New law impacts specific type of retirement fund, but not TRS

After a fiery column–“Bill declares open season on Texas teachers’ retirement funds”–appeared in the Dallas Morning News this week, we’re getting a lot questions about HB 2820.

  • HB 2820 DID NOT impact the Teacher Retirement System or any TRS pensions. With a headline stating, “Bill declares open season on Texas teachers’ retirement funds,” it is critical our members understand this does not impact their pension in TRS.

  • HB 2820 removes regulatory authority over 403(b) products from the TRS. A 403(b) plan is a tax-sheltered annuity plan similar to a 401(k) for specific employees of public schools and other tax-exempt organizations. In order to offer qualified investment products to employees of educational institutions in Texas, a company would be required to be licensed by the Texas Department of Insurance and be in compliance with minimum capital and surplus requirements.
  • While the Teacher Retirement System (TRS) has been charged with certifying these plans, TRS does not have the staff or expertise to do so. Oversight is conducted by state and federal agencies, including the Texas State Securities Board.
  • The bill does remove the limit on maximum fees for 403 (b) products, as Texas had been the only state to regulate these rates. This means that there is no cap on the fees that can be applied to such investments.
  • Before investing in any financial instrument, we strongly advise members to speak to a financial advisor.