Texas 2017 - 85th Regular

Texas Senate Bill SB1752

Caption

Relating to authorizing certain municipalities to establish defined contribution plans to provide retirement benefits to certain employees.

Impact

If enacted, SB1752 will significantly alter the retirement benefits landscape for municipal employees. The ability to create defined contribution plans allows municipalities to potentially reduce their long-term liabilities and respond more flexibly to budgetary constraints. Additionally, the bill would require an election to approve any proposed retirement plan, ensuring that the decision-making process is democratic and engages local voters. This requirement could enhance community involvement in fiscal and personnel decisions while also providing transparency regarding retirement benefit provisions.

Summary

SB1752 introduces provisions for certain municipalities in Texas to establish defined contribution plans as an alternative to traditional defined benefit plans for newly hired employees. The bill aims to address flexibility and sustainability in municipal retirement systems by allowing local governments to opt for defined contribution plans that align with broader trends in public sector retirement policy. The new chapter added to the Government Code specifically outlines the definitions, applicability, and processes that municipalities must follow to implement such plans.

Contention

Notably, the bill places important restrictions on participation in retirement plans. Specifically, employees participating in defined contribution plans would not be eligible for defined benefit plans offered by the same public retirement system, which may raise discussion among labor groups and municipal associations regarding the potential implications for employee morale and long-term retirement security. As the state implements these changes, there may be concerns about the effectiveness of defined contribution plans in comparison to traditional pensions, especially regarding issues of market volatility and retirement adequacy.