Public pensions eyed by outside interests

Tweaking the Teacher Retirement System seems to be a back-burner issue for lawmakers heading into the next legislative session, but outside interests are angling for big changes just a bit further down the road.Credit Crunch USA

Texans for Secure Retirement, a coalition of state employee groups, including ATPE, gathered advocates together Wednesday to focus on safeguarding and improving the public retirement system.

Addressing the group, state Rep. Dan Flynn (R-Canton), who chairs the Texas House Pensions Committee, said efforts to shore up the Employees Retirement System (ERS) during the 2015 legislative session helped get ERS “going in the right direction.” Legislators will determine its fate through the Sunset process this session (beginning in January), and TRS will undergo the same process in 2019.

So what does this have to do with educators’ pensions?

A few interest groups are pressuring government employers to abandon traditional “defined benefit” (DB) pension plans, which promise you’ll receive guaranteed retirement income for the rest of your life, based on your salary and length of service. Once the most common type of retirement plan around, DB plans have gradually been phased out by private sector employers in favor of “defined contribution” (DC) plans like 401(k)s, which promise to deliver a lump sum upon retirement, based upon monthly contributions.

Lower interest rates, tougher regulation and a desire to cut costs have all contributed to the private sector’s switch; and it’s true that many private sector employees are spending less time with a single employer – which has a negative effect on DB retirement income. Yet for long-term employees like teachers, the average DC plan yields comparatively little retirement support and exposes retirees to the risk of outliving their money. For example, an annuitized 401(k) balance of $100,000 could translate to around $400 a month in retirement. Furthermore, while your retirement is actuarially sound and managed by full-time professionals, 75 percent of DC funds failed US Department of Labor audits in 2013.

So why the interest?

The $130 billion portfolio managed by TRS is a big, shiny apple to Wall Street fund managers – but it’s your money, and its strength lies in conservative, long-term investment. The push to convert plans isn’t very big and currently appears concentrated at the local and county levels, where some plans need significant work to get their fiscal houses in order. Unlike the troubled local plans DC conversion proponents like to point to, TRS has remained sound over the years. This is largely thanks to stable funding, sound investing, and a conservative benefit structure.

These fundamentals were further strengthened by the passage of Senate Bill 1458 by former state Sen. Robert Duncan in 2013. Thanks to SB 1458, passed in large part due to the efforts of the ATPE lobby team, it’s unlikely we’ll see discussion of major changes to teachers’ retirement this session, but it’s something we’ll continue to watch closely for you.

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3 thoughts on “Public pensions eyed by outside interests

  1. Zona Ray

    Both active and retired teachers MUST remain vigilant as regards thone who are eager to make money through a defined contribution plan. One of the strengths and drawing aspects to the teaching profession is paying into a retirement funds that is professiona, conservative investors. Educators do not have time to study investing trends and worry as to how a private brokerage firm may choose to handle the future of their lives. The TRS pension fund is a solid, well-run, fund, ranked in the top 10 national funds. Of course brokerage firms and their lobbiest want to get their hands on our money. More teachers and retirees must realize what a catastrophe losing our current pension system would be. We would be foolish to give away our current, well-endowed pensions. Educators do not make large salaries, certainly not like salaries of wall street brokers. But we DO have a fine retirement system, and we MUST FIGHT TO MAINTAIN OUR PENSIONS.

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  2. Zona Ray

    Active and retired teachers MUST BE VIGILANT as to the future of our pension fund. We must stay on top of changes outsiders would like to make. Brokerage firms want control of all teachers’s investments, and we must prevent this at all costs. TRS PENSION FUNDS have been successful since inception. We will not permit outsiders to basically raid our huge TRS PENSION FUND, which we contributed to throughout our careers.

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  3. Susan Chelf

    I have been retired for 14 years, and have not had one cost of living increase in my teacher retirement! Even social security occasionally gives retired people a cost of living increase. This lack of concern for retired teachers in Texas is due to Texas being a “right to work state” with no rights! As long as Texas teachers are not allowed to be in real unions, they will be under paid and have no power to fight against unfair demands made on them by local administrators. Texas teachers depend on the Texas legislators to bring up an increase in their retirement benefits, and with the majority of the Texas legislators being Republicans, this hasn’t happened in over a decade. I have little hope that Texas retired teachers will ever have a decent retirement paycheck. You would think that the people who trust us to teach their children would want their teachers to have decent pay and retirement benefits! I dedicated my life to teaching special education students, and paid into the Texas teacher retirement system every year that I worked. I deserve better!

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