TITLE 34. PUBLIC FINANCE

PART 4. EMPLOYEES RETIREMENT SYSTEM OF TEXAS

CHAPTER 67. HEARINGS ON DISPUTED CLAIMS

34 TAC §67.201

The Employees Retirement System of Texas (ERS) proposes amendments to 34 Texas Administrative Code (TAC) Chapter 67, concerning Hearings on Disputed Claims, by amending §67.201 (Procedures Governing Bid Protests).

ERS is a constitutional trust fund established as set forth in Article XVI, §67, Texas Constitution, and further organized pursuant to Title 8, Tex. Gov't Code, as well as 34 Texas Administrative Code, §§61.1 et seq.

Amendments are proposed for §67.201 in order to clarify the rule and its interaction with other rules and statutes, to remove the requirement that copies of bid protests be sent to interested parties, and to enhance public understanding of the rule.

GOVERNMENT GROWTH IMPACT STATEMENT

ERS has determined that during the first five-year period the amended rules will be in effect:

(1) the proposed amendments will not create or eliminate a government program;

(2) implementation of the proposed amendments will not require the creation of new employee positions or eliminate existing employee positions;

(3) implementation of the proposed amendments will not require an increase or decrease in future legislative appropriations to the agency;

(4) the proposed amendments will not require an increase or decrease in fees paid to the agency;

(5) the proposed amendments will not create a new rule or regulation;

(6) the proposed amendments will not expand, limit, or repeal an existing rule or regulation;

(7) the proposed amendments will not increase or decrease the number of individuals subject to the rules' applicability; and

(8) the proposed amendments will not positively or adversely affect the state's economy.

Gabrielle Schreiber, Director of Procurement and Contract Oversight, has determined that for the first five-year period the rules are in effect, there will be no fiscal implication for state or local government or local economies as a result of enforcing or administering the rules; and small businesses, micro-businesses, and rural communities will not be affected.

The proposed amendments to the rules reflect clarifications of the intent of the rules and their interaction with other rules and statutes. The proposed amendments do not constitute a taking. Ms. Schreiber has also determined that, to her knowledge, there are no known anticipated economic effects to persons who are required to comply with the rules as proposed, and the proposed amendments do not impose a cost on regulated persons.

Ms. Schreiber also determined that for each year of the first five years the rules are in effect, the public benefit anticipated as a result of adopting and complying with the rules would be to clarify public understanding of the agency's administration of the rules.

Comments on the proposed amendments may be submitted to Cynthia C. Hamilton, General Counsel, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or you may email Ms. Hamilton at General.Counsel@ers.texas.gov. The deadline for receiving comments is March 3, 2025, at 10:00 a.m.

The amendments are proposed under Tex. Gov't Code §815.102, which provides authorization for the ERS Board of Trustees to adopt rules necessary for the administration of the funds of the retirement system and regarding the transaction of any other business of the Board.

No other statutes are affected by the proposed amendments.

§67.201.Procedures Governing Bid Protests.

(a) A vendor who is aggrieved by the solicitation, evaluation, or award of a contract [by ERS, hereinafter referred to as the Protesting Party,] may file a formal written protest with the Director of Procurement and Contract Oversight. [of ERS. Such protests must be in writing and received in the Office of Procurement and Contract Oversight within the time stated in subsection (d) of this section.] Formal protests must conform to the requirements of this subsection, subsections [subsection] (c) and [, subsection] (d), and, when applicable, subsection (e) of this section, and shall be resolved in accordance with [the procedure set forth in] subsections (f) - (h) [(m)] of this section. [Copies of the protest must be mailed or delivered by the Protesting Party to ERS and other Interested Parties. For the purposes of this section, "Interested Parties" means all vendors who have submitted bids or proposals for the applicable contract.] A [The] protest must be emailed or mailed as specified on the ERS website or hand delivered to ERS during regular business hours. [Interested Parties contemporaneously with filing the protest with the Director of Procurement and Contract Oversight of ERS.]

(b) If the Executive Director determines that the award of a contract without delay is necessary to protect the best interests of ERS, the agency may proceed with the award despite a timely protest.

[(b) In the event of a timely protest or appeal under this section, ERS shall not proceed further with the solicitation or with the award of the contract unless the Executive Director of ERS makes a determination that the award of the contract or implementation of the contract without delay are necessary to protect the best interests of ERS.]

