Alabama

Overview

The Retirement Systems of Alabama is the sole statewide retirement system in Alabama, administering retirement benefits for employees of the state, public school teachers, and employees of political subdivisions that have elected to participate. 

Plan Design

Defined benefit plans serve as the primary retirement benefit for substantially all public employees in Alabama.

According to the US Government Accountability Office, 97 percent of employees of state and local government in Alabama participate in Social Security.

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Authorizing Statutes and Board Structure

AL Code § 36-27-2 establishes the Emplyoees' Retirement System. AL Code § 36-27-23 establishes the ERS Board of Control, which includes 15 members. 

AL Code § 16-25-2 establishes the Teachers' Retirement System. AL Code § 16-25-19 establishes the TRS Board of Control, which includes 15 members. 

Details regarding the composition of these and other retirement boards is accessible via the Retirement and Investment Board Characteristics search tool located at the bottom of this page.

Fiduciary Duty/Prudence Standard

Employees' Retirement System: AL Code § 36-27-25 

(a) The Board of Control shall be the trustees of the several funds of the Employees' Retirement System created by this article as provided in Section 36-27-24 and shall have full power to invest and reinvest the funds, through its Secretary-Treasurer in the classes of bonds, mortgages, common and preferred stocks, shares of investment companies or mutual funds, or other investments as the Board of Control may approve, with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. Subject to like terms, conditions, limitations and restrictions, the Board of Control, through its Secretary-Treasurer, shall have full power to hold, purchase, sell, assign, transfer, and dispose of any investments in which the funds created in Section 36-27-24 shall have been invested as well as the proceeds of the investments and any moneys belonging to the funds.

Teachers' Retirement System: AL Code § 16-25-20

(a) (1) The Board of Control shall be the trustees of the several funds of the Teachers' Retirement System created by this chapter as provided in Section 16-25-21, and shall have full power to invest and reinvest the funds, through its Secretary-Treasurer, in the classes of bonds, mortgages, common and preferred stocks, shares of investment companies or mutual funds, or other investments as the Board of Control may approve, with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with the matters would use in the conduct of an enterprise of a like character and with like aims; and, subject to like terms, conditions, limitations, and restrictions, the Board of Control, through its Secretary-Treasurer, shall have full power to hold, purchase, sell, assign, transfer, and dispose of any investments in which the funds created herein shall have been invested, as well as the proceeds of the investments and any moneys belonging to the funds.

Legal Protections of Retirement Benefits

Benefits are contractually protected for vested employees who are eligible to retire. Board of Trustees of Policemen's and Firemen's Retirement Fund of City of Gadsden v. Cary, 373 So.2d 841 (Ala. 1979)(pension benefits were vested for employees who had completed 20 years of service before the effective date of a statutory amendment, but were not vested for employees with less service); Calvert v. City of Gadsden, 454 So.2d 983 (Ala. 1984)(retirement benefits for members who had not yet served 20 years of service at time statute fixing retirement pay as last three years' rank had not yet vested and were not entitled to specific performance); Snow v. Abernathy, 331 So.2d 626 (Ala. 1976) (holding that where employee voluntarily elected to become member of the contributory retirement system relationship was contractual in nature giving rise to vested rights). (AL CONST., Article I, §22) Source: Robert Klausner, Esq., State Constitutional Protections for Public Sector Retirement Benefits

See also the following search tools:

Retirement System Account Interest Policies Economic Actuarial Assumptions Retirement and Investment Board Characteristics
Information about interest rates applied to account balances of inactive plan participants Assumed rates of investment return and inflation Composition of the members of public retirement and investment oversight boards
Mortality Assumptions Plan Design Features Post-retirement Employment Policies
Public retirement system actuarial assumptions for mortality Numerous elements of retirement plan design Policies governing return-to-work for retirement system annuitants

More Data

 

Flag of Alabama(February 16, 1895)[3]

Population (2024) 5,157,699

Alabama public pension statistics,
per U.S. Census Bureau as of FY 2024

Assets

$51.9 billion

Active Members

238,011

Annuitants

178,627

Benefits Paid

$4.3 billion

Employee Contributions

$1.0 billion

Employer Contributions

$1.8 billion

Systems

One state system that accounts for 94 percent of assets and 97 percent of public pension plan participants in the state. The Census Bureau also reports 12 local systems.

More Data

Other  Resources


 


Become A Member

Becoming a member of NASRA offers a unique opportunity to join a community committed to the sound, efficient, and innovative stewardship of public retirement systems. Membership connects you with a network of professionals and experts, providing valuable insights into managing public retirement systems with a focus on sustainability and risk-averse strategies.

By joining NASRA, you gain the tools and resources to enhance the management of public retirement systems, ensuring their long-term success and reliability for generations to come.


 

What's New at NASRA: Public Pension Investment Return Assumption Brief Updated

NASRA’s latest update to standing issue briefs, Public Pension Plan Investment Return Assumptions underscores the critical role the investment return assumption plays in the financial health of public pension plans. Of all actuarial assumptions, it has the greatest impact on plan funding levels and cost. This brief traces how a decade of low interest rates and inflation, beginning in 2009, prompted many plans to reduce their long-term expected returns in line with more modest capital market projections. However, since inflation began rising in early 2021, the trend toward lowering return assumptions has largely paused. While reducing a plan’s assumed return can increase both costs and unfunded liabilities, setting this assumption is a careful, thorough process. It draws on expert input from actuaries and investment professionals and is guided by actuarial standards of practice.