A Great Value for All Texans

TRS

Teacher Retirement System of TexasFebruary 2017

TRS Mission Statement

TRS Vision

Earning your trust every day.

TRS Core Values

Customer Satisfaction

Collaboration & Teamwork

Accountability

Respect

Ethics

Excellence

Employee Ful�llment

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Improving the retirement security of Texas educators by prudently investing and managing trust assets and delivering benefits that make a positive difference in members’ lives.

TRS Core Values

Teac

her R

etire

men

t Sys

tem

of T

exas

TRS has grown dramatically since

its inception in 1937, from 38,000 members to more than 1.5 million

participants.

T he Teacher Retirement

System of Texas (TRS) is one of

the largest retirement systems in the

nation. The system’s core mission is to

make a positive difference in the lives of

Texas educators by prudently investing

and managing trust assets and delivering

member benefits. Not only does TRS

provide great value to its members, it also

benefits all Texans by adding significant

dollars to the state and local economies.

A GreAt VAlue for All texAns

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Benefits Stay in Texas and Stimulate the Economy

Value to the Texas Economy

Upper Rio Grande $341

Upper East

Texas$539

NorthwestTexas$282

South Texas $902

Central Texas $545

Capital $718

West Texas$219

High Plains$381

Metroplex$2,236

SoutheastTexas $359

Gulf Coast $2,189Alamo

$1,191

Economic Benefits from Annuity Payments by Region

(2016 gross product in millions of dollars)

Coastal Bend$273.2

In 2016, TRS paid over $9.3 billion in retirement benefits to more than 393,000 retirees and their beneficiaries.

Over $8.9 billion of these retirement benefits were for service retirements, with the balance for disability and death and survivor benefits.

Over 94 percent of these benefit payments, or approximately $8.8 billion, went directly to retirees and their beneficiaries who live and spend these dollars in Texas.

Retirement Benefits

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Source: “The Impact of Annuity Payments by the Teacher Retirement System on Texas and Local Areas Within the State” (The Perryman Group, January 2017)

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Economic Stimulus

Retirees spending their benefits provide a notable economic stimulus to communities throughout the state.

When spent locally, these payments generate additional expenditures on an ongoing basis.

The estimated increase in business activity generated by retirement benefit payments is illustrated below:

Tax RevenueRetirement benefits and the economic stimulus the benefits produce generate tax revenue.

Over $975 million in state revenues and $368 million in local government revenues were generated in 2016.

Source: “The Impact of Annuity Payments by the Teacher Retirement System on Texas and Local Areas Within the State” (The Perryman Group, January 2017)

Every $1 in benefits paid by TRS generates $2.34

in economic activity.

Annual Impact of Payments on Texas Business (2016)

Retirement Benefits

Economic Stimulus

Tax Revenue

Total Expenditures $20.6 billion

Personal Income $6.1 billion

Permanent Jobs 131,422

Investing in Texas Businesses

TRS provides capital for businesses in Texas. TRS has $6.1 billion worth of holdings in Texas-based businesses and $11.4 billion invested or committed to Texas-based money managers.

Retiree Volunteer Hours

In 2015, retirees contributed almost 5.6 million volunteer hours to Texas communities valued at over $137 million.Source: Texas Retired Teachers Association

Economic Impact

by Industry

All major industrial sectors experienced gains in business activity resulting from TRS annuity payments. Industry groups experiencing the largest effects include:

Retail Trade $4,199.0 75,333

Other Services $1,012.8 17,641 Health Services $761.5 10,791

INDUSTRY GROSS PRODUCT JOBSIn millions

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Source: “The Impact of Annuity Payments by the Teacher Retirement System on Texas

and Local Areas Within the State” (The Perryman Group, January 2017)

(including restaurants)

Value for State & Member Contributions

Changes to Contributions

The member contribution rate increased beginning in fiscal year 2015 to 6.70 percent and will reach the ultimate contribution rate of 7.70 percent in fiscal year 2017.

In fiscal year 2015, non-Social Security school districts and charter schools began contributing 1.5 percent of the statutory minimum salary for employees whose positions are subject to the state minimum salary schedule.

