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Retirement benefits help recruit and retain dedicated police and firefighters, Patterson tells senators

Secure retirement benefits keep dedicated employees on the job, which is especially vital during natural disasters, says Max Patterson, executive director of the Texas Association of Public Employee Pension Systems.

TEXPERS Staff Report

 
Max Patterson, seated left at the table, provides public testimony during Senate Committee on State Affairs April 4 in Austin.

During Hurricane Harvey, which hit the Gulf Coast area in August last year, law enforcement, firefighters and other first responders helped rescue more than 17,000 people from catastrophic flooding triggered by the storm's rainfall. 

"When a natural disaster occurs, like Hurricane Harvey, they [public employees] are there, working shoulder-to-shoulder with citizens, to get civil society restored in short order.," Patterson says.

TEXPERS' executive director made the statement during a public testimony period of a Texas Senate Committee on State Affairs hearing held April 4 in Austin's Capitol building. The hearing was held by the nine-member committee to assess state and local pension systems. Sen. Joan Huffman, R-Houston, chairs the committee. 

TEXPERS is a statewide nonprofit educational association of more than 80 local public employee pension systems. Trustees, administrators, professional service providers and employee groups which manage the retirement money of police, firefighters, and municipal and district employees join TEXPERS voluntarily to gain educational services.

"According to the U.S. Bureau of Labor Statistics, approximately 85 percent of employees of state and local government participate in a defined-benefit plan (this also includes those who participate in hybrid retirement plans); substantially all of the remainder participate in a defined contribution plan," Patterson says. "We support defined-benefit plans because they retain public employees and the skills they gain through years of experience on the job, as well as the training they receive from taxpayer-paid programs."

Executive directors and board chairpersons from various pension plans joined officials with the state's Pension Review Board to discuss actuarial assumptions used by retirement systems to value plan liabilities. Other topics included investment practices of public employee systems and an overview of progress made by Dallas and Houston pension systems after the passage of reform bills during the last legislative session.   

After invited testimony from six panels of public pension stakeholders, Patterson told the committee that TEXPERS is dedicated to preserving defined-benefit retirement savings plans for police officers, firefighters and municipal workers. Limited to roughly 2 minutes to speak, Patterson provided the committee an information packet highlighting the importance of providing public employees secure incomes during retirement. 

The information packet included a new case study published by the National Institute on Retirement Security that exams the impacts of actions by the Town of Palm Beach, Florida, to change the retirement plans of police officers and firefighters. According to the study, the town "dramatically lowered defined-benefit pensions" and offered new less-secure individual 401(k)-like defined contribution retirement schemes. The result? The quick exit of public safety employees to neighboring communities that continued to offer more secure defined-benefit retirement plans. NIRS found that the change in benefit plans in Palm Beach increased costs in human resource areas and required the public safety departments to work with skeleton crews. In 2016, the town council voted to abandon the defined-contribution plan and to improve the pension plan. 

The TEXPERS information packet outlined the strengths of defined-benefit retirement plans, explained the actuarial assumptions used by retirement systems to value their liabilities, described the investment practices and performance of local retirement systems, and discussed the adequacy of financial disclosures including asset returns and fees. 

Huffman commented that she would keep the information packet to use as future reference. She did not say that of any other presentation made during the committee meeting. 

Patterson thanked the legislators for their work last year on behalf of defined benefit plans in Dallas and Houston.

 
The Texas Senate provides an archive of the committee meeting on its website. Patterson's public testimony begins at the 4:57 mark.

Click the links for copies of Patterson's information packet:
 

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