(c) A formal protest must be sworn and [, under the penalties of perjury,] contain:

(1) a list [specific identification] of every [the] statutory and [or] regulatory provision [provision(s)] that [the action complained of] is alleged to have been violated;

(2) a specific description of every [each] act that is alleged to have violated the listed statutory and [or] regulatory provisions [provision(s) identified in paragraph (1) of this subsection];

(3) a precise statement of [the] relevant facts;

(4) a precise statement [an identification ] of every [the] issue of law and fact that the protesting party contends must [or issues to] be resolved; and

(5) argument and authorities in support of the protest.

(d) To be considered timely, the protest must be received [filed]:

(1) by the last day [end] of the posted solicitation period, if the protest concerns the solicitation [documents or actions associated with the publication of solicitation documents]; [or]

(2) by the day of the contract award, if the protest concerns the evaluation; or

(3) [(2)] no later than 10 business [calendar] days after the date that ERS issued notice of award, if the protest concerns the award.

(e) If a protest is not resolved by mutual agreement, the Director of Procurement and Contract Oversight shall issue a written determination.

[(e) If ERS determines that it may need to utilize the services of an actuary, consultant, or another professional (Professional Services) in its efforts to resolve the protest, the Protesting Party shall be required to post a bond in an amount no less than the estimated cost to ERS for such Professional Services. The amount of the bond shall be determined in the sole discretion of ERS. The Protesting Party shall post the bond within five calendar days of notice from ERS that such bond is required or shall be deemed to have waived the right to protest.]

[(1) If such Professional Services are utilized by ERS and the bid protest is not finally resolved in favor of the Protesting Party, the Protesting Party shall be required to forfeit its bond.]

[(2) If such Professional Services are not utilized by ERS and/or the bid protest is finally resolved in favor of the Protesting Party, the Protesting Party's bond shall be returned to the Protesting Party after final resolution of the bid protest.]

(f) A protesting party may submit a written appeal of a protest determination to the Deputy Executive Director. An appeal must be emailed or mailed as specified on the ERS website or hand delivered to ERS during regular business hours and must be received by ERS no later than 10 business days after the date that ERS issued notice of the determination. Any appeal shall be limited to the matters timely raised in writing in the formal protest.

[(f) The Director of Procurement and Contract Oversight of ERS may accept written responses to the protest from Interested Parties and ERS staff.]

[(g) The Director of Procurement and Contract Oversight of ERS may confer with the General Counsel of ERS in his/her review of the protest.]

[(h) The Director of Procurement and Contract Oversight of ERS shall have the authority to settle and resolve the protest.]

[(i) If the protest is not resolved by mutual agreement, the Director of Procurement and Contract Oversight of ERS will issue a written determination on the protest.]

[(1) If the Director of Procurement and Contract Oversight of ERS determines that no violation of rules or statutes has occurred, he/she shall so inform the Protesting Party and Interested Parties by letter that sets forth the reasons for the determination.]

[(2) If the Director of Procurement and Contract Oversight of ERS determines that a violation of the rules or statutes has occurred in a case where a contract has not been awarded, he/she shall so inform the Protesting Party and Interested Parties by letter which sets forth the reasons for the determination and the appropriate remedial action.]

[(j) The determination of a protest by the Director of Procurement and Contract Oversight may be appealed by the Protesting Party to the Deputy Executive Director of ERS. An appeal of the determination by the Director of Procurement and Contract Oversight of ERS must be in writing and must be received in the office of the Deputy Executive Director of ERS no later than 10 calendar days after the date of the determination by the Director of Procurement and Contract Oversight. The appeal shall be limited to the review of the determination by the Director of Procurement and Contract Oversight. Copies of the appeal must be mailed or delivered by the Protesting Party to ERS and Interested Parties contemporaneously with filing the appeal to the Deputy Executive Director of ERS. The appeal must contain a certified statement that such copies have been served on all parties as required by this subsection.]

[(k) The Deputy Executive Director of ERS may confer with the General Counsel of ERS in his/her review of the matter appealed.]

(g) [(l)] An untimely appeal [that is not filed timely] shall not be considered unless the appealing party demonstrates good cause for the untimeliness. [delay is shown. The Deputy Executive Director shall determine if good cause exists.] "Good Cause" [Good Cause] means that a person's failure to act was not because of a lack of due diligence the exercise of which would have caused a reasonable person to take prompt and timely action. A failure to act based on ignorance of the law or facts reasonably discoverable through the exercise of due diligence does not constitute good cause.

