EXECUTIVE WORKSHOP
AGENDA Presentations at
www.tmrs.com/workshop.php
9:30 Breakfast
10:00 Welcome and Introductions 10:15 2017 Update on TMRS
10:45 Investments and Actuarial Panel 11:45 Questions/Summary
12:00 Lunch
An Update on the
Texas Municipal Retirement System
Presented by
Eric Davis, Deputy Executive Director
Pension Issues in 2017
• Unprecedented negative attention to local pension plans in Texas – not TMRS
• Funding, administration, plan design, and
governance issues are drawing the attention of elected officials, the press, and the public
• Transparency is absolutely essential
• Members and other “customers” expect a new level of service and communication
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Legislative
Update
85
thTexas Legislative Session
• Significant attention to retirement systems in Dallas and Houston
• Several bills are proposing investment restrictions on all public plans
• Other bills are aimed at creating a dialogue about the long-term sustainability of defined benefit
retirement systems
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Bills Amending the TMRS Act
• HB 3056 – Would permit the City of University Park to close its TLFFRA plan for fire fighters and enroll new fire department employees in TMRS
• HB 3670 – Would change the law governing TMRS
return-to-work after an 8-year separation to also pay interest on the suspended benefit
• SB 1752 – Would authorize a home rule city to hold an election that could close a defined benefit plan and create a defined contribution plan for new hires
Other Legislation
• HB 89 / SB 29 / SB 134 – Would require TMRS and other state investment funds to divest any direct holdings in companies that boycott Israel
• HB 632 – Would cap the benefit of any new
member of a retirement system at a rate tied to an active military pay grade (effectively $15,583 per month), after the effective date.
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Other Legislation, cont.
• SB 509 – Would require TMRS and other public
retirement systems to select an independent firm to evaluate the system’s investment practices and
performance at least every three years
• HB 500 / SB 500 – Would suspend annuity payments of a member of a public retirement system convicted of a felony in office while performing the duties of the office
Joint Interim Committee
• SB 936 – Would create a Joint Interim Committee composed of three Senators and three
Representatives to study public retirement systems, including different optional approaches to the
current plans
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New Projects and
Initiatives at TMRS
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Online City and Member Self-Service
TMRSDirect® — Additional functions in TMRS’ online programs, MyTMRS and the City Portal
• Multifactor Authentication for MyTMRS introduced in April
• Increased security for members
• Best practice for online systems
• Beneficiary selection in MyTMRS beginning in June
• Cities enroll members in City Portal
• Member makes beneficiary selection in MyTMRS
City Contribution Reporting
• Project underway to standardize electronic payroll reporting and contribution payment through the City Portal
• Over the next 18 months, TMRS will
• Issue a standardized file format for electronic reporting
• Provide an online entry point for pension payroll reporting Watch the TMRS website for more details
New Website Features
• Internal Audit page, with links to TMRS’ internal audit plan and audit results when completed
• “Help page” for cities’ use in earning the Texas State Comptroller’s Transparency Star in Pensions
• “My City Plan,” a handy one-page city plan
description that displays easily on a phone or tablet
• On-line “e-subscriptions” to all TMRS electronic publications
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New Communications Products
• Executive E-News, for TMRS members and city officials who want a more in-depth look at topics affecting TMRS
• Flyers on TMRS benefit provisions – COLAs, Updated Service Credit, etc. – to help members easily find the information they need
• Retiree luncheon – this year in San Antonio. If your city has an active retiree organization, please let us know!
Annual Training Seminar – “Strong by Design”
• TMRS’ annual training seminar will be held October 25 – 27, 2017 in Grapevine at the Gaylord Hotel and Resort
– Afternoon session on October 25 for new cities, new administrators, and anyone who wants a refresher – Registration will be available through an online app
starting in June
– Motivational and inspirational keynote speakers will kick off and close out the seminar
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How TMRS Differs from
Other Plans
Pensions in the News
• Pension problems may include:
• Benefits that are not sustainable
• Required contributions that are not being made
• Unrealistic assumptions may understate pension costs and lead to long-term problems
• Controversy over state vs. local governance
• All these issues affecting specific plans are being examined in the current legislative session
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Benefits that are not sustainable…
• Cities choose their plan of benefits; if chosen benefits become unsustainable, the city may reduce them
prospectively.
• TMRS’ cash balance design bases benefits on
accumulated deposits and interest, not on a formula.
• The average “original” TMRS annual benefit received by retired TMRS members at retirement was $17,411
— an average of all the initial retirement annuities of retiring TMRS members from 1997 through 2015.
Required contributions that are not being made…
• State law requires funding discipline: each city must pay the actuarially determined employer
contribution (ADEC) to advance fund all benefits over each employee’s active working career.
• No “pension holidays” or delayed contributions are allowed
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Unrealistic assumptions that may understate pension costs and lead to long-term problems…
• TMRS assumes an annual investment return of 6.75%, one of the most conservative assumptions among all plans, but this assumption is realistic based on TMRS’
asset allocation and capital market expectations
• All actuarial assumptions are examined and adjusted regularly as needed
• TMRS has modernized its life expectancy tables to address longevity of retirees
Controversy over State vs. Local Governance
• TMRS is centrally governed by a 6-member Board of Trustees, appointed by the Governor, but benefit
decisions are made by city officials
• TMRS is subject to oversight by the State Pension Review Board and state legislative committees
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Recognition of TMRS Practices
• Named “Public Plan Sponsor of the Year” for 2009 by PlanSponsor Magazine
• In a 2012 study by the Texas State Comptroller’s Office, TMRS was one of only three Texas plans to meet all
benchmarks for financial stability
• Meets all of the funding guidelines currently under
consideration by the Texas State Pension Review Board
• Identified in 2017 by the Center for State and Local Government Excellence as one of five systems
nationwide that have developed effective approaches to pension reporting and communication
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