A report issued Friday by the Texas Teacher Retirement System spells out what everyone seemed to be expecting, given the current economic situation. However, the report is the first official indication of how bad things are.
As of August 31, 2008, the TRS pension trust fund reported a value of $104.9 billion. Since then, the fund has decreased to $70.6 billion, or nearly 32 percent. Many observers are quick to point out that the fund performed better than the rest of the market.
No one is suggesting that current retirees, or those planning to retire soon, are in any danger of losing benefits. TRS did report that, if contribution levels to the pension fund go unchanged (with a state contribution of 6.58 percent and a member contribution rate of 6.4 percent), and the fund earns an annual average return of eight percent on its investments, the fund has enough assets to cover expected benefit payments through 2040.
While the eight percent return won't happen this year, of course, the fund has consistently earned above this level over time.
Obviously in such an atmosphere it will be difficult to argue that benefits should be enhanced for future retirees.
TRS reports that, in order for the pension trust fund to be actuarially sound, the state contribution rate would need to be 11.25 percent—an increase of 4.67 percent. So far no lawmakers are suggesting such a hike. In fact, state leaders, according to media reports, have been hesitant to make any predictions at all.
Here's the official TRS report.
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