Wednesday, October 18, 2017

Governor's office announces administrative changes

By Allen Jones
TEXPERS Communications Manager

For those looking to lobby the Texas governor regarding the merits of defined benefits, there are a few new faces in his administration that public pension trustees and administrators may get to know as his staff transitions to the interim and prepares for the 2019 legislative session to take place.

Luis Saenz
Last month, Gov. Greg Abbott's office announced changes to his senior administration. Top among those changes is his new chief of staff, Luis Saenz, who previously served as the governor's appointments director. The principal and founder of Saenz Public Affairs, he has been involved in politics for more than 25 years, according to a biography provided by the governor's office.

Saenz is replacing Daniel Hodge, who is transitioning to the private sector, according to a news release issued by the governor's office Sept. 18.

"I have been privileged to have Daniel Hodge by my side dating back to my tenure as attorney general, bringing excellence to the organizations in which he has served," Abbott says. "I am truly grateful for his commitment and service to the State of Texas."

In the news release, Abbott also thanks his staff for their work to "enact conservative policies and preserve the freedom that Texans hold dear."

Saenz is among nine people announced to the governor's staff. Abbott says that while they have "big shoes to fill," he is confident his new team is up to the task.

"There are big ideas I plan to tackle in the upcoming session, and this team will be integral in spearheading those efforts," Abbott says. "We have already started working to ensure a smooth transition, and we will continue our work to keep Texas the beacon of opportunity."

Here is the complete list of the staff changes, from the news release, which took effect Oct. 1:

Luis Saenz will serve as Governor Abbott’s Chief of Staff. Saenz is currently the Principal and Founder of Saenz Public Affairs and has been actively involved in conservative politics at all levels of government for over 25 years. Saenz began his professional career at The Heritage Foundation in Washington, D.C. He previously served as Appointments Director for Governor Abbott and has also served in senior staff positions for Texas Governor Rick Perry, was Chief of Staff to former Texas Comptroller Carole Keeton Strayhorn and has worked as an aide to former U.S. Senators Phil Gramm and Kay Bailey Hutchison, and former Congressman Henry Bonilla. Saenz is a native of Carrizo Springs, TX, and he is a graduate of St. Mary’s University in San Antonio.

 Steven Albright will serve as Governor Abbott's Senior Advisor for State Operations. Albright previously served as the Governor's Budget Director. Prior to joining the Office of the Governor, he served eight years as Chief of Staff in the Texas Senate for Senator Robert Nichols, as well as Policy Director for the Texas Senate Committee on Transportation. Albright also served as a legislative director and Chief of Staff in the Texas House of Representatives. He has more than 16 years of experience in the legislative and executive branches of Texas government, including 22 regular and special legislative sessions focusing on natural resources, transportation and finance-related policy. Albright graduated from The University of Texas at Austin and received a Master’s in Public Administration from Texas State University.

 Reed Clay will serve as Governor Abbott’s Counselor and Chief Operating Officer. Clay currently serves as the Governor’s Deputy Chief of Staff. He has worked alongside Governor Abbott for 8 years, having previously worked at the Texas Attorney General’s office prior to transitioning to Governor Abbott’s gubernatorial administration in 2015. Clay has also served as a litigator for the U.S. Department of Justice. He holds a bachelor’s degree from Wake Forest University and masters and law degrees from Duke University.

 John Colyandro will serve as Governor Abbott’s Senior Advisor and Policy Director. Colyandro currently serves as the Executive Director of the Texas Conservative Coalition Research Institute, and the Executive Director of the Texas Conservative Coalition, a legislative caucus.  He previously served as Director of Policy and Research for Greg Abbott's campaign for Governor (2014), and as Director of Policy for Greg Abbott's campaign for Attorney General (2002).  He is a graduate of the University of Texas at Austin.

 Walter Fisher will serve as Governor Abbott’s Legislative Director. Fisher previously served as Texas State Senate Parliamentarian from 1996-2014. Prior to this, he served as Assistant Parliamentarian for the Texas House of Representatives. Most recently he was Senior Advisor to Lieutenant Governor Dan Patrick in 2015. Fisher is a graduate of the University of Texas.

 Sarah Hicks will serve as Governor Abbott’s Budget Director. Hicks is currently the Assistant Vice Chancellor and Director of State Relations at the Texas A&M University System. She previously served as the Committee Director of the Texas Senate Committee on Finance and was a legislative aide to former State Senator Steve Ogden. Hicks holds a bachelor’s and master’s degree from Texas A&M University.

 Matt Hirsch will serve as Governor Abbott’s Deputy Chief of Staff and Communications Director. Hirsch currently serves as Governor Abbott’s Communications Director, a role he has held since the Governor announced his gubernatorial campaign in 2013. He has previously worked in various communications roles on Presidential, U.S. Senate and Governor campaigns. Hirsch is a graduate of the George Washington University.

