ERS Retirement Group 4 Gain-share for Retirees

Retirees in ERS Retirement Group 4 received a permanent increase of 1.77% in their ERS annuity, beginning with their Dec. 29, 2023 payment.

ERS is able to provide this increase as gain-share, a feature of the Group 4 retirement benefit. This gain-sharing increase is based on ERS’ five-year average investment earnings as of the end of Fiscal Year 2023.

If you are in Group 4 and want to see the amount of your monthly annuity with the gain-share, log in to your ERS OnLine account. On your Retiree Home Page, click on View Payment (under My Payroll Information).

What is gain-sharing?

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

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 annuity will never decrease.
  • By law, gain-share is capped at 3% annually, so Group 4 retirees’ annuities will never increase more than 3% a year.

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 by which Group 4 retirees’ annuities will increase.

    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 increase to Group 4 retirees’ annuities, starting with the Dec. 29, 2023 payment.

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

The Texas Legislature established retirement benefits for all ERS retirement groups. The benefits for Groups 1, 2 and 3 (those who started work at a Texas state agency before Sept. 1, 2022) were not designed to provide regular annuity increases like cost-of-living adjustments (COLAs) or additional retirement payments (sometimes called “13th checks”). In past years, ERS retirees received COLAs or 13th checks from the Legislature on an ad hoc basis, but the benefit design for Groups 1, 2 and 3 does not include regular annuity increases in retirement. Learn more about how benefits are different in the four retirement groups.

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