CHAPTER 854. BENEFITS - Texas Statutes

GOVERNMENT CODE

TITLE 8. PUBLIC RETIREMENT SYSTEMS

SUBTITLE G. TEXAS MUNICIPAL RETIREMENT SYSTEM

CHAPTER 854. BENEFITS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 854.001. TYPES OF BENEFITS. The types of benefits payable

by the retirement system are:

(1) service retirement benefits;

(2) disability retirement benefits; and

(3) death benefits.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

64.001 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1,

1989.

Sec. 854.002. COMPOSITION OF RETIREMENT ANNUITY. (a) Each

retirement annuity payable under this subtitle consists of a

prior service annuity and a current service annuity.

(b) A prior service annuity is actuarially determined from any

updated service credit or any prior service, special prior

service, or antecedent service credit in effect for a member on

the date of retirement, plus accumulated interest.

(c) A current service annuity is actuarially determined on the

date of a member's retirement from the sum of:

(1) the amount credited to the member's individual account in

the employees saving fund; and

(2) the amount from the municipality accumulation fund equal to

the amount in the member's individual account or a greater amount

authorized by a participating municipality under Section 855.501.

(d) Notwithstanding any other provision of this subtitle,

instead of an annuity, a person will receive from the retirement

system a single payment equal to the sum of the following if on

the date of that person's retirement that sum is $10,000 or less:

(1) any updated service credit or any prior service, special

prior service, or antecedent service credit for that person on

the date of retirement, plus accumulated interest;

(2) the amount credited to the person's individual account in

the employees saving fund; and

(3) the amount from the municipality accumulation fund equal to

the amount in the member's individual account or a greater amount

authorized by a participating municipality under Section 855.501.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1981, 67th Leg., 1st C.S., p. 223, ch. 18,

Sec. 80, eff. Jan. 1, 1982. Renumbered from Vernon's Ann.Civ.St.

Title 110B, Sec. 64.002 and amended by Acts 1989, 71st Leg., ch.

179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1999, 76th Leg.,

ch. 83, Sec. 5, eff. Dec. 31, 1999; Acts 2001, 77th Leg., ch.

121, Sec. 9, eff. Jan. 1, 2002.

Sec. 854.003. EFFECTIVE DATE OF RETIREMENT. (a) Except as

provided by Subsections (b) and (d), the effective date of a

member's service retirement is the date the member designates at

the time the member applies for retirement under Section 854.101,

but the date must be the last day of a calendar month and may not

precede the date the member terminates employment with all

participating municipalities.

(b) If a member dies before retirement and an annuity becomes

payable under Section 854.105, the member is considered to have

retired on the last day of the month immediately preceding the

month in which death occurred, except as provided by Subsection

(e).

(c) Except as provided by Subsections (b) and (d), the effective

date of a member's disability retirement is the date designated

on the application for retirement filed by or for the member as

provided by Section 854.301, but the date must be the last day of

a calendar month and may not precede the date the member

terminates employment with all participating municipalities.

(d) Notwithstanding any other provision of this subtitle, each

distribution of a benefit under this subtitle must be determined

and made in accordance with Section 401(a)(9) of the Internal

Revenue Code of 1986, and its subsequent amendments, including

the minimum incidental death benefit requirements of Section

401(a)(9)(G) of that code. The board of trustees may adopt rules

it determines necessary to comply with the distribution

requirements, including rules under which a person is considered

to have retired as a result of those requirements.

(e) If the person who is eligible to receive an annuity under

Subsection (b) is the member's surviving spouse, the person may

elect, by notifying the retirement system not later than the

180th day after the date of the member's death, to leave the

member's accumulated contributions on deposit with the retirement

system until the date the member would have been eligible for

service retirement. If a surviving spouse makes an election under

this subsection, the deceased member is considered to have

retired on the last day of the month in which the member would

have attained an age for service retirement eligibility. An

election under this subsection is revocable before the payment of

the first annuity payment by filing a written application

approved by the board of trustees to receive the member's

accumulated contributions.

Added by Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff.

Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B,

Sec. 64.003 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1,

eff. Sept. 1, 1989. Amended by Acts 1993, 73rd Leg., ch. 57, Sec.

9, eff. Jan. 1, 1994; Acts 1995, 74th Leg., ch. 514, Sec. 9, eff.

Sept. 1, 1995; Acts 2001, 77th Leg., ch. 121, Sec. 10, eff. Jan.

1, 2002; Acts 2003, 78th Leg., ch. 599, Sec. 10, eff. Jan. 1,

2004.

Sec. 854.004. WHEN ANNUITY IS PAYABLE; CHANGES BEFORE FIRST

PAYMENT. (a) A retiree may change the retiree's choice of

retirement annuity payment plans or the designation of

beneficiary after the retiree's effective date of retirement by

filing written notice with the board of trustees before the later

of the date on which the retirement system makes the first

payment or the date the first annuity payment becomes due. After

the first payment has been made by the retirement system or has

become due, a retiree may not change the annuity payment plan

selected and may not change the designated beneficiary except

under Section 854.006.

(b) For purposes of this section, the term "makes payment"

includes the depositing in the mail of a payment or the crediting

of an account with payment through electronic funds transfer.

(c) An annuity under this subtitle is payable for a period

beginning on the last day of the first month following the month

in which retirement occurs and ending, except as otherwise

provided by this subtitle, on the last day of the month in which

death occurs.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

64.004 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1,

1989. Amended by Acts 1995, 74th Leg., ch. 514, Sec. 10, eff.

Sept. 1, 1995; Acts 1999, 76th Leg., ch. 83, Sec. 6, eff. Dec.

31, 1999.

Sec. 854.005. REDUCTION OF ANNUITY PAYMENTS ON REQUEST. (a) An

annuitant by written request may authorize the retirement system

to cease the annuitant's monthly payment or reduce the

annuitant's monthly payment to an amount specified in the

request. In writing, the annuitant may subsequently request the

retirement system to reinitiate or increase the annuitant's

monthly payment at or to any specified amount that does not

exceed the amount originally payable.

(b) If the retirement system receives a request under Subsection

(a), the director may cause the monthly annuity payment of the

requesting annuitant to be reduced or increased as specified in

the request.