 Peggy Venable will serve as Governor Abbott’s Appointments Director. Venable is currently serving as a Senior Visiting Fellow for the Texas Public Policy Foundation.  She has worked at the highest levels of government, having previously served in the administrations of Presidents Reagan and H.W. Bush. Upon coming back to Texas, Venable worked on public policy and grassroots campaigns, serving 20 years as the Texas director for Americans for Prosperity and its predecessor, Citizens for a Sound Economy. Venable is a graduate of Texas State University and has a master’s degree from Baylor University.

 Tommy Williams will serve as Governor Abbott’s Senior Advisor for Fiscal Affairs. Williams currently serves as the Vice-Chancellor for Federal and State Relations for the Texas A&M System. Prior to working in the TAMU System, Williams was a Texas State Representative from 1997-2003, and a Texas State Senator from 2003-2013. While in the Senate, he served as Chairman of three different committees: the Administration Committee, the Transportation and Homeland Security Committee, and the Finance Committee. During his legislative career, Williams was a respected leader on budget, education, transportation and tax issues. He graduated with a BBA in Accounting from Texas A&M.

Allen Jones
About the Author:Allen Jones is the communications manager for the Texas Association of Public Employee Retirement Systems. Email him at or call 713-622-8018.
Notes from the Oct. 13 PRB Actuarial Committee Meeting

TEXPERS Staff Report

Here are a few note from the the Actuarial Committee Meeting of the Pension Review Board held Oct. 13 in Austin:
  • Board chair Josh McGee asserted to Fort Worth officials that the legacy costs involved in maintaining a system while enrolling new employees in the Texas Municipal Retirement System were "accounting problems" and not real. Committee member and PRB board vice chair Keith Brainard disputed that, as did TEXPERS' board member David Stacy at the end of the meeting. Of course McGee has written in past that legacy costs are not concerns and therefore fail as a reason not to convert defined benefit plans to defined contribution plans.
  • McGee asked PRB staff to add a 10th actuarial review test – the 10-year actual investment return of systems versus their discount rate. Brainard disputed the value of this test and committee member Robert May supported Brainard. The matter is tabled for now. McGee positioned the additional metric as possibly offering a red flag, saying, roughly, that if a pension system hasn’t been successful meeting its discount rate in the last 10 years there’s little reason to believe that it will do so going forward. Discussions about market anomalies ensued.
  • The Texas legislature authorized PRB staff to spend $90,000 on creating an online pension dashboard, which staff has started. Stacy and Julie Higgins of the Houston Firefighters' Relief and Retirement Fund expressed concern regarding comparisons of systems that pay Social Security and those that don’t. Also, plan size was discussed.  

Union honors pension advocate for 

labor causes, minority rights support

By Allen Jones
TEXPERS Communications Manager

Longtime pension advocate Rep. Roberto Alonzo, D-Dallas, was recently recognized by an industry union for his work in support of labor causes and minority rights during the state’s recent legislative session.
Rep. Roberto Alonzo, D-Dallas

During the 85th legislative session, Alonzo filed House Bill 285, seeking to raise the minimum wage to $15 an hour, a push he says would have improved the lives of 2.4 million Texans. In addition to pushing to create what he terms as a “livable wage,” Alonzo continued his defense of public pensions as vice-chairman of the House Pensions Committee. He also filed a bill designed to set up a state-administered retirement savings program for all private sector employees. Despite his effort to see House Bill 3601 passed, it didn’t make it out of the committee for a floor vote.
However, it is his fight to support hard-working Texans that motivated United Latinos of the United Food and Commercial Workers Union to recognize Alonzo with an award of gratitude. The organization promotes labor interests for Latino workers in the union, according to its website.

In a Sept. 26 newsletter to constituents, Alonzo’s office announced the representative’s receipt of the award.

“The United Commercial Food Workers is a union family that fights every day,” according to the newsletter. “Representative Alonzo fights every day, too. Not only as a state representative, nor as immediate past president of the National Labor Caucus, but as a proud union member.”

The group issued the award to Alonzo Sept. 14.

The representative is to take part in a panel discussion during Texans for Secure Retirement’s Fourth Annual Symposium Oct. 19 in Austin. Alonzo joins Rep. Justin Rodriguez, D-San Antonio, and Houston City Controller Chris Brown in discussing the current state of pensions in politics. Vicki Truitt, a former state representative and owner of governmental relations firm VTruitt LLC, will moderate the panel discussion. The panel convenes at 10:15 a.m. and is part of a day of discussions focused on pensions and retirement issues. The symposium opens with welcoming remarks at 10 a.m. and closes with closing comments at 2:45 p.m. TEXPERS executive director Max Patterson serves as president of the nonprofit TSR, a secure retirement advocacy group. Patterson is scheduled to provide concluding remarks.

The symposium is open to TSR members and will be held at Dimensional Fund Advisors, 6300 Bee Cave Road in Austin. TSR members who would like to attend the symposium should notify Lena Terrell, TEXPERS’ membership manager, at 713-622-8018 or For more information, visit

To become a member of TSR, visit Applications are available for public employee groups and investment professionals.

Allen Jones
About the Author:
Allen Jones is the communications manager for the Texas Association of Public Employee Retirement Systems. Email him at or call 713-622-8018.

