How 2021 Investment Performance Impacts Employer Rates & TCDRS Reserves

Thanks to the 2021 investment return, TCDRS and your plans are in a very strong position as we navigate the challenges and market volatility of 2022.

Investments play a huge role in funding benefits. Investment earnings fund an estimated 74 cents of every benefit dollar paid. TCDRS’ strong investment return in 2021 will impact your plan in two ways.

First, the positive returns will have a rate-reducing effect on your employer contribution rate. Other factors, such as demographic experience, also impact your rate, but we anticipate that more than 90% of our employers will receive a rate decrease in 2023.

The second impact involves our reserves. Thanks to the gains this year, the TCDRS Board of Trustees has increased our reserves fund to nearly $5 billion — more than 11% of assets.

Maintaining a healthy reserves fund is important because it gives us an effective tool to offset future adverse experience and help keep employer rates more stable.

As a percentage of assets, the reserves are at their highest point since the Great Financial Crisis. At that time, we had more than 14% of assets set aside, and we used that fund to mitigate the losses that occurred in 2008, smoothing them over time to reduce the impact on employer rates.

TCDRS and your plans are in a very strong position as we navigate the challenges and market volatility of 2022.

Investments & Finance