(c) Any amounts by which an annuity is reduced under this

section are forfeited to the retirement system and are not

recoverable by any person.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

64.005 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff.

Sept. 1, 1989. Amended by Acts 1995, 74th Leg., ch. 514, Sec. 11,

eff. Sept. 1, 1995.

Sec. 854.006. CHANGE OF BENEFICIARY OR DIVISION OF BENEFIT FOR

CERTAIN PERSONS RECEIVING MONTHLY BENEFITS. (a) A retiree who

is receiving payments of an annuity for the retiree's life but

with payments to continue if the retiree dies until a determined

number of payments have been made may, with the consent of the

retiree's spouse if there is one, revoke any existing selection

and designation of beneficiary nominated to receive any monthly

payments that may become due under the annuity after the

retiree's death and may select a new beneficiary to whom the

monthly payments are to be made.

(b) A person who, as beneficiary of a deceased retiree, is

receiving monthly payments of any fixed-term annuity described by

Subsection (a) may select and designate a person to whom will be

paid any monthly payments that may be due under the annuity after

the death of the beneficiary making the designation.

(c) Any selection and designation of beneficiary under

Subsection (a) or (b) must be in writing, on forms prescribed by

the board of trustees, and will become effective on filing with

the director.

(d) If a qualified domestic relations order, as that term is

defined by Section 804.001, so provides, the benefit payable to a

retiree who is receiving payments of an annuity for the retiree's

life with payments to continue after the retiree's death until

the death of another person under Section 854.104(c)(1), (2), or

(5) may be divided by the retirement system into two annuities

if:

(1) the person who was designated to receive the continued

payment after the retiree's death is the same person as the

alternate payee;

(2) the domestic relations order specifies that one of the two

annuities is payable over the remaining life of the retiree, with

no payments to be made under that annuity after the death of the

retiree;

(3) the domestic relations order specifies that the annuity

payable to the alternate payee is payable over the remaining life

of that person, with no payments to be made under that annuity

after the death of the alternate payee named in the order; and

(4) the domestic relations order specifies that the portion of

the benefit payable to the alternate payee is stated as a fixed

percentage of the present benefit payable to the retiree, which

percentage may not exceed 50 percent of a benefit provided under

Section 854.104(c)(2) and may not exceed 75 percent of a benefit

provided under Section 854.104(c)(5) .

(e) The division of an annuity under Subsection (d) is effective

when the order is determined by the retirement system to be a

qualified domestic relations order, and the amount of each of the

two annuities shall be computed by the retirement system at that

time, based on tables that have been adopted by the retirement

system and in effect at that time, so that the two annuities are

actuarially equivalent at the time of division to the annuity

being divided.

(f) If a divorce decree or a qualified domestic relations order,

as that term is defined by Section 804.001, so provides, the

benefit payable to a retiree who is receiving payments of an

annuity for the retiree's life with payments to continue after

the retiree's death until the death of another person under

Section 854.104(c)(1), (2), or (5), 854.305(c)(1), (2), or (5),

or 854.410(c)(1), (2), or (5) may be increased to the amount that

would have been payable if the retiree had selected an annuity

payable only during the retiree's lifetime if:

(1) the proceeding in which the decree or order is entered

terminates the marriage between the retiree and the person who

was designated to receive the continued payment after the

retiree's death;

(2) the decree or order awards the retiree all benefits

resulting from the retiree's participation in the retirement

system; and

(3) the decree or order is signed after December 31, 1999.

(g) A decree or order under Subsection (f) applies only to

annuity payments made after the date the retirement system

receives and approves the decree or order as complying with

Subsection (f).

Added by Acts 1991, 72nd Leg., ch. 466, Sec. 3, eff. Aug. 26,

1991. Amended by Acts 1993, 73rd Leg., ch. 57, Sec. 10, 11, eff.

Jan. 1, 1994; Acts 1999, 76th Leg., ch. 83, Sec. 7, eff. Dec. 31,

1999; Acts 2003, 78th Leg., ch. 599, Sec. 11, eff. Jan. 1, 2004.

Sec. 854.007. LIMITATION ON PAYMENT OF BENEFITS. If the amount

of a benefit payment under this subtitle would exceed the

limitations provided by Section 415, Internal Revenue Code of

1986, and its subsequent amendments, and the regulations adopted

under that section, the retirement system shall reduce the amount

of the benefit to comply with that section.

Added by Acts 1993, 73rd Leg., ch. 57, Sec. 12, eff. Jan. 1,

1994. Amended by Acts 1995, 74th Leg., ch. 514, Sec. 12 to 14,

eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 76, Sec. 7, eff.

Sept. 1, 1997; Acts 2001, 77th Leg., ch. 121, Sec. 11, eff. Jan.

1, 2002.

Sec. 854.008. PARTIAL LUMP-SUM DISTRIBUTION ON RETIREMENT. (a)

A member who is eligible for service retirement and who

terminates employment with all participating municipalities may

apply for a partial lump-sum distribution under this section. The

board of trustees may adopt rules to allow the beneficiary of a

deceased member who at the time of death was eligible for service

retirement but had not retired to make the same election that the

member could have made under this section at the time of

retirement.

(b) The amount of a lump-sum distribution under this section may

not exceed three-fourths of the total contributions and

accumulated interest in the member's individual account in the

employees saving fund at the time of the member's retirement.

(c) Subject to the limitation in Subsection (b), the member may

elect to have the lump-sum distribution be equal to the monthly

annuity payments, excluding any distributive benefit payments,

that the member would have received if the member had selected

the standard service retirement annuity described in Section

854.103 over a period of:

(1) 12 months after the effective date of the member's

retirement;

(2) 24 months after the effective date of the member's

retirement; or

(3) 36 months after the effective date of the member's

retirement.

(d) The lump-sum distribution will be made as a single payment,

payable at the same time as the first monthly annuity payment

that is paid to the member.

(e) The amount of the lump-sum distribution will be deducted

from the sum used in computing the member's current service

annuity under Section 854.002(c). If a payment is made under

Section 854.502, the amount of the lump-sum distribution will be

considered to be included in the payments made by reason of the

annuity.

(f) If a benefit payable under this section is subject to a

domestic relations order that the retirement system determines is

qualified under Section 804.003, the alternate payee under that

order may elect to receive a partial lump-sum distribution under

Subsection (g).

