update for taccbo june 2013
DESCRIPTION
Update for TACCBO June 2013. Topics for Discussion. Status of the TRS Pension Fund 2013 Legislative Session Specific Legislation: SB 1458; Benefits/Contributions Changes HB 3357; Omnibus Administrative SB 1812; 50% State Match. What We Do. - PowerPoint PPT PresentationTRANSCRIPT
Teacher Retirement System of Texas
Update for TACCBOJune 2013
Topics for Discussion
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Status of the TRS Pension Fund
2013 Legislative SessionSpecific Legislation:
SB 1458; Benefits/Contributions Changes
HB 3357; Omnibus Administrative
SB 1812; 50% State Match
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The Teacher Retirement System manages a $116.3 billion trust fund and provides pension and health care benefits. TRS serves 1.3 million active and retired members. One out of every 20 Texans is a member of TRS. The average retirement check is $1,929 per month with $7.8 billion paid in retirement benefits in 2012.Manage two major health programs:
TRS-Care: 218,013 Covered Members TRS-Active Care: 470,967 Covered Members
What We Do
Status of Pension Fund
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With the global economic decline, the TRS pension trust fund decreased to $70.6 billion, as of February 28, 2009.
As of February 28, 2013, the fund was valued at $116.3 billion.
As of the February 28, 2013, the six-month investment return rate was 6.12% (equal to 12.24% annualized). The FY 2012 return rate was 7.6% compared to 15.5% in FY 2011.
Over the past 25 years, the return rate was 8.6% despite a decade of highly volatile markets. The assumed rate is 8.0%.
As of February 28, 2013, the fund could make benefit payments to 2069 under funding from the previous Legislature.
State of the Legislature
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Key issues included budget, school finance, water, transportation.
5,868 bills were filed in both chambers. Only 1,437 passed both chambers and were sent to the Governor. Approximately 24% of the bills made it through the legislative process.
67 bills were referred to the House Committee on Pensions. Of those, 14 are on their way to the Governor’s office.
The Governor has three options: sign the bill into law, allow the bill to become law without his signature, or veto the bill.
General Appropriations Act
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The General Appropriations Act determines the state contribution rate per biennium. The House and Senate agreed on a 6.8% state contribution rate for FY 2014 and 6.8% for FY 2015.
Rider 21 in public community/junior college bill pattern allows for settle up funding to be drawn from formula funding should the settle up amounts for both FY2012 and FY2013 not be paid this FY.
Please remit by August 31st.
SB 1458Benefit Modifications
3% COLA (capped at $100) for annuitants who retired on or before August 31, 2004.
Increased normal retirement age to 62 with Rule of 80 and at least 5 years of service credit for new and non-vested members (those with less than 5 years of service credit) as of August 31, 2014.
Reduces annual interest paid on member account balances from 5% to 2%, prospectively starting September 1, 2014.
Current retirees are not affected. Set a minimum age of 62 in order to be eligible for TRS-Care 2 or 3 on September 1, 2014. Members are grandfathered if they meet the rule of 70 or the person has at least 25 years of service credit as of August 31, 2014. All non-grandfathered members will only be eligible for TRS Care 1 until the age of 62 is met.
Retirement Eligibility
Annual Interest
Rate
Retiree Health Care
Benefit Modifications
If the state contribution rate is reduced below 6.8%, then the member and district contribution rates will be reduced by an equivalent percentage .
State law determines the member and district rates. The
General Appropriations Act determines the state rate.
*District rate is only applicable to school districts that do not contribute to Social Security
Contribution Rates
Cost-of-Living Increase
HB 3357
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Relating to the administration of and benefits payable by the Teacher Retirement System of Texas, provides for technical and clarifying changes in addition to administrative changes.
Removes the requirement that previously unreported service must be purchased in order to receive an annuity.
Allows a retiree who has selected an optional annuity payment plan to revert to the standard annuity payment plan.
HB 3357
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TRS employers will be required to provide TRS employee information by position and work email addresses to improve TRS communication efforts.
HB 3357 also brings TRS health care plans into compliance with the Affordable Care Act by raising the dependent coverage from age 25 to age 26.
Made various technical clean up amendments such as updating “tape-recording” to “recording” and clarifying that regional service centers and charter school employees can serve as trustees and vote in the election of trustees.
SB 1812
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Relating to the determination of state contributions for participation by certain junior college employees in the state employees group benefits program, the Teacher Retirement System of Texas, and the Optional Retirement Program.
Limits state match to 50% of compensation for employees who are instructional or administrative.
The number of employees eligible for state match cannot exceed enrollment growth.
SB 1812
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Districts shall remit other half of employer match monthly. Submit monthly report of salary and employer contributions required.
Details of reporting to be determined.
TRS will certify to Comptroller the names of districts that have failed to remit employer contributions. The Comptroller shall withhold the amount certified, plus interest, from the first state money payable to the district. TRS shall deposit the money received in the pension fund.
