Honorable Giovanni Capriglione, Chair, House Committee on Pensions, Investments & Financial Services
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB2464 by Price (Relating to optional annuity increases for certain retirees and beneficiaries of the Texas Municipal Retirement System.), As Introduced
COST ESTIMATE
The bill would amend the Government Code to add an optional cost-of-living-adjustment (COLA) annuity for participating cities of the Texas Municipal Retirement System (TMRS).
This bill would allow participating cities in TMRS to adopt a new COLA that is a repeating fixed rate of any percentage and calculated without the current retroactive catch up feature. Participating cities would need to adopt this new COLA to be effective January 1 of 2024 or 2025. The new COLA may not cause the annuity to exceed what the annuitant would have been entitled to had the maximum increase under the current method been applied instead of the new optional method. The subsection allowing the adoption of this new optional COLA would expire December 31, 2025, but a city would have to adopt an ordinance by December 31, 2024, to have a COLA effective January 1, 2025.
According to TMRS, the provisions in the bill should not have an actuarial impact on the system as the funding requirements and cost impact are the responsibility of TMRS' participating cities. Additionally, the bill would not automatically apply to any participating city, so the impact depends on the COLA provision a city adopts under this bill.
SOURCES Actuarial Analysis by Joseph P. Newton, FSA, EA, MAAA, and Janie Shaw, ASA, EA, MAAA, Gabriel, Roeder, Smith & Company, March 27, 2023.