(g) The partial lump-sum distribution under Subsection (f) shall

be paid as a single payment, payable at the same time as the

first monthly annuity payment paid to the alternate payee, and

shall be deducted from the sum used in computing the alternate

payee's annuity. The amount of the lump-sum distribution shall be

equal to the monthly payments, excluding any distributive benefit

payments that the alternate payee would otherwise have received,

during the:

(1) 12 months after the effective date of the member's

retirement;

(2) 24 months after the effective date of the member's

retirement; or

(3) 36 months after the effective date of the member's

retirement.

Added by Acts 1997, 75th Leg., ch. 76, Sec. 8, eff. Sept. 1,

1997. Amended by Acts 1999, 76th Leg., ch. 83, Sec. 8, eff. Dec.

31, 1999; Acts 2001, 77th Leg., ch. 121, Sec. 12, eff. Jan. 1,

2002.

SUBCHAPTER B. SERVICE RETIREMENT BENEFITS

Sec. 854.101. APPLICATION FOR SERVICE RETIREMENT. A member may

apply for service retirement by filing a retirement application

with the board of trustees not later than the date specified by

the member for retirement or, if the member has not previously

selected an optional service retirement annuity under Section

854.105, not earlier than the 90th day before that date.

Added by Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff.

Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B,

Sec. 64.101 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1,

eff. Sept. 1, 1989; Acts 2003, 78th Leg., ch. 599, Sec. 12, eff.

Jan. 1, 2004.

Sec. 854.102. ELIGIBILITY FOR SERVICE RETIREMENT ANNUITY. (a)

A member is eligible to retire and receive a service retirement

annuity, if the member:

(1) is at least 60 years old and has at least 15 years of

credited service in the retirement system; or

(2) has at least 28 years of credited service in the retirement

system.

(b) A member is eligible to retire and receive a service

retirement annuity, if the member is at least 50 years old and

has at least 25 years of credited service in the retirement

system performed for one or more municipalities that:

(1) have effective dates of participation in the retirement

system after May 28, 1969; or

(2) have adopted a like provision under Section 854.201 or

854.202.

(c) A member is eligible to retire and receive a service

retirement annuity, if the member is at least 60 years old and

has at least 10 years of credited service in the retirement

system performed for one or more municipalities that either have

an effective date of participation in the retirement system after

August 26, 1979, or have adopted a like provision under Section

854.202.

(d) A member employed by a municipality having an effective date

of participation in the retirement system after May 28, 1969, may

terminate employment and remain eligible to retire and receive a

service retirement annuity at any time after the member attains

an applicable age provided by law for service retirement of

employees of the municipality, if the member has at least 20

years of credited service performed for one or more

municipalities that are either subject to this subsection or have

adopted a like provision under Section 854.201(c).

(e) A member employed by a municipality having an effective date

of participation in the retirement system after August 26, 1979,

may terminate employment and remain eligible to retire and

receive a service retirement annuity at any time after the member

attains an applicable age and service requirement, if the member

has at least 10 years of credited service performed for one or

more municipalities that are either subject to this subsection or

have adopted a like provision under Section 854.202.

(f) A member is eligible to retire and receive a service

retirement annuity if the member has at least 25 years of

credited service in the retirement system performed for one or

more municipalities that have participation dates after September

1, 1987, or that have adopted a like provision under Section

854.202(f).

(g) A member is eligible to retire and receive a service

retirement annuity if the member has at least 20 years of

credited service in the retirement system performed for one or

more municipalities that have adopted a like provision under

Section 854.202(g).

(h) A member is eligible to retire and receive a service

retirement annuity if the member is at least 60 years old and has

at least five years of credited service in the retirement system

that is performed for one or more municipalities to which the

five-year vesting provision under Section 854.205 applies.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1981, 67th Leg., 1st C.S., p. 223, ch. 18,

Sec. 81, eff. Jan. 1, 1982; Acts 1987, 70th Leg., ch. 183, Sec.

7, eff. Aug. 31, 1987. Renumbered from Vernon's Ann.Civ.St. Title

110B, Sec. 64.102 and amended by Acts 1989, 71st Leg., ch. 179,

Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1995, 74th Leg., ch.

514, Sec. 22, eff. Sept. 1, 1995; Acts 1995, 74th Leg., ch. 712,

Sec. 1, eff. Sept. 1, 1995; Acts 2001, 77th Leg., ch. 121, Sec.

13, eff. Jan. 1, 2002.

Sec. 854.103. STANDARD SERVICE RETIREMENT ANNUITY. (a) The

standard service retirement annuity payable under this subtitle

is the sum of a member's prior service annuity and current

service annuity.

(b) A standard service retirement annuity is payable throughout

the life of a retiree.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

64.103 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1,

1989. Amended by Acts 2001, 77th Leg., ch. 121, Sec. 14, eff.

Jan. 1, 2002.

Sec. 854.104. OPTIONAL SERVICE RETIREMENT ANNUITY. (a) Instead

of the standard service retirement annuity payable under Section

854.103, a retiring member may elect to receive an optional

service retirement annuity under this section.

(b) An optional service retirement annuity is payable throughout

the life of the retiree and is actuarially adjusted from the

standard service retirement annuity to its actuarial equivalent

under the option selected under Subsection (c).

(c) An eligible person may select an optional annuity that

provides that:

(1) after the retiree's death, the reduced annuity is payable

throughout the life of a person designated by the retiree;

(2) after the retiree's death, one-half of the reduced annuity

is payable throughout the life of a person designated by the

retiree;

(3) if the retiree dies before 120 monthly annuity payments have

been made, the remainder of the 120 payments are payable to the

retiree's beneficiary or, if one does not exist, to the retiree's

estate;

(4) if the retiree dies before 180 monthly annuity payments have

been made, the remainder of the 180 payments are payable to the

retiree's beneficiary or, if one does not exist, to the retiree's

estate;

(5) after the retiree's death, three-fourths of the reduced

annuity is payable throughout the life of a person designated by

the retiree; or

(6) if the retiree dies before 60 monthly payments have been

made, the remainder of the 60 payments are payable to the

retiree's beneficiary or, if one does not exist, to the retiree's

estate.

(d) An option under Subsection (c) applies to both prior and

current service annuities, except that prior service annuities

are subject to reduction under Section 855.308(f).

