Last month, the Pension Integrity Project at Reason Foundation submitted testimony to the Texas House Committee on Pensions, Investments & Financial Services in response to its call for public comment regarding its interim charge four of 2020.
The charge, to review and evaluate the actuarial soundness of the Texas Employees Retirement System and Teachers Retirement System, recognizes that even before the coronavirus pandemic and recession, Texas’ public pension plans had accrued over $30 billion in unfunded liabilities.
The charge specifically asks the legislature to assess the growing costs of the state’s two largest public pension systems and consider policy changes that would improve the solvency of the funds. It also implores the legislative committees to analyze the state’s investment disclosure and transparency policies as well as overall investment objectives.
The Pension Integrity Project’s comments provide analysis on the challenges these public pension funds currently face and details possible solutions to these issues. These suggestions include lowering the assumed rate of return, adopting a governance structure designed to minimize the role of politics, and planning for downside risk.
If the state legislature and governor choose to pursue such policy changes they would move the state towards more sustainable and responsible retirement systems that better protect Texas’ teachers, public employees and taxpayers.
The Pension Integrity Project at Reason Foundation offers pro-bono consulting to public officials and other stakeholders to help design and implement policy solutions aimed at improving public pension plan resiliency and promoting retirement security for all public employees. We have also built up-to-date actuarial models for both the Texas Employee Retirement System and Texas Teacher Retirement System and stand ready to help your work in whatever way we can.
Our full comments are available in the below document.