Benefits from Member

Contributions

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Contributions to TRS Pension Fund

Contribution Rate

–

–

–

–

–

–

–

–

Fiscal Year State Member Employer1990 - 1991 7.65% 6.40%

1992 - 1995 7.31% 6.40%

1996 - 2007 6.00% 6.40%

2008 - 2009 6.58% 6.40%

2010 - 2011 6.64% 6.40%

2012 6.00% 6.40%

2013 6.40% 6.40%

2014 6.80% 6.40%

2015 6.80% 6.70% 1.50% 2016 6.80% 7.20% 1.50%

By contributing to TRS, school employees areinvesting in a retirement program thatprovides several major advantages.

Retirement SecurityOver 95 percent of TRS public schoolmembers do not participate in Social Security.As a result, employees in these districts arenot eligible for Social Security when theyretire.

Freedom from Investment DecisionsRather than having to buy and sellinvestments, rebalance portfolios, andreallocate assets based on their age, TRSmembers can count on a strong team tomanage their contributions before and afterretirement.

Protection from Investment RiskTRS members are assured that their pensionswill not be affected even by declines infinancial markets.

Certainty of PaymentsTRS members know that they will not outlivetheir monthly benefits. And, if they aremarried, they have the option of paymentsthat continue throughout their lifetime or thatof their spouse, whichever is longer.

In 2016, more than 847,000 active TRS members contributed over $2.9 billion to

the TRS Pension Trust Fund.

• Prior TRS actuarial modeling shows that to provide the same level of benefits, other plan designs (such as traditional defined contribution plans) are 10 percent to 130 percent more expensive than the current TRS defined benefit plan. Source: TRS Pension Benefit Design Study, Sept. 1, 2012

• The spending power of a typical retiree in the TRS defined benefit plan is about 44 percent more than it would be if that retiree were in a defined contribution plan. This means that a defined benefit plan has greater economic impact, including an impact on state and local tax revenues, than a defined contribution plan.

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Defined Benefit (TRS)

Members and state contribute to an investment pool which is professionally managed.

Retirement eligibility is based on service time and age. Members

receive an annuity determined by service time and salary.

Defined Contribution (Like 401(k), 403(b), & 457 plans)Investments are self-directed and member must manage account

for duration of retirement.

Defined Benefit

Defined Contribution

Total Expenditures $20.6 $14.0

Gross Product $9.9 $6.7

Personal Income $6.1 $4.2

Retail Sales $5.6 $3.8

Employment (Permanent Jobs)

131,422 89,282

Annual Economic Impact Monetary Values in Billions

Source: “The Impact of Annuity Payments by the Teacher Retirement System on Texas and Local Areas Within the State” (The Perryman Group, January 2017)

Source: “The Impact of Annuity Payments by the Teacher Retirement System on Texas and Local Areas Within the State” (The Perryman Group, January 2017)

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Value from Investments

Strengths of the TRS Pension Trust Fund

The TRS pension trust fund is:

Large – With a market value of $132.5 billion as of Jan. 1, 2017, TRS manages the sixth largest U.S. public pension fund. The fund’s size enables TRS to pursue large attractive opportunities not available to a majority of the marketplace.

Long-term – TRS’ size and membership composition allow for a long-term view in managing the investment portfolio and avoiding short-term investment limitations and constraints.

Liquid – With $94.5 billion in highly liquid assets as of Dec. 31, 2016 (approximately 70 percent of the total portfolio), the TRS portfolio is structured with access to liquidity well in excess of what is needed to pay regular monthly benefits.

Not Leveraged – The TRS investment portfolio has low levels of leverage (the use of borrowed funds to make investments). Because of this, TRS is better able to withstand periods of market volatility and less likely to sustain permanent capital losses during market downturns.

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Annualized Returns (Period ending Dec. 31, 2016)

Return (Percentage)

1

5

25

7.81%

8.41%

7.95%

Investments (62.2%)

Members (18.6%)

State & Employers (19.2%)

Over three-fifths of pension fund revenue comes from investments.

Time Period (Years)

3 5.47%

10 5.29%

Investment Performance is Vital to Funding Benefits

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TRS serves a vital role to more than 1.5 million active and retired members working in education.

• One out of every 20 Texans is a member of TRS; • 72 percent of annuitants are female; and • 393 annuitants are age 100 or older.

In 2016, TRS provided:

• $173 million in disability benefits; and• $266 million in death and survivor benefits.

