Teacher Retirement System of Texas
Encyclopedia
Teacher Retirement System of Texas (TRS) is a public pension plan of the State of Texas. Established more than 70 years ago, TRS provides retirement and related benefits for those employed by the public schools, colleges, and universities supported by the State of Texas and manages a more than $107 billion trust fund, as of November 2011, established to finance member benefits. Nearly 1.3 million public education and higher education employees and retirees participate in the system. TRS is the largest public retirement system in Texas in both membership and assets and the 6th largest public pension fund in the U.S. as of February 2011. The agency is headquartered at 1000 Red River Street in Austin
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A Board of Trustees governs the retirement system.
The Board is composed of nine trustees who are appointed to staggered terms of six years. Three trustees are direct appointments of the governor. Two trustees are appointed by the governor from a list prepared by the State Board of Education. Two trustees are appointed by the governor from the three public school district active member candidates who have been nominated for each position by employees of public school districts. One trustee is appointed by the governor from the three higher education active member candidates nominated by employees of institutions of higher education. One trustee is appointed by the governor from the three retired member candidates who are nominated by retired TRS members.
While its mission to provide retirement benefits remains essentially unchanged, the breadth of its responsibility has increased considerably. Originally applicable only to teachers and public school administrators, the system now provides service and disability benefits for employees of public schools, educational service centers, charter schools, community and junior colleges, universities, and medical schools. A number of events and legislative actions have affected TRS since its inception, including the following:
Benefit Delivery - TRS administers an array of benefits, including service and disability retirement benefits, death and survivor benefits, health benefit programs, and long-term care insurance. TRS is committed to delivering these services in an efficient and professional manner.
Investment Management - TRS manages a pension trust fund for the benefit of its members. The trust fund is presently the largest public pension fund in the state and the sixth largest overall in the nation, based on asset size. The fund is established through contributions from the State of Texas, TRS members, TRS reporting entities (employers), and investment returns. Over the last 10 years investment returns have provided nearly 47 percent of TRS' revenues.
Communication with Stakeholders - Consistent with Texas state government philosophy, TRS recognizes that it is each individual's right and responsibility to make informed retirement decisions. As subject-matter experts for a number of complex programs, TRS staff are responsible for providing accurate information about TRS programs and services to all interested parties, including active and retired members, legislative and governing bodies, school districts and institutions of higher education, and the public. TRS communicates with stakeholders to enable them to make informed decisions related to TRS programs. This may include funding and benefit design decisions made by the legislature or retirement options selected by members. TRS also provides general educational information regarding pensions and health benefit matters, and responds to media and other requests relating to the investments of the system. TRS continues to sharpen its communication focus on benefit delivery and fund management and is committed to enhancing its channels of communication to meet the needs of all constituents.
Workforce Contribution - In order to provide the level of excellence expected by its stakeholders, TRS must attract, develop, and retain an exceptionally qualified and diverse workforce.
Along with the four PPO plan options administered by Blue Cross and Blue Shield of Texas and Medco, there are three health maintenance organization (HMO) options offered under TRS-ActiveCare for the 2011-2012 plan year: FirstCare Health Plans, Scott & White Health Plan, and Valley Baptist Health Plans. These HMO options will provide additional plan choices to the employees of participating entities in areas served by these HMOs. These employees will be able to select TRS-ActiveCare coverage under one of the PPO plans or through the authorized HMO serving their part of the state.
TRS-Care plan descriptions, eligibility requirements, a list of participating health care providers, important telephone numbers, and other TRS-Care information can be found in this section of the TRS Web site.
Notice about Retiree Health Insurance (Required Disclosure by House Bill 2365)
TRS-Care is currently funded on a pay-as-you-go basis and is subject to change based on available funding. At the inception of the plan in fiscal year 1986, funding was projected to last 10 years through fiscal year 1995. The original funding was sufficient to maintain the solvency of the fund through fiscal year 2000. Since that time, the appropriations and contributions have been established to be sufficient to provide benefits for the biennium. The Texas Legislature determines the funding of benefits and has no continuing obligation to provide benefits beyond each fiscal year.
Eligible persons between the ages of 18 and 80 include active Texas public school Employees who are contributing members of TRS and TRS Retirees, their spouses, parents and parents-in-law, and grandparents who are eligible may apply. Eligible persons must be legal U.S. residents. All applicants are subject to the underwriting requirements of Genworth.
Austin, Texas
Austin is the capital city of the U.S. state of :Texas and the seat of Travis County. Located in Central Texas on the eastern edge of the American Southwest, it is the fourth-largest city in Texas and the 14th most populous city in the United States. It was the third-fastest-growing large city in...
