The TRS traditional defined benefit plan is the best type of retirement plan for public education retirees. The defined benefit plan is a secure and healthy pension plan. It’s intended to provide a lifetime annuity. It differs from defined contribution plans, 401(k)s, that provide only a sum-certain amount. TRS has never missed a payment to its annuitants in its 81 years of existence.
However, some interest groups and legislators are seeking to change TRS into a defined contribution plan. This would be a disastrous move. It would undermine the integrity and trust that retirees have placed in our state government. It would risk the livelihood and investments of the 1.5 million educators who rely on and have paid into TRS.
That’s why TRTA is steadfast in its approach to protecting the defined benefit plan. Legislators and candidates running for political office in Texas should also know that 95 percent of school employees in Texas do not pay into the federal Social Security program, and most retirees -about 80 percent – receive no Social Security benefits at all.
Most TRS retirees rely on their modest monthly annuity as their sole form of retirement income. The average monthly annuity is a little over $2,000 and more than 125,000 retirees earn $1,000 or less per month!
TRTA supports increasing the employer contribution rate, which includes the state and school district, to the pension fund to 8.62 percent. This open the door for the pension fund to reach actuarial soundness as soon as possible. Since 95 percent of the school employees do not contribute to Social Security, a contribution rate of 8.62 percent is reasonable, and would still be one of the lowest rates for any state pension fund in the nation. TRTA also supports requiring all school districts in Texas to pay the 1.5 percent employer contribution rate.
Adjusting these rates will bolster the pension fund and ensure retirement security for all current and future public education retirees in Texas. The fund must be actuarially sound by statutory definition for the Legislature to consider a cost-of-living increase for retirees.
We are asking all TRTA members to reach out to their legislators and candidates running for political office. Ask them to set policy that will provide adequate funding for the TRS pension fund so that all current and future retirees can have the retirement security they deserve.
Everyone running for office in Texas should know, understand, and agree that TRS retirees deserve retirement security including a secure defined benefit plan. TRS retirees deserve better!