Texas Municipal Retirement System
The City of McKinney and three of its component units participate in the nontraditional, joint contributory, hybrid defined benefit agent multiple-employer pension plan administered by the Texas Municipal Retirement System (TMRS).
TMRS, an agency created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act), is an agent multiple-employer retirement system for municipal employees in the State of Texas. The TMRS Act places the general administration and management of the System with a six-member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of Texas.
TMRS’s defined benefit pension plan is a tax-qualified plan under Section 401(a) of the Internal Revenue Code. TMRS issues a publicly available annual comprehensive financial report.
TMRS provides retirement, disability and death benefits. Benefit provisions are adopted by the governing body of the city, within the options available in the state statutes governing TMRS.
|Plan Provisions Summary|
|Employee Deposit Rate:||7% of pay|
|Matching Ration (City to Employee)||2 to 1|
|Vesting of Benefits:||5 years|
|Service retirement eligibility:||20 years at any age, 5 years at the age of 60 and above|
|Updated Service Credit:||100% Repeating Transfers|
|Annuity Increases (to retirees):||70% of CPI Repeating|
Employees Covered by Benefit Terms
At the December 31, 2019 valuation and measurement date, the following employees were covered by the benefit terms:
|Inactive employees or beneficiaries currently receiving benefits||236|
|Inactive employees entitled to but not yet receiving benefits||121|
To understand the pension commitments made by government to its employees and how successful it has been in funding those commitments to date, it is important to understand the following:
- Investments - management of the assets / TMRS responsibility.
- Actuarial valuations - calculation of the cost of benefits earned to date / TMRS responsibility.
- Funding - the city’s commitment to make contributions to fund the benefits earned to date/city responsibility.
Information on investment strategies and results are available in the investment section of TMRS’s Comprehensive Annual Financial Report (CAFR). If TMRS does not earn its projected rate of return, assets will be less than expected and the city will have to make up the shortfall through increased contributions.
Additional information on actuarial policies including valuations and experience studies validating assumptions used can also be found on pages 72-93 of the CAFR. If unrealistic actuarial assumptions or methodology are used, actual liabilities could be higher than projected and the city would be required to make up the shortfall with additional 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 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; however, the City of McKinney began contributing the full ADC rate in 2014.
View more detailed information about investment objectives, policies and performance of the TMRS pension system or view the TMRS Comprehensive Annual Financial Report (CAFR) PDF.
Actuarial Valuations – McKinney-Specific
- 2020 Rate Letter (2018 Funding Valuation Summary) PDF
- 2019 GASB 68 Valuation for City of McKinney PDF
- Prior Years TMRS Rate Letters – (Funding Valuations)
- Prior Years GASB 68 Actuarial Valuations for City of McKinney
TMRS System Documents - McKinney-specific citations
- 2019 TMRS Comprehensive A PDF (pages 124-125)
- 2019 Schedule of Changes in Fiduciary Net Position (pages 32-33)
- 2019 TMRS Funding Valuation (page 176)
- 5 Year City of McKinney History of Net Position - Excel spreadsheet
Links to Other Information
- Texas Transparency Texas Comptroller’s website
- Public Pension Search Tool
- TMRS Prior Years Comprehensive Annual Financial Reports