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<br /> <br />,. <br /> <br />1). .. <br />TML Board Communication <br /> <br />INl'ERGOVERNMENTAL RISK POOL <br /> <br /> <br />October 13, 2001 <br /> <br />Continuation of 10 Year Ves.ting with TMRS <br /> <br />Senate Bill 522, amending the Texas Municipal Retirement Act, passed both houses of <br />the Texas legislature and has' been signed into law by Governor Perry. This bill makes <br />numerous changes to the Texas Municipal Retirement System. Among the major <br />amendments are provisions for a five year vesting alternative to the existing ten year <br />vesting requirement. The five year option means that after five years of service a TMRS <br />member will have earned the right, upon termination of employment, to choose to leave . <br />the member's deposits and interest in TMRS, and, upon reaching age 60, apply for <br />retirement. The provisions ofSB 522 take effect January 1,2002. <br /> <br />Participating members of TMRS have from September I, 200 I, through December 31, <br />2001, to opt out of this new five-year vesting provision. The Texas Municipal League <br />and the Texas Municipal League Intergovernmental Employee Benefits Pool have chosen <br />to opt out of this provision and remain at 10-year vesting. It is recommended that the <br />Pool opt out of the five year vesting provision. The 10-year vesting schedule has <br />benefited the Pool in retaining qualified staff. The five year option increases the <br />likelihood of losing skilled staff since employees would be eligible to leave the Pool after <br />only five years of service and retain their earned retirement bene~t. <br />~ <br /> <br />The cost for the current year,to incorporate the five year vesting is minimal (0.14%). But <br />this cost is expected to grow as wi ever-increasing number of employees reach the five <br />year vesting mark and become eligible to receive credit for the Pool's matching <br />contributions. <br /> <br />Recommendation: The Pool continue the 10-year vesting requirement that is ,currently <br />in place. Further, the attached resolution be adopted to comply with the State law <br />requirement that members opt out of the five year vesting provisions between September <br />1,2001, and December 31, 2001.' <br /> <br />~ <br /> <br />'/ Allan J. Romer <br /> <br />~ <br /> <br />JR. Marv' Townsend <br />