ACTUARIAL EFFECTS
Under the current Pension Review Board (PRB) Pension Funding Guidelines, funding should be sufficient to cover the normal cost and to amortize the unfunded actuarial accrued liability over as brief a period as possible, but not to exceed 30 years, with 10 to 25 years being the preferable target range. Both the Teacher Retirement System of Texas (TRS) and Employees Retirement System of Texas (ERS) statute define actuarial soundness, for purposes of making modifications to benefit and contribution levels, as no more than 31 years. TRS and ERS are currently actuarially sound. Due to the uncertainty of the bill as it is currently written, neither TRS nor ERS can determine how the bill would impact their respective funds.
SYNOPSIS OF PROVISIONS
The bill would allow peace officers who are members of TRS to transfer to ERS's Law Enforcement and Custodial Officer Supplemental Retirement Fund (LECOS) starting January 1, 2024. Peace officers who are members of TRS would be required to elect whether to begin membership in LECOS no later than Dec. 31, 2023. The time before and after joining LECOS would be considered service credit earned in two retirement systems for the purpose of the proportionate retirement program.
If enacted, the bill would take effect September 1, 2023.
FINDINGS AND CONCLUSIONS
The actuarial analysis from TRS states it is unclear if the members impacted by the bill would remain in TRS or move to be a member in the main ERS fund. In order to put an impact on the bill, TRS needs further clarification.
The actuarial analyses from both TRS and ERS cite potential legal barriers that currently hinder their ability to do a full analysis of the bill.
SOURCES
Actuarial Analysis by Joseph P. Newton, FSA, and Dana Woolfrey, FSA, EA, MAAA, Gabriel Roeder, Smith and Company, March 27, 2023.
Email correspondence from ERS, March 24, 2023.
Actuarial Review by David Fee, ASA, EA, Staff Actuary, Pension Review Board, March 27, 2023.