Thirteen municipal pension systems in Texas are enshrined in state statute. This means that, locally, Texans across the state are paying taxes into pension systems that they have no control over. Even worse, they are currently locked into an unsustainable defined benefit plan model. This model places the bulk of pension responsibility on taxpayers, who have little say in funding of the plans or how they are managed.
This creates a major problem when local governments can’t afford to pay the full actuarial required amount into their pensions systems. As these unfunded liabilities continue to add up, municipal governments across Texas face increasingly uncertain futures.
Municipal pension systems should freeze their current plans, and begin to phase in defined contribution pension models as they add new or previously unvested employees. Easing the burden placed on the taxpayers will ensure that retiree benefits will be available when the time comes.
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