TRS Provides Financial Security to

Members and Their Families

Value to Education

9

32%23%24%14%

5%3%

MonthlyBenefit

Number of Retired

Members

Percent of Retired

Members

$1 - $1,000$1,001 - $2,000$2,001 - $3,000$3,001 - $4,000$4,001 - $5,000 >$5,000

TOTAL

125,321

90,40193,358 54,73519,60610,493

100.0%393,914

2016 Benefit Distribution

2016 average monthly life annuity: $2,035

Investment Performance is Vital to Funding Benefits

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High Quality Service to Satisfied Members

In 2016, retiree satisfaction was particularly high, with an overall approval rating (satisfied or very satisfied) of 96.5 percent. Active members also gave TRS an overall rating (satisfied or very satisfied) of 88.8 percent.

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Continuously Improving Member Services

Source: 2016 TRS Member Satisfaction Survey, Texas A&M University – Public Policy Research Institute

As a retiree, you can: • View the most recent 1099-R form(s) • Change income tax withholding • View annual TRS-Care health benefits • View annuity verification • Sign up for email subscriptions

MyTRS allows active members and retirees to conduct convenient business transactions online, review important announcements, update contact information and receive TRS publications electronically.

As an active member, you can: • Calculate retirement estimates • View annual statements • Email a question to a benefit counselor • Register for group benefit presentations • Sign up for email subscriptions

MyTRS

Remote CounselingTRS offers members the option to meet with a counselor through the internet. All that is needed is a personal computer or tablet with a camera and a reliable internet connection. To schedule a live video counseling session, call 800-223-8778.

Board MeetingsTRS provides live webcasts of all board meetings. Board meeting agendas are linked to the meeting videos and archived for later viewing. Board meeting books are available online while watching a live broadcast. They are then archived for easy on-demand viewing through a cataloged, searchable agenda item menu.

Social MediaVisit us at www.trs.texas.gov and click on the social media icons.

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Low Administrative Cost

According to an independent study, the pension administration cost of TRS is well below that of other similarly sized systems.

Source: “Defined Benefit Administration Benchmarking Analysis, Fiscal Year 2015,” CEM Benchmarking, Inc. (April 2016)

TRS Facilitates Several Valuable Programs

TRS-Care – The health care program for public school retirees expended over $1.5 billion for services covering over 261,000 participants in 2016.

403(b) Certification and Product Registration – TRS publishes information on companies meeting 403(b) certification requirements and the 403(b) products registered by these companies.

TRS-ActiveCare – The health care program for active public school employees expended almost $2.0 billion for services covering over 484,000 participants in 2016.

In addition to delivering pension benefits to public educators, TRS offers participation in other optional health and retirement programs for members:

A large part of the $3.5 billion in expenditures for

TRS-Care and TRS-ActiveCare is paid to providers in Texas.

403(b)

