Honorable Giovanni Capriglione, Chair, House Committee on Pensions, Investments & Financial Services
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB1393 by Frank (relating to an optional service retirement annuity that provides an increasing annuity under the Employees Retirement System of Texas.), Committee Report 1st House, Substituted
COST ESTIMATE
The bill would amend Chapter 814 of the Government Code to add an increasing annuity option for eligible members of the Employees Retirement System of Texas (ERS).
The increasing annuity option would be provided by reducing that member's retirement benefit payment for an appropriate period beginning immediately after the member's retirement and then annually increasing the benefit payment amount while they are receiving benefits. The bill would require the optional increasing annuity option adjustment be calculated to be actuarially equivalent to a standard or optional service retirement annuity as applicable and must result in no actuarial loss to ERS.
Only members eligible for an unreduced service retirement annuity and who have not yet retired would be eligible to select this option. This option would not apply to a disability retirement annuity, and members retiring under the proportionate retirement program would not be eligible for the partial lump-sum option.
The optional retirement annuity with increasing annuity option added by this bill would only apply to a retirement that occurs on or after January 1, 2024.
According to ERS, the provisions in the bill would be provided on an actuarial equivalent basis and therefore would not have an actuarial impact on ERS.
SOURCES Actuarial Analysis by Ryan Falls, FSA, EA, MAAA Gabriel Roeder Smith & Company, March 10, 2023.