The Texas Government has passed Senate Bill no. 321, relating to contributions to, benefits from, and the administration of the Employees Retirement System of Texas. The law has come into effect on September 1, 2021.
Key features of the Act are:
- The Act establishes a new cash balance retirement plan for new state employees starting on or after September 1, 2022.
- The new plan shall deposit a percentage of a worker’s annual compensation in retirement accounts. Currently, employees have defined-benefit retirement accounts based on employment position and previous salaries.
- It requires the state to make annual amortization payments to the ERS trust fund in order to start paying down the existing unfunded liability. Therefore, this will lead to more stability in the pension fund and the funding period will be lowered.
*Tanvi Singh, Editorial Assistant has reported this brief.