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Public Pensions

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Public Pension Overview

Fort Bend County participates in the Texas County & District Retirement System (TCDRS). With an 8.0% 30-year return and at nearly 90% funded, TCDRS is one of the best funded retirement systems in the nation. TCDRS does not receive any state funding. Each plan is funded by investment earnings, the employer and its employees.

Fort Bend County maintains its own customized plan of retirement benefits. Benefits are savings based, meaning that members are saving for their own retirement over the length of their careers. Benefits are based on the final employee savings balance and employer matching. In contrast, benefits in many traditional pension plans are based on a final average salary calculation and length of career, which can cause unplanned increases in employer costs if there is a late-career promotion or if excessive overtime occurs.

Benefits are responsibly funded. Fort Bend County pays 100% of its required contributions each year. This ensures that funds will be there when the time comes to pay benefits. In addition, TCDRS has one of the most conservative funding policies in the nation. Fort Bend County’s liabilities are scheduled to be paid over 12.8 years. This is one of the lowest amortization periods in the state and is well within the Pension Review Board’s (PRB’s) policy that an amortization period not exceed 30 years.

Another unique feature that makes the TCDRS plan a model for providing retirement benefits is that Fort Bend County can adjust benefit levels annually to meet its workforce needs and budgets. This level of flexibility is not standard in most traditional retirement plans, and it allows the County to lower costs, if needed.

According to PRB funding policy standards, assumptions should be reasonable and should comply with applicable actuarial standards. TCDRS recently completed an experience study as of Dec. 31, 2017, to review all economic and demographic assumptions. Two independent outside actuarial firms concurred that the investment return assumption is reasonable based on TCDRS’ asset allocation and capital market assumptions, which are forward-looking expectations of the return, risk and correlation of each of the asset classes. When compared to the average public pension plan, TCDRS’ asset mix is very different. The major difference in TCDRS’ portfolio is that a very small percentage of the portfolio is allocated to investment-grade bonds. TCDRS’ investment portfolio is engineered for an 8% return.

In the TCDRS plan, measures are in place to manage and share risk, including a healthy reserves fund of over $1 billion that may be used to offset future adverse experience. In addition, the conservative funding policy and the fact that Fort Bend County has the ability to annually adjust benefits, if needed, ensures that its plan stays in balance and well-funded.

TCDRS has a robust, transparent website that includes information on asset allocation, performance, and investment strategy and management. All information on fees, including those for TCDRS’ private asset classes, may be found on the site. In addition, TCDRS is one of the only pension plans in the country that publishes its capital market assumptions, which support the asset mix and the investment return assumption. TCDRS has exceeded its long-term return goal of 8% and has outperformed its benchmarks. All investments are described online at www.TCDRS.org

(Stats are as of 12/31/2018)

 

Pension Plan Summary

Retirement Plan Funding 

 

Plan Year

 

2018

2017

2016

2015

2014

Funded Ratio:

86.9%

87.3%

86.6%

83.3%

85.8%

Amortization Period:

12.8 Yrs.

13.1 Yrs.

13.9 Yrs.

14.4 Yrs.

14.3 Yrs.

Assumed Rate of Return:

8.0%

8.0%

8.0%

8.0%

8.0%

 

Retirement Plan Contributions 


Plan Year

 

2020

2019

2018

2017

2016

Normal Cost Rate:

6.74%

6.75%

6.96%

6.96%

7.33%

UAAL/(OAAL) Rate:

5.75%

5.11%

5.16%

4.99%

4.46%

Required Rate

12.49%

11.86%

12.12%

11.95%

11.79%

 

 

 

 

 

 

Elected Rate:

12.49%

11.86%

12.12%

11.95%

11.79%

Employee Rate:

7.00%

7.00%

7.00%

7.00%

7.00%

Total Required Contribution:

19.49%

18.86%

19.12%

18.95%

18.79%

 

Rates of Return

One-year return:           -1.9% Net of Fees

Three-year return:         6.6% Net of Fees

Ten-year return:            9.0% Net of Fees

 

1 (2)

Fort Bend County Actuarial Value of Assets Vs. Actuarial Accrued Liabilities (In Millions)

 

Years

 

2014

2015

2016

2017

2018

Actuarial Value of Assets

$347.8

$368.1

$525.4

$574.1

$615.1

Actuarial Accrued Liabilities

$405.5

$441.9

$606.5

$657.7

$707.8

 

Assets Vs Liabilities [XLSX]

 2 (2)

3

Asset Reconciliation Fund Value [XLSX]

Visualizations

What Fort Bend County is Providing

The TCDRS benefit is based on employee deposits, which earn 7% compound interest each year, and employer matching at retirement. The following chart shows the estimated TCDRS benefit as a percentage of final salary prior to retirement for a new hire:

 chart 1

Assumptions:

  • Employees are new hires and will work for Fort Bend County until retirement.
  • Current plan provisions will remain in effect through employee’s retirement.
  • Current laws governing TCDRS will continue as they are.
  • Graded salary scales give bigger raises early in careers with smaller raises later in careers (see Summary Valuation Report under Plan Data).
  • Based on Single Life benefit.

Reasons for Rate Change

Below is a record of the required rate history for Fort Bend County’s retirement plan over the last five years

 

Plan Year

 

2015-2016

2016-2017

2017-2018

2018-2019

2019-2020

Beginning Rate

12.14%

11.79%

11.95%

12.12%

11.86%

Plan Changes Adopted

0.00%

0.00%

0.00%

0.00%

N/A

Investment Return

-0.09%

0.43%

0.46%

0.01%

0.57%

Elected Rate/Lump Sum

0.00%

0.00%

0.00%

0.00%

0.00%

Demographic/Other Changes

-0.26%

-0.22%

-0.29%

-0.21%

0.06%

Assumptions/Methods

0.00

-0.05%

0.00%

-0.06%

0.00%

Ending Rate

11.79%

11.95%

12.12%

11.86%

12.49%


Required Vs Actual Contributions[XLSX]

 endingratechart

Funded Ratio

Valuation Year

2014

2015

2016

2017

2018

Funded Ratio

85.8%

83.3%

86.6%

87.3%

86.9%

 6.  Visualization Section Information 2020_03_18-3

A complete Summary Valuation Report for the December 31, 2018 valuation is shown in the Documents/Downloadable, Plan Data Section.

 investmentreturns

 diversifiedportfolio

Documents / Downloadable Data

A plan assessment and a summary valuation are published annually for Fort Bend County’s plan. These materials show the County’s benefit levels, a five-year history of plan funding and the reasons for rate changes from year-to-year. Finally, Fort Bend County annually reports pension expense and liabilities in the County’s Comprehensive Annual Financial Report (CAFR), in compliance with GASB.

TCDRS Comprehensive Financial Reports (CAFR). Actuarial Data can be located in the CAFR Reports.

  • 2018 CAFR [PDF] – Actuarial Data begins on page 65 

  • 2017 CAFR [PDF] – Actuarial Data begins on page 64

  • 2016 CAFR [PDF] – Actuarial Data begins on page 66

  • 2015 CAFR [PDF] – Actuarial Data begins on page 60

  • 2014 CAFR [PDF] – Actuarial Data begins on page 60

  • 2013 CAFR [PDF] – Actuarial Data begins on page 62

Schedule of Changes in Financial Net Position

Actuarial Valuation Results

Plan Data:

Other Information