Pension Change Concerns Retired Texas Teachers

The state’s Teacher Retirement System board voted to lower the expected rate of return on investments. That means the state anticipates earning less money to cover the cost of providing benefits.

By Jill AmentJuly 30, 2018 3:42 pm| , ,

The Teacher Retirement System operates a $147 billion pension fund. A change to it like one that happen Friday impacts more than 400,000 retired Texas teachers.

Texas Retired Teachers Association Executive Director Tim Lee says retirees will not see an immediate change in their pensions.

“It does mean that it will be almost impossible for retirees to get any cost of living increases for the next 50 to 100 years if they don’t make up for the difference somewhere on the lost revenue for the shortened investment return,” Lee says.

Lee says, ultimately, this means more money needs to be collected into the pension system to help current retirees and to pay the benefits promised to future retirees.

“So, the legislature is going to have to increase their appropriation to TRS,” Lee says. “They could do that out of the general revenue and say, hey, we’re just going to increase our amount, which of course Texas has the lowest state contribution in the nation to our public pension fund for teacher retirement.”

Lee says school districts and active teachers could also contribute more – but, percentage-wise, active teachers contribute more than the school districts and state.