Senate Bill 12 has increased employer, employee and state future contributions to the Teacher Retirement System of Texas.
SB 12, which adds a onetime supplemental payment to eligible members of the Teacher Retirement System, was signed in June and went into effect on Sept. 1. As a result, the amount the University pays the system will increase by $4.62 million per year until fiscal year 2021.
The Teacher Retirement System of Texas is a retirement program where employees pay a certain amount each year based on service credit and salary, and each UT employee is automatically added to the program upon employment, Barbie Pearson, chief benefit officer for the TRS, said in an email. If eligible UT employees choose to switch to UT’s separate retirement program, the Optional Retirement Program, they do not have to contribute to the system.
According to the bill, eligible TRS members who retired on or before Dec. 31, 2018 will receive a one time supplemental payment of either $2,000 or the amount of their monthly annuity payment -— whichever is less.
Pearson said once a TRS member begins service retirement under the rules of the plan, the member is eligible to receive a monthly retirement benefit for life.
“The monthly retirement benefit is defined by the formula under law, and it is not limited to the amount of the employee’s accumulated contributions in (their) TRS account,” Pearson said.
Tany Norwood, former assistant Dean of Students and member of the system, said while she is grateful the legislature is paying attention to the issue of low teacher pensions, it is not enough because retirees need to live comfortably.
“It helps make up for the years that we haven’t seen increases in our annuity,” Norwood said. “For the future, I hope that the changes that the legislature will make … the retirement fund more financially stable and allow TRS to give — hopefully — an annual increase.”
Norwood said expenses have significantly increased after retirement for her and fellow retirees, partially due to medical expenses.
“Both (my husband and I) expected to be able to still travel and do things like that after we retired,” Norwood said. “We really haven’t been able to do that as much as we had hoped … That has been a hard reality for us to accept and deal with.”
The contribution of employees’ to the Teacher Retirement System pension trust fund will gradually increase from 7.7% of their current salary to 8.25% by Sept. 1, 2023, Pearson said.
“I would say that I would have been supportive even though it’s a little bit left out of your monthly check,” Norwood said. “I would have been happy to do that rather than run the risk of counting on Social Security.”
Changes to employee contribution rates do not take effect until fiscal year 2021-2022, according to the UT Budget Office.
“We are currently evaluating funding sources to determine which sources will be used to pay for the increase,” the UT Budget Office said in an email.
Editor's Note: The infographic originally included in this article was removed due to inaccuracies. The Texan regrets this error.
