Texas Municipal Retirement System (TMRS)
The Texas Municipal Retirement System (TMRS) was established in 1947 and is administered in accordance with the Texas Municipal Retirement System Act (Texas Government Code, Title 8, Subtitle G).
City of Denton requires a contribution match of 7%. The City matches the employee contributions and interest 2:1 upon retirement. TMRS vesting requirements include: 5 years of service at age 60 or 20 years of service at any age. At retirement, the benefit is calculated as if the sum of the employee's contributions, with interest, and the city-financed monetary credits with interest were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven payments options. Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member's deposits and interest.
The funded ratio is utilized by cities to represent the ratio of the pension's assets to its liabilities or obligations. TMRS currently utilizes two separate actual valuations; Government Accounting Standards Board (GASB) 68 valuation and the Asset Smoothing Method (ASM). GASB 68 actual valuation captures the asset market value at a particular moment in time. Asset Smoothing Method recognizes asset over a period of time to reduce the effects of market volatility and stabilize contributions.
- Rate of Return
- Actuarial Accrued Liability, Actuarial Value of Assets & Funded Ratio
- Contribution Rates
Rate of Return Determination
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.
In determining their best estimate of a recommended investment return assumption under the various alternative asset allocation portfolios, TMRS's actuary focused on the area between arithmetic mean (aggressive) without an adjustment for time (conservative) and the geometric mean (conservative) with an adjustment for time (aggressive).
The target allocation and best estimates of real rates of return for each major asset class in fiscal year 2020 are summarized in the following table:
|Asset Class||Target Allocation||Long-Term Expected Rate of Return (Arithmetic)|
|Core Fixed Income||10.0%||1.25%|
|Non-Core Fixed Income||20.0%||4.14%|
Actuarial Accrued Liability, Actuarial Value of Assets & Funded Ratio
The Actuarial Accrued Liability represents the present value of the obligation of the pension to its members whereas the Actuarial Value of Assets represents the funds in trust set aside to meet that obligation. The difference in these values represents the Unfunded Actuarial Accrued Liability and the ratio of assets to liabilities determines the plan’s Funded Ratio:
- Amortization Period (Equivalent Single Amortization Period): 15.6 Years
- Funded Ratio (ASM): 84.6%
- Unfunded Actuarial Accrued Liability (UAAL) as percent of covered payroll: 83.9%
AAL Document Resources
- Actuarial Value of Assets Versus Actuarial Accrued Liability (PDF)
- Actuarial Value of Assets Versus Actuarial Accrued Liability (XLSX)
- TMRS Actuarial Valuation Reports Archive
- TMRS Changes to Fiduciary Net Position (PDF)
- TMRS Changes to Fiduciary Net Position (XLSX)
|Year||Total Contribution Rate||Actuarially Determined Contribution Rate||Full Retirement Rate: Actuarially Determined Employer Contribution (ADEC)|
For more information, visit the TMRS Rate Letters Archive.