Texas Senate approves overhaul of pension plans for new state employees

[TexasTowelie]

by Shawn Mulcahy, Texas Tribune


A plan to overhaul the pension for Texas’ future state employees and shore up billions of dollars in unfunded obligations owed to retirees advanced out of the Texas Senate on Wednesday.

Republican State Sen. Joan Huffman’s proposal to revamp the Texas Employees Retirement System moved forward by a 19-12 vote, despite fierce opposition from some state workers’ unions. Senate Bill 321 would enroll new state workers hired after Sept. 1, 2022 in a cash balance plan — similar to a common 401(k) retirement account — rather than the traditional defined benefit pension plan. The bill now heads to the Texas House for consideration.

“This is a good bill,” Huffman said. “It's good for current workers, it's good for future workers and it requires a great investment by the state of Texas into their employees.”

Texas’ pension fund faces a $14.7 billion shortfall. Huffman amended the bill on Wednesday to authorize annual payments of $510 million through 2054 to pay down debt owed to the fund. The measure’s original language included yearly, $350 million payments. But Huffman said the increased contributions would save the state $34 billion in interest payments over the next three decades.

Read more: https://www.texastribune.org/2021/04/28/texas-pension-ers-overhaul/

One of the perks of being a state employee is that the pension program is a defined benefit plan. If the state is going to eliminate that perk, then they are going to have to increase the pay for employees, otherwise, the state will have difficulty retaining employees. The latest figure that I read is that 20% of employees leave the state each year which is up from the normal rate of 16%-17%. Having a high employee turnover rate means that the quality of services will decline so expect longer lines and longer telephone queues with more unsuccessful interactions with the clients.

[jimfields33]

1. I do have a federal pension

I’ve known some that took the thrift savings and seem happy with it because you have more flexibility when you retire. For example, the roof goes. You can grab the money from the thrift savings. The pension person must find another financial avenue. I guess it’s how you look at it.

[TexasTowelie]

2. I believe that the compensation for federal employees is more in line with the private sector

than that in Texas. Most studies show that employees for Texas earn between 20% and 25% less than if they work in the private sector. As for my personal experience, I was pretty much forced to look for another job because the rents in Austin were going up at much greater pace than my paycheck did. My salary increased about 25% when I left state employment to work in the private sector and I routinely say raises that I didn't see as a state employee.

[jimfields33]

3. I wish it were better. However, I'm glad you went elsewhere

It’s horrible how they treat their workers in texas. Atrocious that they don’t pay what they should.