TEXPERS: Public Employee Pension Funds Set New Performance Record

AUSTIN (November 13, 2019) – The number of Texas state and local pension funds achieving Pension Review Board recommendations for overall financial health hit a new high in 2019, according to PRB data analyzed by the Texas Association of Public Employee Retirement Systems. In addition, for the first time in decades, no Texas pension fund has a target rate greater than 8 percent.
TEXPERS issued its Special Report today, revealing that the 99 state and local pension funds which report financial statistics to the PRB combined in 2018-19 to improve their aggregate amortization periods in record-breaking fashion. Forty-five (45) pension funds achieved the PRB-recommended amortization period of 0-25 years, the highest most attaining this level in at least the last eight years.
Amortization periods are somewhat comparable to home mortgages, describing the number of years needed to pay all present and future projected benefits to employees. The PRB has said that amortization periods are the single “most appropriate” measure of public retirement systems’ health.
“This is indisputably the best overall set of data we’ve seen regarding the aggregate health of Texas’ state and local pension funds,” said Art Alfaro, executive director of TEXPERS. “Clearly, the public policies established by the Texas Legislature are achieving intended results.”
“The most compelling finding is that amortization periods continued to improve despite a very bad year-end in the markets in 2018, and despite systems’ continuing efforts to lower target rates for investment returns. If target rates had remained the same, we might have seen even greater numbers of funds improving their amortization periods,” Alfaro said.
“Of course, our member pension systems can always strive to do better and the Pension Review Board’s expansion of issues of concern beyond amortization periods is warranted. The intensive reviews it established a few years ago to explore other measures of pension fund health may already be having effect in the data here,” Alfaro concluded.
TEXPERS full report is available at 2019-amperiod-target and charts at 2019_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]