Pension Plan Overview
Deer Park is a member of the Texas Municipal Retirement System (TMRS), a statewide, multi-employer plan. The TMRS plan allows for city-centric actuarial measurement and a degree of local control over plan design. TMRS is considered a “hybrid” plan that features define contribution member deposits with defined benefit annuity payments.
The local control components of the Deer Park plan are:
|City Match on member deposits:||2 times employee (member) contributions|
|Employee (member) contributions:||7% of pay|
|Vesting of Benefits:||5 years|
|Retirement Eligibility:||60 with 5 years of service or 20 years of service with any age|
|Cost of Living Adjustment:||50% of Consumer Price Index (CPI)|
|Updated Service Credits:||75%|
|Supplemental Death Benefits:||1 times salary for employees / $7500 for retirees|
(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.)
Information on investment strategies and results as well as actuarial valuations and policies are available in TMRS’s Comprehensive Annual Financial Report (CAFR) online. 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. And/or 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 funded status of pension liabilities are provided in the City’s CAFR, located on our Budget page.
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.
Deer Park’s funded ratio is over 90% which compares well against the 73.7% national average found in the 2015 Public Fund Survey conducted by the National Association of State Retirement Administrators (NASRA). Funding ratio can be impacted by many factors including investment returns, actual experience different from assumptions, changing assumptions used and changing the benefits provided.