Sec. 853.404. ALLOWANCE OF UPDATED SERVICE CREDIT AND ANNUITY INCREASES. (a) The governing body of a participating municipality that adopts an ordinance authorizing the crediting in the retirement system of updated service credits under Sections 853.401, 853.402, and 853.403, to be effective January 1 of a designated year, may further provide in the ordinance that updated service credits will be credited effective January 1 of each year following the designated year, using the same percentage of the base updated service credit specified in the ordinance in computing updated service credits for each future year, until changed or discontinued as provided by this section.

(b) The governing body of a participating municipality that adopts an ordinance under Section 853.601, authorizing the crediting of updated service credits for transferred service effective January 1 of a designated year, may further provide in the ordinance that updated service credits will be credited effective January 1 of each year following the designated year, using the same percentage of the base updated service credit specified in the ordinance in computing updated service credits for each future year, until changed or discontinued as provided by this section.

(c) The governing body of a participating municipality that adopts an ordinance under Section 854.203 providing for increased annuities effective January 1 of a designated year may further provide in the ordinance that increases in annuities will be credited effective January 1 of each year following the designated year based on recomputations made as provided by Section 854.203(b)(1) for each year following the initial computation, and using the fraction specified in the ordinance as required under Section 854.203(b)(2) in the recomputations.

(d) Except as provided by Subsection (e), an ordinance under this section continues in effect for each year that the actuary determines that all obligations charged against the municipality's account in the benefit accumulation fund, including the obligations to become effective the next January 1, can be funded by the municipality within its maximum contribution rate and within its amortization period as in effect on the next January 1. An ordinance under this section will cease to be in effect for future years if the actuary cannot make that determination, but shall again take effect for future years beginning January 1 of the first year after the actuary can make that determination.

(e) An ordinance under this section ceases to be in effect for future years if the municipality:

(1) adopts a new ordinance under this section;

(2) adopts a new matching ratio for matching a member's future contributions and earnings on those contributions at the time of retirement under Section 855.501;

(3) adopts a new rate of member contributions under Section 855.401; or

(4) adopts an ordinance stating that the ordinance in effect under this section will cease to be in effect for future years.

(f) Subject to Subsection (f-1) and notwithstanding conflicting provisions of Subsection (c) or Section 854.203, the governing body of a participating municipality that adopts an ordinance under Section 854.203 providing for increased annuities effective January 1 of 2024, 2025, or 2026 may elect to compute the annuity increase, including an annual annuity increase authorized under Subsection (c), as the sum of prior and current service annuities, as increased in subsequent years under Section 854.203 or Subsection (c), of the person on whose service the annuities are based on the effective date of the annuity increase, 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, during the 12-month period ending in December of the year 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.

(f-1) Subsection (f) applies only with respect to:

(1) a participating municipality that as of January 1, 2023:

(A) does not provide by ordinance an annual annuity increase under Subsection (c) because the municipality:

(i) passed an ordinance before January 1, 2023, that rescinded a previous ordinance authorizing annual increases under Subsection (c); or

(ii) has not passed an ordinance authorizing annual increases under Subsection (c); or

(B) does provide by ordinance an annual annuity increase under Subsection (c) if the governing body of the municipality elects to provide increased annuities recomputed in accordance with Subsection (f) for purposes of maintaining or increasing the amount of the annuity increase otherwise authorized by the ordinance; and

(2) the annuity of:

(A) a retiree who retired not later than the last day of December of the year that is 13 months before the effective date of the ordinance providing the increase; or

(B) a beneficiary of a deceased retiree whose death occurred not later than the last day of December of the year that is 13 months before the effective date of the ordinance providing the increase.

Added by Acts 1991, 72nd Leg., ch. 466, Sec. 2, eff. Aug. 26, 1991. Amended by Acts 1995, 74th Leg., ch. 514, Sec. 8, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 76, Sec. 4, eff. Sept. 1, 1997.

Amended by:

Acts 2011, 82nd Leg., R.S., Ch. 1208 (S.B. 350), Sec. 9, eff. June 17, 2011.

Acts 2023, 88th Leg., R.S., Ch. 234 (H.B. 2464), Sec. 1, eff. May 27, 2023.