The Alabama House of Representatives on Thursday passed legislation to allow Tier 2 education employees to receive their retirement after 30 years of service. HB134 received a favorable report from the Ways and Means Education Committee on Wednesday.
House Bill 134 is sponsored by State Rep. Alan Baker (R-Brewton).
“This removes some of the disparity of Tier 1 and Tier 2 retirement,” for education employees, Baker explained. “Tier 1 can retire after 25 years, Tier 2 cannot retire until after age 62. This removes much of the disparity.”
In the Teachers Retirement System, there are two tiers of members. Tier 1 members joined the state’s retirement system before Jan. 1, 2013. Tier 2 members joined the system on or after Jan. 1, 2013. For Tier 1 members, the contribution amount for regular state employees is 7.5% of compensation. For Tier 2 it is just 6.2%. On the backside, a Tier 1 employee can begin to draw a lifetime of state pension benefits once they reach 25 years of service, regardless of age. A Tier 2 employee, no matter how many years of service, cannot draw their pension benefits until they are age 62.
Baker said that a pension and early retirement is “Part of the expectation of the profession.”
“Law enforcement, military, and educators all have early retirements,” Baker explained. “Because you want a younger more energized workforce.
“Thirty years is a reasonable compromise. I appreciate RSA [Retirement Systems of Alabama] for working with me.
“This bill will raise the employee contribution from 6.2% to 6.5%. This increase will be to repay the unfunded liability of $49 million. $11 billion is the total liability.”
State Rep. Danny Garrett (R-Trussville) asked, “A similar bill passed the House last year?”
“Yes, a bill passed last year,” Baker said. “This is the same bill we had last year.”
State Rep. Thomas Jackson (D-Thomasville) said, “We should have incentives to try to become teachers. I would like to see Tier 2 brought up to 30 years. It is like we are trying to make it hard for them.”
“We are both educators – retired,” Jackson said to Baker. “I admire you for what you are trying to do and what you have done.”
Jackson said that the state, “Insults them (teachers) by giving them a 2% or 3% raise which inflation eats up before we can even get it out to them. These people are being burned out and leaving the profession.”
State Rep. David Wheeler (R-Vestavia) said to Baker, “I want to commend you for bringing this back. Everyone in this chamber knows that we are having trouble recruiting and retaining teachers.”
Baker said, “Tier 1 pay 7.5%. Tier 1 retirement would be difficult to try to turn back to because of the cost.”
The legislature had reformed the pension benefits paid to state employees and teachers 10 years ago, due to the budget problems that the state experienced in the wake of the Great Recession of 2008 - 2010. There were discussions then about switching state employees from a defined benefit plan to a 401K, but the upfront cost of backstopping the RSA liabilities was then seen as too costly.
HB134 passed the House 102 to zero.
Speaker of the House Mac McCutcheon (R-Monrovia) told Baker, “Thank you so much for the work that you have done working for this.”
The bill now goes to the Senate for its consideration. The 30-year retirement bill for Tier 2 education employees stalled in the Senate during the 2021 Regular Legislative Session.
Tuesday will be day seven of the 2022 regular legislative session. An Alabama Regular Legislative Session may be no longer than 30 legislative days or 12 calendar days from start to finish.
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