Media contact: Bill Wallace, Director of Communications
TMRS Strategic Plan 2018 - 2022 • Adopted December 7, 2017
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 upon the options selected by each city. To determine which options a particular municipality 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 Actuarial Funding Policy, is to achieve the long-term full funding of promised benefits.
|Year End (as of 12/31)||2017||2016||2015||2014||2013||2012||2011||2010||2009|
|New Employee Members||15,771||15,094||15,476||14,457||11,093||13,176||11,619||10,303||12,158|
|Payments to Retirees||$1.3B||$1.2B||$1.1B||$1.0B||$946.5M||$864.9M||$810.3M||$743.5M||$685.7M|
The Texas Municipal Retirement System (TMRS) administers a retirement program for 883 Texas cities. TMRS administered $28.9 billion in assets as of December 31, 2017. 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 (currently) 883 cities, providing retirement, disability, and survivor benefits to active and retired municipal employees. 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 employee deposits, city contributions, and investment income
- For a maximum benefit TMRS plan, investment income provides as much as 80% of a 20-year employee’s benefit
Local Control - Each 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 stands on its own by having its own actuarial assets, liabilities, and funded ratio.
Conservative Plan Features - TMRS’ Investment Return Assumption is currently 6.75%. Each city’s unfunded liability is amortized over a closed period of no more than 30 years. Each member’s benefits are advance funded over the member’s working career. Contribution “holidays” are not allowed; every city must pay its required contribution.
Funded Status - The funded status (ratio) of TMRS, as a system, was 86.3% as of 12/31/2016. This funded ratio has trended upward over the past few years.
* The decrease from 2012 to 2013 was primarily due to a change in the actuarial cost method, from Projected Unit Credit to Entry Age Normal. The funded ratio is expected to continue increasing in future years.
Investments & Fees - Annual investment returns were 10.2% in 2009, 9.0% in 2010, 2.4% in 2011, 10.1% in 2012, 9.86% in 2013, 5.99% in 2014, 0.34% in 2015, 7.04% in 2016, and 13.78% in 2017. Gross annual return averages for the period ending 12/31/17 were:
|3 year average||5 year average||10 year average||20 year average||30 year average|
Investment management fees were .30% of net position in 2017. TMRS’ total administrative costs in 2017, including investment management fees, were 0.37% of net position.
Benefits - The average "original" annual benefit received by retired TMRS members was $18,971 (average of all initial retirements from 1997 through 2017).
TMRS paid a total of $1.3 billion in benefits in 2017, up from $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 an employee, the matching amount agreed to by the city, and interest income credited to the employee’s account over the employee’s career. Employee 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 city has chosen the highest level of options for its employees; i.e., 7% employee 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 employee.
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.
Administrative costs represent the percentage of the plan’s net assets required to run the administration of the plan (includes items such as staff salaries, building and equipment costs, materials, and technology costs).
- Pension Intelligence • November 2018
- Pension Intelligence • October 2018
- Pension Intelligence • September 2018
- Pension Intelligence • August 2018
- Pension Intelligence • July 2018
- Pension Intelligence • June 2018
- Pension Intelligence • May 2018
- Pension Intelligence • April 2018
- Pension Intelligence • March 2018
Public Pension Information / Resources
- Texas Pension Review Board, February 2017, “Guide to Public Retirement Systems in Texas” (2017 "PRB Primer" - 279-page PDF)
- National Institute on Retirement Security, December 2014, “Still a Better Bang for the Buck: An Update on the Economic Effiencies of Defined Benefit Pensions” (30-page PDF)
- Texas Pension Review Board, December 2014, “Summary: Study of the Health of Texas Public Retirement Systems” (Summary flyer)
- Texas Pension Review Board, December 2014, “Study of the Health of Texas Public Retirement Systems” (121-page PDF)
- The Pew Charitable Trusts, February 2014, Public Pension Cash Balance Plans - A Primer
- Texas Comptroller of Public Accounts report, December 4, 2012, “Your Money and Pension Obligations”
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)
- Texas Town and City, January 2013, “The Texas Municipal Retirement System: Proven Success” (pdf)
- Texas Town and City, July 2012, “Texas Municipal Retirement System: Extreme Makeover” (pdf)
- PLANSPONSOR magazine, March 2010, “Public Plan Sponsor of the Year: Texas Municipal Retirement System” (pdf)