
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%.
(3) The reduction factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008, for optional forms of retirement annuities are independent of the gender of the member and the beneficiary and apply to retirements effective on or after September 30, 2009. For retirements first effective prior to September 1, 2009, the previously adopted factors apply.
(4) [(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. The 2009 reduction factors
for [All] optional annuities for service retirement,
disability retirement, and death benefit plans under the JRS-I and
JRS-II plans apply to retirements first effective on or after September
1, 2009, and are those factors adopted by the board on February 24,
2009, based on assumptions adopted by the board on May 13, 2008. For
retirements first effective prior to September 1, 2009, the previously
adopted factors apply. [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. The reduction [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. The reduction factors that apply to deaths of members prior to age 65 and that occur on or after September 1, 2009, are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. For deaths occurring prior to September 1, 2009, the previously adopted factors 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. The reserve factors apply to periods beginning on or after September 1, 2009, and are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. For periods occurring prior to September 1, 2009, the previously adopted factors 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
title (relating to Payments To Establish or Reestablish Service Credit)
[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. The 2009 additional service credit
tables apply to service purchase calculations performed on or after
September 1, 2009, and are those tables adopted by the board on February
24, 2009, based on assumptions adopted by the board on May 13, 2008.
For service purchase calculations performed prior to September 1,
2009, the previously adopted tables 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 April 6, 2009.
TRD-200901345
Paula A. Jones
General Counsel and Chief Compliance Officer
Employees Retirement System of Texas
Earliest possible date of adoption: May 17, 2009
For further information, please call: (512) 867-7416