City Of Houston Retirement Plan

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Houston pension plan passes Senate

Select a plan and view key indicators of financial health over time.

This data center contains information reported by retirement systems to the PRB in annual financial reports, actuarial valuations and other studies, and investment and membership reports. The information may not reflect a systemââ¬â¢s current status, only its most recently reported information. Deadlines for reporting information vary and may be viewed here. Historical data and trends presented are not intended to predict future events or continuing trends.The information in this data center is intended to meet the Texas Government Code Section 801.209 requirement to post each public retirement systemââ¬â¢s most recent data from reports required under Chapter 802, as well as to meet the Section 2054.1265 requirement for state agencies to post high-value data sets created or maintained by the agency on a generally accessible internet website maintained by or for the agency.This site is best viewed using the current browser version of Firefox, Chrome, Safari, or Microsoft Edge some features may not work in Internet Explorer.

Service Credit And Service Purchases

In 1991 the Texas Legislature established a Proportionate Retirement Program for the benefit of members of participating public retirement systems. The current proportionate systems are:

  • Austin Police Retirement System
  • The El Paso City Employees’ Pension Fund
  • Employees Retirement System of Texas
  • Judicial Retirement System of Texas I and II
  • Teacher Retirement System of Texas
  • Texas County and District Retirement System
  • Texas Municipal Retirement System
  • Other Texas retirement systems covering municipal employees who have elected to participate in the Proportionate Retirement Program

Combining service credit using the Proportionate Retirement Program may advance your retirement eligibility date but it does not increase the amount of your COAERS monthly benefit. For example, if you have five years of service credit with the Employees Retirement System of Texas and eighteen years with COAERS, your combined service credit for retirement eligibility would be twenty-three years. However, your COAERS monthly benefit payment will be calculated using only your eighteen years of COAERS service credit.

Before relying on service credit from another system, contact that system to verify that your service credit is eligible to be combined with COAERS service credit under the Proportionate Retirement Program and discuss any benefit to which you may be entitled.

Additional notes on proportionate service:

Prior Service

Prior Military Service

Contact: Third Party Administrator Houston

Pinnacle Plan Design is proud to offer retirement plan administration services in Houston, TX , and surrounding areas including The Woodlands, Baytown, Bridgeland, Channelview, Cypress, Deer Park, Dickinson, Galena Park, Galveston, Jersey Village, Katy, Kemah, La Marque, La Porte, League City, Missouri City, Pasadena, Pearland, South Houston, Stafford, Sugar Land, and Tomball.

Recommended Reading: How To Honor A Retiring Pastor

Houston Municipal Employees Pension System

Membership
Actuarial

HMEPS was created in 1943 by an act of the 48th Legislature, and codified under Article 6243g, Vernon’s Texas Civil Statutes. The System was recodified by the 77th Texas Legislature in 2001 under Article 6243h, Vernon’s Texas Civil Statutes. The System is a multiple-employer defined benefit pension plan that provides service retirement, disability retirement and death benefits for all full-time municipal employees, except police officers and firefighters , elected City officials, full-time employees of the System, and eligible beneficiaries. Member contributions are split into three groups group A contributes 8%, Group B contributes 4%, and Group D contributes 3%. City contribution rates are based on a two-part statutory funding requirement consisting of the 2016 UAAL amortized over a closed 30-year period paid on a fixed contribution schedule plus an amount determined in each subsequent Risk Sharing Valuation Study that includes normal cost and amortization of additional gains and losses. As of the 7/1/2020 RSVS city contributions were 8.41% of payroll plus $138.2 million.

Pension funding requires assumptions to be made about the future, which are called actuarial assumptions. These assumptions along with current plan participant data and benefits are used to project future benefit obligations. Actuarial methods are used to calculate a system’s liabilities, current and future costs, as well as amortization payments.

Why It’s Called A National Model

The Changing World of Retirement Planning, Prairie View A& M University ...
  • Under the old plan, if investments did not meet expectations, the City had to make up the difference. The solution implements a“cost corridor” so that the City’s contributions are capped. If investments perform too far below established levels, the pension boards will cut benefits or increase employee contributions to bring costs in line.
  • Houston’s pension systems were in open amortization – we would never pay off the debt. The solution places the systems in closed amortization – we treat the debt like a mortgage, paying it off in 30 years.
  • There are no new taxes needed for the City to meet its obligations. The solution is budget neutral.

Read Also: Swanton Health Care & Retirement Center

Tax Deferred Annuity Program

Employees may purchase tax deferred plans with a portion of their salary. The employees contributions are deposited with an approved company of the employees selection and are tax sheltered. A variety of investment options are available including fixed annuities, variable annuities and mutual funds. The minimum monthly contribution is $25.00 and the maximum amount is determined according to EGTRRA regulations and qualifications. Employees may increase or reduce the monthly amount , change companies or cancel their participation at any time with the required documentation. TDAs have a 10% penalty tax applied to distributions made prior to age 59 ½ unless an exception applies. For additional information, please contact your Benefits Coordinator or a UHS Approved ORP/TDA vendor above. To enroll or make changes to your Tax Deferred Annuity Program, login to the Retirement at Work.

Real Numbers For A Real Solution

  • For the first time, the pension boards are opening their books. All gains and losses will be recognized.
  • The solution implements a more realistic rate of return of 7 percent, which is in line with national standards.
  • After recognizing all our gains and losses and using a more realistic rate of return, we know that our real unfunded liability is $8.2 billion. Only by using real numbers do we understand the true extent of the problem, and only then are we able to fully address it.
  • The City had borrowed more than $1 billion from pension systems. To pay back the debt, the City has issued pension obligation bonds, which voters passed in November 2017 with more than 75 percent of the vote.

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Social Security And Medicare

UHV participates in Social Security and Medicare. The contribution rates are Social Security/FICA – 6.2% by employee 6.2% by Employer. The Federal Insurance Contributions Act is the federal law that requires you to withhold two separate taxes from the wages you earn. It includes Social Security Tax and Medicare Tax at a flat percentage rate. The Social Security Tax is 6.2% rate of your wages, and the Medicare Tax is 1.45% of your wages. For additional information please refer to www.ssa.gov.

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