Last week Texas heard that their public pension plans are doing much better than other public pension plans across the nation. During the Texas Public Pension briefing on Thursday, January 27, and the Texas Lyceum conference exploring the “Future of Public Pension Funds,” on Friday, January 28, the Texas defined benefits (DB) public pension plans were said to be faring well given recent economic times. In the 2008 overall state funding ratios, Texas is in the top 12 according to Britt Harris, Chief Investment Officer of the Teacher Retirement System of Texas (TRS), who spoke at the Lyceum conference. He further stated that pensions are a key factor in the U.S. employment growth rate.
Representative Vicki Truitt in her remarks before the Public Pension briefing noted that both the Employees Retirement System (ERS) and TRS are funded over 80% as of August 31, 2010.
Discussion during both events also focused in the difference of defined benefit (DB) plans versus defined contribution (DC) plans. Defined benefits plans were noted as being the best plan for employee retention and defined contribution plans as offering portability.
During the Texas Public Pension briefing, Talmadge Heflin, Director of the Center for Fiscal Policy at the Texas Public Policy Foundation, said they recommend that the state and cities change to defined contribution plans since the plan is portable, will not lock people into their jobs, and will address unfunded pension liabilities which could become a serious issue in Texas. Overall, Texas is not in an unfunded pension crisis, according to the Public Employee panel at the Lyceum conference. The panel was moderated by Senator Kirk Watson who pointed out that Texas has the long term ability to pay off unfunded liabilities.
There may be more discussion this session on defined benefit versus defined contribution plans, but, Senator John Whitmire while speaking at the Lyceum conference, noted we all need to remain calm, offering a strong word of caution against those who would want to play politics with something so important.