Still confused about the new retirement benefit for agency employees starting after August 31?

In September, the new cash balance retirement benefit will start for employees who begin work at state agencies on or after Sept. 1, 2022 (Group 4). We want all state agency employees—even those not in Group 4—to know who will get this benefit and how it will work.

In particular, we want you to know three important things:

• Not a 401(k): The new cash balance benefit is a true pension with lifetime annuities, not a 401(k). Like your retirement benefit, the cash balance benefit is a defined benefit that will provide lifetime annuities for retirees. No matter how long they live or if there’s no more money in their account, retirees with this benefit will continue to get monthly payments from ERS for the rest of their lives.
• No changes for you: As a current state agency employee, you will still have your current retirement benefits. The calculations the Employees Retirement System of Texas (ERS) uses to determine your eligibility and annuity will not change. The new cash balance benefit applies only to employees who start work at a state agency on or after Sept. 1, 2022, or to employees who leave (or left) state employment, withdrew their retirement accounts and return to state employment on or after Sept. 1, 2022. 
• Service credit not for purchase: If you leave state employment, withdraw your ERS retirement account and return to state employment after Aug. 31, 2022, you will not be able to buy back your service credit. Members in retirement Groups 1, 2 and 3—that is, members who started work at an agency before Sept. 1, 2022—can buy service credit. But employees in Group 4 cannot (except in specific circumstances related to participation in a Proportionate Retirement System (PRP) and when they are no longer ERS members). If you leave and withdraw your retirement account, then return to a state agency after Aug. 31, 2022, you will be in Group 4 and cannot buy service credit. 

Of course, there’s a lot more to know about the new retirement benefit, and ERS will provide detailed information to agency HR departments and Group 4 members. 

If you’re curious about the benefit and want to learn more, read this Q&A article from last fall.