Pay Raises Mean Pension Raises

The 5% pay raises that State of Texas employees receive this year and next won’t just help them today — but even after they retire.

The Employees Retirement System (ERS) calculates retirees' pensions based on their highest annual salary:

• 36 months for people who went to work for the state before September 1, 2009,
• 48 months for people hired between September 1, 2009, through August 31, 2013, and
• 60 months for people hired September 1, 2013, through August 31, 2022.

Regular steady pay raises, like the two 5% pay raises planned for state employees will also help your retirement.

How much?

The Texas Public Employees Association (TPEA) was instrumental in securing these raises and has estimated what the pay raises could mean to you. All examples assume you work for the state for 25 years, stay the 2025 fiscal year and are in group 1.

• For example, an employee in group 1 earning $50,000 before the raises and who works until August 2025 and retires with 25 years of service, will see their yearly pensions go from $28,750 to $30,211 — an increase of $1,461.

• An employee earning $75,000 before the raises and who retires with 25 years of service, will see their yearly pensions go from $43,125 to $45,325 — an increase of $2,200.

• An employee earning $100,000 before the raises and who retires with 25 years of service, will see their yearly pensions go from $57,500 to $60,423— an increase of $2,923.

Recent history shows that once state workers retire, they can go decades without a pension increase: current retirees haven’t had a cost-of-living adjustment, 13^th check, or other pension increase since 2001. (A fact we’re trying hard to change.)

So, the 5% raises that active workers are getting now will put you in a better starting position when you are ready to leave state service. You have dedicated your long careers to making Texas the great state it is and deserve a financially stable and secure retirement.

You can use ERS’s online calculator to see how much you will earn when you retire. 

Ann explains how the pay raises increase your pension when you retire in this video.

Thank you for your service to the Texas. 

Let us know in the comment below for any topics that you would like for us to cover in the new year.