HB268 Alabama 2020 Session

Summary

Primary Sponsor

Reed IngramRepresentative

Republican

Session

Regular Session 2020

Title

Retirement, RSA, ERS, Tier III Retirement plan created, plan benefits defined, Secs. 36-26-36.1, 36-27-1, 36-27-16, 36-27-24, 36-27-59 am'd.

Summary

HB268 creates a new Tier III defined-benefit retirement plan for public employees hired on or after October 1, 2020 (or Tier II employees who opt in).

What This Bill Does

It establishes a new defined-benefit retirement tier (Tier III) for eligible hires and for Tier II members who choose to join, shifting how their retirement benefits are calculated. Tier III uses a benefit formula of 2% of average final compensation per year of creditable service, with a maximum of 80% of AFC, and is funded through the system’s existing funds based on actuarial rates. It allows up to 180 days of unused sick leave to be converted into creditable service for Tier I and Tier III members to count toward retirement eligibility, but not for Tier II members. The act updates definitions and provisions to accommodate the new plan and permits Tier II members to join Tier III, aligning their rules with the new tier.

Who It Affects

• New public employees hired on or after October 1, 2020 by employers participating in the Employees' Retirement System would be inserted into the new Tier III defined-benefit retirement plan.
• Tier II plan members who elect to join the new Tier III plan would transition from Tier II to Tier III and receive the Tier III benefit framework, including the sick-leave credit provisions applicable to Tier III.

Key Provisions

• Creates a new Tier III defined-benefit retirement plan for hires on or after October 1, 2020, or Tier II members who elect to join the new plan.
• Tier III benefits: annuity equal to the actuarial value of contributions and a pension equal to 2% of average final compensation times years of creditable service, with a maximum of 80% of AFC.
• Allows conversion of up to 180 days of accrued, unused sick leave into creditable service for Tier I and Tier III members (not for Tier II members) to influence retirement eligibility.
• Keeps the system's funding structure (Annuity Savings Fund, Pension Accumulation Fund, Expense Fund) with contributions set by annual actuarial valuations and fixed normal/accrued liability contribution rates.
• Amends multiple retirement statutes to implement the new Tier III plan and to define eligibility and enrollment for the new tier.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Retirement Systems