(h) A protesting party may appeal a protest determination only to the Deputy Executive Director, and the determination of the Deputy Executive Director shall not be subject to further appeal or judicial review.

[(m) A decision issued in writing by the Deputy Executive Director of ERS shall be the final administrative action of ERS, and no further appeal shall be permitted.]

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 17, 2025.

TRD-202500149

Cynthia Hamilton

General Counsel and Chief Compliance Officer

Employees Retirement System of Texas

Earliest possible date of adoption: March 2, 2025

For further information, please call: (877) 275-4377

CHAPTER 73. BENEFITS

34 TAC §73.21, §73.22

The Employees Retirement System of Texas (ERS) proposes amendments to 34 Texas Administrative Code (TAC) Chapter 73, concerning Benefits, by amending §73.21 (Reduction Factor for Age and Retirement Option) and adding new §73.22 (Increasing Annuity Option).

ERS is a constitutional trust fund established as set forth in Article XVI, §67, Texas Constitution, and further organized pursuant to Title 8, Tex. Gov't Code, as well as 34 Texas Administrative Code, §§61.1 et seq.

Amendments are proposed for §73.21 in order to clarify that the tables described in the rule continue to govern benefits payable after August 31, 2022. New §73.22 is proposed to clarify how ERS will administer the new increasing annuity option described in Tex. Gov't Code §814.110 for ERS retirees and their designated beneficiaries.

GOVERNMENT GROWTH IMPACT STATEMENT

ERS has determined that during the first five-year period the amended and new rules will be in effect:

(1) the proposed rules will not create or eliminate a government program;

(2) implementation of the proposed rules will not require the creation of new employee positions or eliminate existing employee positions;

(3) implementation of the proposed rules will not require an increase or decrease in future legislative appropriations to the agency;

(4) the proposed rules will not require an increase or decrease in fees paid to the agency;

(5) the proposed rules will not create a new rule or regulation;

(6) the proposed rules will not expand, limit, or repeal an existing rule or regulation;

(7) the proposed rules will not increase or decrease the number of individuals subject to the rules' applicability; and

(8) the proposed rules will not positively or adversely affect the state's economy.

Robin Hardaway, Director of Customer Benefits, has determined that for the first five-year period the rules are in effect, there will be no fiscal implication for state or local government or local economies as a result of enforcing or administering the rules; and small businesses, micro-businesses, and rural communities will not be affected.

The proposed amendments and new rules reflect clarification of the intent of the rules and their interaction with other rules and statutes. They also provide for the implementation of the new increasing annuity option described in Tex. Gov't Code §814.110. The proposed amendments and new rule do not constitute a taking. Ms. Hardaway has also determined that, to her knowledge, there are no known anticipated economic effects to persons who are required to comply with the rules as proposed, and the proposed amendments and new rule do not impose a cost on regulated persons.

Ms. Hardaway also determined that for each year of the first five years the rules are in effect, the public benefit anticipated as a result of adopting and complying with the rules would be to enhance public understanding of the agency's administration of the rules and related statutory provisions.

Comments regarding the proposed amendments and new rule may be submitted to Cynthia Canfield Hamilton, General Counsel, Employees Retirement System of Texas, P.O. Box 13207, Austin, Texas 78711-3207, or you may email Ms. Hamilton at General.Counsel@ers.texas.gov . The deadline for receiving comments is March 3, 2025, at 10:00 a.m.

The amendments and new rule are proposed under Tex. Gov't Code §814.110, which authorizes the ERS Board of Trustees to adopt rules for the implementation of the new increasing annuity option; 815.105, which requires the Board to adopt mortality, service, and other tables based on actuarial reports; and Tex. Gov't Code §815.102, which authorizes the Board to adopt rules necessary for the administration of the funds of the retirement system and regarding the transaction of any other business of the Board.

No other statutes are affected by the proposed amendments.

§73.21.Reduction Factor for Age and Retirement Option.

(a) Actuarial assumptions, mortality tables, and reduction factors used for calculation of benefits first payable on or after September 1, 2018, [but prior to September 1, 2022,] are those adopted by the board, as adjusted from time to time as required by Tex. Gov't Code §815.105, and apply to forms and effective dates of annuities specified by the board.

