TEXPERS Report: Texas’ State and Local Pension Funds Continue Trend Improvements

HOUSTON (October 24, 2018) – The 99 state and local pension funds monitored by the Texas Pension Review continued improving in 2017, according to a new study of PRB data by the Texas Association of Public Employee Retirement Systems.
TEXPERS analysis of pension funds' amortization periods shows an eight year trend of fewer years needed to pay off all present and future projected benefits to employees. The amortization period is similar to a home mortgage in showing the years needed to pay off interest and principal owed. The PRB says that amortization periods are the single “most appropriate” measure of public retirement systems’ health.
Six systems now have a 0-year amortization, compared to three last year. Thirty-five systems join them in the PRB’s recommendation for amortization periods less than 25 years.
TEXPERS’ study shows that 32 systems lowered their targeted investment return in line with Pension Review Board recommendations for more conservative estimates. Only 12 systems now target an 8% or better return compared to 24 systems which did so last year. Most systems (46) seek a 7.50-7.99% average yearly return, as compared to 42 last year. The targets are a major factor used to calculate the contributions needed from employees and their city sponsor.
TEXPERS executive director Max Patterson said: “Trend data reveals a high level of pension system health across Texas. Lawmakers should have every confidence in the defined benefits which continue to prove themselves by delivering reasonable earned benefits to police, firefighters and municipal employees at minimal contribution from taxpayers.”
The full report is available at 2018-amperiod-target and charts at 2018_am_period_charts.
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The Texas Association of Public Employee Retirement Systems (TEXPERS) is a statewide voluntary nonprofit association which provides quality education to trustees, administrators, professional service providers and employee groups and associations engaged or interested in the management of public employee retirement systems.

Media Contact: Joe Gimenez, 713.478.8034, [email protected]