ERS Retirement Group 4 Gain-share for Members

Group 4 members will receive a 1.77% gain-share on the Aug. 31, 2023 balance of their ERS Retirement account.

If you are a current Group 4 member with an account balance as of Aug. 31, 2023, this 1.77% gain-share will be reflected in your ERS Retirement account balance. This is in addition to the guaranteed 4% interest that Group 4 members earn over the course of the year.

If you are in Group 4 and want to see the gain-share’s impact on your account balance, log in to your ERS OnLine account after Jan. 17, 2024. On your Member Home Page, click on Account Balance Summary (under My Retirement Information).

What is gain-sharing?

Gain-sharing is a way for ERS to share positive investment returns with Group 4 members and retirees. In a fiscal year when the average investment return for the previous five fiscal years is more than 4%, members in Group 4 get an increase in their accounts, up to an additional 3% gain-share, for a possible maximum total 7% increase. By law, gain-share is available only to participants in the Group 4 retirement benefit.

If you’re a Group 4 member who contributes to the Law Enforcement and Custodial Officer Supplemental (LECOS) Retirement Fund, your LECOS account will receive the same gain-share percentage as your regular retirement account.

It's important to note:

  • Because gain-share is based on the five-year average of annual investment returns, there’s no guarantee Group 4 members will get a gain-share every year.
  • Your ERS Retirement account will never earn less than 4% each year, and it will never lose money.
  • Gain-share is capped at 3% under current law.

How does ERS calculate and apply a gain-sharing increase?

  1. At the end of the fiscal year, ERS’ external custodian bank determines the five-year average return on investments.

  2. If the average is more than 4%, ERS divides the amount over 4% in half to get the gain-share percentage members will earn for that fiscal year.

    Fiscal Year 2019 - 2023 average return 7.53% - 4% = 3.53% excess return
    Excess return 3.53% / 2 = 1.77% gain-share for FY23

  3. ERS applies the gain-sharing interest to Group 4 members’ Aug. 31, 2023 account balances in December 2023.

How does gain-sharing benefit Group 4 members?

Group 4 Retirement is a cash balance benefit, a type of pension in which the lifetime annuity is based on the amount of money in the employee’s ERS retirement account when they retire. Gain-share increases the interest on employees’ retirement accounts in a given year, which increases the amount in their accounts when they retire.

Why don’t Groups 1, 2 and 3 get gain-share?

Retirement annuities for members of Groups 1, 2 and 3 (those who started work at a Texas state agency before Sept. 1, 2022) are based on how long they worked for the state, their highest average salary when they worked for the state and, for Groups 2 and 3, their age when they retired. Because their annuities aren’t based on the amount in their retirement accounts, the amount of interest earned doesn’t affect their annuity calculations. Learn more about how benefits are different in the four retirement groups.

More information

Who's in Retirement Group 4?

Group 4 members are those who:

  • started work at a Texas state agency after Aug. 31, 2022,
  • currently have an ERS Retirement account, and
  • have not started drawing an ERS retirement annuity.

This includes those who meet the above criteria, but no longer work at a Texas agency—that is, former employees in Retirement Group 4 who haven’t withdrawn their ERS retirement accounts and haven’t started getting an ERS annuity.

This doesn’t include members who worked at a Texas agency before Sept. 1, 2022, left state employment and didn’t withdraw their ERS Retirement account, then returned to state employment after Aug. 31, 2022.

Learn more about the four retirement groups.