HB77 Alabama 2019 Session

Summary

Primary Sponsor

Alan BakerRepresentative

Republican

Session

Regular Session 2019

Title

Retirement, RSA, retirement plans, Tier III retirement plan created, Tier III Teacher Recruitment and Retention Act, plan benefits defined, Secs. 16-25-1, 16-25-11.1, 16-25-14, 16-25-21 am'd.

Summary

HB 77 creates a new Tier III defined-benefit retirement plan for certain Alabama public employees and allows sick leave to count toward Tier III retirement service.

What This Bill Does

It establishes Tier III for employees who first become TRS/ERS members on or after January 1, 2013 (and who do not remain in Tier II) and defines Tier III benefits as a defined pension: an annuity plus a pension equal to 2% of average final compensation times years of creditable service, with a maximum of 80% of the average final compensation. It also provides disability retirement for Tier III using the same 2% formula and cap. The act allows accrued sick leave to be converted into creditable service for Tier III members (not applicable to Tier II). It sets funding rules, including employer deductions into the Annuity Savings Fund (7.5% of earnable compensation for most Tier III members, 7.75% for certain Tier III correctional/officer roles) and contributions to the Pension Accumulation Fund, with rates determined by the Board of Control and subject to actuarial valuation. The bill becomes effective immediately upon passage.

Who It Affects

• Public employees who are newly eligible as TRS/ERS members (with no prior TRS/ERS service) and who join Tier III will have a different retirement benefit formula and may have sick leave counted as service.
• Employers participating in the Teachers' Retirement System and the system's funding structure will implement new Tier III payroll deductions and fund allocations; some Tier II members may move to Tier III if they opt in under the law.

Key Provisions

• Creates the Tier III defined-benefit retirement plan for eligible new hires and certain Tier II members who elect to join Tier III.
• Tier III retirement benefit consists of an annuity plus a pension equal to 2% of average final compensation times creditable service, capped at 80% of the average final compensation.
• Disability retirement for Tier III uses the same 2% times years formula with the 80% cap.
• Allows conversion of accrued sick leave into creditable service for Tier III members (not available to Tier II).
• Establishes funding structure with the Annuity Savings Fund and Pension Accumulation Fund; sets employer deduction rates (7.5% for most Tier III members, 7.75% for certain Tier III corrections/officers) and related contributions, subject to actuarial valuation and Board adjustments.
• Effective date of the act is immediate upon passage.

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

Subjects

Teachers' Retirement System