TRS Board gets update on pension fund at December meeting

During its final meeting of the year on Dec. 9, the TRS Board of Trustees received an update that the pension fund remains actuarially sound despite lower market performance over the past year. This was possible due to strong market returns in the previous two years. The five-year investment return is approximately 7.3%.

The health of the fund would allow for the Texas Legislature to consider a cost-of-living adjustment (COLA) for retirees for fiscal years 2024 and 2025 during the upcoming legislative session. Actuaries recommended that the Legislature directly fund any potential COLA responsibly, either as a lump-sum payment or within a 12-year payment schedule, rather than through the TRS fund.

The last COLA provided by the Legislature only impacted retirees who retired in or before 2004. Members who have retired since 2004 have only received supplemental 13th checks occasionally.

TRS actuaries also discussed how TRS and the system in Louisiana are the only two retirement systems for school employees in the country in which retirees are not provided with an automatic COLA and are negatively impacted by the federal Windfall Elimination Provision and the Government Pension Offset provisions of Social Security.

In other action, TRS Board members received a briefing on the new El Paso Regional Office, which opened Nov. 14 within the Region 19 Education Service Center. If data suggests the pilot office is valuable to TRS members, TRS will present options for the Legislature to consider establishing additional regional offices in strategic locations across Texas during the 2024-25 biennium.

Changes to ERS service credits may impact some TRS members

Moving forward, service credit in the Employees Retirement System for Texas state employees and the Teacher Retirement System may no longer be compatible. Senate Bill 321, which was passed in 2021, created a mandatory cash-balance plan (rather than the defined-benefit plan for existing ERS members and for TRS members) for ERS members who begin membership on or after Sept. 1, 2022.

Importantly, ERS members who participate in this cash-balance plan may use their ERS service credit to assist with eligibility, but not for benefit calculations at TRS; similarly for TRS members who move to ERS. In addition, TRS members with prior ERS credit who have not maintained an ERS membership established prior to Sept. 1, 2022, will no longer be able to reinstate withdrawn ERS service for the purpose of transfer to TRS.

Members may contact their retirement plan directly for questions specific to their ability to transfer their service at 800-223-8778 for TRS or 877-275-4377 for ERS.