HB356 Alabama 2017 Session

Summary

Primary Sponsor

Jim Patterson

Republican

Session

Regular Session 2017

Title

Teachers' Retirement System and Employees' Retirement System, lump sum retirement option authorized, Alabama Pension Authority created, bond authority, Secs. 16-25-14, 16-25-21, 36-27-16, 36-27-24 am'd.

Summary

HB356 creates a lump-sum retirement option for TRS and ERS retirees, funds it through a new Alabama Pension Authority with bond financing, and updates the retirement laws to implement and regulate the option.

What This Bill Does

The bill allows eligible retirees of the Teachers' Retirement System and Employees' Retirement System to elect a lump-sum cash payment of up to 50% of their retirement allowance, in lieu of a portion of the ongoing benefit. The Director of Finance must certify that available funds and economic conditions are sufficient to support the option; if not, the option is suspended for 12 months. It creates the Alabama Pension Authority, authorized to issue bonds to fund the lump-sum payments, with debt repaid from savings from reduced state contributions to TRS/ERS, and it outlines the authority's powers, bond rules, investments, and dissolution. It also sets up funding mechanisms, requires financial counseling for beneficiaries choosing the option, and prohibits purchasing prior service credit for which a lump-sum was distributed.

Who It Affects

• Retirees and former members of the Teachers' Retirement System and Employees' Retirement System who may elect to take a lump-sum payment (up to 50% of their retirement allowance) in lieu of part of their ongoing retirement.
• Active Tier I/II TRS/ERS members with 10+ years of creditable service who are no longer in state service and may elect a lump-sum present-value option within 12 months for retirement benefits earned after distribution.

Key Provisions

• Allows a lump-sum cash payment equal to and in lieu of a portion of the retirement allowance, not exceeding 50% for TRS/ERS retirees.
• Director of Finance must certify that funds are available and economic conditions are adequate; if not, the lump-sum option is suspended for 12 months.
• Creates the Alabama Pension Authority, with power to issue bonds to fund the lump-sum payments and to manage bond-related debt service.
• Debt service for the bonds is to be paid from savings accrued from decreased state contribution obligations to TRS/ERS.
• The lump-sum option is funded through a new lump-sum option contribution process and designated funds, with contributions allocated to support debt service.
• Eligible retirees who receive a lump-sum option may not purchase prior service credit for which a lump-sum payment was distributed; future service can be purchased.
• Option 5 (the lump-sum option) becomes available to members with retirement dates on or after October 1, 2017.
• Retirement systems must provide financial counseling to any member electing the lump-sum option.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Retirement