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Texas Municipal Retirement System (TMRS)

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Texas Municipal Retirement System (TMRS)

Overview:

The Texas Municipal Retirement System (TMRS) administers a retirement program for 860 Texas cities. 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.
TMRS administers a program for approximately 860 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 7%. 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 85.8% as of 12/31/2014. This funded ratio has increased significantly over the past few years.
2008       2009     2010     2011     2012     2013     2014
74.4%       75.8%       82.9%     85.1%     87.2%     84.1%*     85.8%

* 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 increase in future years.

Investments & Fees - Annual investment returns were −1.3% in 2008, 10.2% in 2009, 9.0% in 2010, 2.4% in 2011, 10.1% in 2012, 9.86% in 2013, and 5.99% in 2014. Gross annual return averages for the period ending 12/31/14 were:
3 year average       5 year average     10 year average
8.57%       7.40%       6.45%

Investment management fees were .077% in 2014. TMRS’ total administrative costs in 2014 were 0.146% of net assets.

Benefits - The average annual benefit received by retired TMRS members was $17,324 (average of all retirements as of 12/31/14).

TMRS paid a total of $1.0 billion in benefits in 2014, up from $946.5 million in 2013, $865 million in 2012, and $810 million in 2011.

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