The City participates in the non-traditional, joint contributory, hybrid defined benefit agent multiple employer pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS, an agency created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) is an agent multiple-employer retirement system for municipal employees in the State of Texas.
The TMRS Act places the general administration and management of the System with a six-member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of Texas. TMRS’s defined benefit pension plan is a tax-qualified plan under Section 401(a) of the Internal Revenue Code. TMRS issues a publicly available comprehensive annual financial report (CAFR) that is available online.
TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. A summary of plan provisions for the City are as follows:
Employee Deposit Rate - 7% of pay
Matching Ratio (City to Employee) - 2 to 1
Vesting of Benefits - 5 years
Service retirement eligibility - 20 years at any age; 5 years at the age of 60 and above
Updated Service Credit - 100% repeating transfers
Annuity Increases (to retirees) - 70% of CPI repeating
Supplemental Death Benefits - Yes
Death Benefits to retirees - Yes
Employees Covered by Benefit Terms
At the December 31, 2016 valuation and measurement date, the following employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits - 197
Inactive employees entitled to but not yet receiving benefits - 222
Active employees - 490
Total - 909
TMRS provides each of its member cities with two slightly different actuarial valuations which are both reflected below as of December 31, 2016. The first is a smoothed valuation used to calculate the City of League City’s actuarially determined contribution (ADC) to the plan. The second valuation is provided for Governmental Accounting Standard Board (GASB) Pronouncement 68 financial reporting purposes and reflects the City of League City’s fiduciary net position based on the market value of its assets. The equivalent single amortization period is 21.3 years and the covered payroll is $29,449,809.
Based upon on the City’s plan provisions, employees are required to contribute 7% of annual gross earnings. Beginning in 2009, certain eligible member cities could elect to contribute a minimum amount equal to their Actuarially Determined Contributions (ADC) less a “Phase in” of the increase due to a change in the TMRS actuarial cost method in the 2007 valuation.