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You Have Options
Build and annually adjust a plan that works for your organization and employees.
Plan Fundamentals
How TCDRS Works for You
Your benefit works in three simple steps:
Step 1
A percentage of your employee’s paycheck is deposited into his or her TCDRS account. That percentage (from 4% to 7%) is set by you.
Step 2
Your employee’s savings grow at an annual, compounded rate of 7% interest.
Step 3
At retirement, your employee receives a benefit payment based on the final account balance and employer matching. You choose the employer matching from “dollar for dollar” up to $2.50 for every dollar.
Plan Provisions
Your plan has four basic provisions, which you’re able to choose based on your organization and employees’ needs.
Employee Deposit Rate
The percentage of each employee’s paycheck that goes to TCDRS every month. You may choose an employee deposit rate of 4% up to 7%.
Employer Matching
The amount your county or district adds to an employee’s retirement account when they retire. You choose the employer matching rate of at least “dollar for dollar,” up to $2.50 per $1.00 saved.
Retirement Eligibility
There are three options that determine the number of years employees must work to earn the right to a lifetime monthly retirement benefit, and employees only need to meet one.
Prior Service
Your employees automatically get service time for time worked before you joined TCDRS. You can provide monetary credit for the prior service time, which is funded solely by you, the employer.
Retirement Eligibility Options
At Age 60 (Vesting)
Amount of service time your employees must have to retire at 60 or older. You may choose 5, 8 or 10 years.
Rule Of
A vested employee may retire if their age plus years of service add up to at least 75 or 80.
At any Age
Employees may retire when they have 20 or 30 years of service time, no matter their age.
Additional Plan Options
Your TCDRS plan also lets you add extra benefits to your retirement plan. These provisions are optional — you can choose to add them or not.
COLAs
COLAs allow you to increase retiree benefit payments to restore purchasing power lost due to the effects of inflation.
Learn MoreGroup Term Life
You can provide the families of your employees with extra peace of mind by participating in Group Term Life, a program of group term life insurance administered by TCDRS.
More InfoPartial Lump-Sum Payment
This allows an employee to withdraw part of their account balance as a lump sum at retirement, with the remainder payable as a lifetime monthly benefit.
Get DetailsBuybacks
Lets current employees re-establish a closed TCDRS account from previous service with your organization, including employer matching. For more information, please contact your Employer Services Representative at 800-651-3848.
Key Dates for Plan Review
When reviewing your plan, keep these important time frames in mind throughout the year.
January-April
Actuarial Valuations
- TCDRS actuaries and an outside consultant perform an actuarial valuation of your plan using a snapshot taken on Dec. 31 of the previous year.
- This valuation determines your plan rates for the following year.
- During this time, the Plan Customizer is unavailable.
July
Attend Our Conference
- At the TCDRS Annual Conference, you’ll learn more about your retirement plan and what’s on the horizon.
Mid-December
Submit Your Plan
Changes
- Your plan changes are due each year on Dec. 15, unless that day falls on a weekend.
- You can make additional contributions or adopt an elected rate, which is a rate selected by you that is higher than the one shown on your Plan Assessment in the Employer Portal.
- If you are changing your benefit levels, adopting an elected rate or making an additional contribution, you’ll need to submit a plan change to TCDRS.
If you do not wish to make any changes to your plan, you do not need to send anything to TCDRS.
May-December
Start Reviewing
Your Plan
- Rate information and the Plan Customizer become available in May.
- The Plan Customizer | Lets employers visualize how changing their plan options may affect costs and benefits.
TCDRS will let you know when the Plan Customizer as well as the Plan Assessment and the Summary Valuation are available. To access them, sign into our Employer Portal.
- Plan Assessment | Shows your current benefit selections and cost for the upcoming plan year, including Group Term Life, if applicable.
- Summary Valuation | Provides details about your workforce, as well as a summary of the actuarial methods and assumptions used to determine your rate.
During your annual review, you may want to consider:
- How much of your employees’ pre-retirement income would you like to replace when they retire?
- How much should employees contribute toward their retirement?
- When should your employees be able to retire?
January-April
Actuarial Valuations
- TCDRS actuaries and an outside consultant perform an actuarial valuation of your plan using a snapshot taken on Dec. 31 of the previous year.
- This valuation determines your plan rates for the following year.
- During this time, the Plan Customizer is unavailable.
May-December
Start Reviewing
Your Plan
- Amount employees put into the plan each month
- The Plan Customizer | Matching offered to employees upon retirement
TCDRS will let you know when the Plan Customizer as well as the Plan Assessment and the Summary Valuation are available. To access them, sign into our Employer Portal .
- Plan Assessment | Shows your current benefit selections and cost for the upcoming plan year, including Group Term Life, if applicable.
- Summary Valuation | Provides details about your workforce, as well as a summary of the actuarial methods and assumptions used to determine your rate.
During your annual review, you may want to consider:
- How much of your employees’ pre-retirement income would you like to replace when they retire?
- How much should employees contribute toward their retirement?
- When should your employees be able to retire?
July
Attend Our Conference
- At the TCDRS Annual Conference you will learn employees put into the plan each month
Mid-December
Submit Your Plan
Changes
- Your plan changes are due each year on Dec. 15, unless that day falls on a weekend.
