Colleyville, Texas

Many TMRS cities will see higher annual contribution rates if they retain their current benefit choices. If a city sees an increase of greater than 0.5% of payroll, the increase due to these changes will be phased in evenly over an eight-year period, beginning in 2009.

A change in TMRS’ Actuarial Cost Method will provide advance funding of annually repeating benefits – Updated Service Credit (USC) and Annuity Increases – that have historically been funded one year at a time.

Some cities may choose to turn off annually repeating benefits and adopt USC and Annuity Increases one year at a time, on an ad hoc basis. Although turning off annually repeating benefits will result in a lower contribution rate for 2009, ad hoc benefits will not be advance-funded, and cities will see contribution rates continue to rise each year they choose this approach.

TMRS will help cities evaluate the effects on future Contribution Rates of any benefits changes they wish to consider.

Investments

TMRS is gradually diversifying its investment portfolio from its current fixed income strategy (bonds) to a more diversified portfolio that will contain both stocks and bonds, with a target of 6% in domestic and 6% in foreign indexed stocks by the end of 2008.

If TMRS remained entirely invested in bonds, the interest credited to members’ accounts and the discount rate used to calculate annuities for future retirees would fall below 5% in just a few years.

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