(e) To select an optional service retirement annuity, a member

or retiree must make the selection and designate a beneficiary on

a form prescribed by and filed with the board of trustees before

the 31st day after the effective date of retirement.

(f) Notwithstanding any other provision of this subtitle, each

distribution to any person or estate under this subtitle must be

made in accordance with Section 401(a)(9) of the Internal Revenue

Code of 1986 (26 U.S.C. Section 401(a)(9)).

(g) If a person who retires after August 31, 1997, elects a

reduced retirement annuity that is payable until the death of the

last to die of the retiree and a person designated under

Subsection (e), and if the retiree survives the other person, the

monthly payments to the retiree will be increased to the amounts

that would have been payable if the retiree at the time of

retirement had elected to receive an annuity payable only during

the retiree's life, and adjustments had been made for any

applicable postretirement increases in that benefit. The

increased benefit becomes payable the month after the month in

which the person designated under Subsection (e) dies and

continues until the retiree dies.

(h) Subsection (i) applies only to a person who retired before

September 1, 1997, and who elected, at retirement, to receive a

reduced annuity that is payable until the death of the last to

die of the retiree and a person designated as a beneficiary under

Subsection (e).

(i) If both the retiree and the beneficiary described in

Subsection (h) are alive, they may jointly elect in the manner

provided by Subsection (j) to modify the annuity being received.

An annuity modified under this subsection:

(1) begins with the first payment after one calendar month has

passed since the date the form under Subsection (j) is filed,

with the amount of the monthly payments, while the beneficiary is

alive, being the actuarial equivalent of the previous annuity;

and

(2) increases to the amount of the standard service retirement

annuity that the retiree would otherwise be entitled to receive

if the retiree had not selected the optional annuity with

adjustments made for any postretirement increase in that benefit

and becomes payable the month following the month in which the

beneficiary dies and continues until the retiree dies.

(j) To make the election under Subsection (i), the retiree and

beneficiary must execute and acknowledge, as provided by this

subsection, a form stating that they are requesting a

modification under Subsection (i) and that they understand that

the modified annuity will be smaller than the standard service

annuity while they are both living and if the beneficiary

survives the member. The acknowledgment must be on a form

prescribed by the board of trustees and be made before a notary

public or other officer authorized to take acknowledgments. The

retiree and beneficiary must file the executed form with the

retirement system before January 1, 2003.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

64.104 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff.

Sept. 1, 1989. Amended by Acts 1993, 73rd Leg., ch. 57, Sec. 13,

eff. Jan. 1, 1994; Acts 1997, 75th Leg., ch. 76, Sec. 9, eff.

Sept. 1, 1997; Acts 2001, 77th Leg., ch. 121, Sec. 15, eff. Jan.

1, 2002.

Sec. 854.105. SELECTION OF OPTIONAL SERVICE RETIREMENT ANNUITY.

(a) A vested member may, while continuing to perform service for

a participating municipality or after terminating all service,

file with the board of trustees, on a form prescribed by the

board, a selection of an optional service retirement annuity

available under Section 854.104 and a designation of beneficiary

or a designation of beneficiary without selecting a retirement

option. An annuity selected as provided by this section is

payable on the member's death before retirement.

(b) A member may change a selection of an optional annuity or a

designation of beneficiary at any time before the member's

retirement or death in the same manner that the original

selection or designation was made.

(c) If a member eligible under this section to select an

optional service retirement annuity dies before retirement

without having made a selection, the beneficiary designated under

Subsection (a) may select an optional annuity in the same manner

as if the member had made the selection, subject only to the

requirements of the Internal Revenue Code of 1986, and its

subsequent amendments, as to the length of time over which the

payments can be made.

(d) If a beneficiary has not been designated under Subsection

(a), the member's surviving spouse may elect to receive a refund

of the member's accumulated contributions or an optional annuity

in the same manner as if the member had made the selection.

(e) If a beneficiary has not been designated under Subsection

(a) and no surviving spouse exists, the member's surviving

children jointly may elect to receive:

(1) a refund of the member's accumulated contributions; or

(2) an optional annuity in the same manner as if the member had

made the selection, subject only to the requirements of the

Internal Revenue Code of 1986, and its subsequent amendments, as

to the length of time over which the payments can be made.

(f) If there is no surviving spouse or surviving child and no

beneficiary designated under Subsection (a) exists, the last

person designated by the member as a beneficiary on a form filed

with the retirement system may elect to receive:

(1) a refund of the member's accumulated contributions; or

(2) an optional annuity in the same manner as if the member had

made the selection, subject only to the requirements of the

Internal Revenue Code of 1986, and its subsequent amendments, as

to the length of time over which the payments can be made.

(g) If there is not a person who is eligible to make a selection

under Subsections (c)-(f), the executor or administrator of the

member's estate may elect:

(1) for an estate beneficiary to receive the optional annuity

under Section 854.104(c)(4), in which case the member will be

considered to have retired on the last day of the month

immediately preceding the month in which death occurred; or

(2) for the estate to receive a refund of the member's

accumulated contributions under Section 854.501, in which case

the member will be considered to have been a contributing member

at the time of death.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

64.105 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff.

Sept. 1, 1989. Amended by Acts 2001, 77th Leg., ch. 121, Sec. 16,

eff. Jan. 1, 2002.

Sec. 854.106. NO SURVIVING SPOUSE, EXECUTOR, OR ADMINISTRATOR.

(a) If a surviving spouse, or the executor or administrator of a

member's estate, would be entitled to make an election under

Section 854.105 because of the death of the member, the heirs of

the deceased member may make that election if:

(1) no surviving spouse exists;

(2) no petition for the appointment of a personal representative

of the member is pending or has been granted;

(3) 30 days have elapsed since the death of the member;

(4) the value of the entire assets of the member's estate,

excluding homestead and exempt property, does not exceed $50,000;

(5) there are not more than three heirs; and

(6) on file with the retirement system is a certified copy of a

small estates affidavit that has been approved and filed in

accordance with Section 137, Texas Probate Code, or an original

affidavit as described by Subsection (b).

