Several bills passed during the recent legislative session will impact A&M System employee benefits and compensation.

Teacher Retirement System

The biggest impact for many employees will be the changes made to the Teacher Retirement System (TRS). Three major changes apply to current employees, except those who, before Sept. 1, 2005, will be at least age 50, will have at least 25 years of service or will have age plus service totaling at least 70:

• Retirement benefits will be calculated based on an average of the member’s salary in the member’s five highest paid years of plan participation. This will result in a lower retirement benefit than the current formula, which uses an average of the three highest paid years.

• The current pension subsidy for employees who retire with at least 20 years of service but whose age plus service does not equal at least 80 has been eliminated. This means that these employees can still retire early, but their benefits will be reduced by a larger percentage.

• Retiring employees will need to have age plus service that totals at least 90 to receive a partial lump-sum payment of their pensions at retirement.

The same bill eliminates a provision that allowed TRS members with at least seven years of service to buy up to three additional years of service. This applies to all TRS members, and they have until Dec. 31, 2005, to purchase service under this provision.

In addition, the bill eliminates the 90-day waiting period for new employees to begin participation, effective Sept. 1, 2005. Those who are still in their waiting periods as of Sept. 1 will begin participation on Sept. 1.

Optional Retirement Program

Another bill eliminates Optional Retirement Program (ORP) participants’ eligibility to reinstate previously withdrawn Employees Retirement System (ERS) service credit without first becoming an active members of ERS again. It’s effective Sept. 1, 2005.

Retirees returning to work

Employees who retire after June 1, 2005, and later return to work will not be eligible to receive longevity pay and benefit replacement pay, and only post-retirement service will count toward vacation accrual rates. Those who retired before June 1, 2005, and return to work on or after Sept. 1, 2005, also lose their eligibility for longevity pay.

Another bill allows retired nursing faculty members to return to teaching, beginning in fall 2005, without losing their TRS annuities, as long as they have not worked for a public school, including an institution of higher education, for at least 12 months before returning to work.

Compensation

Several changes will affect employees’ pay. These changes are all effective Sept. 1, 2005, except the military pay change, which became effective in June 2005:

• Longevity pay will increase to $20 per month for each two years of service, up to 42 years. It is currently $20 for each three years of service.

• Hazardous duty pay will increase from $7 to $10 per month for each year of service to a maximum monthly payment of $300.

• Employees who are eligible for Benefit Replacement Pay (BRP) and leave state employment will not be eligible for BRP if they return to state employment after a break of more than 30 days. Currently, employees who leave employment keep their eligibility if they return within 12 months.

• The amount of military pay used to determine the pay differential for those on military leave will no longer include combat or hardship pay or any family separation allowance. This means more employees will qualify for the pay differential and the payments will be higher.

Insurance benefits

• The contribution the state provides for health coverage increased for both years of the biennium.

• No bill passed that would impact A&M System insurance benefits for the 2006 plan year.

If you have questions on these changes, please contact your Human Resources office.