SB388 Alabama 2012 Session

Summary

Primary Sponsor

Gerald H. AllenSenator

Republican

Co-Sponsors

J.T. WaggonerDel MarshTrip PittmanArthur OrrDick BrewbakerBryan TaylorMark Slade Blackwell

Session

Regular Session 2012

Title

Retirement, Teachers (TRS) and State Employees (ERS), new defined benefit plan for persons entering TRS and ERS on or after January 1, 2013; contributions, minimum retirement ages, and benefits provided, Secs. 16-25-1, 16-25-3, 16-25-11.1, 16-25-14, 16-25-21, 36-26-36.1, 36-27-1, 36-27-4, 36-27-16, 36-27-24, 36-27-59 am'd

Summary

SB388 creates a new Tier II defined-benefit retirement plan for new TRS/ERS members after January 1, 2013, with mandatory salary contributions and separate retirement rules, while keeping the existing Tier I plan for those who joined earlier and assigning administration to the Retirement Systems of Alabama.

What This Bill Does

Establishes a new Tier II defined-benefit plan for employees who first become eligible members on or after January 1, 2013, with mandatory employee contributions to the new plan. Sets retirement ages and eligibility, including 62 for Tier II general members (with some earlier options for certain public safety roles) and preserves a 60-year retirement age for Tier I members. Creates three dedicated funds (Annuity Savings Fund, Pension Accumulation Fund, and Expense Fund) to manage contributions and benefits, with actuarial rates (normal and accrued liability contributions) set based on valuations and determined by the Retirement Systems of Alabama.

Who It Affects

• New hires who become members of TRS or ERS on or after January 1, 2013: entered into the new Tier II plan with required salary contributions and separate benefit rules.
• Employers (schools, state agencies, and others participating in TRS/ERS): must deduct member contributions and make employer contributions into the three funds; funding levels and reporting are governed by the act.
• Existing Tier I members and the administering bodies (RS Alabama): continue under the current Tier I framework, while the new Tier II plan operates alongside it for new members.
• Public safety personnel (police, correctional officers, firefighters, and related law enforcement officers) within Tier II: have specific retirement provisions and the act defines specialty rules and contributions for those roles.
• Retirement Systems of Alabama (RS Alabama): designated administrator of the new Tier II plan and the overall funding/fund management structure.

Key Provisions

• Establishes a new Tier II defined-benefit retirement plan for TRS/ERS members who first join on or after January 1, 2013 and requires these members to contribute a portion of their salary to the new plan.
• Creates three funds to manage benefits and contributions: Annuity Savings Fund (member contributions), Pension Accumulation Fund (employer contributions and reserves), and Expense Fund (administrative costs).
• Sets retirement ages: Tier I members may retire at age 60; Tier II members may retire at age 62, with certain older or earlier-eligibility options for state policemen and other public safety roles as defined in the act.
• Uses actuarial valuations to determine normal contributions and accrued liability contributions; both employer and member contributions are collected and managed across the three funds, with annual reporting requirements and potential adjustments based on valuations.
• Converts unused sick leave to membership service only for Tier I members; Tier II members are not eligible for this conversion under the act.
• Holds that any future increase in Tier II retirement age requires a two-thirds vote of the elected membership of both legislative chambers.
• Provides severability, repeal of conflicting laws, and an effective date of January 1, 2013.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Retirement