The Texas Municipal Retirement System (TMRS) administers a retirement program for 895 Texas cities. TMRS administered $34.5 billion in assets as of December 31, 2020. TMRS was established in 1947 and is administered in accordance with the Texas Municipal Retirement System Act (Texas Government Code, Title 8, Subtitle G). TMRS is a qualified retirement plan under Section 401(a) of the Internal Revenue Code. The System offers a choice of benefits so that each participating city can design a plan to suit its needs and budget. IRS Favorable Determination Letter for 2017 (pdf)
TMRS administers a program for 895 participating cities, providing retirement, disability, and survivor benefits to active and retired Members. Distinguishing features of the System are:
- TMRS is a statewide retirement system that cities may elect to join
- TMRS is a “hybrid”cash-balance defined benefit retirement plan rather than a traditional, formula-based defined benefit plan
- TMRS does not receive any state funds and does not administer a health care plan
- Benefits are based on a Member’s account balance at retirement. The retirement benefit is funded through mandatory Member contributions, city contributions, and investment income
- For a maximum benefit TMRS plan, investment income provides as much as 80% of a 20-year Member’s benefit
Local Control. Each TMRS participating city chooses from a menu of benefit options to design a retirement program that suits its needs. Certain benefits chosen can be prospectively modified by each city to control costs. Each city has its own actuarial assets, liabilities and funded ratio.
Conservative Plan Features. TMRS’ Investment Return Assumption is 6.75%. Each city’s unfunded liability is amortized over a closed period of 20 years. Each Member’s benefits are advance funded over the Member’s working career. Every city must pay its required contribution.
Funded Status. The funded status (ratio) of TMRS, as a system, was 89.5% as of 12/31/2020.
Investments. Annual investment returns were 2.4% in 2011, 10.1% in 2012, 9.86% in 2013, 5.99% in 2014, 0.34% in 2015, 7.04% in 2016, 13.78% in 2017, -2.1 in 2018, 14.27% in 2019 and 7.65% in 2020.
Investment returns (as of 12/31/2020; Net of Fees)
Benefits. TMRS retirees and beneficiaries received an average annual retirement benefit of $21,524.
TMRS paid a total of $1.6 billion in benefits in 2020, $1.4 billion in 2019, $1.3 billion in 2018, $1.3 billion in 2017, $1.2 billion in 2016, $1.1 billion in 2015, $1 billion in 2014, and $946 million in 2013.
As a cash-balance plan, TMRS benefits are based on the contributions made by the Member, the matching amount agreed to by the participating city, and interest income credited to the Member’s account over the Member’s career. Member accounts are credited a minimum of 5% per year.
A defined benefit plan, as opposed to a 401(k)-type defined contribution plan, is a plan in which the formula to compute the retirement benefit is “defined” in advance.
In this context, a maximum benefit TMRS plan refers to a plan in which a participating city has chosen the highest level of options for its employee Members; i.e., 7% Member contributions, 2:1 city match, 100% Updated Service Credit, and retiree COLAs at 70% of CPI.
The investment return assumption is the assumed future rate of return used by an actuary to determine future funding requirements. .
All TMRS benefits are fully advance funded over the active working career of each Member.
The funded status is a measure of the progress in the System’s funded ratio, which is the actuarial value of assets expressed as a percentage of the actuarial accrued liability.
Each participating TMRS city has its own retirement benefit structure within the general framework of the TMRS Act. Provisions may vary from city to city, depending on the options selected by each city. To determine which options a particular city has adopted, use the My City Plan or the City Plan Provisions page. For detailed information on TMRS’ investment policy and performance, see the Investments page.
The primary financial objective of TMRS, contained in the latest Actuarial Funding Policy, is to achieve the long-term full funding of promised benefits.
|Year End (as of 12/31)||2020||2019||2018||2017||2016||2015||2014||2013||2012||2011|
|New Employee Members||TBD||18,132||17,117||15,771||15,094||15,476||14,457||11,093||13,176||11,619|
|Retired Member Accounts||TBD||69,625||66,051||62,776||59,611||56,481||48,576||45,580||42,931||40,534|
|Payments to Retirees||$1.6B||$1.4B||$1.3B||$1.3B||$1.2B||$1.1B||$1.0B||$946.5M||$864.9M||$810.3M|
*Total active and inactive plan member accounts.
Stories/Studies about TMRS
- Center for State and Local Government Excellence and NASRA, April 2017, “Public Pension Reporting and Disclosure: The Current State of Practice and Examples of What Works Well” (pdf)