H.B. No. 3870 proposes amendments to the Employees Retirement System of Texas, specifically introducing two new sections, 814.605 and 814.606, to enhance benefits for annuitants. Section 814.605 establishes a one-time 10 percent adjustment to monthly benefits for service retirement, disability retirement, and death benefits, effective from January 2026. The board of trustees is tasked with recalculating the monthly benefit amounts to include this adjustment. Section 814.606 mandates an annual cost-of-living adjustment based on the Consumer Price Index, allowing for increases in benefits to reflect inflation, contingent upon the retirement system's actuarial soundness and available funds.

Additionally, the bill outlines a one-time supplemental payment to eligible annuitants, set to be disbursed in January 2026. This payment will be the lesser of $2,000 or the gross amount of the regular annuity payment for December 2025. Eligibility criteria are specified, including requirements for standard and optional retirement annuity payments, with certain exclusions for payments based on service credited in the elected class. The supplemental payment is contingent upon the legislature appropriating sufficient funds to avoid increasing the retirement system's unfunded actuarial liabilities. The act is set to take effect on September 1, 2025.

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