THE HISTORY OF HMEPS - SERVING CITY OF HOUSTON EMPLOYEES FOR 70 YEARS
City of Houston officials in 1934 began setting aside funds with a special goal in mind – creating a retirement system to serve its hard-working employees. Nine years later, they had accumulated $281,000 that they used to create the Municipal Pension System. The Texas Legislature established the plan, making the system official on May 3, 1943.
Fast forward to the present, the System remains true to the original vision of providing a pension to its members. But there have been a few changes along the way, as well as plenty of growth in assets and membership.
The Municipal Pension System consisted of a seven-member Board of Trustees made up of the city manager, city treasurer, two city employees who were members of the System and three taxpaying Houston voters. Membership included 108 retirees who received average monthly pensions of $44.98 and 1,067 active members who made monthly contributions of $2.00.
By 1950, Houston was the nation’s 14th largest city - behind Milwaukee - with a population of 596,163. As the city continued to expand, officials knew they needed a solid work force to fuel the growth and so they promised new hires a pension. The offer attracted many citizens to local government work, spurring a dramatic increase in the pension system.
Membership in the mid-1950s reached 4,548 and assets grew to $3,966,825. An employee retiring in 1956 with 28 years of service was entitled to a pension benefit of $100 per month. The monthly contribution by employees rose to $7. Also during that time, employees became eligible for Social Security benefits.
As a new decade began in 1960, the System’s assets surpassed the $10 million mark for the first time to total $10,596,901. Membership stood at 5,376 and active members were contributing $10 a month to help fund the System’s positive trend.
More change came in 1981, when bills were introduced in the Texas Legislature to establish a noncontributory pension group for employees, Group B.
The Pension System continued its upward trek in the early 1980s, with membership topping 14,856, including 12,252 active members and 2,604 retired members, beneficiaries and inactive vested members. During this time, Houston became the nation’s fourth largest city. The System’s market value surpassed yet another milestone, the $100 million mark, to equal $108.5 million.
In 1987 the U.S. stock market suffered a severe decline and budgets in most of the nation’s cities, including Houston, were adversely affected.
Despite the economic turmoil of the 1980s, the System’s market value continued to grow. The 1989 fund was $546.3 million – a 400 percent increase from 1980. That same year, the System published the first issue of the Pension Press newsletter.
In 1992, Roderick J. Newman was elected as the first African American to serve on the HMEPS Board. In 1993, the Board hired its first executive director, David L. Long, and his administrative staff. That same year, the name was changed to the Houston Municipal Employees Pension System, HMEPS.
HMEPS thrived and its market value climbed to $1.17 billion in 1997, another major first for the pension system. Also, that year the Deferred Retirement Option Plan (DROP) was instituted.
In 2004, HMEPS and the City entered into its first Meet and Confer Agreement to make certain changes to the pension plan. In subsequent years, there have been four amendments to the original Meet and Confer Agreement. The Meet and Confer Agreement also established a new noncontributory group - Group D.
HMEPS continued to expand services to its membership in 2006 by participating in the City’s first Financial Fitness Expo and introducing AccessHMEPS, an online service for DROP participants.
After serving the System for 35 years in different capacities, Fred Holmes stepped down from the HMEPS Board in 2008. Rod Newman was elected Chairman, the first African American elected to the post since the creation of the fund in 1943. In September, Sherry Mose became the first female elected to the office of Chairman.
Effective on July 1, 2011 the Amended and Restated Meet and Confer Agreement (Agreement) between the City and the System went into effect. The agreement provides for structured contributions from the City to provide the City budgetary flexibility while strengthening the System, enhancements to Board operations to promote best practices, and increased options for eligible participants that are cost nuetral to the System.
As of June 30, 2012 the System had more than 26,675 participants and total assets of more than $2.0 billion. HMEPS is honored to continue the commitment set forth so many decades ago for the valued employees of the City of Houston.