$0

$20

$40

$60

$80

$100

TRS Peer Average

$29

$92

Pension Administration Cost

Per Active Member and Annuitant

ANDERSON 20.7 949

ANDREWS 6.6 255

ANGELINA 33.6 1,564

ARANSAS 13.5 591

ARCHER 4.0 194

ARMSTRONG 1.1 - 5.0 50 - 250

ATASCOSA 19.7 885

AUSTIN 15.3 641

BAILEY 1.9 104

BANDERA 12.4 527

BASTROP 33.0 1,533

BAYLOR 2.1 91

BEE 12.0 576

BELL 96.6 4,207

BEXAR 587.4 25,351

BLANCO 6.9 295

BORDEN < 1.1 < 50

BOSQUE 10.8 487

BOWIE 36.6 1,581

BRAZORIA 119.5 4,756

BRAZOS 108.2 4,653

BREWSTER 5.0 - 11.0 251 - 500

BRISCOE < 1.1 < 50

BROOKS 4.8 216

BROWN 20.7 937

BURLESON 11.0 - 25.0 500 - 1,200

BURNET 29.2 1,184

CALDWELL 19.0 881

CALHOUN 9.4 425

CALLAHAN 7.3 313

CAMERON 134.9 5,677

CAMP 5.8 263

CARSON 3.5 156

CASS 15.6 705

CASTRO 2.6 119

CHAMBERS 17.5 691

CHEROKEE 19.8 912

CHILDRESS 2.9 134

CLAY 5.3 248

COCHRAN 1.4 54

COKE 1.1 - 5.0 50 - 250

COLEMAN 5.2 235

COLLIN 198.8 7,605

COLLINGSWORTH 1.8 82

COLORADO 12.2 522

COMAL 87.1 3,382

COMANCHE 9.0 390

CONCHO 2.1 97

COOKE 16.8 749

CORYELL 20.3 933

COTTLE 1.1 - 5.0 50 - 250

CRANE 1.9 77

CROCKETT 1.4 75

CROSBY 2.9 143

CULBERSON < 1.1 < 50

DALLAM 1.1 62

DALLAS 585.2 22,543

DAWSON 4.7 223

DE WITT 9.7 473

DEAF SMITH 5.0 249

DELTA 1.1 - 5.0 50 - 250

DENTON 193.4 7,557

DICKENS 1.2 63

DIMMIT 4.3 203

DONLEY 2.1 98

DUVAL 7.3 337

EASTLAND 9.7 443

ECTOR 38.8 1,680

EDWARDS 1.1 - 5.0 50 - 250

EL PASO 250.0 11,201

ELLIS 60.5 2,387

ERATH 21.8 956

FALLS 6.4 302

FANNIN 15.3 703

FAYETTE 15.6 682

FISHER 1.1 - 5.0 50 - 250

FLOYD 3.3 164

FOARD < 1.1 < 50

FORT BEND 216.7 8,151

FRANKLIN 5.3 210

FREESTONE 8.5 392

FRIO 6.1 286

GAINES 5.1 224

GALVESTON 189.4 7,610

GARZA 1.9 89

GILLESPIE 11.0 - 25.0 500 - 1,200

GLASSCOCK < 1.1 < 50

GOLIAD 5.1 202

GONZALES 9.1 422

GRAY 7.3 333

GRAYSON 51.2 2,207

GREGG 51.2 2,226

GRIMES 14.3 656

GUADALUPE 54.4 2,389

HALE 12.7 525

HALL 1.1 59

HAMILTON 5.0 - 11.0 251 - 500

HANSFORD 2.3 97

HARDEMAN 2.5 108

HARDIN 22.7 1,068

HARRIS 1073.7 43,052

HARRISON 25.4 1,169

HARTLEY 1.7 80

HASKELL 4.1 161

HAYS 79.6 3,356

HEMPHILL 1.6 72

HENDERSON 37.0 1,658

HIDALGO 235.0 10,043

HILL 18.0 796

HOCKLEY 12.7 550

HOOD 35.4 1,429

HOPKINS 15.2 718

HOUSTON 11.5 524

HOWARD 11.0 512

HUDSPETH 1.1 57

HUNT 35.4 1,569

HUTCHINSON 7.6 337

IRION < 1.1 < 50

JACK 3.4 154

JACKSON 8.2 331

JASPER 18.8 808

JEFF DAVIS 1.1 - 5.0 50 - 250

JEFFERSON 101.8 4,236

JIM HOGG 3.4 143

JIM WELLS 18.1 858

JOHNSON 49.3 2,140

JONES 6.5 308

KARNES 7.2 348

KAUFMAN 37.5 1,559

COUNTY NAME

ANNUITYPAYMENTS(in millions)

NUMBER OFANNUITANTS COUNTY NAME

ANNUITYPAYMENTS(in millions)

NUMBER OFANNUITANTS COUNTY NAME

ANNUITYPAYMENTS(in millions)

