Title:
Consider and take action on an ordinance removing the maximum contribution rate limit of 15.50% for TMRS retirement contributions (Director of Human Resources and Civil Service)
Staff requests approval on first and final reading.
Background:
Approval of this item will remove the maximum contribution rate limit of 15.50% for TMRS retirement contributions.
This change:
- does not change retirement benefits to employees,
- is funded in the FY2025 adopted budget,
- maintains the financial stability of the plan,
- going forward the TMRS percentage each year will be disclosed during the annual budget process.
The TMRS Act provides a limit to the maximum rate that a city can be required to contribute for the retirement portion of its plan (the cost of Supplemental Death Benefits is excluded from this limit) based on the combination of the employee deposit rate and the matching ratio. This maximum contribution rate limit, also known as the statutory maximum, or “Stat Max,” is not a limit of the cost of a plan, but rather is simply a limit on the maximum a city could be required to contribute for the plan. If the TMRS minimum required retirement contribution rate exceeds this limit, unless the city takes additional action as permitted under the TMRS Act, it will not be meeting the minimum contribution requirements for its TMRS plan.
League City’s 2025 minimum retirement contribution rate has exceeded the maximum contribution rate limit (15.50% for League City). The approval of this ordinance will remove this maximum contribution rate limit. The ordinance can become effective as early as the first day of the month following its adoption.
By adopting this ordinance, League City is agreeing to fully fund the costs of the pension benefits included in the city’s plan.
This ordinance will allow League City to impose its own “limit” on the contribution rate by using its discretion in determining which potential plan improvements to adopt, or not to adopt, bas...
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