Retirement Security

Key Facts: The TRS Pension Trust Fund

The Teacher Retirement System of Texas (TRS) Pension Trust Fund provides annuity payments to more than 475,000 retired educators, totaling more than $1 billion each month. Nearly 930,000 active educators contribute 8% of their salaries to the TRS Pension Fund and are relying on the fund for financial security in their retirement.

The average TRS standard annuity is just $2,174 per month.

  • A TRS member’s annuity is set for life unless the Texas Legislature passes a cost-of-living adjustment (COLA).
  • Inflation has reduced the pension buying power of some TRS annuitants by as much as 33%.
  • The average TRS standard annuity is $2,174 per month, 13% below where it should be if it had kept up with inflation since 2014.
  • A COLA can be funded by TRS pension funds, state appropriations, or a combination of the two.
  • The overall cost of a COLA is lower with greater initial state appropriations.
A retired educator holds up a sign at a rally that reads, "Retirees 2 old 4 2nd Hustle."

The Fight for a COLA

TRS retirees haven’t received a cost-of-living adjustment (COLA) to their monthly annuity since 2013.

That’s why a COLA is a major part of our Respect Agenda for the Texas Legislature.

TRS Pension Cost-of-Living Adjustment

TRS retirees have not received a cost-of-living adjustment (COLA) to their monthly annuity since 2013, and that 3% COLA only applied to TRS members who retired before August 2004.

Any member who retired since then has never seen an adjustment to their annuity.

So a TRS member who retired in 2005, when the average monthly annuity was less than $1,800, is still receiving the same monthly annuity check. According to inflation data from the Bureau of Labor Statistics, the U.S. dollar is now only worth two-thirds of what it was worth in 2005, meaning that a TRS member who retired in 2005 has seen the purchasing power of their annuity decrease by 33%.

A line graph showing the T-R-S average monthly annuity versus inflation since 2014. By 2022, the average monthly annuity ($2,174) was 13.4% below what it should be if it had kept place with inflation ($2,511).

In 2014, the first full year after the last COLA went into effect, the average TRS standard annuity was $1,995 per month. $1,995 would be equivalent to $2,511 in today’s dollars, meaning that the average TRS monthly annuity would be $2,511 if it had kept up with inflation since 2014.

The actual average annuity today is only $2,174, 13% less than the inflation-adjusted average.

“Retirees are living from paycheck to paycheck every single day. There is no rainy day fund. There is no retirement savings fund.”

— Rita Runnels, Texas AFT Retiree Plus president

Cover of the 2022 T-R-S value brochure: A Great Value for All Texans

A TRS COLA Is a Win for All Texans

The Teacher Retirement System of Texas estimates that 94% of all TRS pension payments were spent locally in Texas. When combining the economic impact of pension payments and health care payments made by the system, TRS estimates that in 2021, it was responsible for adding $23.9 billion to the state’s total gross domestic product (GDP).

Imagine the impact if the Legislature chose to invest in TRS and our retirees.

Funding a TRS COLA

TRS is currently financial sound and can afford to pay for a small COLA out of existing TRS pension funds while remaining so.

But to give retirees the significant COLA they need while sticking to actuarial best practices, the state needs to appropriate money to the pension system. A COLA can be financed:

  • entirely from state appropriations to the system
  • entirely from existing TRS pension funds
  • or from some combination of the two.

If the state chose to appropriate funds to TRS for the purpose of funding a COLA, the overall cost of COLA would be significantly reduced. A greater share of the funding for a COLA that comes from initial state appropriations directly correlates with a lower total cost of the COLA because any investment the state makes now would compound over time. The resulting earnings from that long-term investment would go toward paying the COLA, thus reducing the overall cost to fund it.

Doing the Math

Why a State Investment Is Important

TRS currently assumes a 7% return each year on every dollar it invests. Because investment returns compound annually, $1 invested today would be estimated to yield an almost 100% return after 10 years.

Over the past 10 years, TRS has over-performed this assumption significantly, but the TRS Board of Trustees adopted a more conservative investment return assumption to protect the fund.

Accordingly, the least expensive option to fund the COLA would be for the state to fund the COLA with a single lump-sum appropriation, and the most expensive option would be to fund the COLA out of existing TRS pension funds.

According to calculations by TRS, the overall cost of funding a COLA would be six times as much if the COLA paid for entirely from existing TRS pension funds, as opposed to a lump-sum state appropriation.

Join Our Fight: If you’re a retired Texas public education employee, we invite you to join our union & the fight to pass our Respect Agenda. Join our Retiree Plus chapter for just $2 per month!