Research finds defined benefits play important role in 

teacher recruitment, retention, and productivity

By Allen Jones
TEXPERS Communications Manager

Robert Marrs is in his 40th year teaching with the Cypress-Fairbanks Independent School District and says he seriously considering retiring at the end of the current school year. The 61-year-old’s pension is his only form of retirement savings.

Robert Marrs
Leaving the profession he has spent four decades working in isn’t an easy decision for him to make, but he says having a secure retirement makes going less scary. After all, being a public educator allowed him to build up a secure nest egg.

“I will rely mainly on my pension for the remainder of my life,” he says. “If I retire this year, I will draw 92 percent of my top three salaries.”

Marrs is planning to meet with the Teachers Retirement System of Texas soon to start planning his departure from public education. He has already been giving the prospect of leaving his job some thought.

In Marrs' situation, he is divorced and his pension will impact no one but himself. However, because he will only be 62 by the time he retires, Marrs is sure he will want to obtain some sort of part-time job.

Several of his closest friends have already retired, and he often discusses with them what life will be like when he leaves the public education system behind. Their primary concern had to do with insurance, which Marrs is sure it will be his concern as well. All of his associates, however, feel good about their defined benefits, he says. He is already sure of that, too.

“Not having to worry if my portfolio is going to go crazy the wrong way kept me feeling safe over these years,” he says.

Another thing he is confident of is the career he chose for himself more than 40 years ago. Marrs received his Bachelor of Arts in Teaching from Sam Houston State University in 1978 and began teaching Texas history at Campbell Junior High School in Cypress-Fairbanks ISD that same year. During his time with the school district, he has been a seventh grade Texas history team leader and served as a social studies department chair, until that job converted to a content curriculum instructional specialist.

“I declined that role as it would take me out of the classroom, something I had no desire to do,” he says.

The educator says he has never considered leaving the teaching profession because he loves sharing the history of “the great state of Texas” and teaching is his passion. Knowing he will have a defined benefit retirement to live on made his decision to remain a teacher that much easier, Marrs says.

And staying in the teaching profession for four decades, he says, has improved his effectiveness as a teacher. His time in the classroom has taught him how to better deal with parents, many of whom he taught in earlier years, and helped him adopt a flexibility to deal with the annoyances and chaos that often comes in dealing with seventh graders.

Chairita Franklin, Cypress-Fairbanks ISD’s assistant superintendent of human resources, says defined benefits are significant to retaining high-performing teachers, such as Marrs. And having teachers like him, she adds, has a direct correlation to students receiving quality first-time instruction.

Her opinion mirrors that of a new research brief that indicates defined benefits play an important role in teacher recruitment, retention, and productivity. The research brief, “Revisiting the Three Rs of Teacher Retirement Systems: Recruitment, Retention and Retirement,” is published by the National Institute on Retirement Security and authored by Ilana Boivie, a senior policy analyst with the DC Fiscal Policy Institute.

“The reality we face is that the nation’s schools continue to struggle with a growing shortage of teachers and that teachers are paid on average as much as 60 percent less than similarly educated professionals across the globe,” says Diane Oakley, NIRS executive director in a news release announcing the research brief’s findings. “Pensions play an essential role in recruiting and retaining our best and most experienced teachers. It’s critical that states continue to leverage the magnetic effect of pensions to help students achieve at their highest potential.”

Public employees prefer pensions over 401(K)-type or defined contribution plans and that Americans strongly support teacher pensions to help address recruiting problems and the broad wage gap, according to the NIRS report. Also, the report finds:

•    The more retention among midcareer teachers, the more the average productivity within a school increases.
•    Teacher turnover doesn’t just impact a school district financially. It affects a school district’s productivity.
•    The availability of defined benefits is a tool to recruit high-quality teachers and keep them employed and productive longer compared with defined contribution savings plans that force educators to act as their own investment brokers.
•    According to data, in 2009, DB pensions helped to retain an additional 30,000 teachers throughout the United States. More tenured teachers produced more productive and efficient teachers, and that increased the overall quality of public education.
•    But, as DBs help keep teachers in classrooms, reducing the profession’s turnover rates, school districts save money. In 2009, districts nationwide saved between $131 million and $284 million in costs usually associated with teacher turnover.

The NIRS study also looked at state teacher attrition rates, the percentage of those who left the teaching profession in Texas during 2009. The state’s attrition rate that year is 7.3 percent, which is higher than the national average of 6.8 percent. The Alliance for Excellent Education provided the data. Turnover costs for Texas were between $100 million and $250 million.

Those numbers could have been a lot higher, if not for DBs, according to the NIRS report. Texas saved between $14 million and $30 million in teacher turnover costs. And if the state would have had a 401(k)-like DC plan, the attrition rate is projected to have been 8.2 percent. Instead, according to the NIRS report, DBs are estimated to have prevented 3,235 teachers from leaving the profession that year.

There are about 1.5 million members in the Teacher Retirement System of Texas. The number includes both active and retirees. The largest public retirement system in the state, members include teachers and non-classroom public educators such as bus drivers, administrators, and cafeteria workers, for example. The TRS has assets of about $146 billion.

