TMRS Highlights

Media contact: Michelle Mellon-Werch, Director of Communications
TMRS Strategic Plan 2018 - 2022 • Adopted December 7, 2017

Overview

The Texas Municipal Retirement System (TMRS) administers a retirement program for 888 Texas cities. TMRS administered $31.9 billion in assets as of December 31, 2019. 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) 888 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 88.0% as of 12/31/2018.

2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
82.9%	85.1%	87.2%	84.1%*	85.8%	85.8%	86.3%	87.4%	87.1%	88.0%

* 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 - 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, 13.78% in 2017, -2.1 in 2018, and 14.27% in 2019.

Investment returns (as of 12/31/2018; Net of Fees)

1-year average	3-year average	5-year average	10-year average	20-year average	30-year average
14.54%	8.34%	6.38%	6.85%	7.79%	8.27%

Benefits - The average "original" annual benefit received by retired TMRS members was $17,711 (average of all initial retirements from 1997 through 2016).

TMRS paid a total of $1.4 billion in benefits 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.

Definitions

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).

Data

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 latest Actuarial Funding Policy, is to achieve the long-term full funding of promised benefits.

Year End (as of 12/31)	2019	2018	2017	2016	2015	2014	2013	2012	2011	2010
Employee Accounts*	179,944	174,316	167,577	162,612	157,601	149,073	145,448	142,883	141,532	141,372
*New Employee Members*	18,132	17,117	15,771	15,094	15,476	14,457	11,093	13,176	11,619	10,303
*Retired Member Accounts*	69,625	66,051	62,776	59,611	56,481	48,576	45,580	42,931	40,534	38,260
*New Retirements*	3,866	3,669	3,550	3,456	3,302	3,675	3,317	2,995	2,874	2,754
*Payments to Retirees*	$1.4B	$1.3B	$1.3B	$1.2B	$1.1B	$1.0B	$946.5M	$864.9M	$810.3M	$743.5M
*Total Cities*	888	887	883	872	866	860	850	849	847	842