Lillard Outlines Plans to Change State Pension System

By Lucas Johnson, Associated Press
NASHVILLE, Tenn. (AP) — Tennessee’s treasurer said Monday that he wants to overhaul the state’s public retirement system to cut costs and ensure it can pay out benefits for years to come.
David Lillard said he will propose legislation laying out the overhaul, even though Tennessee’s public pension system is faring better than those in most other states. Changes to the Tennessee Consolidated Retirement System will only apply to state employees, higher education officials and teachers hired after July 1, 2014, Lillard said at a news conference. The retirement benefits of those currently in the system won’t be affected.
The state is doing better than its peers with similar plans, but earnings of the Tennessee plan have fallen short of expectations over the past several years, he said. The changes are needed because it’s uncertain how much money the retirement system’s investments will yield in the future, Lillard said.
He said that in 2003, taxpayers spent about $264 million a year to support the system. As of last year, that number had grown to $731 million, he said.
“Based on projections we have seen, the cost could go up by one-third or more over the next 10 years if changes aren’t made, which would push the taxpayers’ total annual expense above $1 billion,” said Lillard, adding that at least 45 states have enacted some type of pension reform in the past few years.

here are currently about 217,000 employees in Tennessee’s system, and roughly 122,000 retirees.
The changes being proposed would limit the state’s future liability for pension costs by creating a type of hybrid between a defined benefit plan and a defined contribution plan.
The reforms are also intended to reduce pension costs by adjusting the formula used to calculate retirement benefits, raising eligibility requirements and collecting payroll deductions.
Under the current plan, only teachers are required to contribute 5 percent of their salaries. The new proposal would require all state employees to contribute that much.
Lillard said he realizes there may be some concern among new hires, but he said they should understand what the state is offering “versus the private sector and versus other competing entities is a very good pension benefit.”
“We want to be able to say to a young state employee who is hired on July 1, 2014, that when they retire … they can truly expect to see the benefit that we promised them,” he said.
Chris Dauphin, spokesman for the Tennessee State Employees Association, said the group hasn’t taken a position on the proposal but does have some concerns. He did not elaborate on those concerns.
However, Lillard said some have expressed concerns about a provision in the measure that would allow the state to change the pension plan in the future. Lillard said he doesn’t plan to retract it.
“Management of a pension plan requires some flexibility going forward for the interest of the people who are in it,” he said.

5 thoughts on “Lillard Outlines Plans to Change State Pension System

  1. Frank Irwin

    Tennessee teachers are poorly paid so it’s hard for them to save for retirement on their own. TCRS is among the most well funded public retirement plans in the US and has one of the lowest payouts. Changing it to a defined contribution plan will likely reduce payouts further and leave elderly retired teachers in poverty. Given the insecurity Tennessee teachers are subject to and the low pay now and in retirement why would anyone consider becoming a teacher?

  2. Sandra Irwin

    This is the most absurd, ridculous plan imaginable. I know deceased teachers who worked very hard, making endless trips to Nashville to preserve TCRS. Now, a politician wants to greedily change the system. This, too, is the way greedy politicians are running the country. This must be stopped immediately!!!

  3. Robert Paul

    It’s about time that the other state employees besides educators started to contribute to the state retirement system!
    They have had a free ride for over 20+ years, enjoying the largesse of the teaching profession!

  4. D. Hill

    I feel this is unfair. The pay of state employees working in similar areas is less than the private sector. The employer sponsored retirement (pension) benefits is an advantage of working for the state. However, if they get rid of this what will retain employees??? low pay…. State employees have alot of high stress jobs just look at DCS employees. I feel this is unfair. They should not make these changes and I strongly oppose. TSEA Help!!

  5. Becky Carter

    Lillard’s proposal for changes to TCRS has passed. This plan seems to match SB2171, a bill sponsored by state senator Brian Kelsey in the session of 2012. Kelsey’s bill appears to match a bill designed by the American Legislative Exchange Coucil (ALEC) called the “Public Employees’ Portable Retirement Option Act”. Those who are aware of ALEC’s agenda, know that their concern is not to create a secure pension for public employees, but rather to reduce the amount of state funds appropriated into TCRS in an attempt to create “smaller government” and reduce or eliminate benefits for public employees. Having been a grassroots leader within TSEA for years,I have been informed by several leaders in TSEA that they do not want state employees to be made aware of this risk to their pensions and who is responsible because they do not want workers to offend legislators and officials by calling them to protest. The reduced investment into TCRS by the state will apparently be detrimental to all in the TCRS system, but workers might cause officials to “not like us” or to be angered with TSEA should we contact them over this matter. If you are depending on TSEA to adequately inform or mobilize public employees to protect their pensions,you will be disappointed. I suggest that state employees appeal to education unions who will be fighting for TCRS or to contact state officials on their own. TSEA has allowed us to lose our Civil Service protections, many jobs, full workmen’s comp., full funding to our pensions,pensions for new hires, and they are facing Sen. Campfield’s bill that will end payroll deductions for TSEA dues. These losses have occured because of the change in strategy involving not mobilizing or informing state employees of threats toward them so that they will not offend the legislators proposing these threats by contacting them. Reduced appropriations WILL hurt those of us in the TCRS system or who are receiving pensions because the pot of money we draw from will most likely shrink. State appropriations are what kept our pension strong. If an insurance company stops taking in premiums, there will be no money for you when your house burns down no matter how long you paid your premiums. Public employees–stay alert, read the newspapers, and fight for yourselves in these dark times.

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