Marrs, the Cypress-Fairbanks ISD teacher, is considering retirement right at the average age of TRS members who retire, 61 years old. All TRS members become vested in retirement benefits after five years of service.

Rebecca Merrill, TRS’ chief strategist, certainly sees some correlation between retirement benefits and longevity in public education. She says TRS data doesn’t indicate how many teachers leave the retirement system before being fully vested. However, upwards of half of all new system members drop out of the system before reaching the five-year vestment period. Once members reach vestment, though, the dropout rate dramatically declines to 10 to 20 percent.

“Maybe after five years in the classroom they are comfortable and committed or maybe they are vested and feel they better stick around,” she says. “But there is a correlation of those who have been here five years; they stick around.”

Allen Jones
About the Author:Allen Jones is the communications manager for the Texas Association of Public Employee Retirement Systems. Email him at or call 713-622-8018.

Tuesday, September 26, 2017

6 Exciting Things to Look Forward to at TEXPERS' Annual Conference in South Padre Island!

TEXPERS 29th Annual Conference 
Casting the Net for Retirement Security
April 15-18, 2018
South Padre Island, TX

Mark your calendar now - you won't want to miss this!
Registration will open in November. 
Visit the conference webpage for updates.

What's new at the 2018 Annual Conference?
  • Monday and Tuesday sessions will be conducted at the South Padre Island Convention Center. Transportation provided. Free parking at hotels and the Convention Center for those that drive.
  • A wide variety of lodging choices and affordable rates will be available from four conference hotels.
  • The attire will be Jimmy Buffett casual - No ties allowed! Cool and comfortable will be required. Shorts and flip-flops encouraged!
  • Channel your inner Frankie and Annette at TEXPERS' first ever Beach Party!
  • The conference program will have lots of topics from which to choose. Some breakout sessions will be repeated (you asked and we listened!)
  • The Program is being designed to allow time for you to enjoy beautiful South Padre Island
Do you have a topic you would like to see us cover? Email

Watch this video and get excited 
about South Padre Island!

See you at the beach!

Wednesday, September 20, 2017

Start a Grassroots Effort at Your Fund

Education is key in creating pension advocacy

By Allen Jones
TEXPERS Communications Manager

Credit: iStock
America’s northern neighbor, Canada, has turned out to be a proving ground for public pension systems that are actively preparing plan participants to spread the importance of defined benefits. The systems can teach Texas funds a thing or two about grassroots advocacy building.

Ontario-based public pension plans are turning to their participants to convince the country’s corporate employers to keep DB plans, according to an article recently published in Pensions & Investments magazine. Systems are building grassroots networks by educating their plan participants about the value of their retirement plans and counting on the messages spreading to their friends and family and eventually to private companies.

The P&I article highlighted three public pension systems that have developed grassroots efforts. They include:
  •       The Healthcare of Ontario Pension Plan recruits plan participants who are educated in the DB model to serve as ambassadors. The participants are then able to correct misleading views of DB retirement plans among their friends, relatives and colleagues in the private sector.
  •       The Ontario Public Service Employees Union Pension Plan established a “People for Pensions” program. The program explains the difference between DB benefits and other retirement plan models to the system’s plan participants so they will have the knowledge they need to discuss DB with people they know.
  •       The Colleges of Applied Arts and Technology Pension Plan established a program called “Building Plan Champions.” P&I describes it as a “participant- and employer-education program.” Again, the goal is that those educated in the value of DB plans will have the knowledge to speak to others.
The Colleges of Applied Arts and Technology Pension Plan, or CAAT, conducts annual surveys of its members. Those surveys show that plan participants want long-term retirement protection and are willing to pay up to 10 percent to get there, with a 10 percent match from their employer, says Derek Dobson, the system’s CEO and plan manager, in the P&I report.
“That would be enough to guarantee retirement security for them,” he told the magazine. “The Canadian culture is such that Canadians want DB plans. The question is, how to get them access.”
CAAT provides seminars, offers webinars, and has produced online videos to help educate its members about defined benefits. The goal isn’t to ensure plan participants understand their benefits and have the knowledge to talk about the value of their retirement plans when conversations arise. CAAT’s program goal is to educate 5,000 members and is 91 percent there, according to information CAAT provided TEXPERS.

CAAT members and employers are surveyed on their knowledge of DB plans, and those with a high level of knowledge are designated as “champions.”
“Early on, about 8 percent or 9 percent (of those surveyed) were designated as ‘champions,’ but after the seminars, we identified 35 percent as ‘champions,’” Dobson told P&I magazine. “Clearly, there’s a direct link that the more you understand a pension, the more value you place in it, and they can go out and defend their defined benefit plans.”
Offering the various learning opportunities is attracting plan participants. According to information from CAAT and shared with TEXPERS, the 90-minute seminars are often held on Saturdays and have attracted as many as 270 people. Plan members are spending lunch hours and breaks attending CAAT’s webinars, which run for 1 hour and 45 minutes. The pension system also produced nine videos that discuss some of the most common questions regarding defined benefits.

