Honorable Rafael Anchia, Chair, House Committee on Pensions, Investments & Financial Services
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB2936 by Frank (Relating to an optional service retirement annuity of the Employees Retirement System of Texas.), As Introduced
COST ESTIMATE
The bill would amend the Government Code to add an additional retirement option for members that retire on or after January 1, 2022. The option is required to be actuarially equivalent to the standard retirement annuity and must result in no actuarial loss to the system. The option would allow a member, before retirement, to opt for a reduced benefit for a period together with a cost-of-living adjustment (COLA), as determined by the system. Before selecting this retirement option, the system must provide a written notice outlining the duration and amount of the reduction. The option does not apply to a disability retirement annuity.
According to the Employees Retirement System (ERS), this bill would not have significant actuarial impact because it is required to be actuarially equivalent and must result in no actuarial loss to the system.
Additionally, the bill would add a new Subsection 814.109(d) to the Government Code which would state that members participating in the proportionate retirement program under Chapter 803 of the Government Code would not be eligible for the partial lump-sum option. The Pension Review Board is not clear whether this provision was intended to apply to the COLA option added by this bill, as the lump-sum option exclusion already exists in Section 814.1082(f) of the current Government Code. Neither the PRB, nor ERS, analyzed that provision due to the lack of clarity.
SOURCES Email correspondence from Employees Retirement System of Texas Governmental Relations Staff on April 2, 2021.