(b) The 1999 reduction factors for optional forms of retirement annuities apply to retirements effective on or after September 30, 1999, but prior to September 30, 2009, and are those factors adopted by the board on December 8, 1999, based on assumptions adopted by the board on December 9, 1998. The 1999 reduction factors apply to annuities first payable between January 1, 2000, and August 31, 2009. The 2009 reduction factors for optional forms of retirement annuities apply to retirements effective on or after September 30, 2009, but prior to September 1, 2014, and are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. The 2014 reduction factors for optional forms of retirement annuities apply to retirements effective on or after September 1, 2014, but prior to September 1, 2018, and are those factors adopted by the board on February 25, 2014, based on assumptions adopted by the board on February 26, 2013, and further based on legislative changes to the retirement plan effective September 1, 2013.

(c) The actuaries have developed reduction factors for early retirement or death in accordance with the mortality tables adopted by the board. The 2009 reduction factors for early retirement or death apply to retirements effective on or after September 30, 2009, but prior to September 1, 2010, and apply to deaths first reported to ERS on or after September 1, 2009, but prior to September 1, 2010, and are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. The 2010 reduction factors for early retirement or death apply only to those employees hired by the state of Texas on or after September 1, 2009, as defined in §73.2 of this chapter. The 2010 reduction factors apply to retirements effective on or after September 30, 2010, but prior to September 1, 2014, and apply to deaths first reported to ERS on or after September 1, 2010, but prior to September 1, 2014, and are those factors adopted by the board on February 23, 2010, based on legislative changes to the retirement plan effective September 1, 2009. The 2014 reduction factors for early retirement or death apply to retirements effective on or after September 1, 2014, but prior to September 1, 2018, and deaths first reported to ERS on or after September 1, 2014, but prior to September 1, 2018, and are those tables adopted by the board on February 25, 2014, based on assumptions adopted by the board on February 26, 2013, and on legislative changes to the retirement plan effective September 1, 2013.

(d) The 2000 reduction factors for the partial lump sum option apply to retirements effective on or after January 1, 2000, but prior to September 1, 2009, and are those factors adopted by the board on December 8, 1999, based on assumptions adopted by the board on December 9, 1998. The 2009 reduction factors for the partial lump sum option apply to retirements effective on or after September 30, 2009, but prior to September 1, 2014, and deaths first reported to ERS on or after September 1, 2009, but prior to September 1, 2014, and are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. The 2014 reduction factors for the partial lump sum option apply to retirements effective on or after September 1, 2014, but prior to September 1, 2018, and are those factors adopted by the board on February 25, 2014, based on assumptions adopted by the board on February 26, 2013, and on legislative changes to the retirement plan effective September 1, 2013.

(e) The 2005 reduction factors for standard nonoccupational disability retirements apply to disability retirement applications received by the system on or after September 1, 2005, for retirements effective prior to September 30, 2009, 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 standard nonoccupational disability retirements apply to retirements effective on or after September 30, 2009, but prior to September 30, 2010, and are those factors adopted by the board on February 24, 2009, based on assumptions adopted by the board on May 13, 2008. The 2010 reduction factors for standard nonoccupational disability retirements apply only to those employees hired by the state of Texas on or after September 1, 2009, as defined in §73.2 of this chapter. The 2010 reduction factors for standard nonoccupational disability retirements apply to retirements effective on or after September 30, 2010, but prior to September 1, 2014, and are those factors adopted by the board on February 23, 2010, based on legislative changes to the retirement plan effective September 1, 2009. The 2014 reduction factors for standard nonoccupational disability retirements apply to retirements effective on or after September 1, 2014, but prior to September 1, 2018, and are those factors adopted by the board on February 25, 2014, based on assumptions adopted by the board on February 26, 2013, and on legislative changes to the retirement plan effective September 1, 2013.

§73.22.Increasing Annuity Option.

(a) This section governs the increasing annuity option described in Tex. Gov't Code § 814.110, which is also known as the "self-funded increase option."

(b) If a retiree selected an increasing annuity under Tex. Gov't Code § 814.110 prior to retirement, annuity payments shall increase by two percent (2%) each year, calculated annually on the anniversary of the retiree's original retirement.

