A historic chance to protect our public pension

Below is a column by Texas Retirees president Luther Elmore published by the Austin American-Statesman on May 5, 2021

For the first time in a generation, Texas state employees, and retirees like me, are entering the final month of the legislative session with reason for hope.

Last week, the Senate approved Senate Bill 321, a transformational proposal that would protect the stable and secure pension on which so many public employees have come to rely.

The bill, sponsored by Sen. Joan Huffman, commits $510 million a year moving forward to pay the Employees Retirement System’s ballooning unfunded liability. Under this schedule,ERS would be actuarily sound in just three years. Lawmakers would then be able to consider a cost-of-living adjustment for retirees at that time — the first since 2001.

The House of Representatives must now do the same — and do right by the 250,000 current and retired employees who dedicated our careers to making Texas safer, stronger and healthier.


ERS was first established in 1947, after World War II when many American employers began offering employee pension plans. This was long before private companies decided to reduce costs by directing workers to personal retirement savings accounts such as an IRA or a 401(k).

The state could never compete with private sector salaries. Instead, it promised a steady, safe pension to attract the law enforcement and corrections officers, parks and wildlife employees, health care professionals, and other workers who have made Texas great. I received this promise when I started my 26-year career with the state’s Comptroller of Public Accounts in 1976.

The promise was simple: each month, workers would contribute a percentage of their salaries to the pension fund and the state would match the contribution. When the employees retired, they would get a monthly payment for the rest of their lives, based on how long they had worked and their highest salaries. Sometimes, the state would provide cost-of-living adjustments to help keep up with inflation.

Over the past decade, new employees have been asked to increase their contributions from 6 percent to 9.5 percent of their salaries. Even with that extra contribution, ERS is now $15 billion short of what it would need to fund all its pension commitments today (called the unfunded liability) and on track to run out of money by 2061.

The unfunded liability threatens the retirement security of state employees. It also threatens the financial well-being of the state by compromising Texas’ bond rating and risking an unnecessarily severe financial burden for future generations of taxpayers.


SB 321 would eliminate that problem. It would also make another change that is creating some confusion. For future state employees, it would replace ERS’ classic defined benefit plan with a hybrid defined benefit plan. This change would not affect current employees or retirees, but state workers who begin after September 1, 2022 would be asked to contribute a lower amount of their salaries to the plan (from 9.5 percent back to 6 percent). They would then be guaranteed to earn at least 4 percent, and as much as 7 percent, annual interest. Once they retire, the state would match their funds at 150 percent.

This future plan should not be confused with a personal savings account such as a 401(k).

Since this new plan is structured in a way that is unlikely to create an unfunded liability, lawmakers believe it is an appropriate change to make while they are eliminating the current liability and protecting existing pensions

With support from the House, the state now has the generational opportunity to sustain ERS into the future, with a cost-of-living adjustment for our retirees possible. This will turn our legislative session hope into reality.

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