As is usual for government organizations, the bad news from Texas Municipal Retirement System (TMRS) was dumped to the internet for public consumption late last Friday. TMRS earned -3.57% on its investments last quarter, and has earned -1.71% year to date.
Remember that when TMRS calculates the City's pension liability, they assume the investments earn 7% annually. When the investments earn less, the City's liability increases. At 7% return, the City's pension liability is covered at 83.3%, whereas at 5.85% the coverage is only 60%. Thus it is easy to see the City's pension liability increases substantially when investment returns decrease.
This bears watching as the City may need to substantially increase its annual pension contributions due to lower than expected investment returns.
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