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A Board of Trustees governs the retirement system.
The Board is composed of nine trustees who are appointed to staggered terms of six years. Three trustees are direct appointments of the governor. Two trustees are appointed by the governor from a list prepared by the State Board of Education. Two trustees are appointed by the governor from the three public school district active member candidates who have been nominated for each position by employees of public school districts. One trustee is appointed by the governor from the three higher education active member candidates nominated by employees of institutions of higher education. One trustee is appointed by the governor from the three retired member candidates who are nominated by retired TRS members.
History
Recognizing that having a sound and reliable retirement benefit would enhance the lives of Texas educators, and thus improve educational quality for the children of Texas, voters in 1936 approved an amendment to the state constitution authorizing creation of the Teacher Retirement System of Texas. Following enabling legislation in 1937, TRS was formed. Currently, The system is established and operates under Section 67, Article XVI of the Texas Constitution.While its mission to provide retirement benefits remains essentially unchanged, the breadth of its responsibility has increased considerably. Originally applicable only to teachers and public school administrators, the system now provides service and disability benefits for employees of public schools, educational service centers, charter schools, community and junior colleges, universities, and medical schools. A number of events and legislative actions have affected TRS since its inception, including the following:
Timeline
- 1949 - TRS retirement plan membership was expanded to include all employees of public education institutions, including cafeteria workers and bus drivers.
- 1985 - The 69th Legislature established TRS-Care, a health benefit program for public school retirees.
- 1987 - The plan was amended to take advantage of federal tax code provisions to make member contributions tax deferred.
- 1999 - Legislation was enacted authorizing TRS to administer an optional long-term care insurance program for eligible active members and retirees.
- 2001 - Legislation was enacted to create TRS-ActiveCare, a statewide health benefit program for employees of school districts, open enrollment charter schools, regional education service centers, and other educational districts whose employees are members of TRS.
- 2005 - Significant legislation was passed altering several aspects of the plan related to benefit eligibility and determination. The legislative objective was to help assure the plan's long-term viability by influencing future retirement patterns.
- 2007 - The TRS Board of Trustees adopted a new long-term asset allocation that over time will increase TRS holdings in private markets and reduce holdings in public markets. This shift in assets is intended to increase investments diversification and returns without increasing risks to the fund. The Legislature also granted TRS authority to use external investment managers and to use certain investment instruments to help manage risk, enhance returns, and promote efficient portfolio management.
Description of Services
TRS is based on two missions that the organizations has: 1. To deliver retirement and related benefits authorized by law for members and their beneficiaries 2. To prudently invest and manage the assets held in trust for members and beneficiaries in an actuarially sound system administered in accordance with applicable fiduciary principles. TRS responsibilities include:- Paying benefits as authorized by law to members and beneficiaries in a timely and efficient manner,
- Collecting member contributions and maintaining records of member accounts,
- Collecting state contributions,
- Maintaining records of financial transactions and reporting them to the state and TRS members,
- Investing the pension trust fund prudently to pay benefits provided by law,
- Administering the insurance plans, and
- Administering the retirement plan to promote an actuarially sound system.
Primary Functions
TRS serves active and retired public and higher education employees of the state through its four core competencies.Benefit Delivery - TRS administers an array of benefits, including service and disability retirement benefits, death and survivor benefits, health benefit programs, and long-term care insurance. TRS is committed to delivering these services in an efficient and professional manner.
Investment Management - TRS manages a pension trust fund for the benefit of its members. The trust fund is presently the largest public pension fund in the state and the sixth largest overall in the nation, based on asset size. The fund is established through contributions from the State of Texas, TRS members, TRS reporting entities (employers), and investment returns. Over the last 10 years investment returns have provided nearly 47 percent of TRS' revenues.
Communication with Stakeholders - Consistent with Texas state government philosophy, TRS recognizes that it is each individual's right and responsibility to make informed retirement decisions. As subject-matter experts for a number of complex programs, TRS staff are responsible for providing accurate information about TRS programs and services to all interested parties, including active and retired members, legislative and governing bodies, school districts and institutions of higher education, and the public. TRS communicates with stakeholders to enable them to make informed decisions related to TRS programs. This may include funding and benefit design decisions made by the legislature or retirement options selected by members. TRS also provides general educational information regarding pensions and health benefit matters, and responds to media and other requests relating to the investments of the system. TRS continues to sharpen its communication focus on benefit delivery and fund management and is committed to enhancing its channels of communication to meet the needs of all constituents.
