SB321 Alabama 2017 Session

Summary

Primary Sponsor

Bill Hightower

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

SB321 lets certain Teachers' Retirement System and Employees' Retirement System members take a lump-sum payout of up to 50% of their retirement, funded by a new Alabama Pension Authority that would issue bonds.

What This Bill Does

It allows eligible Tier I and Tier II TRS and ERS members to elect a lump-sum cash payment equal to up to half of their retirement allowance in place of part of their ongoing retirement. The Director of Finance must certify each year that sufficient funds and favorable economic conditions exist to support the option; if not, the option can be suspended for 12 months. The bill creates the Alabama Pension Authority to issue bonds to fund these lump-sum payments, with debt service paid from savings from reduced state retirement contributions. Option 5 would be available starting October 1, 2017, and the Retirement Systems would provide financial counseling to anyone who elects it; the Authority would have broad powers and provisions for eventual dissolution.

Who It Affects

• TRS and ERS members (Tier I and Tier II) who have 10+ years of creditable service and are no longer in state service; they could elect a lump-sum payment in lieu of part of their retirement.
• State government and taxpayers, because the option is bond-funded through the Alabama Pension Authority and debt service would be paid from projected state savings and changes to retirement contributions; the plan also affects funding mechanisms and potential reductions in annual state contributions.

Key Provisions

• Amends Sections 16-25-14 and 16-25-21 to allow a lump-sum option for up to 50% of a retiree's retirement allowance, available to eligible TRS and ERS members with 10+ years of service.
• Eligibility requires that the member be separated from state service (or retiring under specified conditions) and that an actuarial certification and Board of Control approval are obtained; Director of Finance must certify funds and economic viability, with a 12-month suspension if not.
• Section clarifies that a lump-sum distribution cannot be used to purchase prior service credit; it may be used to purchase service credit for new retirement benefits earned after the distribution.
• Creates the Alabama Pension Authority to issue bonds to finance lump-sum retirement payments; debt service is paid from savings from decreased state contributions to the TRS and ERS, with various powers to manage funds and investments and to dissolve the authority.
• Contributions funding the lump-sum option are integrated into the system's funding structure (Annuity Savings Fund, Pension Accumulation Fund, Expense Fund) and include a 'lump-sum option contribution' to support debt service.
• Option 5 (the lump-sum option) becomes available to members with a retirement date on or after October 1, 2017; financial counseling is required for those electing this 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