Texas Retirement Systems’ Legislative and Statutory Authority
The Texas Constitution allows state and local governments to create retirement systems and set basic fiduciary and governance principles regarding boards of trustees, assets and member benefits. There are 344 local retirement systems in Texas that serve more than 291,000 members and hold more than $30 billion in assets.
In 2003, the Legislature added an amendment to the Texas Constitution to ensure participants in local retirement plans were protected against any benefit reductions that would affect benefits already earned. This section prohibits local retirement plans from reducing the accrued benefits of current and former employees who would have been eligible for those benefits without any additional service. It also prohibits any reduction of retiree benefits. Local governments had one opportunity to opt-out of compliance by holding an election in May 2004. The cities of Denison, Galveston, Houston, Marshall, McAllen, Paris and Port Arthur successfully opted-out. (The amendment does not apply to the Texas County and District Retirement System or the Texas Municipal Retirement System.)
Enabling Legislation
Vernon’s Civil Statures, Title 109
State law (Title 109 of the Vernon’s Civil Statures) sets the contribution rates, benefit levels, and the composition of the board of trustees for the following 12 local public pension systems:
- Austin Employees’ Retirement System
- Austin Fire Fighters Relief & Retirement Fund
- Austin Police Retirement System
- Dallas Police & Fire Pension System
- El Paso Firemen’s Pension Fund
- El Paso Police Pension Fund
- Fort Worth Employees’ Retirement Fund
- Galveston Employees’ Retirement Plan for Police
- Houston Firefighter’s Relief & Retirement Fund
- Houston Municipal Employees Pension System
- Houston Police Officers Pension System
- San Antonio Fire & Police Pension Fund
Texas Local Fire Fighters’ Retirement Act
The Texas Local Fire Fighters’ Retirement Act (TLFFRA) is the governing statute for retirement systems for 41 cities with paid fire fighters and 81 cities with volunteer fire departments. Within the guidelines set under the statute, TLFFRA systems can set their own member contribution rates, benefit levels and other plan provisions on a local basis.
Texas Government Code, Title 8
Local retirement systems are subject to Government Code, Title 8 which outlines several rules for public retirement systems. Chapter 802 covers a retirement system’s administration of assets and outlines key fiduciary guidelines. Political entities including a junior college district, river authority water district, appraisal district, or other special purpose district that establish a local retirement system are subject to Chapter 810 of the Texas Government Code. It was adopted by the 72nd Legislature so that local jurisdictions could establish their own local retirement systems with legislative authority and currently authorizes 28 local retirement plans in Texas. Chapter 810 does not set requirements for a retirement plan’s structure and allows decisions like contribution rates or board composition to be determined by the political entity.
For more detailed information please see the Pension Review Board 82nd Legislature Interim Report.
Source: Texas Pension Review Board, State Pension Review Board 82nd Interim Report.