(b) If no affidavit has been filed with the clerk of the court

having jurisdiction and venue as provided by Section 137 of the

Texas Probate Code, the retirement system may accept instead an

affidavit sworn to by two disinterested witnesses, by the heirs

who have legal capacity, and, if the facts warrant, by the

natural guardian or next of kin of any minor or incompetent who

is also an heir. The affidavit shall include the names and

addresses of the heirs and witnesses, establish the facts listed

in Subsection (a), include a list of the assets and liabilities

of the estate, show the facts that constitute the basis for the

right of the heirs to receive the estate, and show the fractional

interests of the heirs in the estate as a result of those facts.

(c) If the retirement system, acting through the director or a

person designated by the director, approves the affidavit, the

heirs can make the election if each heir agrees to the election.

(d) In this section, "heirs" has the meaning assigned by Section

3, Texas Probate Code, except that the term excludes any persons

who have filed with the retirement system a proper disclaimer or

renunciation.

Added by Acts 1995, 74th Leg., ch. 514, Sec. 15, eff. Sept. 1,

1995. Amended by Acts 2001, 77th Leg., ch. 121, Sec. 17, eff.

Jan. 1, 2002.

Sec. 854.107. DESIGNATION OF BENEFICIARY AFTER RETIREMENT UNDER

STRAIGHT LIFE OR GUARANTEED TERM ANNUITY. (a) This section

applies only to a retiree who marries after the date of the

person's retirement and who at the time of retirement selected

either:

(1) a service or disability retirement annuity that would be

payable throughout the retiree's life and would not be paid after

the retiree's death, except as provided by Section 854.502; or

(2) a service or disability retirement annuity that would be

payable throughout the retiree's life and, if the retiree dies

before 60, 120, or 180 monthly annuity payments, as appropriate,

have been made, would be payable for the remainder of those

months.

(b) A retiree described under Subsection (a) may replace the

annuity by selecting an optional retirement annuity under Section

854.104(c)(1), (2), or (5) and by designating the person's spouse

as beneficiary in the same manner as an annuity selection and

designation of beneficiary may be made before retirement.

(c) The selection under Subsection (b) must be filed with the

retirement system before the first anniversary of the date of the

marriage unless the postretirement marriage occurred before

January 1, 2002, in which case the selection must be filed with

the retirement system before January 1, 2003.

(d) A person may make a postretirement designation of a

beneficiary under this section only once.

(e) The retirement system shall adjust the monthly payments of

the annuity under the option selected to an actuarial equivalent

amount of the annuity being paid immediately before the change in

benefit option and beneficiary selection.

(f) The selection of an optional annuity and designation of a

beneficiary under this section is not effective if the retiree or

beneficiary dies before the date the change is to take effect.

Added by Acts 2001, 77th Leg., ch. 121, Sec. 18, eff. Jan. 1,

2002.

Sec. 854.108. DESIGNATION OF BENEFICIARY AFTER RETIREMENT UNDER

JOINT AND SURVIVOR ANNUITY. (a) This section applies only to a

retiree who:

(1) at the time of retirement selected an optional annuity

providing that, after the retiree's death, payments would be made

to a beneficiary throughout the remaining life of the beneficiary

and the beneficiary predeceases the retiree;

(2) marries after the date of the person's retirement; and

(3) has not previously replaced an annuity under this section.

(b) A retiree described by Subsection (a) may replace an annuity

by selecting an optional annuity under Section 854.104(c)(1),

(2), or (5) and designating the person's spouse as beneficiary in

the same manner as an annuity selection and designation of

beneficiary may be made before retirement.

(c) The selection under Subsection (b) must be filed with the

retirement system before the first anniversary of the date of the

marriage unless the postretirement marriage occurred before

January 1, 2002, in which case the selection must be filed with

the retirement system before January 1, 2003.

(d) The retirement system shall adjust the monthly payments of

the annuity under the option selected to an actuarial equivalent

amount of the annuity being paid immediately before the change in

benefit option and beneficiary selection.

(e) The selection of an optional annuity and designation of a

beneficiary under this section is not effective if the retiree or

beneficiary dies before the date the change is to take effect.

Added by Acts 2001, 77th Leg., ch. 121, Sec. 18, eff. Jan. 1,

2002.

SUBCHAPTER C. OPTIONAL SERVICE RETIREMENT BENEFITS

Sec. 854.201. OPTIONAL SERVICE RETIREMENT ELIGIBILITY. (a) The

governing body of a municipality having an effective date of

participation in the retirement system before May 29, 1969, by

ordinance may authorize eligibility for a service retirement

annuity as provided by this section.

(b) The governing body may authorize a member who is an employee

of the municipality to be eligible for service retirement who is

at least 50 years old and has at least 25 years of credited

service performed for one or more municipalities that either have

authorized eligibility under this section or are subject to

Section 854.102(d), or to terminate employment and remain

eligible to retire and receive a service retirement annuity at

any time after the member attains an applicable age provided by

law for service retirement of employees of the municipality, if

the member has at least 20 years of credited service performed

for one or more municipalities that either have authorized

eligibility under this section or are subject to Section

854.102(d).

(c) A governing body may not adopt an ordinance under this

section unless the actuary first determines that all obligations

charged against the municipality's account in the municipality

accumulation fund, including the obligations proposed in the

ordinance, can be funded by the municipality within its maximum

contribution rate and within its amortization period.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1981, 67th Leg., 1st C.S., p. 224, ch. 18,

Sec. 82, eff. Jan. 1, 1982. Renumbered from Vernon's Ann.Civ.St.

Title 110B, Sec. 64.201 and amended by Acts 1989, 71st Leg., ch.

179, Sec. 1, eff. Sept. 1, 1989.

Sec. 854.202. ADDITIONAL OPTIONAL SERVICE RETIREMENT

ELIGIBILITY. (a) The governing body of a municipality that has

an effective date of participation in the retirement system after

December 31, 1975, or that has previously authorized updated

service credits, by ordinance may authorize eligibility for a

service retirement annuity as provided by this section for a

member who is or was an employee of any participating department

of the municipality.

(b) The governing body may authorize a member to retire and

receive a service retirement annuity, if the member:

(1) is at least 50 years old and has at least 25 years of

credited service performed for one or more municipalities that

have authorized eligibility under this subdivision; or

(2) is at least 60 years old and has at least 10 years of

credited service performed for one or more municipalities that

either have authorized eligibility under this subdivision or have

a participation date in the retirement system after August 26,

1979.