(c) If a retiree selected an increasing annuity together with an optional service retirement annuity described by Tex. Gov't Code § 814.108, the retiree shall receive the annual increase for the retiree's lifetime, and upon the retiree's death, the retiree's designated beneficiary shall continue to receive the annual increase during the beneficiary's lifetime.

(d) If a retiree selected an increasing annuity together with an optional service retirement annuity described by Tex. Gov't Code § 814.108 and the retiree's designated beneficiary predeceases the retiree, the system shall recalculate the annuity. The annuity first shall be recalculated in accordance with Tex. Gov't Code § 814.108(d) and then shall be adjusted to account for the annual increase. The recalculated annuity shall be actuarially equivalent to the increasing annuity that the retiree would have received if the retiree had selected only an increasing annuity without the optional service retirement annuity. After the annuity is recalculated, the retiree shall continue to receive an annual increase based on the recalculated amount, in accordance with Tex. Gov't Code § 814.110 and this section, throughout the retiree's lifetime.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 17, 2025.

TRD-202500150

Cynthia Hamilton

General Counsel and Chief Compliance Officer

Employees Retirement System of Texas

Earliest possible date of adoption: March 2, 2025

For further information, please call: (877) 275-4377

CHAPTER 76. CASH BALANCE BENEFIT

The Employees Retirement System of Texas (ERS) proposes amendments to 34 Texas Administrative Code (TAC) Chapter 76, concerning Cash Balance Benefit, by amending §76.1 (Definitions), §76.3 (Proportionate Service Purchases), §76.4 (Optional Retirement Program), §76.5 (Factor Tables), §76.9 (Annual Interest Rate), §76.10 (Gain Sharing Interest Rate), §76.11 (Return of Excess Contributions), and §76.12 (Uniformed Services Employment and Reemployment Rights Act). Additionally, ERS proposes to repeal the following rules in TAC Chapter 76: §76.6 (Optional Cash Balance Retirement Benefits), §76.7 (Change in Annuity Selection), and §76.8 (Partial Lump-Sum Option).

ERS is a constitutional trust fund established as set forth in Article XVI, §67, Texas Constitution, and further organized pursuant to Title 8, Tex. Gov't Code, as well as 34 Texas Administrative Code, §§61.1 et seq.

Sections 76.1, 76.3, 76.4, 76.5, 76.9, 76.10, 76.11, and 76.12 are being amended in order to incorporate changes resulting from the enactment of Tex. Gov't Code Chapter 840A and in order to clarify the intent of the rules and their interaction with other rules and statutes, thus enhancing public understanding.

Sections 76.6, 76.7, and 76.8 are being repealed because the language is superfluous as a result of amendments to Tex. Gov't Code Chapter 820.

GOVERNMENT GROWTH IMPACT STATEMENT

ERS has determined that during the first five-year period the amended rules will be in effect:

(1) the proposed amendments will not create or eliminate a government program;

(2) implementation of the proposed amendments will not require the creation of new employee positions or eliminate existing employee positions;

(3) implementation of the proposed amendments will not require an increase or decrease in future legislative appropriations to the agency;

(4) the proposed amendments will not require an increase or decrease in fees paid to the agency;

(5) the proposed amendments will not create a new rule or regulation;

(6) the proposed amendments will expand existing rule provisions to incorporate statutory amendments and will repeal existing rule provisions that are now superfluous due to statutory amendments;

(7) the proposed amendments will not increase or decrease the number of individuals subject to the rules' applicability; and

(8) the proposed amendments will not positively or adversely affect the state's economy.

Ms. Robin Hardaway, Director of Customer Benefits, has determined that for the first five-year period the amendments are in effect, there will be no fiscal implication for state or local government or local economies as a result of enforcing or administering the amendments; and small businesses, micro-businesses, and rural communities will not be affected.

Ms. Hardaway has determined that the proposed amendments align with the eligibility and benefit standards for individuals participating in the current retirement plans and that the proposed amendments do not constitute a taking. Ms. Hardaway has also determined that, to her knowledge, there are no known anticipated economic effects to persons who are required to comply with the amendments as proposed and the proposed amendments do not impose a cost on regulated persons.

Ms. Hardaway has determined that for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of adopting and complying with the amendments would be that the proposed amendments align the cash balance benefit with statutory amendments and new statutory provisions and the amendments clarify the intent of the rules and their interaction with other rules and statutes, thus enhancing public understanding.