Workforce Contribution - In order to provide the level of excellence expected by its stakeholders, TRS must attract, develop, and retain an exceptionally qualified and diverse workforce.
Benefit Programs
- TRS administers a defined benefit retirement plan that is a qualified pension trust under Section 401(a) of the Internal Revenue Code. The pension trust fund provides service and disability retirement, as well as death and survivor benefits, to eligible Texas public education employees and their beneficiaries.
- Retirement benefits are financed by member and state contributions, employer contributions in some circumstances, and through investment earnings of the pension trust fund.
- TRS administers TRS-ActiveCare, a statewide health benefit program for eligible public education employees of participating entities. It is financed by plan participant premium payments and investment income.
- In addition, TRS administers a separate trust that provides health benefit coverage for TRS retirees and eligible dependents. This program, is financed by contributions from the state, active public school employees, reporting entities, premium payments from plan participants, and investment income.
- TRS also administers an optional long-term care insurance program for eligible retirees and public school emloyees. Certain family members are also eligible. The plan is available on an enrollee-pay-all basis.
Health Care for Public Education Employees
On September 1, 2002, TRS introduced TRS-ActiveCare, a new statewide health coverage program for public education employees established by the 77th Texas Legislature. Today, participation in that program has grown to over 445,969 employees and dependents. Of the 1,246 districts/entities eligible to participate in TRS-ActiveCare, over 88.9 percent, or 1,108 now do so.Along with the four PPO plan options administered by Blue Cross and Blue Shield of Texas and Medco, there are three health maintenance organization (HMO) options offered under TRS-ActiveCare for the 2011-2012 plan year: FirstCare Health Plans, Scott & White Health Plan, and Valley Baptist Health Plans. These HMO options will provide additional plan choices to the employees of participating entities in areas served by these HMOs. These employees will be able to select TRS-ActiveCare coverage under one of the PPO plans or through the authorized HMO serving their part of the state.
Health Care for Retirees
TRS-Care is the group retiree health benefits program administered by TRS. TRS retirees who are not eligible for ERS, UT, or Texas A&M system health benefit coverage may be eligible for TRS-Care. More than 212,742 retirees and their dependents participate in this plan. Aetna administers the medical benefits; Caremark administers the pharmacy benefits.TRS-Care plan descriptions, eligibility requirements, a list of participating health care providers, important telephone numbers, and other TRS-Care information can be found in this section of the TRS Web site.
Notice about Retiree Health Insurance (Required Disclosure by House Bill 2365)
TRS-Care is currently funded on a pay-as-you-go basis and is subject to change based on available funding. At the inception of the plan in fiscal year 1986, funding was projected to last 10 years through fiscal year 1995. The original funding was sufficient to maintain the solvency of the fund through fiscal year 2000. Since that time, the appropriations and contributions have been established to be sufficient to provide benefits for the biennium. The Texas Legislature determines the funding of benefits and has no continuing obligation to provide benefits beyond each fiscal year.
Long Term Care Insurance
The Teacher Retirement System of Texas (TRS) first introduced the Group Long Term Care Insurance Program for Public School Employees in 2000, as a result of legislation that is now codified in Chapter 1576, Texas Insurance Code, and TRS Rules. The group long term care insurer is always selected by the TRS Trustees following a competitive bidding process. The current group long term care insurer is Genworth Life Insurance Co. (Genworth), a part of Genworth Financial.Eligible persons between the ages of 18 and 80 include active Texas public school Employees who are contributing members of TRS and TRS Retirees, their spouses, parents and parents-in-law, and grandparents who are eligible may apply. Eligible persons must be legal U.S. residents. All applicants are subject to the underwriting requirements of Genworth.
- Employee: a contributing member of the Teacher Retirement System of Texas who is employed by a Public School and is not entitled to coverage in a group insurance program under the Texas Employees Group Benefits Act or the State University Employees Uniform Insurance Benefit Act. Public School means a school district; another education district whose employees are members of the Teacher Retirement System of Texas; a regional education service center established under Chapter 8, Texas Education Code; and an open-enrollment charter school established under Subchapter D, Chapter 12, Texas Education Code.
- Retiree: a former contributing member of the Teacher Retirement System of Texas who has tretired under the Teacher Retirement System of Texas, and who satisfies the age and service requirements determined by the Policyholder and is not entitled to coverage in a group insurance program under the Texas Employees Group Benefits Act of the State University Employees Uniform Insurance Benefits Act.