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Enactment of House Bill 1318 Brings Changes to APRS

House Bill 1318 will be enacted into law on September 1, 2007. The bill has clarified and made minor changes to the Act governing the Austin Police Retirement System. The following is a list of the changes that the bill ratified: This bill changes the existing method of paying interest by providing that interest is only credited to the accounts of "vested" members, or those who have been credited service with the retirement system of 10 years of more. This change rewards career-oriented members by crediting interest only on contributions deposited in their membership accounts. The result of this change will slightly reduce the amortization period of the System's unfunded actuarial liabilities and thus moderately strengthen the System. The interest that is already credited to the account of a member who is not yet vested will remain credited to that account. It protects Board members and Staff from liability and legal expenses while taking action in their official capacity, by allowing the 'System' to reimburse them for these expenses, unless the liability or expenses resulted from the person's dishonesty, fraud, lack of good faith, or intentional failure to act prudently. It provides that information in the System's records concerning individual members, retirees, annuitants, or beneficiaries is confidential and prescribes how information is released and under what circumstances. These two provisions are similar to that of other systems to protect officers and employees. It changes the calculation factor for member service purchases by changing the factor to an 8 percent actuarial cost, which is the current investment return assumption needed to make the 'System' actuarially and financially sound. This applies to forfeited service credit, probationary service credit, and cadet service credit. It enables a deceased member's designated beneficiary, such as a son, daughter, or parents, to purchase a permissive service credit at 20 years of service or more if there is no surviving spouse. Prior to the bill, only a surviving spouse was able purchase a permissive service credit. It enables a member's designated beneficiary at 20 years of service or more to purchase permissive service credit at cost, as determined by the system's actuary and immediately begin receiving an annuity from the member's account. It enables a member's, surviving spouse, and designated beneficiary the ability to purchase service credit and defer receiving an annuity from the member's account until date of normal eligibility is met, at a cost determined by the system's actuary. Normal eligibility for retirement requires a member to have 23 years of service. This eliminates the requirement that a member, spouse or designated beneficiary begin to receive an annuity immediately upon making the permissive service purchase. It provides an increase in the minimum death benefit payable upon the death of an active member, active member eligible to retire or retiree to $10,000 from $7,500. It provides that only members who are making contributions to the System may apply for disability retirement, unless the member is granted an extension by the department. This avoids the problem of members who have been placed under indefinite suspension suddenly discovering some injury that did not interfere with their job prior to their suspension but for which they apply for pension. Finally, in accordance with requirements set forth by the IRS, members who are eligible for a tax-free rollover distribution are prohibited from receiving mandatory distributions.

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