Grassroots efforts such as CAAT’s are bottom-up approaches to facilitating change, says Aabha Brown, a clinical assistant professor of social work at the University of Houston. She spoke to TEXPERS about the Canadian pension systems and how Texas funds can also engage their members to contextualize the value of defined benefits.

Effective grassroots programs, Brown says, have three key components: education, a story to tell, and a clear message.
“It is often hard to make a change if advocates don’t understand why resources are important in the first place,” she says.
Brown says the “grasstops,” or executives, often speak a different language than their “grassroots” plan members. Topics must be explained in a manner they understand and can articulate to their peers or other intended audience.

The education could come in the form of seminars, speaker luncheons, webinars, online videos, discussion groups, newsletters or emails to plan members. Once plan members are educated, there must be a story to tell. People connect with stories, Brown says.
“People often don’t connect to statistics,” she says. “Even though data may connect with an issue, people do not connect to the data. In the case of defined benefits, people enjoy retirement due to having a secure plan or those who do not have one don’t enjoy retirement.”
Those stories don’t always have to be about a threat to pensions. Although bad news does spread, so does good news.
“Consider how benefits are positively helping people,” Brown says.
Any story, though, must have a clear message.
“If a pension system wants to equip their people, they need to very clear in what they are wanting people to act on,” Brown says. “Often, organizations talk about how good a benefit is but they are not clear on what action they are seeking through their stories.”
Brown suggests that pension systems provide multiple ways for their plan participants to get involved. It may be encouraging people to talk to their friends and family about the value of defined benefits. It could be recruiting retirees to write letters to legislators. Maybe, it is to go door-to-door to hand out informational pamphlets. Others may be better at using the phone to advocate for defined benefits. Or, possibly solicit ambassadors to speak one-on-one to lawmakers or testify during legislative hearings.
“Having diversity of actions people can take is important,” Brown says. “Not everybody is wired to go speak to legislators or write a letter.”
She also suggests finding ways to acknowledge the efforts of advocates who are getting the word out and celebrate milestones achieved.
“If 100 members sign a petition or make a phone call, show appreciation and get the message out to other advocates,” she says. “It may motivate those on the sidelines to get involved.”
The big takeaway from CAAT and other Canadian pension plans: Texas public pension systems looking to start a grassroots movement must begin by properly cultivating their greatest assets – the members.

In Texas, The El Paso Firemen & Policemen’s Pension Fund is equipping its members to better understand DB plans by teaching them how to use their deferred compensation accounts to learn about investing. By showing them that deferred benefits are easier due to pooled risk and professional investment management, the members find out how relevant DB plans are, says Tyler Grossman, the fund’s executive director.
“They can see how long it takes to save and how much if they tried to do it on their own,” he says.
The program is part of a series of informational summits the system established this year to help educate its members on the value of DB plans. So far, the El Paso system has held two summits. It is hosting its third Nov. 28. Each summit has a five-member panel, including Grossman who talks about the plan’s Forward Deferred Retirement Option Plans, how members can create health funds with it and cost of living adjustments.
“Each panel member speaks on a subject,” he says. “The other topics are insurance, deferred compensation, taxes, and an attorney for estate planning. Each one expresses how important it is to preserve their DB and the importance of protecting it at all costs.”
Grossman hopes not only will his fund’s member become more knowledgeable of their retirement plans; they will talk up the plan among their friends and family, kick-starting a grassroots effort in the El Paso community.

Allen Jones
About the Author:
Allen Jones is the communications manager for the Texas Association of Public Employee Retirement Systems. Email him at or call 713-622-8018.

TLFFRA to host 2017 Local Firefighter Pension Conference

The 2017 Texas Local Fire Fighter Pension Conference is Sept. 30-Oct. 3 in The Woodlands.

Hosted by the Texas Local Firefighter Retirement Act, the event features vendors, networking, golfing, and educational opportunities. The conference will be held at The Woodlands Waterway Marriott Hotel and Convention Center, 1601 Lake Robbins Dr., in The Woodlands.

Trustee member fees are $50. Add $25 to bring a spouse. The fee includes access to a golf tournament Oct. 1, skeet/sporting clay shoot Oct. 1, and dinner on Oct. 2. Click here to register.

A full agenda can be accessed here. Visit the TLFFRA website for additional information.

Online membership renewal for 2018 is open

As a reminder, when renewing your membership please update your organizations profile. Some of the information on your account will be 
utilized to print the 2018 membership directory, which will be 
available to members at the Annual Conference.
  1. Log in to your TEXPERS online account, if you do not have your username and password please use the "Forgot Password" link.
  2. Please select "Membership Renewal" on the left side
  3. Please go through the renewal steps (note: System Members will need current total assets or total fund balance to renew)
  4. Once you are on the last page select "Register and Pay Online" to use a credit card. Or you can select "Register & Bill Me"

The "Bill Me" option will create an invoice under the "My Invoices" section for you
The "Pay Online" will process a credit card payment, you will be emailed a receipt, you can also view your receipt from the "My Transactions" section.

