Texas Stands Out in NASRA Report on Retirement Benefits for State Legislators
Retirement benefits for state legislators are far from uniform across the country, according to a new report released in April 2025 by the National Association of State Retirement Administrators (NASRA). The report, Understanding Retirement Benefits for State Legislators, reveals significant disparities in plan types, participation requirements, and benefit levels, offering valuable insights into how Texas compares.
According to NASRA, 10 U.S. states offer no retirement benefits at all to their state legislators, while 20 of the 40 states that do offer benefits allow legislators to opt out. Only a subset offer traditional defined benefit (DB) plans—18 in total—while others provide hybrid or defined contribution (DC) options, or allow legislators to choose between them.
Texas provides a cash balance plan for its state legislators through the Employees Retirement System (ERS) of Texas. Though legislators earn just $600 per month ($7,200 annually), the retirement benefit is calculated using the much higher base salary paid to state district judges, currently $140,000 annually.
The plan is optional—legislators must actively elect to participate. For those who do, the cash balance benefit includes:
- An annual interest credit of 4%, and
- Gain sharing equal to one-half of the average return on the system’s investments over the preceding five-year period, but only on returns between 4% and 10%, for a maximum gain sharing adjustment of 3.0%.
Combined, the total annual interest credit can reach up to 7%, depending on investment performance. Legislators contribute 6% of their compensation to the plan, while the state contributes 9%.
Why It Matters
For TEXPERS members and other stakeholders in public pension policy, the NASRA report highlights the uniqueness of Texas’ legislative retirement system in two important ways:
- Benchmarking Benefits to Judicial Salaries: Using a judge’s salary rather than the actual legislator salary for benefit calculations boosts the value of the pension and reflects the service commitment of elected officials despite low base pay.
- Maintaining a Hybrid-Inspired Model: While not a traditional DB plan, Texas’ cash balance structure offers a blend of predictability and market-based growth. It is distinct from purely defined contribution models that place investment risk solely on the employee.
As public pension reforms and legislative compensation remain ongoing topics of discussion, understanding these nuances in Texas’ system is essential for policymakers, pension fund administrators, and the public.
Read the full NASRA report here: NASRA Legislator Benefits Report (April 2025)
About the Author: Allen Jones is the director of communications and event marketing for TEXPERS. He joined the Association in 2017. Before TEXPERS, he worked in the news media industry, producing content for newspapers, magazines, and online publications and leading newsrooms as an editor and publications manager. [email protected]