Texas has passed legislation to increase contributions to the teachers’ pension plan, which also forces school districts to pay part of the cost.
Teacher contributions to the Teachers Retirement System of Texas (TRS) will increase to 7.7% of total salary costs from 6.4% over the next four years.
The state will also increase its contributions to 6.8% beginning in September, up from 6.4%. And school districts will now have to contribute 1.5%, up from zero.
The changes are expected to add about US$600 million to the pension fund in the first two years.
A cost-of-living increase for retired plan members will also be implemented for the first time since 2001. Those retired since 2004 will receive a 3% increase in benefits, which will affect about 60% of current pensioners.
TRS has approximately $117.5 billion in assets.