The City and the employees both contribute funds every pay period to transfer to TMRS for investment. The amount disbursed depends on complicated formulas for each retiree and on the contributions and the earnings of the investments. If there is a shortfall in required funding to meet the pension obligations, the City is required to make up the shortage. Thus, it is important that the investments earn the maximum amount while maintaining an acceptable level of risk.
TMRS has assumed that the investments earn 7% annually. If the investments earn less, the City has to increase their contribution. The investments actually lost money in 2015 as shown in the table.
The net assets of the pension trust declined by about $19 Million dollars in 2015.
TMRS has reduced their assumed rate of return to 6.75% for 2016, but, that is likely still too optimistic and will probably be reduced in the future to a more realistic rate.
The pension trust fund is still well funded with respect to the obligations, but, the trends seem to be going in the wrong direction.
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