Our May issue of TEXPERS Outlook newsletter contains several stories of interest to those who follow pension activities.
I think one of the most interesting story is about new guidelines that the Government Finance Officers Association recently adopted on pension governance. The GFOA works to enhance and promote the professional management of governments for the public benefit by identifying and developing financial policies and best practices and promoting their use through education, training, facilitation of member networking, and leadership.
Specifically the GFOA’s report recommends that state and local governments establish rules of governance for their post-retirement benefits systems and define the key elements necessary for trustees and fiduciaries to fulfill their responsibilities. In my opinion I think a lot of our member pension systems already have such guidelines in place. They are available here.
As I hinted at in my previous blog, Texas pensions do a lot of this already. Just look at that 2005 document of the Lubbock Fire Pension Fund that was discussed previously. There’s a lot there and I think that’s typical of most if not all the TEXPERS members. – Max Patterson
Expanding Awareness of Public Pension Issues
Wednesday, July 28, 2010
Wednesday, July 21, 2010
Local Control: The Foundation of Texas Public Pension Funds
We want our readers to have a good foundational understanding of what TEXPERS is and who we represent.
TEXPERS was founded in 1989 as a voluntary nonprofit educational association. Our members are the trustees, administrators and participants of public employee retirement systems in Texas, as well as professional service providers, employee groups and associations engaged in or interested in the management and financial soundness of those systems. TEXPERS consists of 84 retirement systems, 9 employee groups, 180 investment professionals. Our members manage the money for retirement hopes of more than 420,650 active and retired participants.
It’s important that you know and keep in mind that TEXPERS does not manage money! Instead, our members, spread out across this great state, oversee the management of the money and the administration of benefits of the retirees in their cities, counties and other public entities.
TEXPERS provides fiduciary education to plan members for their administration of benefits and selection of investments on behalf of their members. Instead of a centralized organization managing the money of public employees, our state has largely chosen to give local entities control over the investment activities and benefit levels for their retirees.
This makes sense from the perspective of local control, of keeping decisions close to the people they impact most.
For instance, most if not all of the funds have boards that are comprised of several members from the community in which the organization resides. To pick one name, the Lubbock Fire Pension Fund manages the retirement money of firefighters in Lubbock. The firefighters occasionally vote not only on the members of that Board but also changes and modifications to their pension plans. The Board is then responsible for working with their elected city representatives and the Texas state legislature to make sure those changes are allowed.
To see this in action, take a look at this link which will take you to the results of a vote the Lubbock Fire Pension Fund conducted in 2005. In just reading the first page it is neat to see that some 231 of 278 members of the pension fund participated in this vote on issues directly affecting them, including the definitions of service, final average pay that determines the levels of benefits, and the maximum service retirement benefit, and many other stipulations.
At other times the members of local funds will vote on the Board members who determine those issues. And city governments usually appoint a couple of their own people to the Board as well, often the city treasurer or finance director and a member of the city council, or a former member as it may be. This structure creates a certain check and balance system that we will discuss in more detail in future blog entries.
But it’s important to know that the fireman or police officer on the street has the ability to get involved in issues affecting their own retirement money, by voting directly on matters that are presented to them or by voting on who serves on their pension plan’s Board of Trustees.
It’s a model that has proven effective and that creates a lot of theoretical and practical effects on governance. We’ll be discussing those in future entries. – Max Patterson
TEXPERS was founded in 1989 as a voluntary nonprofit educational association. Our members are the trustees, administrators and participants of public employee retirement systems in Texas, as well as professional service providers, employee groups and associations engaged in or interested in the management and financial soundness of those systems. TEXPERS consists of 84 retirement systems, 9 employee groups, 180 investment professionals. Our members manage the money for retirement hopes of more than 420,650 active and retired participants.
It’s important that you know and keep in mind that TEXPERS does not manage money! Instead, our members, spread out across this great state, oversee the management of the money and the administration of benefits of the retirees in their cities, counties and other public entities.
TEXPERS provides fiduciary education to plan members for their administration of benefits and selection of investments on behalf of their members. Instead of a centralized organization managing the money of public employees, our state has largely chosen to give local entities control over the investment activities and benefit levels for their retirees.
This makes sense from the perspective of local control, of keeping decisions close to the people they impact most.