Comments on the proposed amendments may be submitted to Cynthia C. Hamilton, General Counsel, Employees Retirement System of Texas, P. O. Box 13207, Austin, Texas 78711-3207, or you may email Ms. Hamilton at General.Counsel@ers.texas.gov. The deadline for receiving comments is March 3, 2025, at 10:00 a.m.

34 TAC §§76.1, 76.3 - 76.5, 76.9 - 76.12

The amendments are proposed under Tex. Gov't Code §815.102, which authorizes the ERS Board of Trustees to adopt rules necessary for the administration of the funds of the retirement system and regarding the transaction of any other business of the board, and Tex. Gov't Code §820.004 and §840A.004, which authorize the board to adopt rules necessary to implement cash balance retirement benefits.

No other statutes are affected by the proposed amendments.

§76.1.Definitions.

For purposes of this chapter:

(1) "Cash balance benefit" means the retirement benefit established by Tex. Gov't Code Chapter 820 or Chapter 840A.

(2) "Annuitant" means an individual who is receiving a cash balance annuity established by Tex. Gov't Code Chapter 820 or Chapter 840A, including[, but not limited to,] a retiree, a beneficiary [under §76.6 of this chapter], and an alternate payee under a Qualified Domestic Relations Order.

§76.3.Proportionate Service Purchases.

(a) An individual participating in the Proportionate Retirement Program under Tex. Gov't Code Chapter 803 who did not establish and maintain ERS membership prior to September 1, 2022, may purchase previously canceled [established] service credit in an amount equal to withdrawn member contributions but only for the purpose of establishing service credit and making a deposit under Tex. Gov't Code Chapter 820, including Section 820.032(c)(2) regarding eligibility to participate in the State Employees Group Benefits Program. The system shall receive an employer matching contribution for any individual purchasing previously canceled [established] service credit under this section.

(b) Tex. Gov't Code Chapter 840A does not authorize the purchase of service credit previously canceled in the Judicial Retirement System of Texas Plan Two. An individual who is a cash balance group member under Chapter 840A may only purchase service credit previously canceled in another retirement system under Tex. Gov't Code §803.202 or §803.203.

§76.4.Optional Retirement Program.

For the sole purpose of determining eligibility to receive a cash balance retirement annuity under Tex. Gov't Code Chapter 820, the system shall consider service performed as a participant in the optional retirement program under Tex. Gov't Code Chapter 830 as if it were service for which credit is established in the system. Each full or partial month of service shall count as one-twelfth of a year of creditable service.

§76.5.Factor Tables.

The board shall adopt actuarial assumptions, mortality tables, reduction factors, and other factors applicable to cash balance group members and may adjust them from time to time as provided by Tex. Gov't Code §815.105 or §840.005.

§76.9.Annual Interest Rate.

(a) The annual interest rate established by Tex. Gov't Code §820.102 or §840A.103 shall be applied to a cash balance group member's accumulated account balance, adjusted for compounding, at the beginning of each month before any contribution is deposited.

(b) The system shall not recalculate any annuity based on annual interest.

§76.10.Gain Sharing Interest Rate.

(a) Under Tex. Gov't Code §820.103 and §840A.104, the system shall calculate the gain sharing interest rate based on the investment returns of the total combined ERS retirement trust fund as of August 31 of each of the applicable fiscal years, using the Global Investment Performance Standards for calculating and reporting investment performance. The total combined ERS retirement trust fund does not include amounts associated with the State Employees Group Benefits Program or the Texa$aver program.

[(b) Each fiscal year, the system shall apply the gain sharing interest rate as follows:]

[(1) for a cash balance group member, the rate shall be multiplied by the member's accumulated account balance as of the end of the preceding fiscal year;]

[(2) for a cash balance annuitant, the rate shall be multiplied by the amount of the annuitant's cash balance annuity payment as of the end of the preceding fiscal year; and]

[(3) for an annuitant who retired after August 31 but before the application of the gain sharing interest rate, the rate shall be multiplied by the amount of the annuitant's initial cash balance annuity payment.]

(b) [(c)] A person may not receive gain sharing interest as both a cash balance group member and a cash balance annuitant during the same fiscal year.

(c) [(d)] The gain sharing interest rate shall be applied no earlier than December 1.

§76.11.Return of Excess Contributions.