Please note: Retirement system members, your fund administrator or the person at your fund that is responsible for your TEXPERS membership will take care of renewing the dues.
We appreciate your continued support!!

Attendance and participation in TEXPERS conferences requires your membership be in good standing. If by Dec. 31 you have not submitted your dues or notified the TEXPERS office of your intent to renew, your membership will cease. If you are no longer interested in renewing your membership with TEXPERS, please notify us.

New book serves as reference manual for pension trustees

Plan design. Expected contributions. Investment policy. These are a few of the topics discussed in a new book, “One of a Kind! A Practical Guide for 21st Century Public Pension Trustees.”

The book is published by Funston Advisory Services LLC. It is organized by topic, starting off with “Public Pension Policy” and ending with “Reporting and Reassurance.” Each chapter is written by a different specialist and includes a section of self-assessment.

Rick Funston, the Funston Advisory’s managing partner, says the firm put the book together to answer frequently asked questions by public pension trustees and executives.
“Our approach is to describe the issue, why it’s important, the lessons learned by other systems, the options available and the respective pros and cons,” he says.
The book isn’t a prescription for a public pension system’s ailments, however. Funston says it is up to each trustee and board to determine what works best for them in their specific circumstances.

The book is available on

TEXPERS' 2017 Summer Forum, San Antonio, Texas

Public sector employees overwhelmingly pick defined benefits over individually managed retirement accounts

By Allen Jones
TEXPERS, Communications Manager

Texas public pension plan administrators and trustees have a new study to reference in highlighting the importance of maintaining defined benefits for the state’s police, firefighters and other public workers.

Public sector employees in states with retirement plan choice overwhelmingly pick defined benefits (DB) pension plans over 401(k)-type defined contribution (DC) individual accounts, according to a new study by the National Institute on Retirement Security, a nonprofit research and education organization.
“The report makes it clear that when given a choice, public employees care about the type of retirement benefits they receive,” says Diane Oakley, executive director of NIRS.
Oakley spoke to TEXPERS about the study, “Decisions, Decisions: An Update on Retirement Plan Choices for Public Employees and Employers,” which examines new hire elections in 2015 for systems in seven states that provide public workers with a choice of DB or hybrid DB/DC and DC plans. The systems studied are located in Colorado, Florida, Michigan, North Dakota, Ohio, South Carolina and Utah.

Of the systems studied by researchers, the percentage of persons who took advantage of DB pensions in 2015 was 80 percent or higher in six states, according to the new report. Two of the state systems studied had pension take-up rates greater than 95 percent. Florida and Michigan had take-up rates of 76 percent and 75 percent, respectively. 

Although Texas public pension systems are not among the retirement plans studied in the report, the information is useful in gauging how receptive public workers here could be to a choice of benefit plans, Oakley says. The study is an update to previous research NIRS researchers conducted in 2011.
“The information really didn’t change much from our 2011 study,” Oakley says.
The report is co-authored by Jennifer Brown, manager of research for NIRS, and Matt Larrabee, principal and consulting actuary with Millman. Brown says the study’s findings are consistent with previous polling that finds American’s strongly support pensions for providing economic security in retirement.
“Our findings also suggest that the public sector is unlikely to mimic the trend away from pensions as seen in the private sector for two reasons,” Brown states in a news release announcing the new study. “First, there is strong employee support for pensions. Second, DB pensions remain the most cost-effective way for public employers to provide a modest and secure retirement benefit for employees who typically earn less than comparable private sector employees.”
The report, published late August, also indicates that employees directing their own investments in 401(k)-like defined contribution plans typically earn lower investment returns than that of state pension plans. The report attributes the investment advantage in public DB pensions to lower plan expenses, professional asset management and optimal investment allocations used by the DB plan over decades. DB pension plans also benefit from prolonged risk pooling, says Oakley, NIRS’ executive director.

That’s not the only reason why the 401(k)-like accounts aren’t catching on when public employees or employers are given a choice, however. According to the NIRS report, DC plans typically lack supplemental benefits such as death and disability protection. Some plans have attempted to address these differences, but these provisions require extra contributions that are not deposited to the members’ DC accounts. Plus, “making a complete shift from a DB to a DC structure does nothing in and of itself to close any existing DB funding shortfalls, and can increase near-term costs,” according to the study.

The new report also examines the issue of states eliminating DB pensions and moving new hires into DC accounts in the hopes of lowering costs or addressing funding shortfalls often caused by states skipping their full actuarial contributions. However, the experience of states shows that such a change has the opposite impact with a DB to DC switch increasing retirement costs for employers and taxpayers in the immediate future, according to a synopsis of the report provided by NIRS.

DC plans would especially be less cost-efficient for small pension systems, Oakley says. Not only are DB plans the most cost-effective way to fund lifetime retirement benefits, but defined benefits also continue to help recruit and retain public employees, she adds.
“Of the small minority who choose defined contributions, they tend to leave their jobs more often than those with defined benefit retirement plans,” Oakley says.
According to the NIRS report, the public sector workforce has a median tenure rate that is twice that experienced in the private sector.

