The Teacher Retirement System of Texas (TRS) released some interesting data through its Pension Benefit Design Study and Executive Summary at its quarterly Board of Trustees meeting.
The summary revealed 10 major findings from the survey:
- A total of 96 percent of public school employees do not participate in Social Security.
- The current defined benefit plan provides current benefits at a lower cost than alternative plans.
- Moving new hires to an alternative plan will not eliminate existing liabilities.
- A contribution rate increase of 1.82 percent beginning in fiscal year 2020 will lower the funding period to 30 years.
- A phased-in contribution rate increase of 2 percent beginning in fiscal year 2021 will lower the funding period to 31 years
- Combined employee and employer contribution rates for TRS are the lowest in the nation among teacher plans.
- The value of the retirement benefit available to TRS members is 30 percent less than the average benefits available to members of peer systems.
- Active members have borne approximately 70 percent of plan changes since 2005.
- All plan structures carry differing levels of risk. When examining important aspects of pension plan design, the current defined benefit plan places more risk with the State and generally offers more favorable outcomes for TRS members.
- The majority of TRS members will do significantly worse investing on their own in a plan with a defined contribution component.
For more information, view the survey summary or the TRS news release.
Zach DiSchiano is a communications specialist at TASB HR Services. Send Zach an email at firstname.lastname@example.org.