Pension Information

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The City's Pension Plan

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The City of Carrollton is a member of Texas Municipal Retirement System (TMRS) a statewide, multiple employer agent plan. In an agent plan, each participating government’s pension is centrally administered and governed by state statutes but the assets and related pension liabilities for each government are accounted for separately and any unfunded liabilities are solely the obligation of that government. Carrollton has chosen from a menu of plan options as authorized by the TMRS statute. Carrollton’s plan provides the following benefit level:

Employee Contributions: 7% of pay
Employer Match at Retirement: 2x employee account balance
Updated Service Credits: 75% (100% is maximum) 
Cost of Living Adjustments: 50% of CPI (70% is maximum)
Vesting of Benefits: 5 years
Transfers Credits: None Provided
Death Benefits: None Provided

 

 

 

 

 

 

Upon retirement the employee account balance including interest is combined with the employer match to price a lifetime annuity based on the employee’s age at retirement.  


Digging Deeper in the Pension Numbers

In order to understand the pension commitments made by government to its employees and how successful it has been in funding those commitments to date, it is important to understand 1) investments (management of the assets/TMRS responsibility), 2) actuarial valuations (calculation of the cost of benefits earned to date/TMRS responsibility) and 3) funding (the city’s commitment to make contributions to fund the benefits earned to date/City responsibility).

Information on investment strategies and results are available in the investment section of TMRS’s Comprehensive Annual Financial Report (CAFR) at http://www.tmrs.com/publications.php (pages 58-69). If TMRS does not earn its projected rate of return, assets will be less than expected and the City will have to make up the shortfall through increased contributions.

Additional information on actuarial policies including valuations and experience studies validating assumptions used can also be found at the site above. If unrealistic actuarial assumptions or methodology are used, actual liabilities could be higher than projected and the City would be required to make up the shortfall with additional contributions.

Information on the City’s commitment to fund its pension liabilities and funded status of those liabilities is provided on this page and in the City’s CAFR, located here.

Interested parties should also note that TMRS employs two separate actuarial valuations: 1) a funding valuation to calculate the city’s actuarially determined contribution and 2) the Governmental Accounting Standards Board (GASB 68) valuation which is used for financial reporting purposes and is reported in the city’s CAFR. Similar in many ways, the primary difference between the two valuations is that the funding valuation uses a smoothed actuarial value of assets and the GASB 68 valuation utilizes fiduciary net position based on a market value of assets on the reporting date.


Financials

 

Total Actuarial Liabilities
(Both Valuations):

$356,702,669

 

Actuarial Assets
Per Funding Valuation:

$334,260,620

Total Fiduciary Net Position
Per GASB 68:
$349,353,714


Pension, finances


Historical Investment Returns

 pension history

1-Year Return: 5.85% 
3-Year Return: 8.46%
10-Year Return: 6.41%
30-Year Return: 9.11%

Assumed Rate of Return: 7.00%
Report Date: 12/31/14

 

To accomplish this rate of return, TMRS employs the following asset allocation: 

Asset Class Policy Benchmark Asset Class Goal Policy Index
U.S. Equities Russell 3000 Benchmark  17.5%
International Equities MSCI ACW-ex US IMI Benchmark  17.5%
Core Fixed Income Barclays US Aggregate Bond Index 
Benchmark 10.0%
Non-Core Fixed Income
50% Barclays US Corporate High Yield 
Index; 25% J.P. Morgan GBI Emerging 
Markets Global Diversified ($); 25% J.P. 
Morgan CEMBI Broad Diversified Index ($) 
Benchmark 20.0%
Real Estate NCREIF - ODCE  Benchmark 10.0%
Real Return Barclays World Government Inflation
Linked Bond Index 
CPI + 4%  10.0%
Absolute Return HFRI Fund of Funds Diversified Index  Cash (3-month Libor)
+ 5% 
10.0%
Private Equity Russell 3000 + 3%  Benchmark  5.0%
Cash Equivalents 30 Day T-Bill  Benchmark  0.0%

 

As stated on page 58 of TMRS Annual Report, "the system's portfolio is under the process of diversification and has shifted from an income-oriented strategy to a total return approach similar to most pension funds." As this diversification continues, the allocations listed above will continue to shift away from U.S. Equities and Core Fixed Income towards Non-Core Fixed Income, Real Estate, Private Equity, Real Return and Absolute Return. 


Contributions

Actuarially Determined Contributions
(as a % of pay)

Year

2016

2015

2014

Employee

7%

7%

7% 

Employer

11.48%

12.45%

13.30%

Total Required Contributions

18.48%

19.45%

20.30%

 


Employee Contributions Made as a Percent of Payroll
vs TMRS Minimum Required Contribution

Funded Percentage Over Time - Funding Valuation

 contributions as perc of payroll wtmrs funding ratio

Click here for Downloadable Data 

As illustrated above, the City has a long history of always
contributing its actuarially determined contribution and will often
contribute more than this amount as it eliminates future interest 
costs, improves funding percentages and provides a cushion of 
protection against rate volatility. 

Click here for Downloadable Data

As illustrated above, the City has enjoyed a funding
percentage in excess of 90% for the last five years.
Funding percentage for the funding valuation is defined as 
actuarial value of assets divided by the total actuarially
accrued liability. Funding percentages are affected in any
given year by many factors including investment returns,
actual experience different from assumptions, changing
assumptions used and changing the benefits provided.  



Actuarial

Actuarial Value of Assets (Funding Valuation): $334,260,620 Funded Ratio (Funding Valuation): 93.7%
GASB 68 Valuation (Market Value of Assets): $349,353,714 Funded Ratio (GASB 68 Valuation): 97.94%
 
Covered Payroll: 48,904,096
Unfunded Amount (Funding Valuation)
as a percent of Covered Payroll: 
45.8%
Amortization Period (Yrs):15.0 Unfunded Amount (GASB 68 Valuation)
as a percent of Covered Payroll:
 15.0%
Unfunded Liability: $22,422,049
Unfunded Liability per Member: $12,293 Active Members: 781 
Unfunded Liability GASB 68: $7,348,955 Inactive Members: 524
GASB 68 Unfunded Liability per Member: $4,029.03 Annuitants: 519

 


Cross Reference of Carrollton Specific Information found in TMRS documents 

2015 TMRS Comprehensive Annual Financial Report: Plan Provisions Chosen (pages 112-113)

Schedule of Changes in Fiduciary Net Position (pages 12-13)
5 Year Carrollton History of Net Position (Downloadable Data)

2015 TMRS Funding Valuation (page 124)

2015 GASB 68 Valuation for Carrollton


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