ERS annuity basics
Annuities administered by the Employees Retirement System of Texas (ERS) are a dependable source of income for almost 118,000 state retirees and some of their survivors. If you’re receiving an annuity, you likely talked with an ERS retirement counselor before you retired to discuss your monthly payment. Whether it’s been a few months or several years since you retired, you may have some questions about this important benefit. See a few reminders below.
Will the amount of my annuity ever increase or decrease?
As a defined benefit plan (commonly referred to as a pension), your State of Texas Retirement plan pays you a set monthly payment that is calculated using a formula defined by state law and based on individual factors like highest average salary and years of service. The money for these payments comes from the $29 billion (as of August 31, 2020) ERS Retirement Trust Fund. This fund represents the money employees and the state contribute to the retirement plan, along with investment earnings on those contributions.
The state guarantees payments to current annuitants regardless of the amount of money in the Trust Fund. If necessary, the Texas Legislature can reduce retirement benefits for new and/or future state employees, or increase state or employee contributions to ensure the Fund can make promised payments. They took these steps in 2009, 2013 and 2015.
The state can only increase annuity payments for retirees if the Trust Fund is “actuarially sound”—another measure defined in state law. The ERS Trust Fund is not expected to be actuarially sound for the foreseeable future. Read more about the status of the Fund in the Message from the Executive Director.
The State of Texas Retirement plan was not designed to give increases like cost-of-living adjustments (COLAs) or additional retirement payments (“13th checks”). The state was able to give COLAs and 13th checks in the 1990s and early 2000s, a time when the economy was unusually strong and investment markets consistently performed well. For most of its 74-year history, ERS has not provided increases like these. They are not a typical feature of the plan, and retirees should not expect them.
Your annuity payment can change if you elected one of the survivor options and your beneficiary dies before you. Your monthly payment will change to the standard annuity option for the rest of your life. See more about death benefits.
Why does the amount of my monthly check sometimes change from year to year?
Changes to the federal tax tables can occur each year and can cause your annuity payment to increase or decrease. How much is deducted from your payment depends on things such as the amount of your annuity, your overall annual income and allowances and/or exemptions you claim. The amount deducted for your insurance premiums also can change.
Can I change my annuity beneficiary?
If you selected the standard annuity or an option offering a guaranteed survivor payment for either 60 or 120 months after retirement, you can change your beneficiary by logging in to your ERS OnLine account. After entering your beneficiary’s information you will see “Form Pending” next to your pending designation. ERS will send you a form that must be signed, witnessed, returned and approved by ERS before the change is effective. If you elected the retiree’s and survivor’s lifetime payment option, you can designate only one beneficiary at retirement, and changes can only be made in extremely limited circumstances. See steps at Update Your Beneficiaries . If you do not have access to a computer or internet, contact ERS at (877) 275-4377 to discuss options.
What happens to my annuity when I die?
It depends on your selected annuity option:
- If you chose a lifetime monthly payment to your beneficiary after you die, your beneficiary will receive that pre-determined payment for their lifetime.
- If you chose to get an annuity for either five years (60 months) or 10 years (120 months) after retirement and you die before that time period expires, your survivor(s) will get the monthly payment for the remaining months. Remember, the 60 or 120 months is from your retirement date, not your death.
- If you chose the standard annuity and there is money left in your State of Texas Retirement account when you die, your survivor(s) will get a one-time payment. Your retirement account usually is exhausted in two to three years after retirement. Your death must be reported to ERS as soon as possible. ERS will mail a personalized packet of information and instructions to your beneficiary.
Can my pension be reduced by any Social Security benefits I receive?
No. Your Social Security benefits have no impact on your ERS pension.
What if I decide to go back to work?
If you go back to work for a state agency, you will not contribute to a State of Texas retirement account. In most situations, your annuity gross earnings will be the same no matter where you return to work, although your monthly payment could change based on changes in insurance premiums or deductions. (This also can differ by employee class or if you return to work in a different employee class. Agency employees, law enforcement officers, judges and elected officials are examples of different employee classes.)