Pension

Plan Description

The City of Round Rock is one of 887 members of the 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. TMRS’ defined benefit pension plan is a tax-qualified plan under Section 401 (a) of the Internal Revenue Code. TMRS issues a publicly available comprehensive annual financial report (CAFR) that can be obtained at www.tmrs.com.

 

 

Benefits Provided

Round Rock has chosen from a menu of plan options as authorized by the TMRS statute.  Round Rock’s plan provides the following benefit level:

Employee Contributions:7% of pay
City to Employee Matching Ratio:2 to 1
Updated Service Credit Rate:100% repeating transfers
Cost of Living Adjustments:70% of CPI repeating
Years Required for Vesting:5
Service Retirement Eligibility:5 years at age 60 and above; 20 years at any age
Supplemental Death Benefit to Active Employees:Yes
Supplemental Death Benefit to Retirees:Yes
 

All eligible employees of the City are required to participate in TMRS.  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. 

 

 

Employees Covered by Benefit Terms

At the December 31, 2018 valuation and measurement date, the following employees were covered by the benefit terms:

Inactive employees of beneficiaries currently receiving benefits324 
Inactive employees entitled to but not yet receiving benefits418 
Active employees947 
Total1,689 

Pension Summary

TMRS provides each of its member cities with two slightly different actuarial valuations which are both reflected below as of December 31, 2018 (TMRS’ year-end is December 31, 2018 and that is the most recent valuation date for which data is available and has been provided to the City). The first is a funding valuation which uses a smoothed actuarial value of assets to calculate the City of Round Rock’s actuarially determined contribution (ADC) to the plan. The second valuation is provided for Governmental Accounting Standards Board (GASB) Pronouncement 68 financial reporting purposes and reflects the City of Round Rock’s fiduciary net position based on the market value of its assets on the reporting date. Results of the most recent valuation follows:

A funded ratio of 80% and above is considered stable for a city.  Using both valuation methods, the City’s funded ratio is above 80%.  It is important to note that the primary financial objective of TMRS is to achieve the long-term full funding of promised benefits and each calendar year, TMRS informs the City of what its contribution requirements are to achieve this financial objective.

 

Contributions

Employees are required to contribute 7% of their annual gross earnings based on the City’s plan provisions.  Beginning in 2009, certain eligible member cities could elect to contribute a minimum amount equal to their Actuarially Determined Contributions (ADC) less a “Phase In” of the increase resulting from a change in the TMRS actuarial cost method in the 2007 valuation.  The phase-in period was for eight years (from 2008-2015); however, the City of Round Rock elected to contribute at the full rate rather than the phase-in rate.      

Downloadable Data

Investments

More detailed information regarding investment objectives, policies, and performance of the TMRS pension system can be found at https://www.tmrs.org/investments.php or in the TMRS Comprehensive Annual Financial Report (CAFR).  TMRS’ current assumed rate of return and total fund return at 1 year, 3 years, 5 years, and 10 years, follow: 

Changes in Fiduciary Net Position

The fiduciary net position is the market value of the assets of the trust.  For GASB 68 reporting purposes, the City of Round Rock’s total pension liability is reduced by the fiduciary net position to arrive at the City’s net pension liability. The breakout of the additions to and deductions from the City’s fiduciary net position for the most recent valuation period as of 12/31/2018 follows:

As of December 31, 2018, TMRS recognized an investment return of (2.11%). This, in turn, resulted in a net increase of $22,527,132 in the City’s net pension liability. TMRS is a long-term investor, and losses in some years are expected. Portfolio diversification helps mitigate losses over time and actuarial smoothing of assets reduced the contribution rate volatility that would otherwise be associated with gains and losses based on a single year’s investment performance. A loss in the portfolio does not affect member or retiree benefits. This drove additions to the retirement plan down to $7,298,719 in calendar year 2018 as compared to $40,440,264 in calendar year 2017.

Downloadable Data

Reference Documents and Schedules


Actuarial Valuations (Funding Valuation) – Round Rock Specific

2020 TMRS Rate Letter
2019 TMRS Rate Letter
2018 TMRS Rate Letter
2017 TMRS Rate Letter
2016 TMRS Rate Letter

 

GASB 68 Valuation – Round Rock Specific

2018 Reporting Valuation
2017 Reporting Valuation
2016 Reporting Valuation
2015 Reporting Valuation
2014 Reporting Valuation

 

Comprehensive Annual Financial Reports – Round Rock Specific


Statement of Changes in Fiduciary Net Position

FY2019 Schedule of Changes in Fiduciary Net Position (pages 40-41)
FY2018 Schedule of Changes in Fiduciary Net Position (pages 40-41)
FY2017 Schedule of Changes in Fiduciary Net Position (pages 40-41)
FY2016 Schedule of Changes in Fiduciary Net Position (pages 40-41)
FY2015 Schedule of Changes in Fiduciary Net Position (pages 40-41)


Links to Other Information

Texas Transparency Information to Texas Comptroller’s website
Public Pension Search Tool