In a decision issued on July 1, the United States Court of Appeals for the Fifth Circuit considered whether changes that were made to the City of Fort Worth pension plan violated the Texas constitution’s restriction against reduction of public pension benefits accrued by a participant. Texas Constitution Section 66(d). The court’s opinion concludes that the Texas constitution does not prohibit amendments to a plan with respect to expected but as-yet unearned benefits. The court’s opinion is important because the court declined to follow the Texas Attorney General’s 2008 opinion which concluded that a plan’s benefit formula is constitutionally protected, even with respect to unearned benefits. The Fifth Circuit’s opinion contains an extensive analysis of the difference between accrued benefits and vested benefits and will provide much for public pension plans to consider in future plan amendments. Houten v. City of Fort Worth, 5th Cir. July 1, 2016.
Court’s Opinion is here
2008 Attorney General’s Opinion is here