Allen Jones
About the Author:
Allen Jones is the communications manager for the Texas Association of Public Employee Retirement Systems. Email him at or call 713-622-8018.

Headed Down the Rabbit Hole? Maybe Not

Threat to globalization must be acknowledged, 

but history suggests it won't be derailed

Credit: iStock
By Michael Reynal
Guest Columnist

Chinese President Xi Jinping recently traveled to the World Economic Forum in Davos and championed the benefits of globalization while highlighting the risks of protectionism. Meanwhile, populists in Britain and the United States—stalwart nations of global free trade—have been busy talking up the scourge of globalization. It’s an upside-down world only Lewis Carroll would understand.

Indeed, globalization is in the cross-hairs of many politicians. Threats of tariffs and protectionism abound, and, if enacted, they could pose a drag on global economic growth. Nobody correctly predicted the political outcomes of the past year, and certainly nobody knows how nationalism will manifest itself in future trade policies. Yet there is a feeling that more sensible minds will prevail and globalization is, ultimately, unyielding. Moreover, any setbacks and subsequent market volatility might provide opportunities for active managers who can capitalize when stock prices disconnect from fundamentals.

History as our guide
I fully acknowledges that there are very real risks to globalization today. But as an equity manager with a global perspective, I still believe in trade liberalization and its ability to lift both developing and developed countries. Statistics from the World Trade Organization show a longer-term trend of rising international trade following the conclusion of World War II between 1950 up until the global financial crisis in 2007-2008. There may be setbacks along the way, but I think the slowing pace of trade liberalization and rising protectionism rhetoric is unlikely to completely reverse globalization.

Ultimately, globalization is driven by four key factors: cross-border capital flows, trade, migration, and the free-flow of ideas and communication. Capital flows and trade may have hit a speed bump, but migration and the exchange of ideas and knowledge continue unabated. In fact, the era of digital globalization (the vehicle of increased knowledge-sharing) is still in its infancy. A 2016 report from McKinsey Global Institute asserts that in contrast to slowing international trade in recent years, digital flowsare showing no signs of abating. Cross-border bandwidth “has grown 45 times larger since 2005,” and “is projected to grow by another nine times in the next five years,” according to the report. All of this is boosting participation in the global economy and suggests that globalization is not reversing.

Risks remain
Yet, in recent years, globalization has resulted in uneven economic growth among nations, as well as disruptions across various sectors of the economy. This is the reality, and it may be fueling the recent rise of populism and nationalist rhetoric. There has been heightened talk of protectionism, and, surprisingly, much of it is emanating from the West. This includes rumblings from the new U.S. administration of a 45 percent tariff on Chinese goods, or a border adjustment or“mirror” tax for goods produced in Mexico. No doubt about it, if enacted, these types of protectionist measures could create short-term pain for global investors.

Once protectionism grabs hold, it runs the risk of spawning new tariffs, weakening consumer confidence, and elevating geopolitical tensions. Consumer costs could rise while supply chains are disrupted, resulting in job losses that could continue in a disturbing feedback cycle.

The takeaway
That’s just one possible dystopian economic future, but the likelihood of such a bleak scenario is a long-shot in my opinion. There’s simply too much to be lost on all fronts. In China, for example, the Central Authority must hold up its half of the tacit agreement whereby Beijing continues on a path to economic liberalization (albeit not always as quickly as hoped) in return for stability, peace and control. The U.S. and other developed economies are also unlikely to launch into full protectionism at the risk of hampering economic growth.

In times like these, it’s incumbent upon investors to retain their longer-term focus and commitment as to why they are allocating to emerging markets. That may be to capture potential higher rates of growth, to diversify return streams, or even to diminish their inherent home-country bias. Moreover, emerging markets often tend to over-react to macroeconomic developments in the short term, and this can provide opportunities for active managers.

As emerging markets investors, we’ve been dealing with challenges for more than 16 years, so we take the latest protectionism “threats” in stride and are confident that we will continue to find ways to uncover opportunities in fast-growing and exciting developing markets.

The views expressed herein do not constitute research, investment advice or trade recommendations.

Michael Reynal
About the Author:
Michael Reynal is chief investment officer of Sophus Capital and a portfolio manager of the Victory Sophus Emerging Markets Fund, Victory Sophus Emerging Markets Small Cap Fund and Victory Sophus China Fund.

By Allen Jones
TEXPERS, Communications Manager

Getting ready to leave a public sector job for retirement can be a daunting task that usually results in many employees flipping through their plan’s guidebook to find out what forms must be submitted and by when. However, those nearing retirement often have questions beyond what is on the pages of their fund’s Summary Plan Description, and it's prompting some public pension system administrators to develop creative ways to prepare their members for the day they leave the workforce.

