HB 3356 would require certain public retirement systems to achieve and maintain a funded ratio of 100% no later than the system’s fiscal year beginning in 2045. Furthermore, any additional unfunded liability generated after this date must be amortized over a closed period of no more than 15 years. Exempted plans include the Employees Retirement System, the Teacher Retirement System, Texas County and District Retirement System, Texas Municipal Retirement System, and Judicial Retirement System Plan Two.

PRB Guidelines for Actuarial Soundness establish a minimum amortization period of 40 years, with 15 to 25 years being the recommended range. The provisions of HB 3356 would require affected public retirement systems to achieve and maintain 100% funding by 2045, thus all these systems would be required to establish closed 30 year amortization periods not later than 2015, which would be within the minimum standards established by the PRB. Over time, many public retirement system amortization periods would achieve the recommended range of 15 to 25 years. To fulfill the provisions of HB 3356, public retirement systems would have to pay down any unfunded actuarial accrued liabilities to achieve 100% funding by 2045. This would improve the actuarial soundness of most public retirement systems.

Beyond fiscal year 2045, public retirement systems would be required amortize any new unfunded liabilities over a closed period of no more than 15 years, which is within the recommended range of the PRB Guidelines to Actuarial Soundness. This would preserve the actuarial soundness of any public retirement system after fiscal year 2045.