NUMBER OFANNUITANTS

$ $ $

12

KENDALL 28.5 1,068

KENEDY < 1.1 < 50

KENT < 1.1 < 50

KERR 31.0 1,329

KIMBLE 3.2 138

KING < 1.1 < 50

KINNEY 2.4 97

KLEBERG 18.3 855

KNOX 1.1 - 5.0 50 - 250

LA SALLE 2.6 107

LAMAR 11.0 - 25.0 500 - 1,200

LAMB 5.0 234

LAMPASAS 11.0 - 25.0 500 - 1,200

LAVACA 11.7 544

LEE 7.9 373

LEON 11.1 492

LIBERTY 22.7 1,026

LIMESTONE 10.7 474

LIPSCOMB 1.8 80

LIVE OAK 5.2 247

LLANO 11.0 - 25.0 500 - 1,200

LOVING < 1.1 < 50

LUBBOCK 141.9 5,740

LYNN 2.9 126

MADISON 5.8 273

MARION 4.1 193

MARTIN 1.7 79

MASON 1.1 - 5.0 50 - 250

MATAGORDA 17.4 755

MAVERICK 17.0 670

MCCULLOCH 5.6 248

MCLENNAN 90.7 4,025

MCMULLEN < 1.1 < 50

MEDINA 23.8 1,040

MENARD 1.4 69

MIDLAND 43.0 1,779

MILAM 12.4 574

MILLS 1.1 - 5.0 50 - 250

MITCHELL 3.4 177

MONTAGUE 10.2 445

MONTGOMERY 164.8 6,733

MOORE 5.9 215

MORRIS 7.6 327

MOTLEY < 1.1 < 50

NACOGDOCHES 35.8 1,538

NAVARRO 20.2 877

NEWTON 4.6 227

NOLAN 8.0 370

NUECES 134.1 5,675

OCHILTREE 2.8 128

OLDHAM 1.1 - 5.0 50 - 250

ORANGE 31.6 1,463

PALO PINTO 11.4 504

PANOLA 10.6 481

PARKER 47.4 1,967

PARMER 2.9 136

PECOS 6.0 273

POLK 24.8 1,091

POTTER 27.2 1,345

PRESIDIO 2.8 119

RAINS 4.9 237

RANDALL 70.9 2,943

REAGAN < 1.1 < 50

REAL 1.1 - 5.0 50 - 250

RED RIVER 5.7 284

REEVES 4.0 197

REFUGIO 3.7 169

ROBERTS < 1.1 < 50

ROBERTSON 11.2 528

ROCKWALL 33.6 1,265

RUNNELS 6.2 268

RUSK 22.7 1,040

SABINE 5.0 242

SAN AUGUSTINE 4.9 218

SAN JACINTO 13.0 558

SAN PATRICIO 25.4 1,205

SAN SABA 1.1 - 5.0 50 - 250

SCHLEICHER 1.6 74

SCURRY 9.3 373

SHACKELFORD 1.6 64

SHELBY 11.1 496

SHERMAN < 1.1 < 50

SMITH 101.4 4,286

SOMERVELL 5.8 242

STARR 19.7 956

STEPHENS 4.2 173

STERLING < 1.1 < 50

STONEWALL < 1.1 < 50

SUTTON 1.9 75

SWISHER 3.7 174

TARRANT 507.1 20,078

TAYLOR 63.8 2,509

TERRELL < 1.1 < 50

TERRY 5.2 221

THROCKMORTON 1.1 - 5.0 50 - 250

TITUS 11.2 486

TOM GREEN 50.7 2,149

TRAVIS 338.5 13,458

TRINITY 8.6 394

TYLER 9.3 433

UPSHUR 16.3 760

UPTON 1.2 51

UVALDE 14.1 646

VAL VERDE 18.9 787

VAN ZANDT 23.7 1,090

VICTORIA 37.1 1,689

WALKER 40.2 1,599

WALLER 21.9 908

WARD 4.4 207

WASHINGTON 20.2 890

WEBB 74.3 2,973

WHARTON 23.0 986

WHEELER 2.6 121

WICHITA 47.2 1,961

WILBARGER 6.6 294

WILLACY 9.5 417

WILLIAMSON 163.5 6,666

WILSON 21.0 926

WINKLER 3.2 127

WISE 21.3 916

WOOD 24.7 1,069

YOAKUM 3.8 159

YOUNG 8.3 379

ZAPATA 5.6 244

ZAVALA 5.0 223

- TRS has provided selected data in ranges to avoid disclosure of confidential information and to comply with Sections 552.0038 and

825.507, Texas Government Code.

COUNTY NAME

ANNUITYPAYMENTS(in millions)

NUMBER OFANNUITANTS COUNTY NAME

ANNUITYPAYMENTS(in millions)

NUMBER OFANNUITANTS COUNTY NAME

ANNUITYPAYMENTS(in millions)

NUMBER OFANNUITANTS

$ $ $

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Board of Trustees

R. David Kelly, Chair Plano

Dolores Ramirez, Vice ChairSan Benito

T. Karen Charleston Houston

Joe ColonnettaDallas

David CorpusHumble

John ElliottAustin

Dr. Greg GibsonSchertz

Christopher MossLufkin

Anita Smith Palmer †Jacksboro

Executive DirectorBrian K. Guthrie

1000 Red River Street

Austin, Texas 78701-2698

www.trs.texas.gov

512.542.6400

800.223.8778

† Trustee appointed to Retiree Position. Deceased January 2017.