Texas Government Code 855.110 – Adopting Rates and Tables
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(a) The board of trustees shall adopt rates and tables that the board considers necessary for the retirement system after considering the results of the actuary’s investigation of the mortality and service experience of the system’s members and annuitants. In adopting rates and tables, the board of trustees shall adopt a discount rate that is not less than five percent in developing an annuity purchase rate.
(b) Based on recommendations of the actuary, the board of trustees shall adopt rates and tables necessary to determine the supplemental death benefits contribution rates for each municipality participating in the supplemental death benefits fund.
Terms Used In Texas Government Code 855.110
- Amortization: Paying off a loan by regular installments.
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Rule: includes regulation. See Texas Government Code 311.005
(c) The board of trustees, after consultation with the actuary, by rule or by funding policy adopted by the board of trustees, may:
(1) set open or closed amortization periods not to exceed 30 years;
(2) change the period for amortizing a municipality’s unfunded actuarial accrued liabilities from an open period to a closed period or from a closed period to an open period;
(3) decrease or increase the amortization period, provided the amortization period may not exceed 30 years; and
(4) set different amortization periods for unfunded actuarial accrued liabilities arising from different types of events giving rise to liabilities and ladder the amortization of the liabilities.
(d) In this section:
(1) “Annuity purchase rate” means the present value factor used to convert reserves to a monthly annuity based on the post-retirement discount rate assumption and the life expectancy of the retiree or beneficiary or both the retiree and the beneficiary at retirement under the selected form of payment.
(2) “Discount rate” means the interest rate used in determining the present value of future cash flows.