Item 6AItem 6A Ordinance No. 965, 2nd Reading, Amend certain Texas Municipal Retirement System (TMRS) benefits for employees and retirees
Background
TMRS established under Texas Government Code; qualified plan under IRS Code Sec. 401
More than 800 cities participate
Each City plan is specific within a general framework of options
January 1, 2009 – TMRS initiated significant actuarial cost accounting measures
City’s rate has increased significantly during this period of change but expect to stabilize
Ordinance No. 965 TMRS Changes
Changes recommended to reduce rate
Changes may affect:
Employees with service in other TMRS cities
Retirees COLA
Will not reduce current level of retirement benefits
Ordinance No. 965 TMRS Changes
Updated Service Credit (USC) – Transfer provision
Looks at changes in employee’s salary, any TMRS plan changes
Transfer provision applies this calculation to service in other cities also
May increase City contribution to fund liability
Ordinance No. 965 enacts USC without Transfer provision
Will not affect USC credits for service in Southlake; credits earned while in other cities.
Ordinance No. 965 TMRS Changes
Annuity Increase (AI)
Retirees eligible for COLA based on percentage of CPI
Current level is 70% of CPI
Ordinance No. 965 enacts AI with 50% of CPI multiplier
Little to no effect immediately: 2010 COLA based on 2008 CPI (0.1%)
50¢ increase on $1000 monthly annuity
Ordinance No. 965 TMRS Changes
Reduces City TMRS contribution rate from 14.84% to 12.83%:
UAL over 29 years: ($2,609,921)
City contribution FY 2010 ($321,737)
Effective January 1, 2010
Staff recommends approval of Ordinance No. 965
Questions?