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 of the Employees Retirement System of Texas.), As Introduced
COST ESTIMATE
The bill would amend the Government Code to add an optional service retirement annuity that includes a cost-of-living adjustment (COLA) for eligible members of the Employees Retirement System of Texas (ERS) that retire on or after January 1, 2022.
The COLA would be provided by reducing that member's retirement benefit payment for an appropriate period beginning immediately after the member's retirement and then periodically increasing the benefit payment amount while they are receiving benefits. The bill would require the optional COLA 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.
According to ERS, the provisions and recommendations 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.