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 https://www.tmrs.com/down/pubs/CAFR_2017/CAFR_2017_Investment.pdf (pages 59-72). 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 here (pages 8-67). 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

 

As of 12/31/17 Valuation

 
 

Total Actuarial Liabilities
(Both Valuations):

$414,941,180

 

Actuarial Assets
Per Funding Valuation:

$393,485,849

Total Fiduciary Net Position
Per GASB 68:
$410,286,206


Charts

 


Historical Investment Returns

 Historical Investment Returns

1-Year Return: 14.27% 
3-Year Return: 7.19%
5-Year Return: 7.46%
10-Year Return: 6.71%

Assumed Rate of Return: 6.75%
Report Date: 12/31/17

 

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 Index Benchmark  17.5%
International Equities MSCI ACW-ex US IMI (USD), net Benchmark  17.5%
Core Fixed Income Bloomberg Barclays US Aggregate Bond Index 
Benchmark 10.0%
Non-Core Fixed Income
Rollup of Underlying Manager Benchmarks

50% Bank of America Merrill Lynch US High Yield Constrained Index; 50% Credit Suisse Levered Loan Index

20.0%
Real Estate NCREIF - ODCE Index CPI + 5% 10.0%
Real Return Rollup of Underlying Manager Benchmarks CPI + 4%  10.0%
Absolute Return HFRI Fund of Funds Diversified Index  Cash (3-month Libor)
+ 5% 
10.0%
Private Equity Rollup of Underlying Manager Benchmarks Russell 3000 + 3% 5.0%
Cash Equivalents 30 Day T-Bill  Benchmark  0.0%

 

The Board of Trustees recognizes that the most important determinant of long-term return and risk is the asset allocation decision. The Board's strategic target allocation is intended to reflect, and be consistent with, the return objective and risk tolerance expressed in the IPS. It is designed to meet or exceed the Board's objectives at a controlled level of risk and liquidity that is acceptable to the Board. In establishing its risk tolerance, the Board considers its ability to withstand short and intermediate=term volatility in investment performance and fluctuations in the financial condition of the fund.


Contributions

Actuarially Determined Contributions
(as a % of pay)

Year

2019

2018

2017

Employee

7%

7%

7% 

Employer

11.95%

12.38%

12.44%

Total Required Contributions

18.95%

19.38%

19.44%

 


Employer Contributions Made as a Percent of Payroll
vs TMRS Minimum Required Contribution (Fiscal Year 2018)

 Percent of Payroll

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. 


 

Funded Percentage Over Time - Funding Valuation (Fiscal Year 2018)

 Funded Percentage over time

Click here for Downloadable Data 

As illustrated above, the City has enjoyed a funding percentage in excess of 90% for the last nine 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

Total Pension Liability (same for funding & reporting): $414,941,180  
Actuarial Value of Assets (Funding Valuation): $393,485,849 Funded Ratio (Funding Valuation): 94.8%
GASB 68 Valuation (Market Value of Assets): $410,286,206 Funded Ratio (GASB 68 Valuation): 98.88%
 
Covered Payroll: $56,485,201
Unfunded Amount (Funding Valuation)
as a percent of Covered Payroll: 38
.0%
Amortization Period (Yrs): 13.6 Unfunded Amount (GASB 68 Valuation)
as a percent of Covered Payroll:
 8.53%
Unfunded Liability Funding Valuation: $21,455,331
Unfunded Liability per Member: $10,538 Active Members: 800
Unfunded Liability GASB 68: $4,654,974 Inactive Members: 630
GASB 68 Unfunded Liability per Member: $12,286 Annuitants: 606

 


Cross Reference of Carrollton Specific Information found in TMRS documents 

2017 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)

2017 TMRS Funding Valuation (page 124 of PDF)

FY2019 GASB 68 Valuation for Carrollton


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