Texas Administrative Code › Title 34 - PUBLIC FINANCE › Part 11 - TEXAS EMERGENCY SERVICES RETIREMENT SYSTEM › Chapter 306 - CREDITABLE SERVICE FOR MEMBERS OF THE TEXAS EMERGENCY SERVICES RETIREMENT SYSTEM › Section 306.2 - Merger of Existing Pension Plan into Pension System

Current through Reg. 49, No. 28; July 12, 2024
(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.