(c) The governing body may authorize a member who is or was an

employee of the municipality to terminate employment and remain

eligible to retire and receive a service retirement annuity at

any time after the member attains an applicable age and service

requirement, if the member has at least 10 years of credited

service performed for one or more municipalities that either have

authorized eligibility under this subsection or are subject to

Section 854.102(e).

(d) An ordinance adopted under this section must also include

the provisions specified in Section 852.105. A governing body may

not adopt an ordinance under this section unless the actuary

first determines, on the basis of mortality and other tables

adopted by the board of trustees, that all obligations of the

municipality to the municipality accumulation fund, including

obligations proposed under the ordinance, can be funded by the

municipality within its maximum contribution rate and within its

amortization period.

(e) The governing body shall specify the effective date of an

ordinance under this section, which may be the first day of any

month after the month in which the actuary makes the

determination required by Subsection (d).

(f) The governing body may authorize a member to retire and

receive a service retirement benefit if the member has at least

25 years of credited service performed for one or more

municipalities that either have authorized eligibility under this

subdivision or have a participation date in the retirement system

after September 1, 1987.

(g) The governing body may authorize a member to retire and

receive a service retirement benefit if the member has at least

20 years of credited service performed for one or more

municipalities that have authorized eligibility under this

subsection.

(h) Before a governing body may elect to authorize a member to

retire pursuant to Subsection (g), the governing body shall:

(1) prepare an actuarial analysis of member retirement annuities

at 20 years of service; and

(2) hold a public hearing.

(i) The public hearing required under Subsection (h) shall be

held pursuant to the notice provisions of the Texas Open Meetings

Act, Chapter 551, Texas Government Code.

(j) A member is eligible to retire and receive a service

retirement annuity if the member:

(1) is at least 60 years of age; and

(2) has at least five years of credited service performed for

one or more municipalities to which the five-year vesting

provision under Section 854.205 applies.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1981, 67th Leg., 1st C.S., p. 224, ch. 18,

Sec. 83, 84, eff. Jan. 1, 1982; Acts 1987, 70th Leg., ch. 183,

Sec. 8, eff. Aug. 31, 1987. Renumbered from Vernon's Ann.Civ.St.

Title 110B, Sec. 64.202 and amended by Acts 1989, 71st Leg., ch.

179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1995, 74th Leg.,

ch. 514, Sec. 23, eff. Sept. 1, 1995; Acts 1995, 74th Leg., ch.

712, Sec. 2, 3, eff. Sept. 1, 1995; Acts 2001, 77th Leg., ch.

121, Sec. 19, eff. Jan. 1, 2002.

Sec. 854.203. OPTIONAL INCREASE IN RETIREMENT ANNUITIES. (a)

The governing body of a participating municipality by ordinance,

from time to time but not more frequently than once in each

12-month period, may authorize and provide for increased

annuities to be paid to retirees and beneficiaries of deceased

retirees of the municipality. An annuity increased under this

section replaces any annuity or increased annuity previously

granted to the same person.

(b) The amount of annuity increase under this section is

computed as the sum of the prior and current service annuities on

the effective date of retirement of the person on whose service

the annuities are based, multiplied by:

(1) the percentage change in the Consumer Price Index for All

Urban Consumers, published by the Bureau of Labor Statistics of

the United States Department of Labor, from December of the year

immediately preceding the effective date of the person's

retirement to the December that is 13 months before the effective

date of the ordinance providing the increase; and

(2) 30 percent, 50 percent, or 70 percent, as specified by the

governing body in the ordinance, except that if the governing

body has specified a different percentage in an ordinance adopted

under Section 853.404(c) and in effect on December 31, 1999, the

percentage used in computing annuity increases for retirees of

that municipality remains in effect until changed or discontinued

under Section 853.404.

(c) Except as provided by Subsection (g), the effective date of

an ordinance under this section is January 1 of the year that

begins after the year in which the governing body adopts and

notifies the retirement system of the ordinance.

(d) An increase in an annuity that was reduced because of an

option selection is reducible in the same proportion and in the

same manner that the original annuity was reduced.

(e) If a computation under Subsection (b) does not result in an

increase in the amount of an annuity, the amount of the annuity

may not be changed under this section.

(f) The amount by which an increase under this section exceeds

all previously granted increases to an annuitant is payable as a

prior service annuity, is an obligation of the municipality's

account in the municipality accumulation fund, and is subject to

reduction under Section 855.308(f).

(g) An ordinance under this section may not take effect until it

is approved by the board of trustees as meeting the requirements

of this section. The board may not approve an ordinance unless

the actuary first determines that all obligations charged against

the municipality's account in the municipality accumulation fund,

including the obligations proposed in the ordinance, can be

funded by the municipality within its maximum contribution rate

and within its amortization period as in effect on the effective

date of the increases.

(h) A governing body may not authorize and provide for annuity

increases under this section unless it simultaneously provides

for updated service credits under Subchapter E of Chapter 853.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1981, 67th Leg., 1st C.S., p. 225, ch. 18,

Sec. 85, eff. Jan. 1, 1982. Renumbered from Vernon's Ann.Civ.St.

Title 110B, Sec. 64.203 and amended by Acts 1989, 71st Leg., ch.

179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1997, 75th Leg.,

ch. 76, Sec. 10, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch.

83, Sec. 9, eff. Dec. 31, 1999.

Sec. 854.205. FIVE-YEAR VESTING. (a) This section applies to

each municipality unless the municipality's governing board files

with the board of trustees before December 31, 2001, an election

to not provide for five-year vesting. A governing board that

elects to not provide five-year vesting may revoke that election

by sending notice to the board of trustees to provide for

five-year vesting.

(b) After December 31, 2001, a member may terminate covered

employment and remain eligible to retire and receive a service

retirement annuity at any time after the member attains an

applicable age as provided by law if the member has at least five

years of credited service performed for one or more

municipalities to which the five-year vesting provision under

this section applies.

Added by Acts 2001, 77th Leg., ch. 121, Sec. 20, eff. Sept. 1,

2001.

SUBCHAPTER D. DISABILITY RETIREMENT BENEFITS

Sec. 854.301. APPLICATION FOR DISABILITY RETIREMENT ANNUITY.

