TRTA Helps Lead a United Front Defending TRS Benefits
Associations Testify in Favor of Maintaining Pension and Health Care Benefits
The House Pensions, Investments, and Financial Services Committee (PIFS) met this week to discuss their interim charge on the Teacher Retirement System and other statewide, county, and municipal retirement programs. TRTA expected an attack on the defined benefit traditional retirement program by those interest groups that seem determined to implement a privatized retirement program for all educators and other government workers. Unfortunately, these attacks may just be the beginning.
TRTA members from around the state attended the hearing. Many of these TRS retirees stayed the entire day listening to over 8 hours of testimony on various pension fund structures in the state. All TRTA members and all TRS retirees are fortunate to have such dedicated TRTA members giving their time to be present through these hearings.
TRTA made a strong case promoting the value of the existing TRS defined benefit retirement program for education employees and retirees. Tim Lee, TRTA Executive Director, testified before the committee stressing the need to continue with the TRS defined benefit program. Key points from the TRTA testimony are provided below.
You can also watch Tim’s presentation by clicking here (Pensions, Investments and Financial Services Committee hearing September 12, 2012 advance video to mark 7:25…towards the end of the video presentation).
Key points of the TRTA Testimony:
- TRS is NOT in crisis and under current contributions levels and investment return assumptions, the plan can pay benefits through the year 2075
- TRS is not coordinated with the federal Social Security program and is the sole source of retirement security for 95% of retired public school personnel
- TRS is not being ignored by the Texas Legislature, while other states with flailing pension plans have skipped contributions to their systems, sometimes for years
- Implementing a defined contribution style plan for TRS is not needed, and is not good public policy; it is, in fact, drastic, costly, and fiscally irresponsible
- TRS is not a tremendous burden on Texas taxpayers and is not an entitlement program
- TRS is not an overly rich benefit plan with an average monthly benefit of $1,867
- TRS is not far from achieving actuarial soundness
- TRS is not perfect, but would benefit significantly from modest changes to the system while maintaining its defined benefit structure
- The issue at hand is about ideology versus good public policy
- TRS is in the forever business, with 75 years of proven success in providing benefits for its members
- TRS brings tremendous value to the state of Texas, including $690 million in state revenues
- TRS is a bargain for Texas taxpayers, costing them far less than what private sector businesses pay in for their hourly employees
- TRS is well-managed and has earned more than $40 billion since the two major market declines in 2008 and 2009
- TRS provides real retirement security and is a legacy worth protecting.
TRTA is convinced that the argument to eliminate the TRS defined benefit plan is based more on political ideology than any fiscal need. As TRTA already reported, the TRS study on alternative plan design (TRTA report, click here…TRS Study, click here) indicates that changing to a defined contribution plan would increase the TRS unfunded liability by $11.7 billion!
Make no mistake, TRTA and our members will do whatever we can to protect the TRS retirement program! We are meeting with legislators, talking to educators, sending letters to newspapers, talking to additional media, and informing our own members about this attack. We will never stop fighting those interests that want to undermine the TRS benefit plan.
While it is important to be fully engaged in the existing attacks on the TRS defined benefit plan, the far more critical issue is adequate funding for the TRS-Care retiree health insurance program. Again, as TRTA reported earlier this month (click here), the TRS-Care health insurance program is quickly running out of reserve funding and may experience a funding shortfall in the next two to three years. That funding shortfall may be as much as $1.2 billion.
TRTA expects action this session to improve the funding condition of the TRS-Care program. The need for action was highlighted by Brian Guthrie, TRS Executive Director, stating that the healthcare issue is in need of attention far more than any perceived pension funding crisis.
TRTA members need to tell legislators that their health care is a vital part of their retirement benefit and their livelihood. They should also remind legislators that this program is not a “no-cost” health care plan. TRS-Care participants pay significant premiums to participate in this plan. Combining what retirees pay in premiums, as well as deductibles and out-of-pocket costs indicates that plan participants are paying the highest portion of these health care costs.
TRTA members want the legislature to restore funding to the TRS-Care program that was cut last session and to be ready to provide any additional funding necessary to maintain the TRS-Care retiree health insurance program.
TRTA is working hard to be your voice on these important issues. Thank you for being a TRTA member and supporting our efforts. Our member network exceeded 73,000 members last year. We hope that you will continue to support us as we fight to protect your retirement.
If you are not a member and want more information on joining, please contact our office at 1.800.880.1650. TRTA membership is $25 per year.