Texas Government Code - GOV'T § 843.105. Determination of Maximum and Allocated Prior Service Credit

(a) After receiving a certification of prior service and average prior service compensation under Section 843.104, the retirement system shall credit to the member the prior service certified and determine the member's maximum and allocated prior service credits.

(b) The maximum prior service credit is an amount equal to the accumulation at interest of a series of equal monthly amounts for the number of months of certified prior service.  Each monthly amount equals twice the subdivision's initial deposit rate, times the member's average prior service compensation.  Interest is allowed at the end of each 12-month period on an accumulated amount at the beginning of each period and is credited only for each whole 12-month period.  The rate of interest allowed on a maximum prior service credit is three percent a year.

(c) Allocated prior service credit is a monetary credit granted by a subdivision to be computed at a member's retirement date and, together with any multiple matching credit, used in determining a member's supplemental annuity.  The allocated prior service credit of a member is an amount equal to a percentage of the maximum prior service credit, increased from the subdivision's effective date of participation to the member's effective date of retirement at the applicable rate of interest provided under this subtitle or prior law for the period.

(d) The governing body of a subdivision may adopt a percentage to be used to determine allocated prior service credits.  The rate may be limited to zero or any multiple of five percent.