(a) A member may apply for a disability retirement annuity by:

(1) filing an application for retirement with the board of

trustees; or

(2) having an application filed with the board by the member's

employer or legal representative.

(b) An application for a disability retirement annuity may not

be filed later than the date specified by the member for

retirement or earlier than the 90th day before that date.

(c) An applicant must submit to medical examination as required

by the medical board.

Added by Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff.

Sept. 1, 1981. Renumbered from Vernon's Ann.Civ.St. Title 110B,

Sec. 64.301 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept.

1, 1989. Amended by Acts 2003, 78th Leg., ch. 599, Sec. 13, eff.

Jan. 1, 2004.

Sec. 854.302. ELIGIBILITY FOR DISABILITY RETIREMENT ANNUITY.

(a) A member who has less than 10 years of credited service in

the retirement system is eligible to retire and receive a

disability retirement annuity if the member is the subject of a

certification issued as provided by Section 854.303(b)(1).

(b) A member who has at least 10 years of credited service in

the retirement system is eligible to retire and receive a

disability retirement annuity if the member is the subject of a

certification issued as provided by Section 854.303(b)(2). A

member eligible to retire and receive a disability retirement

annuity under this subsection may elect to retire and receive

instead a service retirement benefit but may not receive both

types of benefits.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1987, 70th Leg., ch. 183, Sec. 10, eff.

Aug. 31, 1987. Renumbered from Vernon's Ann.Civ.St. Title 110B,

Sec. 64.302 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1,

eff. Sept. 1, 1989. Amended by Acts 1991, 72nd Leg., ch. 466,

Sec. 4, eff. Aug. 26, 1991.

Sec. 854.303. CERTIFICATION OF DISABILITY. (a) As soon as

practicable after an application for disability retirement is

filed, the medical board shall evaluate the medical and other

pertinent information concerning the member's application.

(b) The medical board shall issue a certification of disability

and send it to the board of trustees if the medical board finds:

(1) in the case of a member who has less than 10 years of

credited service in the retirement system, that:

(A) the member is mentally or physically incapacitated for the

further performance of duty;

(B) the incapacity is the direct result of injuries sustained

during membership by external and violent means as a direct and

proximate result of the performance of duty;

(C) the incapacity is likely to be permanent; and

(D) the member should be retired; or

(2) in the case of a member who has at least 10 years of

credited service in the retirement system, that:

(A) the member is mentally or physically incapacitated for the

further performance of duty;

(B) the incapacity is likely to be permanent; and

(C) the member should be retired.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

64.303 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1,

1989. Amended by Acts 1991, 72nd Leg., ch. 466, Sec. 5, eff. Aug.

26, 1991.

Sec. 854.304. STANDARD DISABILITY RETIREMENT ANNUITY. (a) The

standard disability retirement annuity payable under this

subtitle is the sum of a member's prior service annuity and

current service annuity.

(b) A prior service annuity is subject to reduction as provided

by Section 855.308(f).

(c) A standard disability retirement annuity is payable

throughout the life of a retiree. When a retiree who receives an

annuity under this section dies, an additional benefit may be

payable under Section 854.502.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1981, 67th Leg., 1st C.S., p. 226, ch. 18,

Sec. 86, eff. Jan. 1, 1982. Renumbered from Vernon's Ann.Civ.St.

Title 110B, Sec. 64.304 and amended by Acts 1989, 71st Leg., ch.

179, Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1999, 76th Leg.,

ch. 83, Sec. 11, eff. Dec. 31, 1999; Acts 2001, 77th Leg., ch.

121, Sec. 21, eff. Jan. 1, 2002.

Sec. 854.305. OPTIONAL DISABILITY RETIREMENT ANNUITY. (a)

Instead of the standard disability retirement annuity payable

under Section 854.304, a member retiring for disability may elect

to receive an optional disability retirement annuity under this

section.

(b) An optional disability retirement annuity is payable

throughout the life of the retiree and is actuarially adjusted

from the standard disability retirement annuity to its actuarial

equivalent under the option selected under Subsection (c).

(c) An eligible person may select an optional annuity under

Section 854.104(c).

(d) An option under Subsection (c) applies to both prior and

current service annuities, except that prior service annuities

are subject to reduction under Section 855.308(f).

(e) To select an optional disability retirement annuity, a

member or retiree must make the selection and designate a

beneficiary on a form prescribed by and filed with the board of

trustees before the 31st day after the effective date of

retirement.

(f) If a disability retirement annuity is discontinued under

Section 854.308, any selection of an option that applies to the

annuity becomes void.

(g) If a person who retires after August 31, 1997, elects a

reduced retirement annuity that is payable until the death of the

last to die of the retiree and a person designated under

Subsection (e), and if the retiree survives the other person, the

monthly payments to the retiree will be increased to the amounts

that would have been payable if the retiree had elected to

receive an annuity payable only during the retiree's life, and

adjustments had been made for any applicable postretirement

increases in that benefit. The increased benefit becomes payable

the month after the month in which the person designated under

Subsection (e) dies and continues until the retiree dies.

Added by Acts 1981, 67th Leg., 1st C.S., p. 226, ch. 18, Sec. 87,

eff. Jan. 1, 1982. Renumbered from Vernon's Ann.Civ.St. Title

110B, Sec. 64.3041 and amended by Acts 1989, 71st Leg., ch. 179,

Sec. 1, eff. Sept. 1, 1989. Amended by Acts 1997, 75th Leg., ch.

76, Sec. 11, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 83,

Sec. 12, eff. Dec. 31, 1999; Acts 2001, 77th Leg., ch. 121, Sec.

22, eff. Jan. 1, 2002.

Sec. 854.306. MEDICAL EXAMINATION OF DISABILITY RETIREE. (a)

Once each year during the first five years after a person retires

for disability, and once in each three-year period after that,

the board of trustees may require a disability retiree who is

less than 60 years old to undergo a medical examination by one or

more physicians designated by the board.

(b) If a disability retiree refuses to submit to a medical

examination as provided by this section, the board of trustees

shall suspend the retiree's annuity payments until the retiree

submits to an examination. If a retiree has not submitted to an

examination as provided by this section before the first

anniversary of the date of first refusal, the board shall revoke

all rights of the retiree to an annuity.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

64.305 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1,

1989. Amended by Acts 1991, 72nd Leg., ch. 466, Sec. 6, eff. Aug.

26, 1991.