- You can make additional contributions or adopt an elected rate, which is a rate selected by you that is higher than the one shown on your Plan Assessment in the Employer Portal .
- If you are changing your benefit levels, adopting an elected rate or making an additional contribution, you’ll need to submit a plan change to TCDRS.
If you do not wish to make any changes to your plan, you do not need to send anything to TCDRS.
Additional Contributions
Staying A Step Ahead
Contributing more than your required rate creates a buffer against adverse plan experience (such as a down investment year or payroll that doesn’t grow as expected). You may also make additional contributions to prefund a future benefit increase or pay down your liabilities faster than required. There are two approaches:
-
Paying an elected contribution rate higher rate than your required contribution rate.
-
Making an additional contribution directly to your employer account.
Controlling Plan Costs
A Measured Approach
With TCDRS, you have the flexibility and local control to make changes that can help manage your plan costs through the years.
Keeping Rates Stable
Keeping your retirement plan contribution rate stable will help you continue to provide your employees with a reliable benefit while also helping you maintain a more predictable retirement plan budget from year to year. In addition to TCDRS’ rate-stabilizing strategies, there are things you can do to help keep your retirement plan rate stable.
- Adopt an elected rate
- Adjust your payment benefits
- Pay for a COLA when you adopt it
TCDRS also has rate-stabilizing methods, including:
- Our funding method
- Our diversified portfolio
- Our reserve fund
Understanding Plan Funding
Responsible retirement plan funding means that there is no doubt the money will be there when your employees are eligible and choose to retire.
No Fees & Low Expenses
TCDRS does not charge fees. All of your employer contributions and employee deposits go toward funding your retirement benefit. Plan administration and investment expenses average between 1/4% and 1/3% of invested assets.
Determining Your Rate
Each year, our independent external consulting actuaries perform an actuarial valuation on your retirement plan. The valuation determines your required employer contribution rate and measures your funded status. Learn More
What is a funded ratio?
Your funded ratio is a comparison of what your TCDRS plan has invested to what it is estimates to own to pay future benefits. It is one tool for measuring the health of your plan.
Your TCDRS plan funds retirement benefits in advance. This means that you and your employees are jointly investing now to pay for their future retirement benefit, rather than paying for the benefit as it cones due. This conservative funding policy ensures that the money will be there when it's needed to pay benefits and that debt will not be pushed to future generations.
Making your required contribution to TCDRS each month, your plan will move toward 100% funding.
Understanding “Unfunded Liabilities”
“Unfunded liabilities” is a phrase that gets a lot of attention in the media, but it is a misnomer at TCDRS. You are funding these liabilities, and you’re funding them responsibly.
TCDRS funds retirement benefits in advance. Actuaries calculate how much you need to pay now to ensure that there is enough money to pay for benefits in the future. The technical term “unfunded actuarial accrued liabilities”, refers to the difference between your estimated plan costs and your plan assets.
What Causes Unfunded Liabilities?
- These liabilities are created whenever your actual plan experience does not match the estimates used in the actuaries’ projections for your plan.
- Investment allocation and changes in payroll — including wage increases, new hires and retirements — are examples of things that can affect your plan experience.
- These liabilities are also created when you adopt benefits that haven’t been funded in advance, such as retroactive benefit increases, retiree cost-of-living adjustments and prior service credit.
How Are These Liabilities Funded?
- These liabilities are not “unfunded”. A portion of your required rate goes toward paying down any liabilities.
- Compare it to having a fixed-rate home mortgage and making your monthly payments, just by paying your required rate, you will pay these liabilities down to zero within 20 years of incurring them and move your plan toward 100% funding.
- This conservative funding policy ensures that the money will be there when needed to pay benefits and that debt will not be pushed to future generations. It’s a responsible way to fund your retirement benefits.
GASB Considerations
How GASB Impacts You
The Governmental Accounting Standards Board (GASB) establishes accounting and financial reporting standards for U.S. state and local governments. It’s important to understand what these regulations mean for you and your employees. New reports are created for GASB 68 and GASB 75 every year, and are usually available in May or June. TCDRS will let you know when they’re ready.
GASB 68
GASB reporting standards related to pension plans separate financial reporting from plan funding. There are three main areas that you’ll need to be aware of when considering GASB 68.
Financial Reporting
You will use the GASB 68 Report to complete your audited financial statement. We’ll provide you with the necessary information.
Learn MoreAudit Process
Your auditors will need to verify that the retirement plan data on your financial statement is accurate. We provide you with an SOC 1 Report to help you complete your audit processes.
GET DETAILSCOLA Decisions
Under the GASB 68 requirements, adoption of frequent COLAs can have an impact on your balance sheet.
FIND OUT WHYGASB 75
GASB 75 only applies to employers who provide Group Term Life (GTL) coverage to their retirees.
- This requirement will affect your financial reporting, but does not affect the cost of GTL coverage.
- Your financial statements will have additional line items, schedules and note disclosures that only apply to the retiree portion of your GTL coverage.
- A GASB 75 report is available in our Employer Portal that contains all the information you need to comply with these standards.