Important TRS Information–Update on SB 1458
The Senate could consider SB 1458 by Sen. Robert Duncan as early as Friday. SB 1458 seeks to get the TRS pension fund actuarially sound within the 31-year funding period to ensure the continuation of the current defined benefit pension program, and provide a Cost of Living Adjustment (COLA) for some retirees.
There have been several proposals put forth that would increase the state and employee contribution rates as well as require school districts to contribute a certain percentage of minimum salary for any TRS participating employee for whom the district is not already contributing to Social Security. In addition, the proposals have included a new minimum age of 62 requirement, with variations in grandfather clauses for both the pension and TRS-Care systems.
The latest proposal put forth is as follows:
- All current TRS members that are vested in the system would not be impacted by the changes in the retirement calculation
- Minimum age of 62 only for new hires and non-vested members - As of August 31, 2014
- 5 percent per year early retirement reduction factor for all new hires and non-vested members
- Minimum age of 62 for TRS-Care 2 or TRS-Care 3 eligibility (grandfather provision - As of August 31, 2014: Rule of 70 or 25 years of service)
- 3 percent COLA increase for certain retirees who are retired 15 years or more, not to exceed $100 per month
Contribution Rate Changes
- State contribution rate would increase from 6.4 percent to 6.8 percent
- Employee contribution rate would increase from 6.4 percent to 7.7 percent
- Creates a new school district rate set at 1.5 percent of minimum salary for any TRS participating employee for whom the district is not already contributing to Social Security
- All three contribution rates would be linked together to ensure future rate increases or decreases would be shared by all contributors
Prior Benefit changes proposed
- Rule of 80 with a minimum age of 62 to retire without a 5 percent or 2 percent reduction per year in benefits for early retirement
- Minimum age of 62 for TRS-Care 2 or TRS-Care 3 (grandfather provision As of August 31, 2014: Rule of 70 or 25 years of service)
- Prior Contribution Rate Changes proposed
- State contribution rate would increase from 6.4 percent to 6.82 percent
- Employee contribution rate would increase from 6.4 percent to 8 percent
- Create a new district contribution rate set at 2 percent
If this or similar legislation is not passed in this legislative session, the system will be in a more difficult financial position in the next session, the unfunded liabilities will increase, and the cost to fix the system will be even greater. We believe the current proposal is substantially better than earlier drafts of this legislation.
If you have any comments or questions, please email Amy Beneski or call 800-725-8272.
A summary provided by Senator Duncan's office is attached.