(a) Except as provided by subsection (c) of this section, when a person who receives a cash balance or disability retirement annuity dies, a lump-sum death benefit is payable from the retirement annuity reserve account in the amount, if any, by which the balance in the retiree's individual account [in the employees saving account] at the time of service retirement exceeds the total of annuity payments payable before the retiree's death.

(b) The benefit provided by subsection (a) of this section is payable to a person designated by the retiree at the time of retirement in a signed and witnessed document filed with the system. If a retiree does not designate a beneficiary or if the beneficiary does not survive the retiree, the benefit is payable to the retiree's estate.

(c) A death benefit may not be paid under subsections (a) and (b) of this section if the retiree selected an optional cash balance annuity [under §76.6 of this chapter].

(d) If the person designated as the beneficiary of an optional cash balance annuity, other than one selected under Tex, Gov't Code §820.0535(c)(3). §820.0535(c)(4), §840A.054(c)(3), or §840A.054(c)(4) [§76.6(c)(3) or §76.6(c)(4) of this chapter], predeceases the retiree, a lump-sum death benefit is payable from the retirement annuity reserve account in the amount, if any, by which the balance in the retiree's individual account [in the employees saving account] at the time of service retirement exceeds the sum of annuity payments payable to the retiree before death.

(e) The benefit provided by subsection (d) of this section is payable to the deceased retiree's estate.

(f) If a beneficiary dies while receiving an optional cash balance annuity, other than one selected under Tex, Gov't Code §820.0535(c)(3). §820.0535(c)(4), §840A.054(c)(3), or §840A.054(c)(4) [§76.6(c)(3) or §76.6(c)(4) of this chapter], a lump-sum death benefit is payable from the retirement annuity reserve account in the amount, if any, by which the balance in the retiree's individual account [in the employees saving account] at the time of service retirement exceeds the sum of annuity payments payable to the retiree and the beneficiary before the beneficiary's death.

(g) If a beneficiary dies while receiving a cash balance annuity selected under Tex. Gov't Code §814.302, [as described in §76.6(c)(1) of this chapter, or Tex. Gov't Code] §814.304(a), or §839.302, a lump-sum death benefit is payable from the retirement annuity reserve account in the amount, if any, by which the balance in the member's individual account [in the employees saving account] at the time of death exceeds the sum of annuity payments payable to the beneficiary before the beneficiary's death.

(h) The benefits provided by subsections (f) and (g) of this section are payable to the deceased beneficiary's estate.

(i) A beneficiary designation that names a former spouse as beneficiary is invalid unless the designation is made after the date of the divorce.

§76.12.Uniformed Services Employment and Reemployment Rights Act.

To the extent that the Uniformed Services Employment and Reemployment Rights Act (USERRA) applies to cash balance group [system ] members, a member:

(1) Shall be entitled to contributions, benefits, and credited service for the period of qualified military service to the extent required by USERRA; Internal Revenue Code §414(u); and effective January 1, 2007, Internal Revenue Code §401(a)(37); and

(2) May claim service credit for military service not previously established by paying a contribution for each month of service credit in an amount equal to the greater of:

(A) The amount that the member contributed for the first full month of membership service that is after the member's date of release from active military duty and that is credited in the system; or

(B) $18.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 17, 2025.

TRD-202500153

Cynthia Hamilton

General Counsel and Chief Compliance Officer

Employees Retirement System of Texas

Earliest possible date of adoption: March 2, 2025

For further information, please call: (877) 275-4377

34 TAC §§76.6 - 76.8

The repeals are proposed under Tex. Gov't Code §815.102, which provides authorization for the ERS Board of Trustees to adopt rules necessary for the administration of the funds of the retirement system and regarding the transaction of any other business of the Board, and Tex. Gov't Code §820.004 and §840A.004, which explicitly authorize the board to adopt rules as necessary to implement cash balance retirement benefits and include implied authority to repeal rules as necessary to implement cash balance retirement benefits.

No other statutes are affected by the proposed repeals.

§76.6.Optional Cash Balance Retirement Benefits.

§76.7.Change in Annuity Selection.

§76.8.Partial Lump-Sum Option.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 17, 2025.

TRD-202500154

Cynthia Hamilton

General Counsel and Chief Compliance Officer

Employees Retirement System of Texas

Earliest possible date of adoption: March 2, 2025

For further information, please call: (877) 275-4377