Sec. 854.307. CERTIFICATION OF END OF DISABILITY. (a) If the

medical board finds that a disability retiree is no longer

mentally or physically incapacitated for the performance of duty

or is able to engage in gainful occupation, it shall certify its

findings and submit them to the board of trustees.

(b) If the board of trustees concurs in a certification under

this section, it shall discontinue annuity payments to the

retiree.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1981, 67th Leg., 1st C.S., p. 227, ch. 18,

Sec. 88, eff. Jan. 1, 1982. Renumbered from Vernon's Ann.Civ.St.

Title 110B, Sec. 64.306 by Acts 1989, 71st Leg., ch. 179, Sec. 1,

eff. Sept. 1, 1989.

Sec. 854.308. RETURN OF DISABILITY RETIREE TO ACTIVE SERVICE OR

EMPLOYMENT. (a) If a retiree who is less than 60 years old and

who is receiving a disability retirement annuity resumes

employment with a participating municipality or otherwise becomes

gainfully employed, the person automatically resumes membership

in the retirement system, and the board of trustees shall

terminate the person's annuity payments.

(b) If a person resumes membership under this section, the

retirement system shall restore to effect any prior service

credit, special prior service credit, antecedent service credit,

or updated service credit used in determining the amount of the

person's annuity at the time of disability retirement. If the

person subsequently retires, the retirement system shall allow

the person credit for all current service for which required

contributions have been made and not withdrawn.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1981, 67th Leg., 1st C.S., p. 227, ch. 18,

Sec. 89, eff. Jan. 1, 1982. Renumbered from Vernon's Ann.Civ.St.

Title 110B, Sec. 64.307 by Acts 1989, 71st Leg., ch. 179, Sec. 1,

eff. Sept. 1, 1989.

Sec. 854.309. REFUND AT ANNUITY DISCONTINUANCE. (a) Except as

provided by Subsection (b), if a disability retirement annuity is

discontinued under Section 854.307 or the right to an annuity

revoked under Section 854.306(c), the retiree is entitled to a

lump-sum payment in an amount, if any, by which the amount in the

retiree's individual account in the employees saving fund at the

time of disability retirement exceeds the amount of current

service annuity payments made before the date the annuity was

discontinued or the right to an annuity revoked.

(b) The benefit provided by this section is not payable to a

retiree who resumes employment with a participating subdivision

or otherwise becomes gainfully employed.

(c) The benefit provided by this section is payable from the

current service annuity reserve fund.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1981, 67th Leg., 1st C.S., p. 227, ch. 18,

Sec. 90, eff. Jan. 1, 1982. Renumbered from Vernon's Ann.Civ.St.

Title 110B, Sec. 64.308 and amended by Acts 1989, 71st Leg., ch.

179, Sec. 1, eff. Sept. 1, 1989.

SUBCHAPTER E. OPTIONAL DISABILITY RETIREMENT BENEFITS

Sec. 854.401. ELIGIBILITY FOR SUPPLEMENTAL DISABILITY RETIREMENT

ANNUITY. (a) A member as an employee of a municipal department

included, as provided by Section 852.003, in the coverage of the

supplemental disability benefits fund is eligible to retire and

receive a supplemental disability retirement annuity if the

member:

(1) is eligible to receive a disability retirement annuity under

Section 854.302;

(2) is the subject of a certification and finding under Section

854.402, as well as a certification under the applicable finding

provided by Section 854.303; and

(3) filed an application for the benefits before January 1,

1989.

(b) Any claim for supplemental disability benefits not filed

with the board of trustees before January 1, 1989, is barred.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1987, 70th Leg., ch. 183, Sec. 11, eff.

Aug. 31, 1987. Renumbered from Vernon's Ann.Civ.St. Title 110B,

Sec. 64.401 and amended by Acts 1989, 71st Leg., ch. 179, Sec. 1,

eff. Sept. 1, 1989.

Sec. 854.402. CERTIFICATION AND FINDING OF DISABILITY. (a) The

medical board shall issue and send to the board of trustees a

certification of disability for a member included in the coverage

of the supplemental disability benefits fund if, after a medical

examination of the member, the medical board finds that the

member is mentally or physically incapacitated and is unable to

engage in gainful occupation.

(b) A member is entitled to a supplemental disability retirement

annuity if the board of trustees, after receiving a certification

of disability for the member under this section, finds that the

member's incapacity:

(1) is the direct result of injuries sustained after the

effective date of coverage of the member in the supplemental

disability benefits fund and before January 1, 1988, as a direct

and proximate result of the performance of the duties of the

member's employment; and

(2) is likely to be permanent.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Amended by Acts 1987, 70th Leg., ch. 183, Sec. 12, eff.

Aug. 31, 1987. Renumbered from Vernon's Ann.Civ.St. Title 110B,

Sec. 64.402 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept.

1, 1989.

Sec. 854.403. SUPPLEMENTAL DISABILITY RETIREMENT ANNUITY. (a)

A supplemental disability retirement annuity payable under this

subtitle is an amount that, when added to a member's standard

disability retirement annuity or, if the member is eligible for

service retirement, to the member's standard service retirement

annuity, equals one-half of the member's average monthly

compensation for service as an employee of a participating

department of a municipality:

(1) for the 60 months immediately preceding the month in which

the injury occurred; or

(2) if the member did not perform service in each of the 60

months immediately preceding the month in which the injury

occurred, for the number of months of service within the 60-month

period.

(b) In a computation of average monthly compensation under this

section, compensation is excluded that exceeds the maximum amount

on which the member was required to make contributions to the

retirement system.

Acts 1981, 67th Leg., p. 1876, ch. 453, Sec. 1, eff. Sept. 1,

1981. Renumbered from Vernon's Ann.Civ.St. Title 110B, Sec.

64.403 by Acts 1989, 71st Leg., ch. 179, Sec. 1, eff. Sept. 1,

1989.

Sec. 854.404. CONDITIONS FOR BENEFITS. (a) Supplemental

disability benefits payable from the supplemental disability

benefits fund cease on the death of the disability retiree and

are, except as provided by this subchapter, subject to the same

terms of issuance as are