TRS shares good news about educator health insurance premiums during April 2022 board meeting
Retirement | TRS | Social Security Texas Legislature Congress | Federal COVID-19 Educator Compensation | Benefits
Date Posted: 4/29/2022 | Author: Monty Exter
The Teacher Retirement System (TRS) Board of Directors met in Austin Thursday and Friday, April 28-29, 2022. The meeting covered a range of topics, including setting the 2022-23 TRS-ActiveCare rates, receiving a recommendation on where to set the anticipated rate of return for the TRS pension trust fund, and receiving updates on the ongoing TRS TEAMs project.
As the board was preparing to vote Thursday morning on new ActiveCare insurance rates, the TRS staff was still working to secure a final decision from state leaders on spending federal COVID-19 relief funds to buy down the cost of those premiums. Ultimately, state leaders announced Thursday they would direct $435 million in federal relief funding toward reducing next year’s ActiveCare premiums, as we reported here on Teach the Vote. In addition to the federal funds, TRS was already set to announce the change from statewide premiums to regional premiums, which will vary across the state depending on the local cost of health care delivery. ATPE released a press statement Thursday afternoon responding to the announcements and expressing our thanks for the one-time use of federal funds to ensure all regions will experience a decrease in TRS-Active Care premiums.
On Friday, board members received a recommendation from the agency’s external third-party actuary that the board reduce the TRS pension trust fund’s anticipated rate of return from 7.25 percent to 7 percent. The rate of return, which is an assumption used in TRS calculations on how much income the pension fund’s investments will generate, affects many other major factors used to gauge the health of the fund, such as the funded ratio, the dollar amount of the unfunded liability, and the number of years it will take to reach 100 percent funding based on the current program.
Using a lower assumed rate of return means assuming there will be fewer dollars coming in through investments; therefore, it shifts to some degree the reliance of the funding benefits away from more speculative investment returns and toward less speculative contributions. This can strengthen the health of a fund over time by decreasing the impact of negative market events, but in the short term, it has a negative impact on the other factors that signal the health of the fund. Those factors and the perception of the fund’s health could also have an impact on the Legislature’s discussions next session about whether to authorize a cost-of-living adjustment (COLA) for retired educators.
No action was taken on changing the rate of return at this meeting, but the TRS board signaled that it could be an action item at its next meeting in July.
The board also received an update on the roll-out of the new MyTRS web portal as TEAMS – the long-term revamp of TRS technical and data systems – turns to more public-facing aspects of the project. According to TRS, “MyTRS is the online access portion of the TRS website.” The agency says the new portal “offers a number of enhancements and self-service options.” TRS is already seeing positive movement in its customer service data since the launch. Of note, members who had an old MyTRS account will have to create a new login to access the new portal.
Access archived video of the April TRS meeting and board materials here.
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