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TCDRS: A Model Retirement Plan
For more than 50 years, TCDRS has been a model for providing reliable retirement benefits. Benefits are responsibly funded, which means costs are not pushed to future generations.
We are one of the best funded retirement plans in the nation. We do not receive state funding. Each plan is funded by investment earnings, the employer and its employees.
How We’re Different
The TCDRS retirement plan has built-in features that make us unique. Our primary differences include:
- TCDRS is a savings-based plan. Members are saving for their own retirement over the length of their careers. The TCDRS benefit is based on the total final employee account balance and employer matching. This differs from a traditional pension plan where the benefit is based on the final salary and length of career. When a benefit is calculated based on final employee salary, benefit costs can jump beyond the employer’s expectations if there is a late-career promotion or if large amounts of overtime occurs.
- Benefits are responsibly funded. A key difference with TCDRS is that employers must pay 100% of their required contributions every year. This ensures that the necessary funds will be there when needed. In comparison, a little more than 80% of other public retirement plans receive 90% or more of their actuarially determined employer contributions every year.
- Employers have flexibility and local control over benefits. Employers can choose benefit levels to meet their workforce needs and budgets. This level of flexibility is not standard in most traditional retirement plans, where it can be difficult or impossible for employers to lower costs when needed.
Our Plan Works in Three Simple Steps
Here’s how the TCDRS plan works for county and district employees:
- A percentage of each employee's paycheck is deposited into his or her TCDRS account. That percentage (from 4% to 7%) is set by the county or district employer.
- The employee's savings grow at an annual, compounded rate of 7% interest.
- At retirement, the employee receives a benefit payment for life that is based on the final account balance and employer matching. The plan’s matching rate — from "dollar for dollar" up to $2.50 for every dollar saved — is chosen by the employer.