(a) Subject to approval by the state board, the governing
body of a department that elects to participate in the pension system
shall merge into the pension system any existing defined-benefit pension
plan it operates for emergency services personnel.
(b) The pension system actuary shall determine the
prior service costs for active members as of the merger date according
to generally accepted actuarial standards. In the event that the assets
of the merging plan do not cover the prior service costs for active
members, the governing body of the department or the governing body
of the political subdivision associated with the department shall
pay the determined prior service costs for active members not later
than the 10th anniversary of the effective date of merger. Interest
on the prior service costs accrues at the assumed rate of investment
return at the time determination of the prior service costs is made,
except that interest is waived if such governing body completes payment
not later than the first anniversary of the effective date of merger.
(c) The state board shall determine the discount rate
for determining the liability for the monthly benefits which retirees
are being paid on the effective date of the merger and for deferred
monthly benefits for inactive members who, on that date, have a vested
right to a future monthly benefit upon attaining the required age.
Using this discount rate, the pension system actuary shall then determine
the liability for these retirees and inactive members according to
generally accepted actuarial standards. In the event that the assets
of the merging plan do not cover the costs associated with the liability
of monthly benefits of these retirees and inactive members, the governing
body of the department or the governing body of the political subdivision
associated with the department shall pay the determined costs for
such monthly benefits not later than the 10th anniversary of the effective
date of merger. Interest on the costs for monthly benefits for retirees
and inactive members accrues at the assumed rate of investment return
at the time determination of such costs is made, except that interest
is waived if such governing body completes payment not later than
the first anniversary of the effective date of merger.
(d) On the effective date of merger, the participating
department shall transfer, or cause to be transferred, all assets
and liabilities of the former pension plan to the pension system.
The pension system shall commingle the transferred assets with other
assets of the pension system for investment purposes, but the assumption
of such assets, the prior service costs for active members according
to subsection (b) of this section, and the liability for the monthly
benefits of retirees and inactive members according to subsection
(c) of this section, must be determined to be actuarially sound for
the cost-sharing pension system.
(e) The pension system shall begin paying benefits
being paid to retirees by the merging plan on the effective date of
merger in accordance with the merged plan as in effect on the date
of the merger. Prior service costs for active members described in
subsection (b) of this section and monthly benefits of retirees and
inactive members described in subsection (c) of this section granted
as a result of a merger are based on service before the effective
date of merger as if it were performed as a member of the pension
system, subject to the requirements of Section 66, Article XVI, Texas
Constitution.
(f) Prior service credit may not be purchased under §306.1
of this title (relating to Prior Service Credit for Members of Participating
Departments) for any service that is credited under the terms of a
merger agreement.
(g) The payment terms associated with the prior service
costs for active members and the liabilities for monthly benefits
of retirees and inactive members as described in subsections (b) and
(c) of this section respectively, and the details of how the assets
of the merging plan will be allocated among such costs and liabilities
and any future monthly contributions, if applicable, must be described
in the merger agreement between the participating department and the
pension system.
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Source Note: The provisions of this §306.2 adopted to be effective January 12, 2012, 37 TexReg 67; amended to be effective August 31, 2014, 39 TexReg 6868; amended to be effective October 18, 2015, 40 TexReg 7102; amended to be effective December 31, 2019, 44 TexReg 8333 |