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Legislative and Regulatory Outlook for Texas Public Pension Systems in 2025

By: Sherry Mose, City of Houston Deferred Compensation Plan and TEXPERS 
 
The 2025 legislative session could bring opportunities and challenges for Texas public pension systems as lawmakers address cost-of-living adjustments, funding policies, and investment strategies, while TEXPERS pushes to preserve the proven effectiveness of local control. 
This is an excerpt from NCPERS Winter 2025 issue of PERSist.
 
With the 89th Legislative Session set to kick off January 14, Texas is gearing up for a season of policy discussions that could shape the future of public pension systems across the state. The Texas Association of Public Employee Retirement Systems (TEXPERS), representing 85 pension plans for police officers, firefighters, municipal workers, and other public servants, is ready to advocate for these vital systems' continued strength and sustainability. 
 
The Session brings not only legislative opportunities but also changes in the composition of the Legislature itself, with a significant number of new faces in both chambers. Combined with ongoing challenges like inflation, workforce trends, and funding pressures, 2025 promises to be an important year for Texas pensions. 
 
The Legislative Landscape: House and Senate Composition 
After recent elections, the Legislature retains its Republican majority: 
  • Texas Senate: 20 Republicans, 11 Democrats, representing an average of 940,178 Texans across 31 districts. 
  • Texas House: 88 Republicans, 62 Democrats, with 150 districts averaging 194,303 Texans each.
 
The Legislative Landscape: Fresh Faces in the 89th Session 
This Session will see an influx of new lawmakers: 
  • Texas Senate: 3 freshmen (2 Republicans, 1 Democrat) 
  • Texas House: 32 freshmen (26 Republicans, 6 Democrats) 
     
These new legislators bring fresh perspectives but must be quickly updated on the complexities of public pension systems. TEXPERS will prioritize outreach and education to ensure they understand the value of these plans and the importance of preserving their integrity. 
 
Progress Worth Celebrating 
Texas' public pension systems have made remarkable progress over the past decade, thanks to thoughtful legislation and diligent management: 
 
  • Funding Improvements: As of mid-2024, only nine pension systems have amortization periods exceeding 40 years, a significant improvement from 2014. Most systems are now meeting or nearing the 30-year target, demonstrating the effectiveness of the Funding Soundness Restoration Plan requirements. 
  • Actuarial Adjustments: Pension systems have continued to lower their target rates of return to reflect realistic market expectations. By 2024, 57 systems had reduced targets to 7% or below, and those remaining above this threshold are actively working to adjust. 
  • Enhanced Education for Trustees: Since 2015, mandatory education requirements have ensured trustees have the training to manage pension plans effectively. TEXPERS has led the charge, providing over 34,000 hours of instruction to more than 4,300 trustees and staff, covering topics like actuarial science, fiduciary responsibility, and investments. 

Key Issues for the 2025 Session 
The upcoming Legislative Session could potentially focus on several critical issues for public pensions: 
 
  • Cost-of-Living Adjustments: Retirees' purchasing power is likely to be impacted by inflation. To balance retiree needs with long-term pension plan health, policymakers may examine frameworks that tie COLAs to funding benchmarks or investment performance. 
  • Preserving Local Control: Texans' system of local control has enabled pension boards and city sponsors to collaborate. TEXPERS will advocate for maintaining this autonomy, which has consistently proven effective in resolving issues tailored to each system's needs. 
  • Strengthening Funding Policies: To maintain pension system fiscal health, legislators may push for stricter funding policies, including enhanced transparency and accountability. 
  • Investment Innovation: Legislators may push pension systems to better understand fiduciary duties and support innovative investment strategies. 
  • State Investment Shifts: Changes at the state and federal level, including potential updates to environmental, social, and governance investment rules, could trickle down to municipal pension systems across the state.

A System That Works
Despite challenges, Texas' public pension systems remain a model of effectiveness and adaptability. Whether it's city workers responding to Hurricane Harvey in 2017 or firefighters assisting during the Smokehouse Creek Fire in 2024, the commitment of public employees underscores the importance of securing their retirement futures. These systems are proof of the success of Texas' legislative framework, which balances fiscal responsibility with retirement security. 
 
The Texas Pension Review Board's reports consistently affirm this, highlighting the strength of local control and the collaboration between pension boards and city sponsors. These structures ensure that challenges are addressed while maintaining flexibility to adapt to changing needs. 
 
Looking Ahead 
As we prepare for the 2025 session, TEXPERS will continue to advocate for policies that strengthen Texas' public pension systems while preserving their integrity. By working with lawmakers, city sponsors, and pension boards, we can build on past progress and address new challenges, ensuring these systems remain vital for future generations. 
 
The 89th Legislative Session presents an opportunity to honor the public employees who dedicate their lives to serving Texans. By securing their pensions, we secure the future of the communities they protect and sustain. Together, we can continue to move forward. 
 
Bio: Sherry Mose is a dedicated leader in public employee retirement systems, currently serving as President of the Board of Directors for the Texas Association of Public Employee Retirement Systems (TEXPERS). She is the Plan Administrator for the City of Houston Deferred Compensation Plan, overseeing all aspects of the program. In 2006, Mose founded the Financial Retirement Educational Event (F.R.E.E. Summit) to educate city employees about pensions and retirement planning. Over 16 years, this event has benefited more than 23,000 city employees. 
 
As Chair of the Houston Municipal Employees Pension System (HMEPS) and a Board Member of TEXPERS and the National Conference on Public Employee Retirement Systems (NCPERS), Mose demonstrates impactful leadership. Her honors include the NAGDCA Leadership Recognition Award and the Joyce Johnson Award from NASP. Mose is an active community volunteer who mentors youth through River Pointe Church and supports initiatives promoting diversity and professional growth for women. 

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