Tag Archives: defined

Lawmakers Approve Changes to State Retirement System

The House has approved and sent to the governor for his signature a bill that changes the pension system for state employees and teachers hired after July 1, 2014.
Drafted by state Treasurer David Lillard, SB1005 would create what is described as a “hybrid” between the present defined-benefits plan, which guarantees retirees a fixed pension based on years of service and earnings, and a defined-contribution plan, which has no guaranteed benefit level.
The bill passed the Senate 32-0 and won 71-16 approval in the House. All no votes came from Democrats.
Explaining his no vote, House Minority Leader Craig Fitzhugh praised the proposal as well designed, but said it is simply not needed in Tennessee because the state retirement system has adequate funding — unlike those in many other states.
But Lillard and sponsors of the bill — Sen. Randy McNally, R-Oak Ridge, and Steve McManus, R-Cordova — said long-range projections show the Tennessee Consolidated Retirement System could face problems and the legislation will head them off, without affecting current state workers and teachers.

Andrea Zelinski has details on the legislation:

Continue reading

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.