TMRS Funding Policy
The primary financial objective of the Texas Municipal Retirement System (“TMRS” or “System”) is to pre-fund the long-term costs of promised benefits to plan members and their beneficiaries at an approximate level percent of payroll from year to year. A pension plan’s funding policy is a systematic set of procedures used to determine the contributions which will be made in a specific year and in a series of years. The key elements of a funding policy include a description of the actuarial cost method, asset valuation (smoothing) method, amortization methods and actuarial assumption determination.
Under the new accounting standards (GASB 67/68), funding policy disclosures and actual funding patterns will be taken into account which will make a written funding policy even more important in ensuring secure retirement benefits. The projected cash flow test used in determining the total pension liability (TPL) single discount rate is basically a funding policy test.