Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. ASSET OWNERS
September 14, 2016 01:00 AM

Houston mayor outlines pension overhaul proposal for 3 city plans

Meaghan Offerman
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Houston Mayor Sylvester Turner announced Wednesday a series of proposals aimed at shoring up the city's three pension funds.

    Speaking at a press conference, Mr. Turner proposed adopting a 30-year closed amortization schedule to pay off the $7.7 billion in unfunded liabilities across the pension funds — the $3.8 billion Houston Firefighters' Relief and Retirement Fund, $4.6 billion Houston Police Officers' Pension System and $2.5 billion Houston Municipal Employees Pension System. “We are replacing the present practice of restructuring the liability every year with a 30-year closed amortization model,” Mr. Turner said. “No longer will we kick the can down the road in this city.”

    Also, the mayor proposed lowering the pension funds' assumed rates of return to 7% from the current rates, which range between 8% and 8.5%, and recognizing all pension liabilities as of June 30, 2016, effectively raising the combined unfunded liabilities to $7.7 billion from the roughly $5.6 billion reported as of June 30, 2015.

    Additionally, Mr. Turner disclosed that all three funds identified benefit changes to reduce the portion of their plans' unfunded liabilities.

    Without going into specifics, Mr. Turner said the changes, which are different for each system, affect one or more of the following — cost-of-living adjustments, future benefit accrual rates and the deferred retirement option program. He said the changes could reduce the combined $7.7 billion funding shortfall by 33%, or about $2.5 billion. Further details will be announced once negotiations have been finalized and the pension fund boards consider the changes.

    Also as part of the proposal, the city will make the full annual required contributions to all three pension funds, and $1 billion in pension obligation bonds will be issued, which could reduce unfunded liabilities further.

    Finally, “to ensure the city does not find itself in the same place again,” the mayor announced a “new cost management component that requires (pension) costs to stay within a specified corridor.”

    “It is like a thermostat,” Mr. Turner said. “If market conditions cause our situation to get too hot, the city and pension systems will go back to the negotiating table to lower the temperature.”

    Mr. Turner noted that the “thermostat concept” is the only piece of Wednesday's proposal that has not received support from all three systems. The police and municipal plans are on board but the firefighters fund is “not comfortable with this model yet,” Mr. Turner said.

    Talks will continue, he added.

    “There is no other solution that provides the relief and certainty of the plan that I am announcing today,” Mr. Turner said.

    Moody's Investors Service and S&P downgraded Houston's credit rating in March, citing the city's high unfunded pension liabilities and rising pension costs.

    Wednesday's proposal is preliminary and will go to the City Council and state Legislature for approval.

    Houston Firefighters board Chairman David L. Keller Jr. said in a news release Wednesday that the pension fund and mayor did not agree on the changes, but fund officials are open to working toward an agreement.

    Peter Koops, spokesman for the municipal plan, and John Lawson, executive director of the police plan, could not immediately be reached for comment.

    Related Articles
    Chicago reaches new pension deal with laborers
    Chicago City Council approves deal to improve funding at municipal pension plan
    Houston mayor announces plan to cut pension benefits, issue bonds
    Houston Firefighters pension fund board OKs mayor's plan to cut benefits, issue…
    Houston City Council approves pension reform plan for 3 city funds
    Recommended for You
    ONLINE_190329864_AR_0_YBKZZQSSKIZH.jpg
    IMCO returns 9.6% in 2021, outperforming its benchmark
    SLIDESHOW2_824009999_PH_7_HOEACWCAWVKF.jpg
    Northern Trust plan universe returns 0.2% in Q3
    Northern Trust: Institutional asset owners post 6% gain in Q2
    Northern Trust: Institutional asset owners post 6% gain in Q2
    OCIO, Anchor in Rough Seas
    Sponsored Content: OCIO, Anchor in Rough Seas

    Reader Poll

    May 23, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Crossroads: Politics, Inflation, & Bonds
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    May 9, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference