Public retirement systems in Texas number several dozen, from numerous, relatively small local plans, to the Teacher Retirement System of Texas, which is the sixth largest public retirement system in the U.S. Other statewide plans include the Employee Retirement System of Texas (ERS), the Texas County & District Retirement System, the Texas Municipal Retirement System, and systems administered by the Office of the Firefighter's Pension Commissioner. The Texas Pension Review Board provides a Guide to Public Retirement Systems in Texas (published January 2011).
Article 16, § 67 of the Texas Constitution authorizes the legislature to create public retirement systems; directs the legislature to establish "a Teacher Retirement System of Texas to provide benefits for persons employed in the public schools, colleges, and universities supported wholly or partly by the state;' and an "Employees Retirement System of Texas to provide benefits for officers and employees of the state and such state-compensated officers and employees of appellate courts and judicial districts." This section also specifies that employee contributions to these systems shall not be less than six percent, and that employer contributions shall be not less than six nor more than 10 percent. This section also provides requirements for the legislature to create local retirement systems.
Texas Government Code; Title 8, Chapters 801 et seq. establishes the Texas Pension Review Board.
Sec. 801.102. describes the composition of the seven-member State Pension Review Board:
The governor shall appoint to the board:
Three persons who have experience in the fields of securities investment, pension administration, or pension law but who are not members or retirees of a public retirement system;
One person who is a fellow of the Society of Actuaries, a member of the American Academy of Actuaries, or an enrolled actuary under the federal Employee Retirement Income Security Act of 1974;
One person who has experience in the field of governmental finance;
One person who is a contributing member of a public retirement system; and
One person who is receiving retirement benefits from a public retirement system
Article XVI, Section 66 of the State Constitution states that with regard to non-statewide systems, "Benefits granted to a retiree or other annuitant before the effective date of this section and in effect on that date may not be reduced or otherwise impaired," subject to certain limitations."
Title 34, Part 3 of the Texas Administrative Code establishes the Teacher Retirement System of Texas.
Per the U.S. Census, in FY 2011, employer contributions to Texas state and local government pension plans were 2.43 percent of all state and local government direct general spending.
Article 16, §66(d) of the Texas Constitution protects against impairment or reduction of accrued pension benefits "[A] change in service or disability retirement benefits or death benefits of a retirement system may not reduce or otherwise impair benefits accrued by a person if the person: (1) could have terminated employment or has terminated employment before the effective of the change; and (2) would have been eligible for those benefits, without accumulating additional service under the retirement system, on any date on or after the effective date of the change had the change no occurred. Benefits granted to a retiree or other annuitant before the effective date of this section and in effect on that date may not be reduced or otherwise impaired." Note that state constitutional protection contains opt out for local government by referendum. Tex. Atty. Gen. Op. GA-0615, The Honorable Phil King (2008) (constitutional provision prohibits a change in the method of determining the compensation base of vested employees if it reduces or impairs retirement benefits that the employee would have been eligible to receive on or before the effective date of the change; City's 12 percent cap on increases in earnings used to determine the compensation base for calculating retirement benefits impairs retirement benefits). Source: Robert Klausner, Esq., State Constitutional Protections for Public Sector Retirement Benefits