Changes made by the
79th Legislature
The 79th Legislature passed several cost-cutting changes in attempts to
address TRS’ solvency issues. To help you understand all the changes that
were made, ATPE has prepared the following question-and-answer document.
Did the Legislature change the “rule of
80” to the “rule of 90”?
No. The rule of 80 is still intact. This
means that an educator whose age plus years of service is equal to at
least 80 is eligible for a full TRS retirement pension.
Must educators now have to be at least 60 years old to retire?
Only if you are hired after Sept. 1, 2007.
The annuities
of TRS members hired after Sept. 1, 2007, will be reduced by 5 percent for
each year the member is retired before age 60, whether or not the member
meets the rule of 80. This change will also apply to educators who left
the profession and withdrew from TRS, but then return to the system after
Sept. 1, 2007.
Will my annuity be calculated using my
highest five years of salary rather than my highest three years of salary?
Yes, unless as of Aug. 31, 2005, you were at
least 50 years old, or had satisfied a rule of 70 (age plus years of
service equal to 70) or had at least 25 years of service credit. If not,
starting Sept. 1, 2005, your retirement annuity will be based on the
average of your highest five years of salary rather than the average of
your highest three years.
Can TRS retirees still return to work and
collect both paychecks and retirement annuities?
Yes. However, school districts will be required to make a contribution equal to
12.4 percent of payroll for each retiree who has returned to work if the retiree retired after Sept. 1, 2005. Active
employees contribute 6.4 percent, and districts contribute 6 percent on
active employees’ behalf. This new requirement reflects the amount that
would have been contributed to TRS if an active employee had filled the
position instead of a retiree. In addition, school districts will have to
cover the state’s portion of the employee’s health insurance premium. This
provision creates financial disincentives that will most likely discourage
school districts from rehiring retirees who retired after Sept. 1, 2005.
This new requirement does not apply to a retired employee who works as a bus
driver if the bus-driving position is his primary employment with the TRS-covered
employer.
Did the 79th Legislature prohibit
schools from offering early retirement incentives, financial or otherwise?
Yes.
Did the Legislature outlaw “air time”
service credit?
Yes. Starting Jan. 1, 2006, TRS members will no longer be allowed to purchase up to an additional three years of
service credit (“air time”).
Can I still purchase out-of-state service
credit?
Yes. However, members who purchase
out-of-state service credit will now have to pay the full actuarial value of
the time. This change will significantly increase the cost from current
rates. TRS members who have earned service in another state
before Jan. 1, 2006, will be able to buy TRS service credit for that service
at any time in the future using current rates.
Must I meet the “rule of 90” to be
eligible for a partial lump-sum payment?
Yes. To be eligible for a partial
lump-sum payment at retirement, the sum of a member’s age and years of
service must equal 90. However, this provision does not apply to TRS members
who as of Aug. 31, 2005, were at least 50, or satisfied a rule of 70, or had
25 years of service credit.
For more information
on these changes, visit the TRS Web site at
www.trs.state.tx.us, or call TRS at (800) 223-8778.
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