Tag Archives: consolidated

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.

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Treasurer Pushes Change in State Retirement System

Tennessee may be contributing much less to state employee retirement accounts in the future based on a state plan to convert to a defined contribution plan, reports the Commercial Appeal.
State Treasurer David Lillard will unveil details of his proposed revisions to the state pension plan Monday, and the state legislature will consider the changes with bills sponsored by Rep. Steve McManus, R-Memphis, and Sen. Randy McNally, R-Oak Ridge.
Lillard’s proposal will change — for future hires only — the pension plan from a defined-benefits plan to a hybrid plan that includes elements of defined-benefits and defined-contribution programs.
Defined-benefits plans guarantee retirees a fixed pension benefit based on their years of service and earnings, while defined-contribution plans do not have guaranteed payment levels but rather specified contribution levels by the employer. The benefit payments may rise and fall with their underlying investments.
The state’s pension plan is part of the Tennessee Consolidated Retirement System, established in 1972 and which today covers state government workers, employees of the state’s public higher education system, local public school teachers statewide and employees of about 485 towns, cities, counties, utility districts and other local entities that choose to participate in the state-run plan. All nonstate entities pay their own costs.

With Cities Pulling Out of State Pension Plan, New Options Offered

The Tennessee Consolidated Retirement System bills itself as “one of the best-funded pension plans in the nation,” but some local governments have been pulling their new hires out of the plan, reports Hank Hayes.
The city of Kingsport did. So did Johnson City and Tri-Cities Regional Airport. The reason: These cash-strapped political entities have found their contributions into TCRS to be too costly.
“Fifty-four (governmental entities) were at or above 15 percent of payroll (with TCRS employer contributions). … Speaking as a former county commissioner, that tells me they are under a bit of funding pressure,” said Tennessee Treasurer David Lillard Jr., who oversees TCRS.
For instance, TCRA’s TCRS contribution expense is almost 18 percent of payroll. The airport decided to go with a different defined contribution plan that would have a maximum 9 percent of payroll cost.
Kingsport’s and Johnson City’s TCRS pullout, in particular, got Lillard’s attention.
“These are all issues of concern to us because these are significant-size local governments, and they are entities participating in the system for many, many years — some going back to 1948,” he noted.
So Lillard hit the road last fall and did listening sessions with more than 200 local government officials about their future with the state’s pension plan.
Proposals from those meetings resulted in legislation passed this year to create three less costly investment options.
TCRS says the bill, scheduled to go into effect on July 1, would not apply to current local government hires, state employees, K-12 teachers or higher education workers. No local governments are required to make any changes. The provisions are only effective if adopted by local governments, according to TCRS.