Corpus Christi
Each October, the Corpus Christi Firefighters’ Retirement System hosts a pre-retirement seminar for its members. The half-day program is open to all of CCFRS’ active firefighters but focuses on employees who are within five years of retirement.
“We host presenters and speakers to inform our members of what they should be aware of before retiring,” says Gracie Flores, the fund’s administrator. “It’s important that our members are ready for retirement. It is a big transition to move from work to retirement. Our seminars provide them the tools and information they need to make the process as smooth as possible.”
The CCFRS program is an example of what other public pension funds can do to ensure members are ready to enter their golden years. The Corpus Christi fund’s pre-retirement seminar explains the retirement process, lays out the benefits members can expect and addresses post-retirement issues. The workshop outlines the deferred compensation process and even uses role playing to demonstrate what steps members must take before their retirement dates arrive.
“Our Path to Retirement role play is a very popular portion of the seminar,” Flores says. “We have a person taking on the role of a future retiree. I’m there acting as the plan’s administrator, and we have a fire department official. We show our members exactly what they must do to retire, who they must talk to and what the process is like.” 
System members learn about documents they will need to file for retirement benefits, deadlines they will need to meet, eligibility requirements, how to calculate the income they will earn during retirement, and when benefits are likely to start after retirement. Flores also demonstrates the fund’s Internet-based membership portal so members know how to log in, what information they can find there and how the software works.

The program doesn’t only focus on pension forms and retirement filing procedures, however. Other topics include such as estate planning, retiree health insurance plans, and Social Security fundamentals.

During last year’s pre-retirement seminar, Melissa Sirus, a Social Security representative, discussed eligibility. Nearly 30 percent of state and municipal employees are not covered by Social Security, according to the National Institute on Retirement Security. Not everyone understands that, Flores says.

Flores tries to offer different topics each year and recruits professionals from the Corpus Christi community to speak to the seminar’s attendees.
“To reduce our liability, I only get speakers who have a relationship with the retirement system,” she says. “For example, CCFRS’ attorney presents the estate planning information.”
To promote the program, Flores sends flyers to system members who are within five years of retirement. She also emails the system’s membership to announce the seminar and promotes the program through board agendas and minutes, which are mailed directly to each fire station within Corpus Christi.

The number of attendees fluctuates each year. Her largest attendance was about 60 people, and she has had as few as 25 people show up. She also arranges to serve lunch to the attendees.

Elvin Bates, a captain with the Corpus Christi Fire Department, is nearing retirement. He has spent more than 40 years with the department and is currently a fire inspector with the department’s fire prevention division. He is a regular attendee of his fund’s annual pre-retirement seminar.
“It’s a fantastic program,” Bates says. “I learn a lot each year.”
He says the program has helped him better understand what steps he must take to leave the fire department with his proper benefits and has provided him insight into other aspects of retirement he might not have considered.
“Getting ready for retirement can be stressful,” Bates says. “There are so many things you have to be aware of. I think all plans should have some program to help retirees prepare for retirement. Gracie [Flores] has done a wonderful job with the seminar.”
Flores says her program has gotten the attention of a few other fund executive directors who have sent representatives to sit in on her CCFRS' pre-retirement seminars to bring back ideas to their own systems. She modeled CCFRS’ program off of a similar program hosted by the San Antonio Fire and Police Pension Fund, which hosts a full-day pre-retirement seminar for its members twice a year.
“Ours, of course, is on a smaller scale due to our member size and resources,” she says.
San Antonio
The San Antonio fund’s program attracts 60 to 80 people each time, says Warren Schott, the system’s executive director.
“If we had more demand, we would hold them more often,” he says. “But currently, twice a year seems to be working fine.”
The seminar is used to get members prepared for retirement and does not focus on pension issues. The program usually focuses on 10 issues that are important for public employees to consider before retiring. During the fund’s May seminar, attendees learned about common tax issues retirees face, legal planning, financial planning, health and wellness, and psychological matters. Individuals outside of the system usually conduct the sessions so a lot of staff time isn’t consumed. Doctors hosted the health and psychological sessions.
“Soon-to-be retirees – regardless whether they are from a small or large fund – need to begin thinking about the numerous issues they will face in retirement,” Schott says. “No one else prepares them for this, so it seems logical that the pension fund would provide it.”
The San Antonio system encourages active members who have been on the job at least 20 years to begin attending the seminars. Schott says those within one year of retirement are invited to participate again.
Schott suggests executive directors sit in on his seminars and “steal” ideas to conduct their own pre-retirement workshops for their members.

The Houston Police Officers’ Pension System doesn’t host a pre-retirement seminar like San Antonio and Corpus Christi. However, the fund hosts an annual conference for its members already in retirement. 

The fund’s retirement program began about 20 years ago. The system’s executive director, John Lawson, says 500 to 600 people attend the program, which runs a full day. He says because people are often busy and don’t have time to read and research the retirement topics on their own, it is important that pension systems work to educate their members after retirement.

Topics include many of those included in the Corpus Christi and San Antonio programs. During this year’s Houston retirement conference, a recap of what bills passed and what didn’t during a recent state legislative session will be discussed. Lawson says he also often invites the mayor of Houston to speak during the assembly and provides attendees with a lunch - two things smaller systems may be able to replicate for their own pre- or post-retirement programs.

Allen Jones
About the Author:
Allen Jones is the communications manager for the Texas Association of Public Employee Retirement Systems. Email him at or call 713-622-8018.