For instance, most if not all of the funds have boards that are comprised of several members from the community in which the organization resides. To pick one name, the Lubbock Fire Pension Fund manages the retirement money of firefighters in Lubbock. The firefighters occasionally vote not only on the members of that Board but also changes and modifications to their pension plans. The Board is then responsible for working with their elected city representatives and the Texas state legislature to make sure those changes are allowed.
To see this in action, take a look at this link which will take you to the results of a vote the Lubbock Fire Pension Fund conducted in 2005. In just reading the first page it is neat to see that some 231 of 278 members of the pension fund participated in this vote on issues directly affecting them, including the definitions of service, final average pay that determines the levels of benefits, and the maximum service retirement benefit, and many other stipulations.
At other times the members of local funds will vote on the Board members who determine those issues. And city governments usually appoint a couple of their own people to the Board as well, often the city treasurer or finance director and a member of the city council, or a former member as it may be. This structure creates a certain check and balance system that we will discuss in more detail in future blog entries.
But it’s important to know that the fireman or police officer on the street has the ability to get involved in issues affecting their own retirement money, by voting directly on matters that are presented to them or by voting on who serves on their pension plan’s Board of Trustees.
It’s a model that has proven effective and that creates a lot of theoretical and practical effects on governance. We’ll be discussing those in future entries. – Max Patterson
Friday, July 2, 2010
Introduction to the TEXPERS Blog
Welcome to the Texas Association of Public Employee Retirement Systems (TEXPERS) blog. I am Max Patterson, the executive director of TEXPERS, and I will be one of several authors contributing to this blog.
In coming weeks and months I will be joined by members of the Board, experts in pensions and investments, and other guest bloggers of various backgrounds to discuss issues of importance regarding the pension systems for public employees of Texas, particularly those employed by police and fire departments as well as municipalities and other districts.
Our joint purpose will be to provide readers with more information about the functioning and performance of Texas public pension systems. Along the way we’ll examine some of the issues that are coming out in the news, both here in Texas and in other states. Our primary focus will be Texas, of course, but so much of the national news seems to focus on problems in other states. We hope to provide a bit of a reality check on those issues, as some of those reports seem to cause confusion and anxiety here among plan members, politicians and the general public.
We don’t want confusion and anxiety when it comes to understanding the good things that are being done at Texas public employee pensions.
Our 80+ member systems work hard to educate their trustees and staff members in their fiduciary responsibilities. They work extremely hard to find the right investment mixes to assure the greatest return with the least risk. They dedicate a tremendous amount of time to the efficient management of their funds and their retirees’ benefits. We owe it to them to clarify issues that are confusing to the media and the general public.
That’s the simple intention for our blog, greater understanding about the Texas public employee pension system. We invite you to come along, learn a little and engage with us in clearing up areas of concern. We’re writing this blog for you, so we hope you’ll engage and question us when things get a little opaque, or comment when we need an extra fact or opinion. This is your blog as much as ours. All Texans win with strong public employee pensions in Texas. Come along and enjoy! --- Max Patterson
In coming weeks and months I will be joined by members of the Board, experts in pensions and investments, and other guest bloggers of various backgrounds to discuss issues of importance regarding the pension systems for public employees of Texas, particularly those employed by police and fire departments as well as municipalities and other districts.
Our joint purpose will be to provide readers with more information about the functioning and performance of Texas public pension systems. Along the way we’ll examine some of the issues that are coming out in the news, both here in Texas and in other states. Our primary focus will be Texas, of course, but so much of the national news seems to focus on problems in other states. We hope to provide a bit of a reality check on those issues, as some of those reports seem to cause confusion and anxiety here among plan members, politicians and the general public.
We don’t want confusion and anxiety when it comes to understanding the good things that are being done at Texas public employee pensions.
Our 80+ member systems work hard to educate their trustees and staff members in their fiduciary responsibilities. They work extremely hard to find the right investment mixes to assure the greatest return with the least risk. They dedicate a tremendous amount of time to the efficient management of their funds and their retirees’ benefits. We owe it to them to clarify issues that are confusing to the media and the general public.
That’s the simple intention for our blog, greater understanding about the Texas public employee pension system. We invite you to come along, learn a little and engage with us in clearing up areas of concern. We’re writing this blog for you, so we hope you’ll engage and question us when things get a little opaque, or comment when we need an extra fact or opinion. This is your blog as much as ours. All Texans win with strong public employee pensions in Texas. Come along and enjoy! --- Max Patterson
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